<PAGE>
As filed with the Securities and Exchange Commission on May 19, 1999
Registration Nos. 811-6241 and 33-39133
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [_]
Post-Effective Amendment No. 19 [X]
and
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 21 [X]
(Check appropriate box or boxes)
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LOOMIS SAYLES FUNDS
(Exact name of registrant as specified in charter)
One Financial Center, Boston, MA 02111
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 482-2450
Name and address
of agent for service with a copy to
- ------------------------ ---------------
Sheila M. Barry Truman S. Casner, Esq.
Loomis, Sayles & Company, L.P. Ropes & Gray
One Financial Center One International Place
Boston, MA 02111 Boston, MA 02110
It is proposed that this filing will become effective (check appropriate box)
[_] immediately upon filing pursuant to paragraph (b)
[_] on [date], 1999 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(2)
[_] on [date] pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[_] on [date] pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
LOOMIS SAYLES FUNDS
Cross Reference Sheet
Items required by Form N-1A
<TABLE>
<CAPTION>
PART A
Item
No. Registration Statement Caption Caption in Prospectus
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Not Applicable
4. General Description of Cover Page; The Trust; Investment Objectives and
Registrant Policies; More Information About the Funds'
Investments and Risk Considerations
5. Management of the Fund Cover Page; The Trust; The Funds' Investment
Adviser; Fund Expenses; Portfolio Transactions;
Back Cover
5A. Management's Discussion of More Information about the Funds' Investments and
Fund Performance Risk Considerations; Performance Information
6. Capital Stock and Other Securities The Trust; Shareholder Services; Dividends, Capital
Gain Distributions and Taxes
7. Purchase of Securities Being How to Purchase Shares; Shareholder Services
Offered
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PART B
Item
No. Registration Statement Caption Caption in Statement of Additional Information
<S> <C> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives, Policies and Restrictions
14. Management of the Fund Management of the Trust
15. Control Persons and Principal Management of the Trust
Holders of Securities
16. Investment Advisory and Other Investment Advisory and Other Services
Services
17. Brokerage Allocation and Other Portfolio Transactions and Brokerage
Practices
18. Capital Stock and Other Securities How to Redeem Shares (Prospectus); Redemptions;
Dividends, Capital Gain Distributions and Taxes
(Prospectus); Income Dividends, Capital Gain
Distributions and Tax Status; Description of the
Trust
19. Purchase, Redemption and Pricing How to Purchase Shares (Prospectus); Shareholder
of Securities Being Offered Services; How to Redeem Shares (Prospectus);
Redemptions; Net Asset Value and Public Offering
Price
20. Tax Status Dividends, Capital Gain Distributions and Taxes
(Prospectus); Income Dividends, Capital Gain
Distributions and Tax Status
21. Underwriters Not Applicable
22. Calculations of Performance Data Calculation of Yield and Total Return; Performance
Data
23. Financial Statements Not Applicable
</TABLE>
<PAGE>
[LOOMIS SAYLES FUNDS LOGO APPEARS HERE]
One Financial Center . Boston, Massachusetts 02111 . (800) 633-3330
The Loomis Sayles Funds
Select Opportunities Fund
Institutional Class
Retail Class
<PAGE>
Prospectus July 1, 1999
Loomis Sayles Select Opportunities Fund
Loomis Sayles Select Opportunities Fund (the "Fund") is a series of Loomis
Sayles Funds (the "Trust"), a registered open-end management investment
company, and is a no-load mutual fund. Loomis, Sayles & Company, L.P. ("Loomis
Sayles") is the investment adviser of the Fund.
The Fund offers two classes of shares: an Institutional Class, which
generally has a higher minimum investment and bears lower expenses, and a
Retail Class, which generally has a lower minimum investment and bears higher
expenses. Each Class of the Fund has a common investment objective and
investment portfolio. The performance of one Class of shares may be different
from the performance of the other Class of shares because of different sales
charges and Class expenses. This Prospectus concisely describes the
information that an investor should know before investing in either the
Institutional Class shares or Retail Class shares of the Fund. Please read it
carefully and keep it for future reference. A Statement of Additional
Information (SAI) dated July 1, 1999, as revised from time to time, is
available free of charge; write to Loomis Sayles Distributors, L.P. (the
"Distributor"), One Financial Center, Boston, Massachusetts 02111 or telephone
800-633-3330. The SAI, which contains more detailed information about the
Fund, has been filed with the Securities and Exchange Commission (the "SEC")
and is available along with other related materials on the SEC's Internet
Website (http://www.sec.gov). The SAI is incorporated herein by reference
(legally forms a part of the Prospectus).
For information about: For all other information about
. Establishing an account the Funds:
. Account procedures and status Call 800-633-3330
. Exchanges
. Shareholder services
Call 800-626-9390
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY OF EXPENSES....................................................... 3
THE TRUST................................................................. 4
INVESTMENT OBJECTIVES AND POLICIES........................................ 4
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS AND RISK CONSIDERATIONS..... 4
THE FUND'S INVESTMENT ADVISER............................................. 10
FUND EXPENSES............................................................. 10
PORTFOLIO TRANSACTIONS.................................................... 11
HOW TO PURCHASE SHARES.................................................... 12
SHAREHOLDER SERVICES...................................................... 14
HOW TO REDEEM SHARES...................................................... 15
CALCULATION OF PERFORMANCE INFORMATION.................................... 17
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES........................... 17
</TABLE>
2
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SUMMARY OF EXPENSES
The following information is provided as an aid in understanding the various
expenses that an investor in the Fund will bear indirectly. The information
below is based on estimated expenses for the Fund's first full fiscal year and
should not be considered a representation of past or future expenses, as
actual expenses may be greater or less than those shown. Also, the 5% annual
return assumed in the Example should not be considered a representation of
investment performance, as actual performance will vary.
<TABLE>
<CAPTION>
Institutional Retail
Class Class
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<S> <C> <C>
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases (as % of
offering price)..................................... none none
Maximum Sales Load Imposed on Reinvested Dividends
(as % of offering price)............................ none none
Maximum Deferred Sales Load (as % of original
purchase price or redemption proceeds).............. none none
Redemption Fees/1................................./.. none none
Exchange Fees........................................ none none
Annual Fund Operating Expenses (as a percentage of
average net assets):
Management Fees...................................... .50% .50%
12b-1 Fees........................................... none .25%
Other Operating Expenses (after expense
reimbursements where indicated)..................... .50% .50%
Total Fund Operating Expenses (after expense
reimbursements where indicated)..................... 1.00%/2/ 1.25%/2/
Example:
An investor would pay the following expenses on a
$1,000 investment assuming a 5% annual return (with
or without a redemption at the end of each time
period)/3/:
One Year............................................. $ $
Three Years.......................................... $ $
</TABLE>
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/1/A $5 charge applies to any wire transfer of redemption proceeds from the
Fund.
/2/Loomis Sayles has voluntarily agreed, for an indefinite period, to limit
the Total Operating Expenses of the Fund's Institutional Class of shares and
Retail Class of shares to 1.00% and 1.25%, respectively. Without this
agreement, it is estimated that Other Operating Expenses and Total Operating
Expenses would be % and %, respectively.
/3/Under SEC rules, new funds are required to show expenses for the one- and
three-year periods only.
3
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THE TRUST
The 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 on February 20, 1991. The Trust is authorized to
issue an unlimited number of full and fractional shares of beneficial interest
in multiple series. Shares are freely transferable and entitle shareholders to
receive dividends as determined by the Trust's board of trustees and to cast a
vote for each share held at shareholder meetings. The Trust does not generally
hold shareholder meetings and will do so only when required by law.
Shareholders may call meetings to consider removal of the Trust's trustees.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective is long-term growth of capital.
The Fund seeks to achieve its objective by investing substantially all of its
assets in common stocks or their equivalent. Loomis Sayles seeks to build a
highly focused portfolio of approximately 20 stocks with a minimum market
capitalization of $1 billion. Loomis Sayles uses a bottom-up, fundamental
approach to select stocks for the Fund. In deciding whether to buy and sell
investments for the Fund, Loomis Sayles will consider a variety of factors such
as earnings growth, price/earnings ratio, cash flows and general financial
health. The Fund may invest any portion of its assets in securities of Canadian
issuers and up to 20% of its total assets in the securities of issuers
headquartered outside the United States or Canada. The Fund may also engage in
foreign currency hedging transactions, options and futures transactions,
securities lending and Rule 144A securities transactions.
For temporary defensive purposes, the Fund may invest any portion of its
assets in fixed income securities, cash and any other securities deemed
appropriate by Loomis Sayles. Except for the Fund's investment objective, and
any investment policies that are identified as "fundamental," all of the
investment policies of the Fund may be changed without a vote of Fund
shareholders.
4
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MORE INFORMATION ABOUT THE FUND'S INVESTMENTS AND RISK CONSIDERATIONS
Common Stocks and Other Equity Securities
Common stocks and similar equity securities, such as warrants and
convertibles, are volatile and more risky than some other forms of investment.
The value of an investment in the Fund that invests in equity securities may
decrease. Equity securities of companies with relatively small market
capitalization may be more volatile than the securities of larger, more
established companies and than the broad equity market indexes.
Because the Fund generally will invest in a relatively small number of
stock, its value is likely to be more volatile than mutual funds that invest in
a larger number of stocks. for the same reason, the Fund is likely to be
adversely affected by a decline in the value of a particular holding to a
greater extent than mutual funds that have a greater number of holdings.
When-Issued Securities
The Fund may purchase securities on a "when-issued" basis. This means that
the Fund may enter into a commitment to buy the security before the security
has been issued. The Fund's payment obligation and the interest rate on the
security are determined when the Fund enters into the commitment. The security
is typically delivered to the Fund 15 to 120 days later. No interest accrues
on the security between the time the Fund enters into the commitment and the
time the security is delivered. If the value of the security being purchased
falls between the time the Fund commits to buy it and the payment date, the
Fund may sustain a loss. The risk of this loss is in addition to the Fund's
risk of loss on the securities actually in its portfolio at the time. In
addition, when the Fund buys a security on a when-issued basis, it is subject
to the risk that market rates of interest will increase before the time the
security is delivered, with the result that the yield on the security
delivered to the Fund may be lower than the yield available on other
comparable securities at the time of delivery. If the Fund has outstanding
obligations to buy when-issued securities, it will maintain liquid assets in a
segregated account at its custodian bank in an amount sufficient to satisfy
these obligations.
Rule 144A Securities
The Fund may invest in Rule 144A securities, which are privately offered
securities that can be resold only to certain qualified institutional buyers.
Rule 144A securities are treated as illiquid, unless Loomis Sayles has
determined, under guidelines established by the Trust's trustees, that the
particular issue of Rule 144A securities is liquid.
Foreign Securities
The Fund may invest in securities of issuers organized or headquartered
outside the United States ("foreign securities"). The Fund may invest any
portion of its assets in securities of Canadian issuers, but will not purchase
foreign securities other than those of Canadian issuers if, as a result, the
Fund's holding of non-U.S. and non-Canadian securities would exceed 20% of the
Fund's total assets.
5
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Although investing in foreign securities may increase the Fund's
diversification, foreign securities may present risks not associated with
investments in comparable securities of U.S. issuers. There may be less
information publicly available about a foreign corporate or governmental
issuer than about a U.S. issuer, and foreign corporate issuers are not
generally subject to accounting, auditing and financial reporting standards
and practices comparable to those in the United States. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable U.S. issuers. Foreign brokerage commissions and securities custody
costs are often higher than in the United States. With respect to certain
foreign countries, there is a possibility of governmental expropriation of
assets, confiscatory taxation, political or financial instability and
diplomatic developments that could affect the value of investments in those
countries. The Fund's receipt of interest on foreign government securities may
depend on the availability of tax or other revenues to satisfy the issuer's
obligations.
The Fund's investments in foreign securities may include investments in
countries whose economies or securities markets are not highly developed.
Special considerations associated with these investments (in addition to the
considerations regarding foreign investments generally) may include, among
others, greater political uncertainties, an economy's dependence on revenues
from particular commodities or on international aid or development assistance,
currency transfer restrictions, highly limited numbers of potential buyers for
such securities and delays and disruptions in securities settlement
procedures.
Since most foreign securities are denominated in foreign currencies or
traded primarily in securities markets in which settlements are made in
foreign currencies, the value of these investments and the net investment
income available for distribution to shareholders of the Fund investing in
these securities may be affected favorably or unfavorably by changes in
currency exchange rates, exchange control regulations or foreign withholding
taxes. Changes in the value relative to the U.S. dollar of a foreign currency
in which the Fund's holdings are denominated will result in a change in the
U.S. dollar value of the Fund's assets and the Fund's income available for
distribution.
In addition, although part of the Fund's income may be received or realized
in foreign currencies, the Fund will be required to compute and distribute its
income in U.S. dollars. Therefore, if the value of a currency relative to the
U.S. dollar declines after the Fund's income has been earned in that currency,
translated into U.S. dollars and declared as a dividend, but before payment of
the dividend, the Fund could be required to liquidate portfolio securities to
pay the dividend. Similarly, if the value of a currency relative to the U.S.
dollar declines between the time the Fund accrues expenses in U.S. dollars and
the time such expenses are paid, the amount of such currency required to be
6
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converted into U.S. dollars will be greater than the equivalent amount in such
currency of such expenses at the time they were incurred.
In determining whether to invest assets of the Fund in securities of a
particular foreign issuer, Loomis Sayles will consider the likely effects of
foreign taxes on the net yield available to the Fund and its shareholders.
Compliance with foreign tax law may reduce the Fund's net income available for
distribution to shareholders.
Foreign Currency Hedging Transactions
The Fund may engage in foreign currency exchange transactions in connection
with the purchase and sale of foreign securities to protect the value of
specific portfolio positions or in anticipation of changes in relative values
of currencies in which current or future Fund portfolio holdings are
denominated or quoted. For example, to protect against a change in the foreign
currency exchange rate between the date on which the Fund contracts to
purchase or sell a security and the settlement date for the purchase or sale,
or to "lock in" the equivalent of a dividend or interest payment in another
currency, the Fund might purchase or sell a foreign currency on a spot (that
is, cash) basis at the prevailing spot rate. If conditions warrant, the Fund
may also enter into private contracts to purchase or sell foreign currencies
at a future date ("forward contracts"). The Fund might also purchase exchange-
listed and over-the-counter call and put options on foreign currencies. Over-
the-counter currency options are generally less liquid than exchange-listed
options and will be treated as illiquid assets. The Fund may not be able to
dispose of over-the-counter options readily.
Foreign currency transactions involve costs and may result in losses.
Options and Futures Transactions
The Fund may buy, sell or write options on securities, securities indexes,
currencies or futures contracts. The Fund may engage in these transactions
either for the purpose of enhancing investment return or to hedge against
changes in the value of other assets that the Fund owns or intends to acquire.
Options and futures fall into the broad category of financial instruments
known as "derivatives" and involve special risks. Use of options or futures
for other than hedging purposes may be considered a speculative activity,
involving greater risks than are involved in hedging.
Options can generally be classified as either "call" or "put" options. There
are two parties to a typical options transaction: the "writer" and the
"buyer." A call option gives the buyer the right to buy a security or other
asset (such as an amount of currency or a futures contract) from, and a put
option gives the buyer the right to sell a security or other asset to, the
option writer at a specified price, on or before a specified date. The buyer
of an option pays a
7
<PAGE>
premium when purchasing the option, which reduces the return on the underlying
security or other asset if the option is exercised, and results in a loss if
the option expires unexercised. The writer of an option receives a premium
from writing an option, which may increase its return if the option expires or
is closed out at a profit. If the Fund as the writer of an option is unable to
close out an unexpired option, it must continue to hold the underlying
security or other asset until the option expires, to "cover" its obligation
under the option.
A futures contract creates an obligation by the seller to deliver and the
buyer to take delivery of the type of instrument or cash at the time and in
the amount specified in the contract. Although many futures contracts call for
the delivery (or acceptance) of the specified instrument, futures are usually
closed out before the settlement date through the purchase (or sale) of a
comparable contract. If the price of the sale of the futures contract by the
Fund exceeds (or is less than) the price of the offsetting purchase, the Fund
will realize a gain (or loss). The value of options purchased or written by
the Fund and futures contracts held by the Fund may fluctuate based on a
variety of market and economic factors. In some cases, the fluctuations may
offset (or be offset by) changes in the value of securities held in the Fund's
portfolio. All transactions in options and futures involve the possible risk
of loss to the Fund of all or a significant part of the value of its
investment. In some cases, the risk of loss may exceed the amount of the
Fund's investment. When the Fund writes a call option or sells a futures
contract without holding the underlying securities, currencies or futures
contracts, its potential loss is unlimited. The Fund will be required,
however, to set aside with its custodian bank liquid assets in amounts
sufficient at all times to satisfy its obligations under options and futures
contracts.
The successful use of options and futures usually will depend on Loomis
Sayles' ability to forecast stock market, currency or other financial market
movements correctly. The Fund's ability to hedge against adverse changes in
the value of securities held in its portfolio through options and futures also
depends on the degree of correlation between the changes in the value of
futures or options positions and changes in the values of the portfolio
securities. The successful use of futures and exchange traded options also
depends on the availability of a liquid secondary market to enable the Fund to
close its positions on a timely basis. There can be no assurance that such a
market will exist at any particular time. In the case of options that are not
traded on an exchange ("over-the-counter" options), the Fund is at risk that
the other party to the transaction will default on its obligations, or will
not permit the Fund to terminate the transaction before its scheduled
maturity. As a result of these characteristics, the Fund will treat most over-
the-counter options (and the assets it segregates to cover its obligations
thereunder) as illiquid.
The options and futures market of foreign countries are small compared to
those of the United States and consequently are characterized in most cases by
8
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less liquidity than are the U.S. markets. In addition, foreign markets may be
subject to less detailed reporting requirements and regulatory controls than
U.S. markets. Furthermore, investments in options in foreign markets are
subject to many of the same risks as other foreign investments. See "Foreign
Securities" above.
Repurchase Agreements
The Fund may invest in repurchase agreements. In repurchase agreements, the
Fund buys securities from a seller, usually a bank or brokerage firm, with the
understanding that the seller will repurchase the securities at a higher price
at a later date. Such transactions afford an opportunity for the Fund to earn
a return on available cash at minimal market risk, although the Fund may be
subject to various delays and risks of loss if the seller is unable to meet
its obligations to repurchase.
Securities Lending
The Fund may lend its portfolio securities to broker-dealers or other
parties under contracts calling for the deposit by the borrower with the
Fund's custodian of cash collateral equal to at least the market value of the
securities loaned, marked to market on a daily basis. The Fund will continue
to benefit from interest or dividends on the securities loaned and will also
receive interest through investment of the cash collateral in short-term
liquid investments. No loans will be made if, as a result, the aggregate
amount of such loans outstanding at any time would exceed 33 1/3% of the
Fund's total assets (taken at current value). Any voting rights, or rights to
consent, relating to securities loaned pass to the borrower. However, if a
material event affecting the investment occurs, such loans will be called so
that the securities may be voted by the Fund. The Fund pays various fees in
connection with such loans, including shipping fees and reasonable custodial
or placement fees.
Securities loans must be fully collateralized at all times, but involve some
credit risk to the Fund if the borrower defaults on its obligation and the
Fund is delayed or prevented from recovering the collateral.
Year 2000
Many computer software systems in use today cannot properly process date-
related information from and after January 1, 2000. Should any of the computer
systems employed by the Fund's major service providers fail to process this
type of information properly, that could have a negative impact on the Fund's
operations and the services that are provided to the Fund's shareholders.
Loomis Sayles and the Distributor each have advised the Fund that they are
reviewing all of their computer systems with the goal of modifying or
9
<PAGE>
replacing such systems prior to January 1, 2000, to the extent necessary to
foreclose any such negative impact. In addition, Loomis Sayles has been
advised by the Fund's custodian that it also is reviewing its systems with the
same goal. As of the date of this prospectus, the Fund and Loomis Sayles have
no reason to believe that these goals will not be achieved. Similarly, the
values of certain of the portfolio securities held by the Fund may be
adversely affected by the inability of the securities' issuers or of third
parties to process this type of information properly.
THE FUND'S INVESTMENT ADVISER
The Fund's investment adviser is Loomis Sayles, One Financial Center,
Boston, Massachusetts 02111. Founded in 1926, Loomis Sayles is one of the
country's oldest and largest investment firms. The general partner of Loomis
Sayles is a special purpose corporation that is an indirect wholly-owned
subsidiary of Nvest Companies, L.P. ("Nvest Companies"). Nvest Companies'
managing general partner, Nvest Corporation, is a direct wholly-owned
subsidiary of Metropolitan Life Insurance Company ("Met Life"), a mutual life
insurance company. Nvest Companies' advising general partner, Nvest, L.P., is
a publicly traded company listed on the New York Stock Exchange. Nvest
Corporation is the sole general partner of Nvest L.P.
In addition to selecting and reviewing the Fund's investments, Loomis Sayles
provides executive and other personnel for the management of the Fund. The
Trust's board of trustees supervises Loomis Sayles' conduct of the affairs of
the Funds.
Philip J. Schettewi and Roderick H. Dillon, Vice Presidents of the Trust and
Loomis Sayles, have served as the portfolio managers of the Fund since its
commencement of investment operations in 1999. Mr. Schettewi has been employed
by Loomis Sayles since 1991. Prior to joining Loomis Sayles in 1997, Mr.
Dillon was President of Dillon Capital Management, from 1993. Dillon Capital
Management was acquired by Loomis Sayles in 1997.
FUND EXPENSES
The Fund pays Loomis Sayles a monthly investment advisory fee of .50% of the
Fund's average daily net assets. In addition to the investment advisory fee,
the Fund pays all expenses not expressly assumed by Loomis Sayles, including
taxes, brokerage commissions, fees and expenses of registering or qualifying
the Fund's shares under federal and state securities laws, fees of the Fund's
custodian, transfer agent, independent accountants and legal counsel, expenses
of shareholders' and trustees' meetings, 12b-1 fees (in the case of the
10
<PAGE>
Retail Class shares), expenses of preparing, printing and mailing prospectuses
to existing shareholders and fees of trustees who are not directors, officers
or employees of Loomis Sayles or its affiliated companies.
The Fund's Retail Class shares have adopted a Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Under the Plan, the
Retail Class shares of the Fund pay the Distributor, a subsidiary of Loomis
Sayles, a monthly distribution fee at an annual rate not to exceed 0.25% of
the Fund's average daily net assets attributable to the Retail Class shares.
The Distributor may pay all or any portion of the distribution fee to
securities dealers or other organizations (including, but not limited to, any
affiliate of the Distributor) as commissions, asset-based sales charges or
other compensation with respect to the sale of Retail Class shares of the
Fund, or for providing personal services to investors in Retail Class shares
of the Fund and/or the maintenance of accounts, and may retain all or any
portion of the distribution fee as compensation for the Distributor's services
as principal underwriter of the Retail Class shares of the Fund.
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 total annual operating expenses to 1.00% and 1.25% of the Fund's average
daily net assets attributable to Institutional Class shares and Retail Class
shares, respectively. Loomis Sayles may change or terminate this voluntary
arrangement at any time, but the Fund's Prospectus would be supplemented to
describe the change.
Loomis Sayles may pay certain broker-dealers and financial intermediaries
whose customers own shares of the Fund a continuing fee in an amount up to
.25% annually of the value of Fund shares held for those customers' accounts.
These fees are paid by Loomis Sayles out of its own assets and are not
assessed against the Fund.
PORTFOLIO TRANSACTIONS
Portfolio turnover considerations will not limit Loomis Sayles' investment
discretion in managing the Fund's assets. The Fund anticipates that its
portfolio turnover rate will vary significantly from time to time depending on
the volatility of economic and market conditions. High portfolio turnover may
involve higher transaction costs and higher levels of taxable gains.
HOW TO PURCHASE SHARES
An investor may make an initial purchase of shares of the Fund by submitting
a completed application form and payment to:
11
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Boston Financial Data Services
P.O. Box 8314
Boston, Massachusetts 02266-8314
Attn: Loomis Sayles Funds
The minimum initial investment for the Institutional Class of shares of the
Fund is $1 million. A $2,500 minimum investment applies to the current and
retired trustees of the Trust, investment advisory clients of Loomis Sayles
(and their directors, officers and employees), and current and retired
employees of Loomis Sayles and the parents, spouses and children of the
foregoing. The minimum initial investment for the Retail Class of shares is
$25,000. This minimum initial investment for Retail Class shares does not
apply to purchases through certain financial intermediaries, including, but
not limited to, certain financial advisers, broker dealers, 401(k) alliances,
wrap programs, "no transaction fee" programs, bank trust departments,
financial consultants and insurance companies. The minimum investment for
Institutional Class shares and Retail Class shares may be waived in whole or
in part by Loomis Sayles in its sole discretion. Subsequent investments in
either class of shares must be at least $50.
Shares of the Fund may be purchased by (i) cash, (ii) exchanging
Institutional Class shares of any other fund that is a series of the Trust for
Institutional Class shares of the Fund or exchanging Retail Class shares of
any other fund that is a series of the Trust for Retail Class shares of the
Fund, provided the value of the shares exchanged meets the investment minimum
of the Class of shares of the Fund into which the exchange is made,
(iii) exchanging securities on deposit with a custodian acceptable to Loomis
Sayles or (iv) a combination of such securities and cash. Loomis Sayles will
not approve the acceptance of securities in exchange for shares of the Fund
unless (1) Loomis Sayles, in its sole discretion, believes the securities are
appropriate investments for the Fund; (2) the investor represents and agrees
that all securities offered to the Fund can be resold by the Fund without
restriction under the Securities Act of 1933, as amended (the "Securities
Act") or otherwise; and (3) the securities are eligible to be acquired under
the Fund's investment policies and restrictions. No investor owning 5% or more
of the Fund's shares may purchase additional shares of the Fund by exchange of
securities.
In all cases Loomis Sayles reserves the right to reject any securities that
are proposed for exchange. Securities accepted by Loomis Sayles in exchange
for Fund shares will be valued in the same manner as the Fund's assets as
described below as of the time of the Fund's next determination of net asset
value after such acceptance. All dividends and subscription or other rights
that are reflected in the market price of accepted securities at the time of
valuation become the property of the Fund and must be delivered to the Fund
upon receipt
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<PAGE>
by the investor from the issuer. A gain or loss for federal income tax
purposes would be realized upon the exchange by an investor that is subject to
federal income taxation, depending upon the investor's basis in the securities
tendered. An investor who wishes to purchase shares by exchanging securities
should obtain instructions by calling 800-633-3330, option 5.
All purchases made by check should be in U.S. dollars and made payable to
State Street Bank and Trust Company. Third party checks will not be accepted.
When purchases are made by check or periodic account investment, redemption
will not be allowed until the investment being redeemed has been in the
account for 15 calendar days.
Upon acceptance of an investor's order, BFDS opens an account, applies the
payment to the purchase of full and fractional Fund shares and mails a
statement of the account to the investor's address of record to confirm the
transaction.
After an account has been established, an investor may send subsequent
investments at any time directly to BFDS at the above address. The remittance
must be accompanied by either the account identification slip detached from a
statement of account or a note containing sufficient information to identify
the account, i.e., the Fund name and the investor's account number or name and
social security number.
Subsequent investments can also be made by federal funds wire. Investors
should instruct their banks to wire federal funds to State Street Bank and
Trust Company, ABA #011000028. The text of the wire should read as follows:
"$ amount, STATE STREET BOS ATTN Mutual Funds. Credit Fund (Select
Opportunities Fund and Class, Institutional or Retail), DDA #9904-622-9,
Account Name, Account Number." A bank may charge a fee for transmitting funds
by wire.
The Fund and the Distributor reserve the right to reject any purchase order,
including orders in connection with exchanges, for any reason that the Fund or
the Distributor in its sole discretion deems appropriate. Although the Fund
does not presently anticipate that it will do so, the Fund reserves the right
to suspend or change the terms of the offering of its shares.
The price an investor pays will be the per share net asset value next
calculated after a proper investment order is received by the Trust's transfer
or other agent or subagent. Shares of the Fund are sold with no sales charge.
The net asset value of the Fund's shares is calculated once daily, as of the
close of regular trading on the New York Stock Exchange on each day the
Exchange is open for trading, by dividing the Fund's net assets by the number
of shares
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<PAGE>
outstanding. Portfolio securities are valued at their market value as more
fully described in the Statement of Additional Information.
The Distributor may accept telephone orders from broker-dealers who have
been previously approved by the Distributor. It is the responsibility of such
broker-dealers to forward purchase or redemption orders to the Distributor
promptly. Although there is no sales charge imposed by the Fund or the
Distributor, broker-dealers may charge the investor a transaction-based fee or
other fee for their services at either the time of purchase or the time of
redemption. Such charges may vary among broker-dealers but in all cases will
be retained by the broker-dealer and not remitted to the Fund.
SHAREHOLDER SERVICES
The Fund offers the following shareholder services, which are more fully
described in the Statement of Additional Information. Explanations and forms
are available from BFDS. Telephone redemption and exchange privileges will be
established automatically when an investor opens an account unless an investor
elects on the application to decline telephone privileges. Other privileges
must be specifically elected. A signature guarantee will be required to
establish a privilege after an account is opened.
Free Exchange Privilege. Institutional Class shares and Retail Class shares
of the Fund may be exchanged for Institutional Class shares or Retail Class
shares, respectively, of any other fund that is a series of Loomis Sayles
Funds and that offers Institutional Class shares or Retail Class shares,
respectively, or for shares of certain money market funds advised by New
England Funds Management, L.P., an affiliate of Loomis Sayles, provided the
value of the shares exchanged meets the investment minimum of the Class of
shares of that Fund and, in the case of Loomis Sayles High Yield Fund-
Institutional Class, Loomis Sayles Municipal Fund-Institutional Class and
Loomis Sayles U.S. Government Securities Fund-Institutional Class, Loomis
Sayles has approved the exchange of shares. Exchanges may be made by written
instructions or by telephone, unless an investor elected on the application to
decline telephone exchange privileges. The exchange privilege should not be
viewed as a means of taking advantage of short-term swings in the market, and
the Fund reserves the right to terminate or limit the privilege of any
shareholder who makes more than four exchanges in any calendar year. The Fund
may terminate or change the terms of the exchange privilege at any time upon
60 days' notice to shareholders. An exchange is a taxable event for federal
income tax purposes in which a gain or loss would be realized by an investor
that is subject to federal income taxation.
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Retirement Plans. The Fund's shares may be purchased by all types of tax-
deferred retirement plans. Loomis Sayles makes available retirement plan forms
for IRAs.
Systematic Withdrawal Plan. If the value of an account is at least $25,000,
an investor may have periodic cash withdrawals automatically paid to the
investor or any person designated by the investor.
Automatic Investment Plan. Voluntary monthly investments of at least $50 may
be made automatically by pre-authorized withdrawals from an investor's
checking account.
HOW TO REDEEM SHARES
An investor can redeem shares by sending a written request to Boston
Financial Data Services, Inc., P.O. Box 8314, Boston, Massachusetts 02266. As
described below, an investor may also redeem shares by calling BFDS at
800-626-9390. Proceeds resulting from a written or telephone redemption
request can be wired to an investor's bank account or sent by check in the
name of the registered owners to their record address.
The written request must include the name of the Fund, the account number,
the exact name(s) in which the shares are registered, and the number of shares
or the dollar amount to be redeemed. All owners of the shares must sign the
request in the exact names in which the shares are registered (the exact names
appear on an investor's confirmation statement) and should indicate any
special capacity in which an owner is signing (such as trustee or custodian or
on behalf of a partnership, corporation or other entity). Investors requesting
that redemption proceeds be wired to their bank accounts must provide specific
wire instructions.
If (1) an investor is redeeming shares worth more than $50,000, (2) an
investor is requesting that the proceeds check be made out to someone other
than the registered owners or be sent to an address other than the record
address, (3) the account registration has changed within the last 30 days or
(4) an investor is instructing us to wire the proceeds to a bank account not
designated on the application, the investor must have his or her signature
guaranteed by an eligible guarantor. This requirement may be waived by Loomis
Sayles in its sole discretion. Eligible guarantors include commercial banks,
trust companies, savings associations, credit unions and brokerage firms that
are members of domestic securities exchanges. Before submitting the redemption
request, an investor should verify with the guarantor institution that it is
an eligible guarantor. Signature guarantees by notaries public are not
acceptable.
15
<PAGE>
When an investor telephones a redemption request, the proceeds are wired to
the bank account previously chosen by the investor. A wire fee (currently $5)
will be deducted from the proceeds. A telephonic redemption request must be
received by BFDS prior to the close of regular trading on the New York Stock
Exchange. If an investor telephones a request to BFDS after the Exchange
closes or on a day when the Exchange is not open for business, BFDS cannot
accept the request and a new one will be necessary.
If an investor decides to change the bank account to which proceeds are to
be wired, the investor must send in this change in writing with a signature
guarantee. Telephonic redemptions may be made only if the investor's bank is a
member of the Federal Reserve System or has a correspondent bank that is a
member of the System. Unless an investor indicates otherwise on the account
application, BFDS will be authorized to act upon redemption and exchange
instructions received by telephone from the investor or any person claiming to
act as the investor's representative who can provide BFDS with the investor's
account registration and address as it appears on the records of State Street
Bank. BFDS will employ these or other reasonable procedures to confirm that
instructions communicated by telephone are genuine. The Fund, State Street
Bank, BFDS, the Distributor and Loomis Sayles will not be liable for any
losses due to unauthorized or fraudulent instructions if these or other
reasonable procedures are followed. For more information on telephone
redemptions, consult BFDS. In times of heavy market activity, an investor who
encounters difficulty in placing a redemption or exchange order by telephone
may wish to place the order by mail as described above.
The redemption price will be the net asset value per share next determined
after the redemption request and any necessary special documentation are
received by BFDS in proper form.
Proceeds resulting from a written redemption request will normally be mailed
to an investor within seven days after receipt of the investor's request in
good order. Telephonic redemption proceeds will normally be wired to an
investor's bank on the first business day following receipt of a proper
redemption request. If an investor purchased shares by check and the check was
deposited less than 15 days prior to the redemption request, the Fund may
withhold redemption proceeds until the check has cleared.
The Fund may suspend the right of redemption and may postpone payment for
more than seven days when the New York Stock Exchange is closed for other than
weekends or holidays, or if permitted by the rules of the SEC when trading on
the Exchange is restricted or during an emergency that makes it impracticable
for the Fund to dispose of its securities or to determine fairly the value of
its net assets, or during any other period permitted by the SEC for the
protection of investors.
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<PAGE>
CALCULATION OF PERFORMANCE INFORMATION
"Total return" for the one-, five- and ten-year periods (or for the life of
a class, if shorter) through the most recent calendar quarter represents the
average annual compounded rate of return on an investment of $1,000 in the
Fund. Total return may also be presented for other periods.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
The Fund declares and pays net investment income to shareholders as
dividends annually. The Fund also distributes all of its net capital gains
realized from the sale of portfolio securities. Any capital gain distributions
are normally made annually, but may, to the extent permitted by law, be made
more frequently as deemed advisable by the trustees of the Trust. The Trust's
trustees may change the frequency with which the Fund declares or pays
dividends.
Dividends and capital gain distributions will automatically be reinvested in
additional shares of the Fund unless an investor has elected to receive cash.
The Fund intends to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended. As such, so long as the Fund
distributes substantially all its net investment income and net capital gains
to its shareholders, the Fund itself does not pay any federal income tax to
the extent such income and gains are so distributed.
An investor's income dividends and short-term capital gain distributions
(that is, net gains from securities held for not more than a year) are taxable
as ordinary income whether distributed in cash or additional shares.
Distributions designated by the Fund as deriving from net gains on securities
held for more than one year (i.e., long-term capital gains) will be taxable as
such (generally at a 20% rate for noncorporate shareholders) whether
distributed in cash or additional shares and regardless of how long an
investor has owned shares of the Fund.
A dividend or distribution made shortly after the purchase of shares of the
Fund by a shareholder, although in effect a return of capital to that
particular shareholder, would be taxable to him or her as described above. If
a shareholder held shares six months or less and during that period received a
distribution of net long-term capital gains, any loss realized on the sale of
such shares during such six-month period would be a long-term capital loss to
the extent of such distribution.
The Fund is required to withhold 31% of any redemption proceeds (including
the value of shares exchanged) and all income dividends and capital gain
distributions it pays to an investor (1) if an investor does not provide a
correct, certified taxpayer identification number, (2) if the Fund is notified
that an investor has underreported income in the past, or (3) if an investor
fails to certify to the Fund that the investor is not subject to such
withholding.
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<PAGE>
Certain designated dividends from the Fund are expected to be eligible for
the dividends-received deduction for corporate shareholders that meet a
holding period requirement.
State Street Bank will send each investor and the Internal Revenue Service
an annual statement detailing federal tax information, including information
about dividends and distributions paid to the investor during the preceding
year. Be sure to keep this statement as a permanent record. A fee may be
charged for any duplicate information that an investor requests.
NOTE: The foregoing summarizes certain tax consequences of investing in the
Fund. Before investing, an investor should consult his or her own tax
advisor for more information concerning the federal, foreign, state
and local tax consequences of investing in, redeeming or exchanging
Fund shares.
18
<PAGE>
INVESTMENT ADVISER Loomis, Sayles &
Company, L.P. One Financial Center Boston,
Massachusetts 02111
DISTRIBUTOR Loomis Sayles Distributors,
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
LEGAL COUNSEL Ropes & Gray One
International Place Boston, Massachusetts
02110
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP One Post Office
Square Boston, Massachusetts 02109
<PAGE>
Loomis Sayles Select Opportunities
Fund
Statement of Additional
Information
JULY 1, 1999
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THIS STATEMENT
OF ADDITIONAL INFORMATION RELATES TO THE PROSPECTUS OF LOOMIS SAYLES SELECT
OPPORTUNITIES FUND DATED JULY 1, 1999, AS REVISED FROM TIME TO TIME. EACH
REFERENCE TO THE PROSPECTUS IN THIS STATEMENT OF ADDITIONAL INFORMATION SHALL
INCLUDE THE FUND'S CURRENT PROSPECTUS UNLESS OTHERWISE NOTED. THIS STATEMENT
OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS. A
COPY OF THE PROSPECTUS MAY BE OBTAINED FROM LOOMIS SAYLES FUNDS, ONE FINANCIAL
CENTER, BOSTON, MASSACHUSETTS 02111.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS........................... 3
MANAGEMENT OF THE TRUST.................................................... 8
INVESTMENT ADVISORY AND OTHER SERVICES..................................... 11
PORTFOLIO TRANSACTIONS AND BROKERAGE....................................... 13
DESCRIPTION OF THE TRUST................................................... 14
Voting Rights............................................................ 15
Shareholder and Trustee Liability........................................ 16
How to Buy Shares........................................................ 16
Net Asset Value.......................................................... 16
SHAREHOLDER SERVICES....................................................... 17
Open Accounts............................................................ 17
Systematic Withdrawal Plan............................................... 17
Exchange Privilege....................................................... 17
IRAs..................................................................... 18
Redemptions.............................................................. 18
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS ............... 19
CALCULATION OF YIELD AND TOTAL RETURN...................................... 21
PERFORMANCE COMPARISONS.................................................... 22
APPENDIX A--PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION................. 24
APPENDIX B--ADVERTISING AND PROMOTIONAL LITERATURE......................... 26
</TABLE>
2
<PAGE>
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objective and policies of the Loomis Sayles Select
Opportunities Fund of Loomis Sayles Funds (the "Trust"), are summarized in the
Prospectus under "Investment Objectives and Policies" and "More Information
About the Fund's Investments and Risk Considerations." The investment policies
of the Fund set forth in the Prospectus and in this Statement of Additional
Information may be changed by the Fund's adviser ("Loomis Sayles"), subject to
review and approval by the Trust's board of trustees, without shareholder
approval except that the investment objective of the Fund as set forth in the
Prospectus and the Fund policies explicitly identified as "fundamental" may
not be changed without the approval of the holders of a majority of the
outstanding shares of the Fund (which in the Prospectus and this Statement of
Additional Information means the lesser of (i) 67% of the shares of that Fund
represented at a meeting at which 50% of the outstanding shares are
represented or (ii) more than 50% of the outstanding shares). Except in the
case of the 15% limitation on illiquid securities, the percentage limitations
set forth below and in the Prospectus will apply at the time a security is
purchased and will not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such purchase.
In addition to its investment objective and policies set forth in the
Prospectus, the following investment restrictions are policies of the Fund
(and those marked with an asterisk are fundamental policies of the Fund):
The Fund will not:
(1) Invest in companies for the purpose of exercising control or
management.
*(2) Act as underwriter, except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
*(3) Invest in oil, gas or other mineral leases, rights or royalty
contracts or in real estate, commodities or commodity contracts. (This
restriction does not prevent the Fund from engaging in transactions in
futures contracts relating to securities indexes, interest rates or
financial instruments or options, or from investing in issuers that invest
or deal in the foregoing types of assets or from purchasing securities that
are secured by real estate.)
*(4) Make loans, except that the Fund may lend its portfolio securities
to the extent permitted under the Investment Company Act of 1940 (the "1940
Act"). (For purposes of this investment restriction, neither (i) entering
into repurchase agreements nor (ii) purchasing bonds, debentures,
commercial paper, corporate notes and similar evidences of indebtedness,
which are a part of an issue to the public, is considered the making of a
loan.)
(5) With respect to 75% of its total assets, purchase any security (other
than a U.S. Government Security) if, as a result, more than 5% of the
Fund's total assets (taken at current value) would then be invested in
securities of a single issuer.
(6) With respect to 75% of its total assets, acquire more than 10% of the
outstanding voting securities of an issuer.
(7) Pledge, mortgage, hypothecate or otherwise encumber any of its
assets, except that the Fund may pledge assets having a value not exceeding
10% of its total assets to secure borrowings permitted by restriction (9)
below. (For the purpose of this restriction, collateral arrangements with
respect to options, futures contracts and options on futures contracts and
with respect to initial and variation margin are not deemed to be a pledge
or other encumbrance of assets.)
*(8) Purchase any security (other than U.S. Government Securities) if, as
a result, more than 25% of the Fund's total assets (taken at current value)
would be invested in any one industry (in the utilities category, gas,
electric, water and telephone companies will be considered as being in
separate industries.)
*(9) Borrow money in excess of 10% of its total assets (taken at cost) or
5% of its total assets (taken at current value), whichever is lower, nor
borrow any money except as a temporary measure for extraordinary or
emergency purposes.
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<PAGE>
(10) Purchase securities on margin (except such short term credits as are
necessary for clearance of transactions); or make short sales (except
where, by virtue of ownership of other securities, it has the right to
obtain, without payment of additional consideration, securities equivalent
in kind and amount to those sold).
(11) Participate on a joint or joint and several basis in any trading
account in securities. (The "bunching" of orders for the purchase or sale
of portfolio securities with Loomis Sayles or accounts under its management
to reduce brokerage commissions, to average prices among them or to
facilitate such transactions is not considered a trading account in
securities for purposes of this restriction.)
(12) Purchase any illiquid security, including any security that is not
readily marketable, if, as a result, more than 15% of the Fund's net assets
(based on current value) would then be invested in such securities.
(13) Write or purchase puts, calls or combinations of both except that
the Fund may (1) acquire warrants or rights to subscribe to securities of
companies issuing such warrants or rights, or of parents or subsidiaries of
such companies, (2) purchase and sell put and call options on securities
and (3) write, purchase and sell put and call options on currencies and may
enter into currency forward contracts.
*(14) Issue senior securities. (For the purpose of this restriction none
of the following is deemed to be a senior security: any pledge or other
encumbrance of assets permitted by restriction (7) above; any borrowing
permitted by restriction (9) above; any collateral arrangements with
respect to options, futures contracts and options on futures contracts and
with respect to initial and variation margin; and the purchase or sale of
options, forward contracts, futures contracts or options on futures
contracts.)
Although the Fund has no current intention of investing in repurchase
agreements, it intends, based on the views of the staff of the Securities and
Exchange Commission (the "SEC"), to restrict its investments in repurchase
agreements maturing in more than seven days, together with other investments
in illiquid securities, to the percentage permitted by restriction (12) above.
U.S. Government Securities
U.S. Government Securities include direct obligations of the U.S. Treasury,
as well as securities issued or guaranteed by U.S. Government agencies,
authorities and instrumentalities, including, among others, the Government
National Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association, the Federal Housing Administration, the
Resolution Funding Corporation, the Federal Farm Credit Banks, the Federal
Home Loan Bank, the Tennessee Valley Authority, the Student Loan Marketing
Association and the Small Business Administration. More detailed information
about some of these categories of U.S. Government Securities follows.
U.S. Treasury Bills--Direct obligations of the United States Treasury which
are issued in maturities of one year or less. No interest is paid on Treasury
bills; instead, they are issued at a discount and repaid at full face value
when they mature. They are backed by the full faith and credit of the United
States Government.
U.S. Treasury Notes and Bonds--Direct obligations of the United States
Treasury issued in maturities that vary between one and forty years, with
interest normally payable every six months. They are backed by the full faith
and credit of the United States Government.
"Ginnie Maes"--Debt securities issued by a mortgage banker or other
mortgagee which represent an interest in a pool of mortgages insured by the
Federal Housing Administration or the Farmer's Home Administration or
guaranteed by the Veterans Administration. The Government National Mortgage
Association ("GNMA") guarantees the timely payment of principal and interest
when such payments are due, whether or not these amounts are collected by the
issuer of these certificates on the underlying mortgages. An assistant
attorney general of the United States has rendered an opinion that the
guarantee by GNMA is a general obligation of the United States backed by its
full faith and credit. Mortgages included in single family or multi-family
residential mortgage pools backing an issue of Ginnie Maes have a maximum
maturity of up to 30 years. Scheduled payments of principal and interest are
made to the registered holders of Ginnie Maes (such as the
4
<PAGE>
Fund) each month. Unscheduled prepayments may be made by homeowners, or as a
result of a default. Prepayments are passed through to the registered holder
of Ginnie Maes along with regular monthly payments of principal and interest.
"Fannie Maes"--Fannie Mae is a government-sponsored corporation owned
entirely by private stockholders that purchases residential mortgages from a
list of approved seller/servicers. Fannie Maes are pass-through securities
issued by Fannie Mae that are guaranteed as to timely payment of principal and
interest by Fannie Mae but are not backed by the full faith and credit of the
United States Government.
"Freddie Macs"--The Federal Home Loan Mortgage Corporation ("FHLMC") is a
corporate instrumentality of the United States Government. Freddie Macs are
participation certificates issued by FHLMC that represent an interest in
residential mortgages from FHLMC's National Portfolio. FHLMC guarantees the
timely payment of interest and ultimate collection of principal, but Freddie
Macs are not backed by the full faith and credit of the United States
Government.
As described in the Prospectus, U.S. Government Securities generally do not
involve the same credit risks associated with investments in other types of
fixed-income securities, although, as a result, the yields available from U.S.
Government Securities are generally lower than the yields available from
corporate fixed-income securities. Like other fixed-income securities,
however, the values of U.S. Government Securities change as interest rates
fluctuate. Fluctuations in the value of portfolio securities will not affect
interest income on existing portfolio securities but will be reflected in the
Fund's net asset value.
When-Issued Securities
As described in the Prospectus, the Fund may enter into agreements with
banks or broker-dealers for the purchase or sale of securities at an agreed-
upon price on a specified future date. Such agreements might be entered into,
for example, when the Fund anticipates a decline in interest rates and is able
to obtain a more advantageous yield by committing currently to purchase
securities to be issued later. When the Fund purchases securities in this
manner (i.e. on a when-issued or delayed-delivery basis), it is required to
create a segregated account with the Trust's custodian and to maintain in that
account liquid assets in an amount equal to or greater than, on a daily basis,
the amount of the Fund's when-issued or delayed-delivery commitments. The Fund
will make commitments to purchase on a when-issued or delayed-delivery basis
only securities meeting that Fund's investment criteria. The Fund may take
delivery of these securities or, if it is deemed advisable as a matter of
investment strategy, the Fund may sell these securities before the settlement
date. When the time comes to pay for when-issued or delayed-delivery
securities, the Fund will meet its obligations from then available cash flow
or the sale of securities, or from the sale of the when-issued or delayed-
delivery securities themselves (which may have a value greater or less than
the Fund's payment obligation).
Repurchase Agreements
The Fund may enter into repurchase agreements, by which the Fund purchases a
security and obtains a simultaneous commitment from the seller (a bank or, to
the extent permitted by the 1940 Act, a recognized securities dealer) to
repurchase the security at an agreed upon price and date (usually seven days
or less from the date of original purchase). The resale price is in excess of
the purchase price and reflects an agreed upon market rate unrelated to the
coupon rate on the purchased security. Such transactions afford the Fund the
opportunity to earn a return on temporarily available cash at minimal market
risk. While the underlying security may be a bill, certificate of
indebtedness, note or bond issued by an agency, authority or instrumentality
of the United States Government, the obligation of the seller is not
guaranteed by the U.S. Government and there is a risk that the seller may fail
to repurchase the underlying security. In such event, the Fund would attempt
to exercise rights with respect to the underlying security, including possible
disposition in the market. However, the Fund may be subject to various delays
and risks of loss, including (a) possible declines in the value of the
underlying security during the period while the Fund seeks to enforce its
rights thereto, (b) possible reduced levels of income and lack of income
during this period and (c) inability to enforce rights and the expenses
involved in attempted enforcement.
5
<PAGE>
Real Estate Investment Trusts
REITs involve certain unique risks in addition to those risks associated
with investing in the real estate industry in general (such as possible
declines in the value of real estate, lack of availability of mortgage funds
or extended vacancies of property). Equity REITs may be affected by changes in
the value of the underlying property owned by the REITs, while mortgage REITs
may be affected by the quality of any credit extended. REITs are dependent
upon management skills, are not diversified, are subject to heavy cash flow
dependency, risks of default by borrowers and self-liquidation. REITs are also
subject to the possibilities of failing to qualify for tax-free pass-through
of income under the Internal Revenue Code of 1986, as amended (the "Code"),
and failing to maintain their exemptions from registration under the
Investment Company Act of 1940 (the "1940 Act").
Investment in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be
subject to more abrupt or erratic price movements than larger securities.
Rule 144A Securities
The Fund may purchase Rule 144A securities. These are privately offered
securities that can be resold only to certain qualified institutional buyers.
Rule 144A securities are treated as illiquid, unless Loomis Sayles has
determined, under guidelines established by the Trust's trustees, that the
particular issue of Rule 144A securities is liquid. Under the guidelines,
Loomis Sayles considers such factors as: (1) the frequency of trades and
quotes for a security; (2) the number of dealers willing to purchase or sell
the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades therefor.
Foreign Currency Transactions
The Fund may invest in securities of foreign issuers and may enter into
forward foreign currency exchange contracts, or buy or sell options on foreign
currencies, in order to protect against uncertainty in the level of future
foreign exchange rates. Since investment in securities of foreign issuers will
usually involve currencies of foreign countries, and since the Fund may
temporarily hold funds in bank deposits in foreign currencies during the
course of investment programs, the value of the assets of the Fund as measured
in United States dollars may be affected by changes in currency exchange rates
and exchange control regulations, and the Fund may incur costs in connection
with conversion between various currencies.
The Fund may enter into forward contracts under two circumstances. First,
when the Fund enters into a contract for the purchase or sale of a security
denominated or traded in a market in which settlement is made in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale, for a fixed amount
of dollars, of the amount of foreign currency involved in the underlying
transactions, the Fund will be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar
and the subject foreign currency during the period between the date on which
the investment is purchased or sold and the date on which payment is made or
received.
Second, when Loomis Sayles believes that the currency of a particular
country may suffer a substantial decline against another currency, it may
enter into a forward contract to sell, for a fixed amount of another currency,
the amount of the first currency approximating the value of some or all of the
Fund's portfolio investments denominated in the first currency. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of such
securities in a currency will change as a consequence of market movements in
the value of those investments between the date the forward contract is
entered into and the date it matures.
The Fund generally will not enter into forward contracts with a term of
greater than one year.
Options on foreign currencies are similar to forward contracts, except that
one party to the option (the holder) is not contractually bound to buy or sell
the specified currency. Instead, the holder has discretion whether
6
<PAGE>
to "exercise" the option and thereby require the other party to buy or sell
the currency on the terms specified in the option. Options transactions
involve transaction costs and, like forward contract transactions, involve the
risk that the other party may default on its obligations (if the options are
not traded on an established exchange) and the risk that expected movements in
the relative value of currencies may not occur, resulting in an imperfect
hedge or a loss to the Fund.
The Fund, in conjunction with its transactions in forward contracts, options
and futures, will maintain in a segregated account with its custodian liquid
assets with a value, marked to market on a daily basis, sufficient to satisfy
the Fund's outstanding obligations under such contracts, options and futures.
Options
As described in the Prospectus, the Fund, may for hedging purposes or to
enhance investment return, purchase and sell call and put options.
An option entitles the holder to receive (in the case of a call option) or
to sell (in the case of a put option) a particular security at a specified
exercise price. An "American style" option allows exercise of the option at
any time during the term of the option. A "European style" option allows an
option to be exercised only at the end of its term. Options may be traded on
or off an established securities exchange.
If the holder of an option wishes to terminate its position, it may seek to
effect a closing sale transaction by selling an option identical to the option
previously purchased. The effect of the purchase is that the previous option
position will be canceled. The Fund will realize a profit from closing out an
option if the price received for selling the offsetting position is more than
the premium paid to purchase the option; the Fund will realize a loss from
closing out an option transaction if the price received for selling the
offsetting option is less than the premium paid to purchase the option.
The use of options involves risks. One risk arises because of the imperfect
correlation between movements in the price of options and movements in the
price of the securities that are the subject of the hedge. The Fund's hedging
strategies will not be fully effective if such imperfect correlation occurs.
Price movement correlation may be distorted by illiquidity in the options
markets and the participation of speculators in such markets. If an
insufficient number of contracts are traded, commercial users may not deal in
options because they do not want to assume the risk that they may not be able
to close out their positions within a reasonable amount of time. In such
instances, options market prices may be driven by different forces than those
driving the market in the underlying securities, and price spreads between
these markets may widen. The participation of speculators in the market
enhances its liquidity. Nonetheless, the trading activities of speculators in
the options markets may create temporary price distortions unrelated to the
market in the underlying securities.
An exchange-traded option may be closed out only on an exchange that
generally provides a liquid secondary market for an option of the same series.
If a liquid secondary market for an exchange-traded option does not exist, it
might not be possible to effect a closing transaction with respect to a
particular option, with the result that the Fund would have to exercise the
option in order to accomplish the desired hedge. Reasons for the absence of a
liquid secondary market on an exchange include the following: (i) there may be
insufficient trading interest in certain options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing transactions or
both; (iii) trading halts, suspensions or other restrictions may be imposed
with respect to particular classes or series of options or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or the Options
Clearing Corporation or other clearing organization may not at all times be
adequate to handle current trading volume; or (vi) one or more exchanges
could, for economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular class or series of
options), in which event the secondary market on that exchange (or in that
class or series of options) would cease to exist, although outstanding options
on that exchange that had been issued by the Options Clearing Corporation as a
result of trades on that exchange would continue to be exercisable in
accordance with their terms.
7
<PAGE>
The successful use of options depends in part on the ability of Loomis
Sayles to forecast correctly the direction and extent of interest rate, stock
price or currency value movements within a given time frame. To the extent
interest rates, stock prices or currency values move in a direction opposite
to that anticipated, the Fund may realize a loss on the hedging transaction
that is not fully or partially offset by an increase in the value of portfolio
securities. In addition, whether or not interest rates or the relevant stock
price or relevant currency values move during the period that the Fund holds
options positions, the Fund will pay the cost of taking those positions (i.e.,
brokerage costs). As a result of these factors, the Fund's total return for
such period may be less than if it had not engaged in the hedging transaction.
An over-the-counter option (an option not traded on an established exchange)
may be closed out only with the other party to the original option
transaction. While the Fund will seek to enter into over-the-counter options
only with dealers who agree to or are expected to be capable of entering into
closing transactions with the Fund, there can be no assurance that the Fund
will be able to liquidate an over-the-counter option at a favorable price at
any time prior to its expiration. Accordingly, the Fund might have to exercise
an over-the-counter option it holds in order to achieve the intended hedge.
Over-the-counter options are not subject to the protections afforded
purchasers of listed options by the Options Clearing Corporation or other
clearing organization.
The staff of the SEC has taken the position that over-the-counter options
should be treated as illiquid securities for purposes of the Fund's investment
restriction prohibiting it from investing more than 15% of its net assets in
illiquid securities. The Fund intends to comply with this position.
Income earned by the Fund from its hedging activities will be treated as
capital gain and, if not offset by net recognized capital losses incurred by
the Fund, will be distributed to shareholders in taxable distributions.
Although gain from options transactions may hedge against a decline in the
value of the Fund's portfolio securities, that gain, to the extent not offset
by losses, will be distributed in light of certain tax considerations and will
constitute a distribution of that portion of the value preserved against
decline.
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
EARL W. FOELL--Trustee. 380 Marlborough Street, #3, Boston, Massachusetts.
Retired; formerly, Editor in-Chief, World Monitor Magazine and Editor-in-
Chief, The Christian Science Monitor.
RICHARD S. HOLWAY--Trustee. 1314 Seaspray Lane, Sanibel, Florida. Retired;
formerly, Vice President, Loomis Sayles. Director, Sandwich Cooperative Bank.
MICHAEL T. MURRAY--Trustee. 404 N. Western Ave., Lake Forest, Illinois.
Retired; formerly, Vice President, Loomis Sayles.
*DANIEL J. FUSS--President and Trustee. Executive Vice President and
Director, Loomis Sayles.
SHEILA M. BARRY--Secretary and Compliance Officer. Assistant General Counsel
and Vice President, Loomis Sayles. Formerly, Senior Counsel and Vice
President, New England Funds, L.P.
ROBERT J. BLANDING--Executive Vice President. 465 First Street West, Sonoma,
California. President, Chairman, Director and Chief Executive Officer, Loomis
Sayles.
- --------
* Trustee deemed an "interested person" of the Trust, as defined by the 1940
Act.
8
<PAGE>
JAMES C. CARROLL--Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles. Formerly, Managing Director and
Senior Energy Analyst at Paine Webber, Inc.
JEROME A. CASTELLINI--Vice President. Three 1st National Plaza, Chicago,
Illinois. Vice President and Director, Loomis Sayles.
MARY C. CHAMPAGNE--Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles.
E. JOHN DEBEER--Vice President. Vice President, Loomis Sayles.
RODERICK H. DILLON, JR.--Vice President. Vice President Loomis Sayles;
formerly President, Dillon Capital Management.
PAUL H. DREXLER--Vice President. Vice President, Loomis Sayles; formerly,
Deputy Manager, Brown Brothers Harriman & Co.
WILLIAM H. EIGEN, JR.--Vice President. Vice President, Loomis Sayles;
formerly, Vice President, INVESCO Funds Group and Vice President, The
Travelers Corp.
CHRISTOPHER R. ELY--Vice President. Vice President, Loomis Sayles; formerly,
Senior Vice President and portfolio manager, Keystone Investment Management
Company, Inc.
QUENTIN P. FAULKNER--Vice President. Vice President, Loomis Sayles.
PHILIP C. FINE--Vice President. Vice President, Loomis Sayles; formerly,
Vice President and portfolio manager, Keystone Investment Management Company,
Inc.
KATHLEEN C. GAFFNEY--Vice President, Vice President, Loomis Sayles.
ISAAC GREEN--Vice President. 1533 N. Woodward, Bloomfield Hills, Michigan.
Vice President and Director, Loomis Sayles.
DEAN A. GULIS--Vice President. 1533 N. Woodward, Bloomfield Hills, Michigan.
Vice President, Loomis Sayles. Formerly, Principal and Director of Research at
Roney & Company.
MARTHA F. HODGMAN--Vice President. Vice President, Loomis Sayles.
MARK W. HOLLAND--Treasurer. Vice President and Director, Loomis Sayles.
JOHN HYLL--Vice President. 155 North Lake Avenue, Pasadena, California. Vice
President, Loomis Sayles.
JEFFREY L. MEADE--Vice President. Executive Vice President, Chief Operating
Officer and Director, Loomis Sayles.
PHILIP R. MURRAY--Assistant Treasurer, Vice President, Loomis Sayles.
KENT P. NEWMARK--Vice President. 555 California Street, San Francisco,
California. Vice President, Managing Partner and Director, Loomis Sayles.
9
<PAGE>
JEFFREY C. PETHERICK--Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles.
LAUREN B. PITALIS--Vice President. Vice President, Loomis Sayles; formerly,
Vice President and Assistant Secretary of Harris Associates Investment Trust.
PHILIP J. SCHETTEWI--Vice President. Vice President and Director, Loomis
Sayles.
DAVID L. SMITH--Vice President. Vice President, Loomis Sayles; formerly,
Vice President and portfolio manager, Keystone Investment Management Company,
Inc.
SANDRA P. TICHENOR--Vice President. 465 First Street West, Sonoma,
California. General Counsel, Executive Vice President, Secretary and Clerk,
Loomis Sayles. Formerly, Partner, Heller, Ehrman, White & McAuliffe.
JEFFREY W. WARDLOW--Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles.
GREGG D. WATKINS--Vice President. Vice President, Loomis Sayles.
ANTHONY J. WILKINS--Vice President. Vice President and Director, Loomis
Sayles.
Previous positions during the past five years with Loomis Sayles are
omitted, if not materially different.
Except as indicated above, the address of each trustee and officer of the
Trust affiliated with Loomis Sayles is One Financial Center, Boston,
Massachusetts. The Trust pays no compensation to its officers or to the
trustees listed above who are directors, officers or employees of Loomis
Sayles. Each trustee who is not a director, officer or employee of Loomis
Sayles is compensated at the rate of $1,250 per fund per annum.
10
<PAGE>
COMPENSATION TABLE
for the nine months ended September 30, 1998
<TABLE>
<CAPTION>
(5)
Total
(3) (4) Compensation
(2) Pension or Estimated From Trust and
(1) Aggregate Retirement Benefits Annual Fund Complex*
Name of Person, Compensation Accrued as Part of Benefits upon Paid to
Position From Trust Fund Expenses Retirement Trustee
--------------- ------------ ------------------- ------------- --------------
<S> <C> <C> <C> <C>
Earl W. Foell, Trustee.. $15,937.50 N/A N/A $15,937.50
Richard S. Holway,
Trustee................ $15,937.50 N/A N/A $15,937.50
Terry R. Lautenbach**,
Trustee................ $15,937.50 N/A N/A $15,937.50
Michael T. Murray,
Trustee................ $15,937.50 N/A N/A $15,937.50
</TABLE>
- --------
* No Trustee receives any compensation from any mutual funds affiliated with
Loomis Sayles, other than the Trust.
** Mr. Lautenbach retired from the Board of Trustees on October 26, 1998.
INVESTMENT ADVISORY AND OTHER SERVICES
Advisory Agreement. Loomis Sayles serves as investment adviser under an
advisory agreement relating to the Loomis Sayles Select Opportunities Fund
dated , 1999. Under the advisory agreement, Loomis Sayles manages the
investment and reinvestment of the assets of the Fund and generally
administers its affairs subject to the supervision by the Board of Trustees of
the Trust. Loomis Sayles furnishes, at its own expense, all necessary office
space, facilities and equipment, services of executive and other personnel of
the Fund and certain administrative services. For these services, the advisory
agreement provides that the Fund shall pay Loomis Sayles a monthly investment
advisory fee at the annual percentage rate of 0.50% of the Fund's average
daily net assets.
The Trust pays the compensation of its trustees who are not directors,
officers or employees of Loomis Sayles or its affiliates (other than
registered investment companies); registration, filing and other fees in
connection with requirements of regulatory authorities; all charges and
expenses of its custodian and transfer agent; the charges and expenses of its
independent accountants; all brokerage commissions and transfer taxes in
connection with portfolio transactions; all taxes and fees payable to
governmental agencies; the cost of any certificates representing shares of the
Fund; the expenses of meetings of the shareholders and trustees of the Trust;
the charges and expenses of the Trust's legal counsel; interest on any
borrowings by the Fund; the cost of services, including services of counsel,
required in connection with the preparation of, and the cost of printing, the
Trust's registration statements and prospectuses, including amendments and
revisions thereto, annual, semiannual and other periodic reports of the Trust,
and notices and proxy solicitation material furnished to shareholders or
regulatory authorities, to the extent that any such materials relate to the
Trust or its shareholders; and the Trust's expenses of bookkeeping,
accounting, auditing and financial reporting, including related clerical
expenses.
Under the advisory agreement, if the total ordinary business expenses of the
Fund or the Trust as a whole for any fiscal year exceed the lowest applicable
limitation (based on percentage of average net assets or income) prescribed by
any state in which the shares of the Fund or the Trust are qualified for sale,
Loomis Sayles shall pay such excess. Loomis Sayles will not be required to
reduce its fee or pay such expenses to an extent or under circumstances which
would result in the Fund's inability to qualify as a regulated investment
company under the Code. The term "expenses" is defined in the advisory
agreements or in relevant state regulations and excludes brokerage
commissions, taxes, interest, distribution-related expenses and extraordinary
expenses.
As described in the Prospectus, Loomis Sayles has agreed to certain
additional, voluntary arrangements to limit Fund expenses. These arrangements
may be modified or terminated by Loomis Sayles at any time.
11
<PAGE>
The advisory agreement provides that it will continue in effect for two
years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
Fund and (ii) by vote of a majority of the Trustees who are not "interested
persons" of the Trust, as that term is defined in the 1940 Act, cast in person
at a meeting called for the purpose of voting on such approval. Any amendment
to the advisory agreement must be approved by vote of a majority of the
outstanding voting securities of the Fund and by vote of a majority of the
Trustees who are not such interested persons, cast in person at a meeting
called for the purpose of voting on such approval. The agreement may be
terminated without penalty by vote of the Board of Trustees or by vote of a
majority of the outstanding voting securities of the Fund, upon sixty days'
written notice, or by Loomis Sayles upon ninety days' written notice, and
terminates automatically in the event of its assignment. In addition, the
agreement will automatically terminate if the Trust or the Fund shall at any
time be required by Loomis Sayles to eliminate all reference to the words
"Loomis" and "Sayles" in the name of the Trust or the Fund, unless the
continuance of the agreement after such change of name is approved by a
majority of the outstanding voting securities of the Fund and by a majority of
the Trustees who are not interested persons of the Trust or Loomis Sayles.
The advisory agreement provides that Loomis Sayles shall not be subject to
any liability in connection with the performance of its services thereunder in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
Loomis Sayles acts as investment adviser or subadviser to New England Value
Fund, New England Strategic Income Fund, New England Star Advisers Fund, New
England Star Small Cap Fund and New England Balanced Fund, which are series of
New England Funds Trust I, a registered open-end management investment
company, New England High Income Fund, a series of New England Fund Trust II,
a registered, open-end management investment company, New England Equity
Income Fund, a series of New England Funds Trust III, a registered open-end
management investment company, and to the Balanced Series and the Small Cap
Series of New England Zenith Fund, which is also a registered open-end
management investment company, as well as to Loomis Sayles Investment Trust,
also a registered open-end management investment company. Loomis Sayles also
provides investment advice to certain other open-end management investment
companies and numerous other corporate and fiduciary clients.
The general partner of Loomis Sayles is a special purpose corporation that
is an indirect wholly-owned subsidiary of Nvest Companies, L.P. ("Nvest
Companies"). Nvest Companies' managing general partner, Nvest Corporation, is
a direct wholly-owned subsidiary of Metropolitan Life Insurance Company ("Met
Life"), a mutual life insurance company. Nvest Companies' advising general
partner, Nvest L.P., is a publicly traded company listed on the New York Stock
Exchange. Nvest Corporation is the sole general partner of Nvest L.P.
Certain officers and trustees of the Trust also serve as officers, directors
and trustees of other investment companies and clients advised by Loomis
Sayles. The other investment companies and clients sometimes invest in
securities in which the Fund also invests. If the Fund and such other
investment companies or clients desire to buy or sell the same portfolio
securities at the same time, purchases and sales may be allocated, to the
extent practicable, on a pro rata basis in proportion to the amounts desired
to be purchased or sold for each. It is recognized that in some cases the
practices described in this paragraph could have a detrimental effect on the
price or amount of the securities that the Fund purchases or sells. In other
cases, however, it is believed that these practices may benefit the Fund. It
is the opinion of the trustees that the desirability of retaining Loomis
Sayles as adviser for the Fund outweighs the disadvantages, if any, which
might result from these practices.
Distribution Agreement and Rule 12b-1 Plan. Under an agreement with the
Trust (the "Distribution Agreement"), Loomis Sayles Distributors, L.P. serves
as the general distributor of each class of shares of the Fund. Under this
agreement, Loomis Sayles Distributors, L.P. is not obligated to sell a
specific number of shares. Loomis Sayles Distributors, L.P. bears the cost of
making information about the Fund available through advertising and other
means and the cost of printing and mailing prospectuses to persons other than
shareholders.
12
<PAGE>
The Fund pays the cost of registering and qualifying their shares under state
and federal securities laws and the distribution of prospectuses to existing
shareholders.
As described in the Prospectuses, the Fund has adopted a Rule 12b-1 plan
("Plan") for its Retail Class shares. The Plan, among other things, permits
the Retail Class shares of the Fund to pay the Fund's distributor (currently
Loomis Sayles Distributors, L.P.) a monthly fee, at annual rates not exceeding
0.25% of the assets of the Retail Class. Pursuant to Rule 12b-1 under the 1940
Act, the Plan (together with the Distribution Agreement) was approved by the
board of trustees, including a majority of the trustees who are not interested
persons of the Trust (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operations of the Plan or the Distribution
Agreement (the "Independent Trustees").
The Plan may be terminated by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting securities of the
Retail Class shares of the Fund. The Plan may be amended by vote of the
trustees, including a majority of the Independent Trustees, cast in person at
a meeting called for that purpose. Any change in the Plan that would
materially increase the fees payable thereunder by the Retail Class shares of
the Fund requires approval of the Retail Class shareholders. The Trust's
trustees review quarterly written reports of such costs and the purposes for
which such costs have been incurred. The Plan provides that, for so long as
the Plan is in effect, selection and nomination of those trustees who are not
interested persons of the Trust shall be committed to the discretion of such
disinterested persons.
The Distribution Agreement may be terminated at any time with respect to the
Fund on 60 days' written notice without payment of any penalty by the Trust or
by vote of a majority of the outstanding voting securities of the Fund or by
vote of a majority of the Independent Trustees.
The Distribution Agreement and the Plan will continue in effect for
successive one-year periods, provided that each such continuance is
specifically approved (i) by the vote of a majority of the entire board of
trustees and (ii) by the vote of a majority of the Independent Trustees, in
each case cast in person at a meeting called for that purpose.
Custodial Arrangements. State Street Bank and Trust Company ("State Street
Bank"), Boston, Massachusetts 02102, is the Trust's custodian. As such, State
Street Bank holds in safekeeping certificated securities and cash belonging to
the Fund and, in such capacity, is the registered owner of securities held in
book entry form belonging to the Fund. Upon instruction, State Street Bank
receives and delivers cash and securities of the Fund in connection with Fund
transactions and collects all dividends and other distributions made with
respect to Fund portfolio securities. State Street Bank also maintains certain
accounts and records of the Fund and calculates the total net asset value,
total net income and net asset value per share of the Fund on a daily basis.
Independent Accountants. The Fund's independent accountants are
PricewaterhouseCoopers LLP, One Post Office Square, Boston, Massachusetts.
PricewaterhouseCoopers LLP conducts an annual audit of the Fund's financial
statements, assists in the preparation of the Fund's federal and state income
tax returns and consults with the Fund as to matters of accounting and federal
and state income taxation.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In placing orders for the purchase and sale of portfolio securities for the
Fund, Loomis Sayles always seeks the best price and execution. Transactions in
unlisted securities are carried out through broker-dealers who make the
primary market for such securities unless, in the judgment of Loomis Sayles, a
more favorable price can be obtained by carrying out such transactions through
other brokers or dealers.
Loomis Sayles selects only brokers or dealers which it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates
13
<PAGE>
which, when combined with the quality of the foregoing services, will produce
best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid. However, the
commissions are believed to be competitive with generally prevailing rates.
Loomis Sayles will use its best efforts to obtain information as to the
general level of commission rates being charged by the brokerage community
from time to time and will evaluate the overall reasonableness of brokerage
commissions paid on transactions by reference to such data. In making such
evaluation, all factors affecting liquidity and execution of the order, as
well as the amount of the capital commitment by the broker in connection with
the order, are taken into account. The Fund will not pay a broker a commission
at a higher rate than otherwise available for the same transaction in
recognition of the value of research services provided by the broker or in
recognition of the value of any other services provided by the broker that do
not contribute to the best price and execution of the transaction.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Loomis Sayles believes will provide best price and
execution for a transaction. These research services include not only a wide
variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and projections,
asset allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although
it is not possible to assign an exact dollar value to these services, they
may, to the extent used, tend to reduce Loomis Sayles' expenses. Such services
may be used by Loomis Sayles in servicing other client accounts and in some
cases may not be used with respect to the Fund. Receipt of services or
products other than research from brokers is not a factor in the selection of
brokers.
DESCRIPTION OF THE TRUST
The Trust, registered with the SEC as a diversified open-end management
investment company, is organized as a Massachusetts business trust under the
laws of Massachusetts by an Agreement and Declaration of Trust (the
"Declaration of Trust") dated February 20, 1991. The Trust currently has
eighteen series: The Bond Fund, Managed Bond Fund, Core Value Fund, Global
Bond Fund, Growth Fund, High Yield Fund, Intermediate Maturity Bond Fund,
International Equity Fund, Investment Grade Bond Fund, Mid-Cap Growth Fund,
Mid-Cap Value Fund, Municipal Bond Fund, Select Opportunities Fund, Short-Term
Bond Fund, Small Cap Growth Fund, Small Cap Value Fund, U.S. Government
Securities Fund and Worldwide Fund.
The Declaration of Trust currently permits the trustees to issue an
unlimited number of full and fractional shares of each series. Each share of
the Fund represents an equal proportionate interest in the Fund with each
other share of the Fund and is entitled to a proportionate interest in the
dividends and distributions from the Fund. The shares of the Fund do not have
any preemptive rights. Upon termination of the Fund, whether pursuant to
liquidation of the Trust or otherwise, shareholders of the Fund are entitled
to share pro rata in the net assets of the Fund available for distribution to
shareholders. The Declaration of Trust also permits the trustees to charge
shareholders directly for custodial, transfer agency and servicing expenses.
The assets received by the Fund for the issue or sale of its shares and all
income, earnings, profits, losses and proceeds therefrom, subject only to the
rights of creditors, are allocated to, and constitute the underlying assets
of, the Fund. The underlying assets are segregated and are charged with the
expenses with respect to the Fund and with a share of the general expenses of
the Trust. Any general expenses of the Trust that are not readily identifiable
as belonging to the Fund are allocated by or under the direction of the
trustees in such manner as the trustees determine to be fair and equitable.
While the expenses of the Trust are allocated to the separate books of account
of each series, certain expenses may be legally chargeable against the assets
of all series.
The Declaration of Trust also permits the trustees, without shareholder
approval, to subdivide the Fund into various classes of shares with such
dividend preferences and other rights as the trustees may designate. Shares of
the Fund are currently divided into two classes, designated Retail Class and
Institutional Class. The trustees may also, without shareholder approval,
establish one or more additional separate portfolios for investments in the
14
<PAGE>
Trust. Shareholders' investments in such an additional portfolio would be
evidenced by a separate series of shares (i.e., a new "fund").
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust or the Fund, however, may be terminated at any time by vote of at
least two-thirds of the outstanding shares of the Fund. The Declaration of
Trust further provides that the trustees may also terminate the Trust or the
Fund upon written notice to the shareholders.
Voting Rights
As summarized in the Prospectus, shareholders are entitled to one vote for
each full share held (with fractional votes for each fractional share held)
and may vote (to the extent provided in the Declaration of Trust) on the
election of trustees and the termination of the Trust and on other matters
submitted to the vote of shareholders.
The Declaration of Trust provides that on any matter submitted to a vote of
all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a
particular series or sub-series would be adversely affected by the vote, in
which case a separate vote of that series or sub-series shall also be required
to decide the question. Also, a separate vote shall be held whenever required
by the 1940 Act or any rule thereunder. Rule 18f-2 under the 1940 Act provides
in effect that a class shall be deemed to be affected by a matter unless it is
clear that the interests of each class in the matter are substantially
identical or that the matter does not affect any interest of such class. On
matters affecting an individual series, only shareholders of that series are
entitled to vote. Consistent with the current position of the SEC,
shareholders of all series vote together, irrespective of series, on the
election of trustees and the selection of the Trust's independent accountants,
but shareholders of each series vote separately on other matters requiring
shareholder approval, such as certain changes in investment policies of that
series or the approval of the investment advisory agreement relating to that
series.
There will normally be no meetings of shareholders for the purpose of
electing trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of trustees at such time as
less than a majority of the trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the board of trustees,
less than two-thirds of the trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders.
In addition, trustees may be removed from office by a written consent signed
by the holders of two-thirds of the outstanding shares and filed with the
Trust's custodian or by a vote of the holders of two-thirds of the outstanding
shares at a meeting duly called for that purpose, which meeting shall be held
upon the written request of the holders of not less than 10% of the
outstanding shares.
Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish
to communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the trustees shall continue to hold office and
may appoint successor trustees. Voting rights are not cumulative.
No amendment may be made to the Declaration of Trust without the affirmative
vote of a majority of the outstanding shares of the Trust, except (i) to
change the Trust's name or to cure technical problems in the Declaration of
Trust and (ii) to establish, change or eliminate the par value of any shares
(currently all shares have no par value).
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Shareholder and Trustee Liability
Under Massachusetts law shareholders could, under certain circumstances, be
held personally liable for the obligations of the Fund of which they are
shareholders. However, the Declaration of Trust disclaims shareholder
liability for acts or obligations of the Fund and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered into
or executed by the Trust or the trustees. The Declaration of Trust provides
for indemnification out of Fund property for all loss and expense of any
shareholder held personally liable for the obligations of the Fund. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is considered remote since it is limited to circumstances in which
the disclaimer is inoperative and the Fund itself would be unable to meet its
obligations.
The Declaration of Trust further provides that the trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a trustee against any liability to which the
trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. The By-Laws of the Trust provide for indemnification by
the Trust of the trustees and officers of the Trust except with respect to any
matter as to which any such person did not act in good faith in the reasonable
belief that such action was in or not opposed to the best interests of the
Trust. No officer or trustee may be indemnified against any liability to the
Trust or the Trust's shareholders to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office.
How to Buy Shares
The procedures for purchasing shares of the Fund are summarized in the
Prospectus under "How to Purchase Shares."
Net Asset Value
The net asset value of the shares of the Fund is determined by dividing the
Fund's total net assets (the excess of its assets over its liabilities) by the
total number of shares of the Fund outstanding and rounding to the nearest
cent. Such determination is made as of the close of regular trading on the New
York Stock Exchange on each day on which that Exchange is open for
unrestricted trading, and no less frequently than once daily on each day
during which there is sufficient trading in the Fund's portfolio securities
that the value of the Fund's shares might be materially affected. During the
12 months following the date of this Statement of Additional Information, the
New York Stock Exchange is expected to be closed on the following weekdays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Equity securities listed on an established securities exchange or on the
Nasdaq National Market System are normally valued at their last sale price on
the exchange where primarily traded or, if there is no reported sale during
the day, and in the case of over-the-counter securities not so listed, at the
last bid price. Long-term debt securities are valued by a pricing service,
which determines valuations of normal institutional-size trading units of
long-term debt securities. Such valuations are determined using methods based
on market transactions for comparable securities and on various relationships
between securities which are generally recognized by institutional traders.
Other securities for which current market quotations are not readily available
(including restricted securities, if any) and all other assets are taken at
fair value as determined in good faith by the board of trustees, although the
actual calculations may be made by persons acting pursuant to the direction of
the board.
Generally, trading in foreign securities markets is substantially completed
each day at various times prior to the close of regular trading on the New
York Stock Exchange. Occasionally, events affecting the value of foreign fixed
income securities and of equity securities of non-U.S. issuers not traded on a
U.S. exchange may occur between the completion of substantial trading of such
securities for the day and the close of regular trading on the New York Stock
Exchange, which events will not be reflected in the computation of the Fund's
net asset value. If events materially affecting the value of the Fund's
portfolio securities occur during such period, then
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these securities will be valued at their fair value as determined in good
faith by or in accordance with procedures approved by the trustees.
SHAREHOLDER SERVICES
Open Accounts
A shareholder's investment in the Fund is automatically credited to an open
account maintained for the shareholder by Boston Financial Data Services, Inc.
("BFDS"), the shareholder servicing agent for State Street Bank. Certificates
representing shares are issued only upon written request to BFDS but are not
issued for fractional shares. Following each transaction in the account, a
shareholder will receive an account statement disclosing the current balance
of shares owned and the details of recent transactions in the account. After
the close of each fiscal year, BFDS will send each shareholder a statement
providing federal tax information on dividends and distributions paid to the
shareholder during the year. This should be retained as a permanent record.
Shareholders will be charged a fee for duplicate information.
The open account system permits the purchase of full and fractional shares
and, by making the issuance and delivery of certificates representing shares
unnecessary, eliminates the problems of handling and safekeeping certificates,
and the cost and inconvenience of replacing lost, stolen, mutilated or
destroyed certificates.
The costs of maintaining the open account system are borne by the Trust, and
no direct charges are made to shareholders. Although the Trust has no present
intention of making such direct charges to shareholders, it reserves the right
to do so. Shareholders will receive prior notice before any such charges are
made.
Systematic Withdrawal Plan
A Systematic Withdrawal Plan, referred to in the Prospectus under
"Shareholder Services--Systematic Withdrawal Plan," provides for monthly,
quarterly, semiannual or annual withdrawal payments of $50 or more from the
account of an eligible shareholder, as provided therein, provided that the
account has a value of at least $25,000 at the time the plan is established.
Payments will be made either to the shareholder or to any other person
designated by the shareholder. If payments are issued to an individual other
than the registered owner(s), a signature guarantee will be required on the
Plan application. All shares in an account that is subject to a Systematic
Withdrawal Plan must be held in an open account rather than in certificated
form. Income dividends and capital gain distributions will be reinvested at
the net asset value determined as of the close of regular trading on the New
York Stock Exchange on the record date for the dividend or distribution.
Since withdrawal payments represent proceeds from liquidation of shares, the
shareholder should recognize that withdrawals may reduce and possibly exhaust
the value of the account, particularly in the event of a decline in net asset
value. Accordingly, the shareholder should consider whether a Systematic
Withdrawal Plan and the specified amounts to be withdrawn are appropriate in
the circumstances. The Fund makes no recommendations or representations in
this regard. It may be appropriate for the shareholder to consult a tax
adviser before establishing such a plan. See "Redemptions" and "Income
Dividends, Capital Gain Distributions and Tax Status" below for certain
information as to federal income taxes.
Exchange Privilege
Shareholders may redeem their shares of the Fund and have the proceeds
applied on the same day to purchase shares of the same class of shares of any
other series or of New England Cash Management Trust or New England Tax Exempt
Money Market Trust.
Exchanges may be effected by (1) making a telephone request by calling 800-
626-9390, provided that a special authorization form is on file with BFDS, or
(2) sending a written exchange request to BFDS accompanied
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<PAGE>
by an account application for the appropriate fund. The Trust reserves the
right to modify this exchange privilege without prior notice. An exchange
constitutes a sale of the shares for federal income tax purposes on which the
investor may realize a capital gain or loss.
IRAs
Under "Shareholder Services--Retirement Plans," the Prospectus refers to
IRAs established under a prototype plan made available by Loomis Sayles. These
plans may be funded with shares of any series.
All income dividends and capital gain distributions of plan participants
must be reinvested. Plan documents and further information can be obtained
from Loomis Sayles.
Check with your financial or tax adviser as to the suitability of Fund
shares for your retirement plan.
Redemptions
The procedures for redemption of Fund shares are summarized in the
Prospectus under "How to Redeem Shares."
Except as noted below, signatures on redemption requests must be guaranteed
by commercial banks, trust companies, savings associations, credit unions or
brokerage firms that are members of domestic securities exchanges. Signature
guarantees by notaries public are not acceptable. However, as noted in the
Prospectus, a signature guarantee will not be required if the proceeds of the
redemption do not exceed $50,000 and the proceeds check is made payable to the
registered owner(s) and mailed to the record address.
If a shareholder selects the telephone redemption service in the manner
described in the next paragraph, Fund shares may be redeemed by making a
telephone call directly to BFDS at 800-626-9390. When a telephonic redemption
request is received, the proceeds are wired to the bank account previously
chosen by the shareholder and a nominal wire fee (currently $5.00) is
deducted. Telephonic redemption requests must be received by BFDS prior to the
close of regular trading on the New York Stock Exchange on a day when the
Exchange is open for business. Requests made after that time or on a day when
the New York Stock Exchange is not open for business cannot be accepted by
BFDS and a new request will be necessary.
In order to redeem shares by telephone, a shareholder must either select
this service when completing the Fund application or must do so subsequently
in writing. When selecting the service, a shareholder must designate a bank
account to which the redemption proceeds should be wired. Any change in the
bank account so designated must be made by furnishing to BFDS a written
request with a signature guarantee. Telephone redemptions may only be made if
an investor's bank is a member of the Federal Reserve System or has a
correspondent bank that is a member of the System. If the account is with a
savings bank, it must have only one correspondent bank that is a member of the
System. The Trust, BFDS, Loomis Sayles Distributors, L.P. and State Street
Bank are not responsible for the authenticity of withdrawal instructions
received by telephone.
The redemption price will be the net asset value per share next determined
after the redemption request and any necessary special documentation are
received by BFDS in proper form, less, in the case of the High Yield Fund, a
redemption fee of 2.00% of the amount redeemed with respect to shares of that
series redeemed within one (1) year of purchase, if applicable. Proceeds
resulting from a written redemption request will normally be mailed to the
shareholder within seven days after receipt of a request in good order.
Telephonic redemption proceeds will normally be wired on the first business
day following receipt of a proper redemption request. In those cases where a
shareholder has recently purchased shares by check and the check was received
less than fifteen days prior to the redemption request, the Fund may withhold
redemption proceeds until the check has cleared.
The Fund will normally redeem shares for cash; however, the Fund reserves
the right to pay the redemption price wholly or partly in kind if the board of
trustees of the Trust determines it to be advisable in the interest of
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the remaining shareholders. If portfolio securities are distributed in lieu of
cash, the shareholder will normally incur brokerage commissions upon
subsequent disposition of any such securities. However, the Trust has elected
to be governed by Rule 18f-1 under the 1940 Act pursuant to which the Trust is
obligated to redeem shares solely in cash for any shareholder during any 90-
day period up to the lesser of $250,000 or 1% of the total net asset value of
the Trust at the beginning of such period.
A redemption constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a long- or short-term capital gain
or loss. See "Income Dividends, Capital Gain Distributions and Tax Status."
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
As described in the Prospectus under "Dividends, Capital Gain Distributions
and Taxes" it is the policy of the Fund to pay its shareholders, as dividends,
substantially all net investment income and to distribute annually all net
realized capital gains, if any, after offsetting any capital loss carryovers.
Income dividends and capital gain distributions are payable in full and
fractional shares of the Fund based upon the net asset value determined as of
the close of regular trading on the New York Stock Exchange on the record date
for each dividend or distribution. Shareholders, however, may elect to receive
their income dividends or capital gain distributions, or both, in cash. The
election may be made at any time by submitting a written request directly to
BFDS. In order for a change to be in effect for any dividend or distribution,
it must be received by BFDS on or before the record date for such dividend or
distribution.
As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31
of the succeeding year.
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order to so qualify and to qualify for the
favorable tax treatment accorded regulated investment companies and their
shareholders, the Fund must, among other things, (i) derive at least 90% of
its gross income from dividends, interest, payments with respect to certain
securities loans, gains from the sale of securities or foreign currencies, or
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies; (ii) distribute with respect to each taxable
year at least 90% of the sum of its taxable net investment income, its tax-
exempt income and the excess, if any, of net short-term capital gains over net
long-term capital losses for such year; and (iii) diversify its holdings so
that at the end of each fiscal quarter (a) at least 50% of the value of its
total assets are invested in cash, U.S. government securities, securities of
other regulated investment companies, and other securities of issuers which
represent, with respect to each issuer, no more than 5% of the value of the
Fund's total assets and 10% of the outstanding voting securities of such
issuer; and (b) not more than 25% of its assets are invested in the securities
(other than those of the U.S. government or other regulated investment
companies) of any one issuer or of two or more issuers which the Fund controls
and which are engaged in the same, similar or related trades and businesses.
To the extent it qualifies for treatment as a regulated investment company,
the Fund will not be subject to federal income tax on income paid to its
shareholders in the form of dividends or capital gain distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
the Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund so elects) plus undistributed amounts from prior years. The Fund
intends to make distributions sufficient to avoid imposition of the excise
tax. Distributions declared by the Fund during October, November or December
to shareholders of record on a date in any such month and paid by the Fund
during the following January will be treated for federal tax purposes as paid
by the Fund and received by shareholders on December 31 of the year in which
declared.
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Shareholders of the Fund will be subject to federal income taxes on
distributions made by the Fund (other than "exempt-interest dividends" paid by
the Municipal Bond Fund, as described in the Prospectus) whether received in
cash or additional shares of the Fund. Distributions by the Fund of net income
and short-term capital gains, if any, will be taxable to shareholders as
ordinary income. Distributions designated by the Fund as deriving from net
gains on securities held for more than one year will be taxable to
shareholders as long-term capital gain (generally taxed at a rate of 20% for
noncorporate shareholders), without regard to how long a shareholder has held
shares of the Fund.
Dividends and distributions on the Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a
time when the Fund's net asset value reflects gains that are either
unrealized, or realized but not distributed. Such realized gains may be
required to be distributed even when the Fund's net asset value also reflects
unrealized losses.
The Fund's transactions, if any, in foreign currencies are likely to result
in a difference between the Fund's book income and taxable income. This
difference may cause a portion of the Fund's income distributions to
constitute a return of capital for tax purposes or require the Fund to make
distributions exceeding book income to avoid excise tax liability and to
qualify as a regulated investment company.
Investment by the Fund in "passive foreign investment companies" could
subject the Fund to U.S. federal income tax or other charges on the proceeds
from the sale of its investment in such a company; however, this tax can be
avoided by making an election to mark such investments to market annually or
to treat the passive foreign investment company as a "qualified electing
fund." A "passive foreign investment company" is any foreign corporation: (i)
75% or more of the income of which for the taxable year is passive income, or
(ii) the average percentage of the assets of which (generally by value, but by
adjusted tax basis in certain cases) that produce or are held for the
production of passive income is at least 50 percent. Generally, passive income
for this purpose means dividends, interest (including income equivalent to
interest), royalties, rents, annuities, the excess of gains over losses from
certain property transactions and commodities transactions, and foreign
currency gains. Passive income for this purpose does not include rents and
royalties received by the foreign corporation from active business and certain
income received from related persons.
If the Fund engages in hedging transactions, including hedging transactions
in options, futures contracts, and straddles, or other similar transactions,
it will be subject to special tax rules (including constructive sale, mark-to-
market, straddle, wash sale, and short sale rules), the effect of which may be
to accelerate income to the Fund, defer losses to the Fund, cause adjustments
in the holding periods of the Fund's securities, or convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders. The Fund will
endeavor to make any available elections pertaining to such transactions in a
manner believed to be in the best interests of the Fund.
The Fund's investment in securities issued at a discount and certain other
obligations will (and investments in securities purchased at a discount may)
require the Fund to accrue and distribute income not yet received. In such
cases, the Fund may be required to sell assets (including when it is not
advantageous to do so) to generate the cash necessary to distribute as
dividends to its shareholders all of its income and gains and therefore to
eliminate any tax liability at the Fund level.
Generally the Fund may designate dividends eligible for the dividends-
received deduction only to the extent that such dividends are derived from
dividends paid to the Fund with respect to which Fund could have taken the
dividends-received deduction if it had been a regular corporation. The
dividends-received deduction is not available to non-corporate shareholders,
Subchapter S corporations or corporations who do not hold their shares for at
least 46 days during the 90-day period beginning on the date that is 45 days
before the ex-dividend date.
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Redemptions and exchanges of the Fund's shares are taxable events and,
accordingly, shareholders may realize gains and losses on these transactions.
In general, any gain realized upon a taxable disposition of shares will be
treated as long-term capital gain if the shares have been held for more than
one year. Otherwise the gain on the sale, exchange or redemption of Fund
shares will be treated as short-term capital gain. However, if a shareholder
sells Fund shares at a loss within six months after purchasing the shares, the
loss will be treated as a long-term capital loss to the extent of any long-
term capital gain distributions received by the shareholder. Furthermore, no
loss will be allowed on the sale of Fund shares to the extent the shareholder
acquired other shares of the same Fund within 30 days prior to the sale of the
loss shares or 30 days after such sale.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative action.
Dividends and distributions also may be subject to foreign, state and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state, foreign, or local taxes.
The foregoing discussion relates solely to U.S. federal income tax law. Non-
U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility
that distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty). The Internal Revenue Service
recently revised its regulations affecting the application to foreign
investors of the back-up withholding tax rules. The new regulations will
generally be effective for payments made on or after January 1, 2001 (although
transition rules will apply). In some circumstances, the new rules will
increase the certification and filing requirements imposed on foreign
investors in order to qualify for exemption from the 31% back-up withholding
tax and for reduced withholding tax rates under income tax treaties. Foreign
investors in the Fund should consult their advisors with respect to the
potential application of these new regulations.
CALCULATION OF YIELD AND TOTAL RETURN
Yield. Yield with respect to the Fund will be computed by dividing the
Fund's net investment income for a recent 30-day period by the maximum
offering price (reduced by any undeclared earned income expected to be paid
shortly as a dividend) on the last trading day of that period. Net investment
income will reflect amortization of any market value premium or discount of
fixed income securities (except for obligations backed by mortgages or other
assets) and may include recognition of a pro rata portion of the stated
dividend rate of dividend paying portfolio securities. The Fund's yields will
vary from time to time depending upon market conditions, the composition of
the Fund's portfolios and operating expenses of the Trust allocated to the
Fund. These factors, and possible differences in the methods used in
calculating yield, should be considered when comparing the Fund's yield to
yields published for other investment companies and other investment vehicles.
Yield should also be considered relative to changes in the value of the Fund's
shares and to the relative risks associated with the investment objectives and
policies of the Fund.
At any time in the future, yields may be higher or lower than past yields
and there can be no assurance that any historical results will continue.
Investors in the Fund are specifically advised that the net asset value per
share of the Fund may vary, just as yields for the Fund may vary. An
investor's focus on yield to the exclusion of the consideration of the value
of shares of the Fund may result in the investor's misunderstanding the total
return he or she may derive from the Fund.
Total Return. Total Return with respect to the Fund is a measure of the
change in value of an investment in the Fund over the period covered, and
assumes any dividends or capital gains distributions are reinvested
immediately, rather than paid to the investor in cash. The formula for total
return used herein includes four steps:
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(1) adding to the total number of shares purchased through a hypothetical
$1,000 investment in the Fund all additional shares which would have been
purchased if all dividends and distributions paid or distributed during the
period had been immediately reinvested; (2) calculating the value of the
hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of shares owned at the end of the period by the
net asset value per share on the last trading day of the period; (3) assuming
redemption at the end of the period; and (4) dividing the resulting account
value by the initial $1,000 investment.
PERFORMANCE COMPARISONS
Total Return. The Fund may from time to time include its total return
information in advertisements or in information furnished to present or
prospective shareholders. The Fund may from time to time include in
advertisements or information furnished to present or prospective shareholders
(i) the ranking of performance figures relative to such figures for groups of
mutual funds categorized by Lipper Analytical Services, Inc. as having similar
investment objectives, (ii) the rating assigned to the Fund by Morningstar,
Inc. based on the Fund's risk-adjusted performance relative to other mutual
funds in its broad investment class, and/or (iii) the ranking of performance
figures relative to such figures for mutual funds in its general investment
category as determined by CDA/Weisenberger's Management Results.
Volatility. The Fund may quote various measures of its volatility and
benchmark correlation. In addition, the Fund may compare these measures to
those of other funds and indices. Measures of volatility seek to compare the
Fund's historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate the extent to which the
Fund's returns change in ways similar to those of the benchmark. All measures
of volatility and correlation are calculated using averages of historical
data. The Fund may utilize charts and graphs to present the Fund's volatility
and average annual total return. The Fund may also discuss or illustrate
examples of interest rate sensitivity.
Lipper Analytical Services, Inc. distributes mutual fund rankings monthly.
The rankings are based on total return performance calculated by Lipper,
generally reflecting changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect deduction of any sales
charges. Lipper rankings cover a variety of performance periods, including
year-to-date, 1-year, 5-year, and 10-year performance. Lipper classifies
mutual funds by investment objective and asset category.
Morningstar, Inc. distributes mutual fund ratings monthly. The ratings are
divided into five groups: highest, above average, neutral, below average and
lowest. They represent a fund's historical risk/reward ratio relative to other
funds in its broad investment class as determined by Morningstar, Inc.
Morningstar ratings cover a variety of performance periods, including 3-year,
5-year, 10-year and overall performance. The performance factor for the
overall rating is a weighted-average return performance (if available)
reflecting deduction of expenses and sales charges. Performance is adjusted
using quantitative techniques to reflect the risk profile of the fund. The
ratings are derived from a purely quantitative system that does not utilize
the subjective criteria customarily employed by rating agencies such as
Standard & Poor's and Moody's Investor Service, Inc.
CDA/Weisenberger's Management Results publishes mutual fund rankings and is
distributed monthly. The rankings are based entirely on total return
calculated by Weisenberger for periods such as year-to-date, 1-year, 3-year,
5-year and 10-year. Mutual funds are ranked in general categories (e.g.,
international bond, international equity, municipal bond, and maximum capital
gain). Weisenberger rankings do not reflect deduction of sales charges or
fees.
Performance information may also be used to compare the performance of the
Fund to certain widely acknowledged standards or indices for stock and bond
market performance, such as those listed below.
Consumer Price Index. The Consumer Price Index, published by the U.S. Bureau
of Labor Statistics, is a statistical measure of changes, over time, in the
prices of goods and services in major expenditure groups.
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Dow Jones Industrial Average. The Dow Jones Industrial Average is a market
value-weighted and unmanaged index of 30 large industrial stocks traded on the
New York Stock Exchange.
Standard & Poor's/Barra Growth Index. The Standard & Poor's/Barra Growth
Index is constructed by ranking the securities in the S&P 500 by price-to-book
ratio and including the securities with the highest price-to-book ratios that
represent approximately half of the market capitalization of the S&P 500.
Standard & Poor's/Barra Value Index. The Standard & Poor's/Barra Value Index
is constructed by ranking the securities in the S&P 500 by price-to-book ratio
and including the securities with the lowest price-to-book ratios that
represent approximately half of the market capitalization of the S&P 500.
Standard & Poor's ("S&P") Mid-Cap 400 Index. The S&P Mid-Cap 400 Index
consists of 400 domestic stocks chosen for market size, liquidity and industry
group representation. It is a market-weighted (stock price times shares
outstanding) with each stock affecting the index in proportion to its value.
The index is comprised of industrial, utility, financial and transportation
stocks, in size order.
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"). The S&P
500 is a market value-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. The
S&P 500 is composed almost entirely of common stocks of companies listed on
the New York Stock Exchange, although the common stocks of a few companies
listed on the American Stock Exchange or traded over-the-counter are included.
The 500 companies represented include 400 industrial, 60 transportation and 40
financial services concerns. The S&P 500 represents about 80% of the market
value of all issues traded on the New York Stock Exchange. The S&P 500 is the
most common index for the overall U.S. stock market.
From time to time, articles about the Fund regarding performance, rankings
and other characteristics of the Fund may appear in publications including,
but not limited to, the publications included in Appendix A. In particular,
some or all of these publications may publish their own rankings or
performance reviews of mutual funds, including the Fund. References to or
reprints of such articles may be used in the Fund's promotional literature.
References to articles regarding personnel of Loomis Sayles who have portfolio
management responsibility may also be used in the Fund's promotional
literature. For additional information about the Fund's advertising and
promotional literature, see Appendix B.
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APPENDIX A
PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION
ABC and affiliates Financial Services Week
Adam Smith's Money World Financial World
America On Line Fitch Insights
Anchorage Daily News Forbes
Atlanta Constitution Fort Worth Star-Telegram
Atlanta Journal Fortune
Arizona Republic Fox Network and affiliates
Austin American Statesman Fund Action
Baltimore Sun Fund Decoder
Bank Investment Marketing Global Finance
Barron's (the) Guarantor
Bergen County Record (NJ) Hartford Courant
Bloomberg Business News Houston Chronicle
Bond Buyer INC
Boston Business Journal Indianapolis Star
Boston Globe Individual Investor
Boston Herald Institutional Investor
Broker World International Herald Tribune
Business Radio Network Internet
Business Week Investment Advisor
CBS and affiliates Investment Company Institute
CDA Investment Technologies Investment Dealers Digest
CFO Investment Profiles
Changing Times Investment Vision
Chicago Sun Times Investor's Daily
Chicago Tribune IRA Reporter
Christian Science Monitor Journal of Commerce
Christian Science Monitor News Service Kansas City Star
Cincinnati Enquirer KCMO (Kansas City)
Cincinnati Post KOA-AM (Denver)
CNBC LA Times
CNN Leckey, Andrew (syndicated column)
Columbus Dispatch Life Association News
CompuServe Lifetime Channel
Dallas Morning News Miami Herald
Dallas Times-Herald Milwaukee Sentinel
Denver Post Money Magazine
Des Moines Register Money Maker
Detroit Free Press Money Management Letter
Donoghues Money Fund Report Morningstar
Dorfman, Dan (syndicated column) Mutual Fund Market News
Dow Jones News Service Mutual Funds Magazine
Economist National Public Radio
FACS of the Week National Underwriter
Fee Adviser NBC and affiliates
Financial News Network New England Business
Financial Planning New England Cable News
Financial Planning on Wall Street New Orleans Times-Picayune
Financial Research Corp. New York Daily News
24
<PAGE>
New York Times Smart Money
Newark Star Ledger St. Louis Post Dispatch
Newsday St. Petersburg Times
Newsweek Standard & Poor's Outlook
Nightly Business Report Standard & Poor's Stock Guide
Orange County Register Stanger's Investment Advisor
Orlando Sentinel Stockbroker's Register
Palm Beach Post Strategic Insight
Pension World Tampa Tribune
Pensions and Investments Time
Personal Investor Tobias, Andrew (syndicated column)
Philadelphia Inquirer Toledo Blade
Porter, Sylvia (syndicated column) UP
Portland Oregonian US News and World Report
Prodigy USA Today
Public Broadcasting Service USA TV Network
Quinn, Jane Bryant (syndicated column) Value Line
Registered Representative Wall Street Journal
Research Magazine Wall Street Letter
Resource Wall Street Week
Reuters Washington Post
Rocky Mountain News WBZ
Rukeyser's Business (syndicated column) WBZ-TV
Sacramento Bee WCVB-TV
San Diego Tribune WEEI
San Francisco Chronicle WHDH
San Francisco Examiner Worcester Telegram
San Jose Mercury World Wide Web
Seattle Post-Intelligencer Worth Magazine
Seattle Times WRKO
Securities Industry Management
25
<PAGE>
APPENDIX B
ADVERTISING AND PROMOTIONAL LITERATURE
Loomis Sayles Funds' advertising and promotional material may include, but
is not limited to, discussions of the following information:
Loomis Sayles Funds' participation in wrap fee and no transaction fee
programs
Loomis Sayles Funds and Loomis, Sayles & Company, L.P. Website
Characteristics of Loomis Sayles including the number and locations of
its offices, its investment practices and clients and assets under
management
Specific and general investment philosophies, strategies, processes and
techniques
Specific and general sources of information, economic models, forecasts
and data services utilized, consulted or considered in the course of
providing advisory or other services
Industry conferences at which Loomis Sayles participates
Current capitalization, levels of profitability and other financial
information
Identification of portfolio managers, researchers, economists, principals
and other staff members and employees and descriptions of Loomis Sayles'
resources devoted to such staff
The specific credentials of the above individuals, including but not
limited to, previous employment, current and past positions, titles and
duties performed, industry experience, educational background and degrees,
awards and honors
Specific identification of, and general reference to, current individual,
corporate and institutional clients, including pension and profit sharing
plans
Current and historical statistics relating to:
--total dollar amount of assets managed
--Loomis Sayles assets managed in total and by Fund
--the growth of assets
--asset types managed
Loomis Sayles Funds' tag line--"Listening Harder, Delivering More" and
statements that and examples of how Loomis Sayles Funds listens to its clients
and works hard to deliver results which exceed their expectations.
References may be included in Loomis Sayles Funds' advertising and
promotional literature about 401(k) and retirement plans that offer the Fund.
The information may include, but is not limited to:
Specific and general references to industry statistics regarding 401(k)
and retirement plans including historical information and industry trends
and forecasts regarding the growth of assets, numbers or plans, funding
vehicles, participants, sponsors and other demographic data relating to
plans, participants and sponsors, third party and other administrators,
benefits consultants and firms with whom Loomis Sayles may or may not have
a relationship.
Specific and general reference to comparative ratings, rankings and other
forms of evaluation as well as statistics regarding the Fund as 401(k) or
retirement plan funding vehicles produced by industry authorities, research
organizations and publications.
26
<PAGE>
PART C
The information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
This Post-Effective Amendment relates solely to Loomis Sayles Select
Opportunities Fund, a series of Loomis Sayles Funds. Information contained in
the Registrant's Registration Statement relating to any other series of the
Registrant is neither amended nor superseded hereby.
<PAGE>
Part C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial statements: Not Applicable
(b) Exhibits:
1. Agreement and Declaration of Trust. (5)
2. By-Laws. (5)
3. Not Applicable.
4. Not Applicable.
5(a). Form of Advisory Agreement. (7)
5(b). Form of Amendment No. 1 to Advisory Agreement between the Trust and
Loomis Sayles Core Value Fund. (3)
5(c). Form of Amendment No. 1 to Advisory Agreement between the Trust and
Loomis Sayles Global Bond Fund. (3)
5(d). Form of Amendment No. 1 to Advisory Agreement between the Trust and
Loomis Sayles Growth Fund. (3)
5(e). Form of Advisory Agreement between the Trust and
Loomis Sayles High Yield Fund. (2)
5(f). Form of Advisory Agreement between the Trust and Loomis Sayles High
Yield Fund II. (6)
5(g). Form of Amendment No. 1 to Advisory Agreement between the Trust and
Loomis Sayles Intermediate Maturity Bond Fund. (3)
5(h). Form of Amendment No. 1 to Advisory Agreement between the Trust and
Loomis Sayles International Equity Fund. (3)
5(i). Form of Advisory Agreement between the Trust and Loomis Sayles
Investment Grade Bond Fund. (3)
5(j). Form of Advisory Agreement between the Trust and Loomis Sayles
Managed Bond Fund. (5)
<PAGE>
5(k). Form of Advisory Agreement between the Trust and Loomis Sayles Mid-
Cap Growth Fund. (3)
5(l). Form of Advisory Agreement between the Trust and Loomis Sayles Mid-
Cap Value Fund. (3)
5(m). Form of Amendment No. 1 to Advisory Agreement between the Trust
and Loomis Sayles Municipal Bond Fund. (3)
5(n). Form of Amendment No. 1 to Advisory Agreement between the Trust
and Loomis Sayles Short-Term Bond Fund. (3)
5(o). Form of Advisory Agreement between the Trust and Loomis Sayles Small
Cap Growth Fund. (3)
5(p). Form of Amendment No. 1 to Advisory Agreement between the Trust
and Loomis Sayles Small Cap Value Fund. (3)
5(q). Form of Advisory Agreement between the Trust and Loomis Sayles
Select Opportunities Fund is filed herein.
5(r). Form of Amended and Restated Investment Advisory Agreement between
the Trust and Loomis Sayles U.S. Government Securities Fund. (7)
5(s). Form of Amendment No. 1 to Advisory Agreement between the Trust
and Loomis Sayles Worldwide Fund. (3)
6(a). Form of Amended and Restated Distribution Agreement. (8)
6(b). Form of Selected Dealer Agreement is filed herein.
6(c). Form of Agent Company Agreement (for use in sales of Fund shares in
Japan) is filed herein.
6(d). Form of Distribution, Repurchase and Shareholders Servicing Agreement
(for use in sales of Fund shares in Japan) is filed herein.
7. Not Applicable.
8(a). Form of Custodian Agreement. (5)
8(b). Letter Agreement between the Trust and State Street Bank and Trust
Company relating to the applicability of the Custodian Agreement to
Loomis Sayles Short-Term Bond Fund. (4)
8(c). Letter Agreement between the Trust and State Street Bank and Trust
Company relating to the applicability of the Custodian Agreement to
Loomis Sayles High Yield Fund. (4)
8(d). Letter Agreement between the Trust and State Street Bank and Trust
Company relating to the applicability of the Custodian Agreement to
Loomis Sayles Intermediate Maturity Bond Fund, Loomis Sayles Investment
Grade Bond Fund, Loomis Sayles Mid-Cap Growth Fund, Loomis Sayles
Mid-Cap Value Fund and Loomis Sayles Small Cap Growth Fund. (4)
<PAGE>
8(e). Form of Letter Agreement between the Trust and State Street Bank and
Trust Company relating to the applicability of the Custodian
Agreement to Loomis Sayles Worldwide Fund. (4)
8(f). Form of Letter Agreement between the Trust and State Street Bank and
Trust Company relating to the applicability of the Custodian
Agreement to Loomis Sayles Managed Bond Fund. (7)
9(a). Form of Transfer Agency and Service Agreement between the Trust and
State Street Bank and Trust Company. (5)
9(b). Letter Agreement between the Trust and State Street Bank and Trust
Company relating to the applicability of the Transfer Agency and
Service Agreement to Loomis Sayles Short-Term Bond Fund. (4)
9(c). Letter Agreement between the Trust and State Street Bank and Trust
Company relating to the applicability of the Transfer Agency and
Service Agreement to Loomis Sayles High Yield Fund and Loomis Sayles
Worldwide Fund. (4)
9(d). Letter Agreement between the Trust and State Street Bank and Trust
Company relating to the applicability of the Transfer Agency and Service
Agreement to Loomis Sayles Intermediate Maturity Bond Fund, Loomis
Sayles Investment Grade Bond Fund, Loomis Sayles Mid-Cap Growth Fund,
Loomis Sayles Mid-Cap Value Fund and Loomis Sayles Small Cap Growth
Fund. (4)
9(e). Transfer Agency and Service Agreement between the Trust on behalf of
the Loomis Sayles Managed Bond Fund and State Street Bank and Trust
Company. (7)
9(f). Transfer Agency and Service Agreement between the Trust on behalf of
the Class J shares of Loomis Sayles Investment Grade Bond Fund is filed
herein.
9(g). Letter Agreement between the Trust and State Street Bank relating to the
applicability of the Transfer Agency and Service Agreement and Custodian
Agreement to Loomis Sayles Select Opportunities Fund to be filed by
amendment.
10(a). Opinion and Consent of Counsel. (3)
10(b). Form of Opinion and Consent of Counsel relating to Loomis Sayles
Managed Bond Fund and Loomis Sayles High Yield Fund II. (6)
11. Not Applicable
12. Not Applicable.
13(a). Investment Representation Regarding Initial Shares. (5)
13(b). Form of Organizational Expense Reimbursement Agreement. (5)
14. Form of IRA prototype documents. (5)
15(a). Form of Distribution Plan - Retail Class. (3)
15(b). Form of Distribution Plan - Admin Class. (5)
<PAGE>
15(c). Form of Service and Distribution Plan relating to Loomis Sayles
Managed Bond Fund. (6)
15(d). Form of Service and Distribution Plan relating to Loomis Sayles
Investment Grade Bond Fund - J Class. (8)
16. Schedule for Performance Computations. (3)
17. Not Applicable
18. Amended and Restated Rule 18f-3(d) Plan is filed herein.
19. Powers of Attorney. (1)
- --------------------
(1) Incorporated by reference to the similarly numbered Exhibit to Post-
Effective Amendment No. 7 to the Trust's Registration Statement under
the Securities Act of 1933 filed with the Commission on February 16,
1996.
(2) Incorporated by reference to the similarly numbered Exhibit to Post-
Effective Amendment No. 10 to the Trust Registration Statement under the
Securities Act of 1933 filed with the Commission on August 30, 1996.
(3) Incorporated by reference to the similarly numbered Exhibit to Post-
Effective Amendment No. 11 to the Trust's Registration Statement under
the Securities Act of 1933 filed with the Commission on October 9, 1996.
(4) Incorporated by reference to the similarly numbered Exhibit to Post-
Effective Amendment No. 12 to the Trust's Registration Statement under
the Securities Act of 1933 filed with the Commission on March 10, 1997.
(5) Incorporated by reference to the similarly numbered Exhibit to Post-
Effective Amendment No. 13 to the Trust's Registration Statement under
the Securities Act of 1933 filed with the Commission on October 31,
1997.
(6) Incorporated by reference to the similarly numbered Exhibit to Post-
Effective Amendment No. 15 to the Trust's Registration Statement under
the Securities Act of 1933 filed with the Commission on August 5, 1998.
(7) Incorporated by reference to the similarly numbered Exhibit to Post-
Effective Amendment No. 17 to the Trust's Registration Statement under
the Securities Act of 1933 filed with the Commission on November 30,
1998.
(8) Incorporated by reference to the similarly numbered Exhibit to Post-
Effective Amendment No. 18 to the Trust's Registration Statement under
the Securities Act of 1933 filed with the Commission on April 7, 1999.
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
Not Applicable.
<PAGE>
Item 26. Number of Holders of Securities
-------------------------------
No Longer Applicable.
Item 27. Indemnification
---------------
Article VIII of the Registrant's Agreement and Declaration of Trust (Exhibit 1
hereto) and Article 4 of the Registrant's By-Laws (Exhibit 2 hereto) provide for
indemnification of its Trustees and Officers. The effect of these provisions is
to provide indemnification for each of the Registrant's Trustees and Officers
against liabilities and counsel fees reasonably incurred in connection with the
defense of any legal proceeding in which such Trustee or Officer may be involved
by reason of being or having been a Trustee or Officer, except with respect to
any matter as to which such Trustee or Officer shall have been adjudicated not
to have acted in good faith in the reasonable belief that such Trustee's or
Officer's action was in the best interest of the Registrant, and except that no
Trustee or Officer shall be indemnified against any liability to the Registrant
or its shareholders to which such Trustee or Officer otherwise would be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Trustee's or Officer's
office.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to Trustees, Officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Trustee, Officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, Officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
(a) Loomis, Sayles & Company, L.P. ("Loomis Sayles"), the adviser of the
Registrant, provides investment advice to the eight series of Loomis Sayles
Investment Trust, six series of New England Funds Trust I, one series of New
England Funds Trust II, one series of New England Funds Trust III, and two
series of New England Zenith Funds, all of which are registered investment
companies, and to other registered investment companies, organizations and
individuals.
The sole general partner of Loomis Sayles is Loomis, Sayles & Company,
Incorporated, One Financial Center, Boston, Massachusetts 02111.
Item 29. Principal Underwriters
----------------------
The Trust's principal underwriter is Loomis Sayles Distributors, L.P., the sole
general partner of which is Loomis Sayles Distributors, Incorporated.
Item 30. Location of Accounts and Records
--------------------------------
The following companies maintain possession of the documents required by the
specified rules:
(a) Registrant
Rule 31a-1(b)(4), (9), (10), (11)
Rule 31a-2(a)
(b) State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Rule 31a-1(a)
Rule 31a-1(b)(1), (2), (3), (5), (6), (7), (8)
Rule 31a-2(a)
<PAGE>
(c) Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
Rule 31a-1(f)
Rule 31a-2(e)
(d) Loomis, Sayles Distributors, L.P.
One Financial Center
Boston, MA 02111
Rule 31a-1(d)
Rule 31a-2(c)
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
(I) The Registrant undertakes to comply with Section 16(c) of the
Investment Company Act of 1940 as though such provisions of the Act
were applicable to the Registrant.
(ii) The Registrant undertakes to furnish each person to whom a prospectus
is delivered a copy of Registrant's most recent annual report upon
request and without charge.
********************
NOTICE
A copy of the Agreement and Declaration of Trust of Loomis Sayles Funds (the
"Trust") is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Registration Statement has
been executed on behalf of the Trust by an officer of the Trust as an officer
and by its Trustees as trustees and not individually and the obligations of or
arising out of this Registration Statement are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Trust.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this amendment to its
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, in the Commonwealth of Massachusetts on
the 19th day of May, 1999.
LOOMIS SAYLES FUNDS
By: DANIEL J. FUSS*
- -----------------------------
Daniel J. Fuss, President
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this amendment to the Registration Statement of Loomis
Sayles Funds has been signed below by the following persons in the capacities
and on the date indicated.
Signature Title
- ------------ -----
DANIEL J. FUSS* President and Trustee
- -------------------------------
Daniel J. Fuss
MARK W. HOLLAND* Treasurer
- -------------------------------
Mark W. Holland
EARL W. FOELL* Trustee
- -------------------------------
Earl W. Foell
RICHARD S. HOLWAY* Trustee
- -------------------------------
Richard S. Holway
MICHAEL T. MURRAY* Trustee
- -------------------------------
Michael T. Murray
*By: /s/ MARK W. HOLLAND
- -------------------------------
Mark W. Holland, for himself and as Attorney-in-fact
May 19, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
- -------------
5(q). Form of Advisory Agreement between the Trust and Loomis Sayles Select
Opportunities Fund.
6(b). Form of Selected Dealer Agreement.
6(c). Form of Agent Company Agreement (for use in sales of Fund shares in
Japan).
6(d). Form of Distribution, Repurchase and Shareholder Servicing Agreement
(for use in sales of Fund shares in Japan).
9(f). Transfer Agency and Service Agreement between the Trust on behalf of the
Class J shares of Loomis Sayles Investment Grade Bond Fund.
18. Amended and Restated 18f-3(d) Plan.
<PAGE>
ADVISORY AGREEMENT
------------------
AGREEMENT made this ___ day of March, 1999, by and between Loomis Sayles
Funds, a Massachusetts business trust (the "Trust"), with respect to its Loomis
Sayles Select Opportunities Fund series (the "Series"), and Loomis, Sayles &
Company, L.P., a Delaware limited partnership (the "Adviser").
WITNESSETH:
WHEREAS, the Trust and the Adviser wish to enter into an agreement setting
forth the terms upon which the Adviser will perform certain services for the
Series;
NOW THEREFORE, in consideration of the premises and covenants hereinafter
contained, the parties agree as follows:
1. The Trust hereby employs the Adviser to manage the investment and
reinvestment of the assets belonging to the Series and to perform the other
services herein set forth, subject to the supervision of the Board of Trustees
of the Trust. The Adviser hereby accepts such employment and agrees, at its own
expense, to render the services and to assume the obligations herein set forth,
for the compensation herein provided. The Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
2. In carrying out its obligations to manage the investment and
reinvestment of the assets belonging to the Series, the Adviser shall:
(a) obtain and evaluate such economic, statistical and financial data
and information and undertake such additional investment research as it
shall believe necessary or advisable for the management of the investment
and reinvestment of the assets belonging to the Series in accordance with
the Series' investment objective and policies;
(b) take such steps as are necessary to implement the investment
policies of the Series by purchase and sale of securities, including the
placing of orders for such purchase and sale; and
(c) regularly report to the Board of Trustees with respect to the
implementation of the investment policies of the Series.
1
<PAGE>
3. All activities in connection with the management of the affairs of the
Series undertaken by the Adviser pursuant to this Agreement shall at all times
be subject to the supervision and control of the Board of Trustees, any duly
constituted committee thereof or any officer of the Trust acting pursuant to
like authority.
4. In addition to performing at its expense the obligations set forth in
section 2 hereof, the Adviser shall furnish to the Trust at the Adviser's own
expense or pay the expenses of the Trust for the following:
(a) office space in such place or places as may be agreed upon from
time to time, and all necessary office supplies, facilities and equipment;
(b) necessary executive and other personnel for managing the affairs
of the Series (exclusive of those related to and to be performed under
contract for custodial, transfer, dividend and plan agency services by the
entity or entities selected to perform such services and exclusive of any
managerial functions described in section 5); and
(c) compensation, if any, of Trustees of the Trust who are directors,
officers, partners or employees of the Adviser or any affiliated person
(other than a registered investment company) of the Adviser.
5. Except as the Adviser may otherwise agree from time to time, nothing
in section 4 hereof shall require the Adviser to bear, or to reimburse the Trust
for:
(a) any of the costs of printing and distributing the items referred
to in subsection (n) of this section 5;
(b) any of the costs of preparing, printing and distributing sales
literature;
(c) compensation of Trustees of the Trust who are not directors,
officers, partners or employees of the Adviser or of any affiliated person
(other than a registered investment company) of the Adviser;
(d) registration, filing and other fees in connection with
requirements of regulatory authorities;
(e) the charges and expenses of the custodian appointed by the Trust
for custodial, paying agent, transfer agent and plan agent services;
(f) charges and expenses of independent accountants retained by the
Trust;
(g) charges and expenses of any transfer agents and registrars
appointed by the Trust;
2
<PAGE>
(h) brokers' commissions and issue and transfer taxes chargeable to
the Trust in connection with securities transactions to which the Trust is
a party;
(i) taxes and fees payable by the Trust to Federal, State or other
governmental agencies;
(j) any cost of certificates representing shares of the Series;
(k) legal fees and expenses in connection with the affairs of the
Trust including registering and qualifying its shares with Federal and
State regulatory authorities;
(l) expenses of meetings of shareholders and Trustees of the Trust;
(m) interest, including interest on borrowings by the Trust;
(n) the cost of services, including services of counsel, required in
connection with the preparation of the Trust's registration statements and
prospectuses, including amendments and revisions thereto, annual,
semiannual and other periodic reports of the Trust, and notices and proxy
solicitation material furnished to shareholders of the Trust or regulatory
authorities; and
(o) the Trust's expenses of bookkeeping, accounting, auditing and
financial reporting, including related clerical expenses.
6. The services of the Adviser to the Trust hereunder are not to be
deemed exclusive and the Adviser shall be free to render similar services to
others, so long as its services hereunder are not impaired thereby.
7. As full compensation for all services rendered, facilities furnished
and expenses borne by the Adviser hereunder, the Trust shall pay the Adviser
compensation at the annual percentage rate of 0.50%, or such lesser rate as the
Adviser may agree to from time to time. Such compensation shall be payable
monthly in arrears or at such other intervals, not less frequently than
quarterly, as the Board of Trustees of the Trust may from time to time determine
and specify in writing to the Adviser. The Adviser hereby acknowledges that
the Trust's obligation to pay such compensation is binding only on the assets
and property belonging to the Series.
8. If the total of all ordinary business expenses of the Series or the
Trust as a whole (including investment advisory fees but excluding taxes and
portfolio brokerage commissions) for any fiscal year exceeds the lowest
applicable percentage of average net assets or income limitations prescribed by
any state in which shares of the Series are qualified for sale, the Adviser
shall pay any such excess. Solely for purposes of applying such limitations
3
<PAGE>
in accordance with the foregoing sentence, the Series and the Trust shall each
be deemed to be a separate fund subject to such limitations. Should the
applicable state limitation provisions fail to specify how the average net
assets of the Trust or belonging to the Series are to be calculated, that figure
shall be calculated by reference to the average daily net assets of the Trust or
the Series, as the case may be.
9. It is understood that any of the shareholders, trustees, officers,
employees and agents of the Trust may be a partner, shareholder, director,
officer, employee or agent of, or be otherwise interested in, the Adviser, any
affiliated person of the Adviser, any organization in which the Adviser may have
an interest or any organization which may have an interest in the Adviser; that
the Adviser, any such affiliated person or any such organization may have an
interest in the Trust; and that the existence of any such dual interest shall
not affect the validity hereof or of any transactions hereunder except as
otherwise provided in the Agreement and Declaration of Trust of the Trust and
the Partnership Agreement of the Adviser, respectively, or by specific
provisions of applicable law.
10. This Agreement shall become effective as of the date of its execution,
and
(a) unless otherwise terminated, this Agreement shall continue in
effect for two years from the date of execution, and from year to year
thereafter only so long as such continuance is specifically approved at
least annually (i) by the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Series, and (ii) by
vote of a majority of the Trustees of the Trust who are not interested
persons of the Trust or the Adviser, cast in person at a meeting called for
the purpose of voting on such approval;
(b) this Agreement may at any time be terminated on sixty days'
written notice to the Adviser either by vote of the Board of Trustees of
the Trust or by vote of a majority of the outstanding voting securities of
the Series;
(c) this Agreement shall automatically terminate in the event of its
assignment;
(d) this Agreement may be terminated by the Adviser on ninety days'
written notice to the Trust;
(e) if the Adviser requires the Trust or the Series to change its name
so as to eliminate all references to the words "Loomis" or "Sayles," then
this Agreement shall automatically terminate at the time of such change
unless the continuance of this Agreement after such change shall have been
specifically approved by vote of a majority of the outstanding voting
securities of the Series and by vote of a majority of the Trustees of the
Trust who are not interested persons of the Trust or the Adviser, cast in
person at a meeting called for the purpose of voting on such approval.
4
<PAGE>
Termination of this Agreement pursuant to this section 10 shall be without
payment of any penalty.
11. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved by vote of a majority of the outstanding voting securities of the
Series and by vote of a majority of the Trustees of the Trust who are not
interested persons of the Trust or the Adviser, cast in person at a meeting
called for the purposes of voting on such approval.
12. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities," "interested person," "affiliated person" and
"assignment" shall have their respective meanings defined in the Investment
Company Act of 1940 and the rules and regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act. References in this Agreement to any assets, property or
liabilities "belonging to" the Series shall have the meaning defined in the
Trust's Agreement and Declaration of Trust and By-Laws as amended from time to
time.
13. In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Adviser, or reckless disregard of its obligations and duties
hereunder, the Adviser shall not be subject to any liability to the Trust, to
any shareholder of the Trust or to any other person, firm or organization, for
any act or omission in the course of, or connected with, rendering services
hereunder.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
LOOMIS SAYLES FUNDS,
on behalf of its
Loomis Sayles Select Opportunities Fund
By: __________________________
Name:
Title:
LOOMIS, SAYLES & COMPANY, L.P.
By __________________________
Name:
Title:
A copy of the Agreement and Declaration of Trust establishing the Trust is
on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the
Trust's Loomis Sayles Select Opportunities Fund series on behalf of the Trust by
officers of the Trust as officers and not individually and that the obligations
of or arising out of this Agreement are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon the assets and
property belonging to the Series.
6
<PAGE>
Loomis Sayles Funds
- --------------------------------------------------------------------------------
Selected Dealer Agreement
Selected Dealer Agreement between Loomis Sayles Distributors, L.P.
("Distributor") and ___________________________________________________________
("Dealer") dated as of , 1999.
WHEREAS, Loomis Sayles Funds (the "Trust") has appointed Distributor as its
exclusive agent to sell and distribute each class of shares of each series (each
a "Fund") of the Trust, which shares are distributed by Distributor and sold by
the Trust at their net asset value; and
WHEREAS, Distributor and Dealer desire that Dealer participate as a
selected dealer in the distribution of one or more classes of shares of any and
all of the Funds and of any Funds hereafter created for which Distributor is the
distributor.
NOW, THEREFORE, Distributor and Dealer hereby agree to the following terms
and conditions:
1. This Agreement relates to the class or classes of shares (the "Shares") of
the Fund or Funds specified in Appendix A hereto.
2. Dealer will offer and sell Shares only at the public offering prices which
shall be currently in effect, in accordance with the terms of the then
current Prospectus of the relevant Fund. Dealer agrees to act only as
principal in such transactions and shall not have authority hereunder to
act as an agent, broker or employee with respect to the Trust, Distributor
or any other dealer in any respect. All orders are subject to acceptance
by the Trust and become effective only upon confirmation by Distributor to
Dealer on behalf of the Trust.
3. As a selected dealer, Dealer is hereby authorized (i) to place orders
through Distributor with the Funds for their Shares to be sold by the Funds
to Dealer subject to the applicable terms and conditions governing the
placement of orders set forth in the Distribution Agreement between the
Trust and the Distributor and subject to the terms set forth in the then
current Prospectus and Statement of Additional Information relating to the
relevant class of Shares of the relevant Fund, and (ii) to tender Shares
directly to the Funds or their agent for redemption subject to the
applicable terms and conditions set forth in said Distribution Agreement,
Prospectus and Statement of Additional Information.
4. Repurchase of Shares will be made at the net asset value of such Shares in
accordance with the applicable then current Prospectus relating to the
relevant class of Shares of the relevant Fund.
5. Each party hereto represents that it is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD") and agrees to
notify the other promptly should it cease to be a member of the NASD and to
the automatic termination of this Agreement at such time as it
-1-
<PAGE>
ceases to be such a member. Further, each party hereto agrees to abide by
the Conduct Rules of the NASD.
6. This Agreement is in all respects subject to Rule 2830 of the Rules of the
NASD, which shall control any provisions to the contrary in this Agreement.
7. Dealer agrees:
(a) To purchase Shares only from the Trust through Distributor or only
from Dealer's customers.
(b) To purchase Shares from the Trust only for the purpose of covering
purchase orders already received or for Dealer's bona fide investment.
(c) In each instance in which Dealer's customer or a nominee thereof will
be a shareholder of record of the Trust, to provide such customer's
correct taxpayer identification number or social security number, and
such other information and documents as the Trust may reasonably
require for purposes of compliance with applicable tax withholding
requirements, in connection with opening any shareholder account for
such customer or nominee.
(d) That Dealer will not purchase any Shares from Dealer's customers at
prices lower than the redemption or repurchase prices next quoted by
the Fund. Dealer shall be permitted to sell Shares to the Funds at
the repurchase prices currently established for such Shares.
(e) That Dealer will not intentionally withhold placing customers' orders
for Shares so as to profit Dealer as a result of such withholding.
8. Distributor, as agent for each Fund, shall not accept from Dealer any
conditional orders for Shares. Delivery of certificates, if any, for Shares
purchased shall be made by a Fund only against receipt of the purchase
price, and only upon request. If payment for the Shares purchased and all
necessary applications and documents required by the applicable Fund or
Distributor are not received within three business days or such shorter
time as may be required by law, the sale may be canceled forthwith without
any responsibility or liability on Distributor's part or on the part of the
applicable Fund (in which case Dealer will be responsible for any loss,
including loss of profit, suffered by a Fund resulting from Dealer's
failure to make payments or provide documents as aforesaid), or, at
Distributor's option, Distributor may cause the Shares ordered to be
redeemed by the relevant Fund (in which case Distributor and the Trust may
hold Dealer responsible for any loss suffered by either of them in
connection with or as a result of such redemption).
9. Dealer will not offer or sell any of the Shares except under circumstances
that will result in compliance with all applicable federal or state
securities laws and, in connection with sales and offers to sell Shares,
Dealer will furnish to each person to whom any such sale or offer is made a
copy of the applicable then current Prospectus relating to the relevant
class of Shares of the relevant Fund. Distributor shall be under no
liability to Dealer except for lack of good faith and
-2-
<PAGE>
for obligations expressly assumed by Distributor herein. Notice and other
applicable filings for Shares of the Funds in various states is the
responsibility of Distributor or one of its affiliates. Nothing herein
contained, however, shall be deemed to be a condition, stipulation or
provision binding any persons acquiring any security to waive compliance
with any provision of the Securities Act of 1933 or of the Rules and
Regulations of the Securities and Exchange Commission or to relieve the
parties hereto from any liability arising under the Securities Act of 1933.
Dealer will use its best efforts in the development and promotion of sales
of Shares and will be responsible for the proper instruction and training
of all sales personnel employed by it.
10. No person is authorized to make any representations concerning Shares of
the Funds except those contained in the applicable then current Prospectus
and Statement of Additional Information and printed information issued by
the Trust or by Distributor as information supplemental to the applicable
Prospectus. Distributor shall supply such Prospectuses at no cost to
Dealer and reasonable quantities of supplemental sales literature, sales
bulletins and additional information as issued. Dealer agrees not to use
other advertising or sales material relating to the Funds, unless approved
in writing by Distributor in advance of such use. Any printed information
furnished by Distributor, other than the applicable then current Prospectus
and Statement of Additional Information and any periodic reports and proxy
solicitation materials of the Trust, are Distributor's sole responsibility
and not the responsibility of the Trust, and Dealer agrees that the Trust
shall have no liability or responsibility to Dealer in these respects
unless expressly assumed in connection therewith.
11. Dealer agrees to provide certain additional services to the extent, if any,
set forth in Appendixes B, C and/or D hereto, as from time to time amended,
for such compensation as is set forth therein. Dealer acknowledges that
Distributor shall pay any compensation to Dealer described in any such
Appendix only out of such monies as may be received for such purpose by
Distributor from either the Funds or Loomis, Sayles & Company, L.P.;
accordingly, any obligation of Distributor to Dealer to pay any such
compensation shall not arise unless and until receipt by Distributor from
the Funds or Loomis, Sayles & Company, L.P. of monies intended to be used
by Distributor for such purpose and in amounts sufficient for such purpose.
12. Either party may terminate this Agreement, without cause, by giving 30
days' written notice to the other party. Distributor may terminate this
Agreement for cause upon the violation by Dealer of any of the provisions
hereof, such termination to be effective on the date notice of such
termination is sent to Dealer. Any notice under this Agreement shall be in
writing and shall be deemed to have been given on the date on which it was
either delivered to the other party, or was mailed postpaid or sent by
facsimile transmission (with machine confirmation) or delivered to a
telegraph office for transmission to the other party, at its Notice Address
as shown on the signature page of this Agreement.
13. This Agreement may be amended from time to time by Distributor upon 10
days' written notice to Dealer. This Agreement shall inure to the benefit
of the successors and assigns of either party hereto, provided, however,
that Dealer may not assign this Agreement without the prior written consent
of Distributor.
-3-
<PAGE>
14. This Agreement shall be construed in accordance with the laws of The
Commonwealth of Massachusetts. Any disputes between the parties hereto
arising in connection with this Agreement shall be submitted to arbitration
in accordance with the Code of Arbitration Procedure of the National
Association of Securities Dealers, Inc., or similar rules or code
hereinafter adopted as in effect at the time of the submission of any such
dispute.
15. This Agreement shall be binding upon both parties hereto when executed by
both parties and supersedes any prior agreement or understanding between
Distributor and Dealer with respect to the sale of Shares of any of the
Funds of the Trust.
Loomis Sayles Distributors, L.P. Notice Address:
One Financial Center
Boston, Massachusetts 02111
By: ______________________________
Title: ____________________________
[Dealer] Dealer's Notice Address:
By: ______________________________
Title: ____________________________
Appendix A [X] Appendix B [ ] Appendix C [X] Appendix D [ ]
-4-
<PAGE>
Appendix A
The attached Selected Dealers Agreement relates to the following class(es)
of shares of the specified Fund(s):
Retail Institutional
------ -------------
Loomis Sayles Bond Fund [ ] [ ]
Loomis Sayles Global Bond Fund [ ] [ ]
Loomis Sayles High Yield Fund N/A [ ]
Loomis Sayles Intermediate Maturity Bond Fund [ ] [ ]
Loomis Sayles Investment Grade Bond Fund [ ] [ ]
Loomis Sayles Municipal Bond Fund N/A [ ]
Loomis Sayles Short Term Bond Fund [ ] [ ]
Loomis Sayles U.S. Government Securities Fund N/A [ ]
Loomis Sayles Core Value Fund [ ] [ ]
Loomis Sayles Growth Fund [ ] [ ]
Loomis Sayles International Equity Fund [ ] [ ]
Loomis Sayles Mid-Cap Growth Fund [ ] [ ]
Loomis Sayles Mid-Cap Value Fund [ ] [ ]
Loomis Sayles Small Cap Value Fund [ ] [ ]
Loomis Sayles Small Company Growth Fund [ ] [ ]
Loomis Sayles Worldwide Fund [ ] [ ]
The Class of shares of the Funds noted above may be offered and sold by
Dealer under the following conditions: [Insert description of particular
transactions in which each class of shares may be sold, for example:
Institutional Class shares may be offered and sold only to shareholders who held
shares of the specified Fund prior to January 1, 1997; and Retail Class shares
may be offered and sold by Dealer to all investors who were not existing
shareholders as of January 1, 1997.]
-5-
<PAGE>
Appendix B
[for use if Dealer is to Receive Payments for Omnibus Account Sub-Accounting,
Recordkeeping or Other Similar Specific Services;
adapt any standard provisions furnished by Dealer and insert them here as
Appendix B]
-6-
<PAGE>
Appendix C
[For Use Only if Dealer is to Receive 12b-1 Payments for Shareholder Servicing/
Account Maintenance Activities; Use Appendix B for Omnibus Account Sub-
Accounting, Recordkeeping or Other Similar Services]
In addition to fulfilling the obligations provided in the attached Selected
Dealer Agreement, Dealer agrees to use its best efforts to make available, to
its customers who from time to time beneficially own Retail Class Shares in
accounts for which Dealer is the dealer of record as reflected in the records of
the Distributor ("Dealer Accounts"), such personal services and information as
are customarily provided by full-service securities brokers to their customers
with respect to such customers' investments in mutual funds for which such
brokers are the dealers of record. In recognition of Dealer's provision of such
services to such customers of Dealer, Distributor agrees, subject to the
provisions of the second sentence of Section 11 of the attached Selected Dealer
Agreement, to pay Dealer, with respect to each calendar quarter during which the
attached Selected Dealer Agreement is in effect, a fee at the Annual Fee Rate
set forth below, applied to the average daily net asset value of all Retail
Class Shares of the Funds that are held during such quarter by Dealer Accounts.
Such fee will be accrued daily and paid no less often than quarterly by the 45th
day of the subsequent calendar quarter. The Annual Fee Rate set forth below is
subject to change by Distributor from time to time, upon 10 days' written
notice, and any orders to purchase Retail Class Shares that are received by the
Trust after the effective date of such change will be subject to the rate(s) in
effect at the time of receipt of such order by the Funds.
The foregoing fee may be paid by Distributor to Dealer out of amounts
received by Distributor from the Funds pursuant to the distribution and
servicing plans (the "Plans") relating to Retail Class Shares adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 by each Fund that offers
Retail Class Shares. Any payments made pursuant to this Appendix C shall be
subject to the following terms and conditions:
(a) Dealer shall provide to Distributor and the Trust each calender
quarter such information as shall reasonably by requested by
Distributor or the Trustees of the Trust with respect to the fee paid
to the Dealer pursuant to this Appendix C.
(b) Dealer will permit representatives of the Trust and Distributor
reasonable access to its personnel and records to enable them to
monitor the quality of services being provided by Dealer pursuant to
this Agreement. Dealer shall promptly deliver to the Trustees of the
Trust such information as is reasonably necessary to permit the
Trustees to make an informed determination whether to continue the
Plans or any of them.
Annual Fee Rate: ______%
-7-
<PAGE>
Appendix D
[For Use Only if Dealer and Loomis, Sayles & Company, L.P. Had in Effect
on January 1, 1997 an Agreement under which Loomis, Sayles & Company, L.P.
Undertook to Pay to Dealer Fees Calculated Based on the Value of Fund Shares
Held By Certain Customers of Dealer.]
Reference is made to the _______________________________ [name of
Agreement] dated _______________________________, 1996 (the "Old Agreement")
between Dealer and Loomis, Sayles & Company, L.P. ("LS&Co."), a copy of which is
attached hereto.
LS&Co. hereby assigns to Distributor all its rights and obligations in and
under the Old Agreement, Distributor hereby assumes all such rights and
obligations and Dealer hereby consents to such assignment and acknowledges that
LS&Co. shall have no further obligations thereunder; provided, however, that all
obligations of Distributor under the Old Agreement are subject to the second
sentence of Section 11 of the Selected Dealer Agreement to which this Appendix D
is an appendix.
LOOMIS, SAYLES & COMPANY, L.P.
By: By:
------------------------ ------------------------
Title: Title:
------------------------ ------------------------
-8-
<PAGE>
LOOMIS SAYLES ____________________________________ FUND
AGENT COMPANY AGREEMENT
-----------------------
This Agent Company Agreement (the "Agreement") is made and entered into as of
___th of ___________, 1999 by and between LOOMIS SAYLES FUNDS (the "Trust"), a
Massachusetts business trust organization under the laws of The Commonwealth of
Massachusetts, on behalf of the Loomis Sayles
___________________________________ Fund series (the "Fund"), and
_________________________________ (" "), a company organized under the
laws of Japan, concerning the appointment of an Agent Company (Daiko Kyokai-in)
in Japan for the Fund.
1. 's Appointment as Agent Company
-------------------------------
(a) The Trust hereby appoints as Agent Company for the Fund in Japan, and
hereby accepts such appointment, with regard to the Shares to be offered to the
Japanese public for the purpose of performing the following functions (the
"Agent Company" means a company as defined in Article 28, Chapter 4 of the Rules
of Foreign Securities Transactions adopted as of December 4, 1973 by the Japan
Securities Dealers Association ("JSDA")):
(i) To distribute to JSDA and the securities companies in Japan who may
be selling the Shares in Japan such Prospectuses relating to the
Shares as may from time to time be required to be prepared in
accordance with the provisions of the applicable laws and
regulations of Japan and/or the aforesaid Rules of JSDA;
(ii) To make public in Japan the daily net asset value per Share;
(iii) To distribute to JSDA and the securities companies in Japan who may
be selling the Shares in Japan such financial statements and other
documents relating to the Fund as may be from time to time required
to be prepared in accordance with the provisions of the applicable
laws and regulations of Japan and/or the aforesaid Rules of JSDA;
(iv) To report to JSDA and to notify the securities companies in Japan
who may be selling the Shares in Japan if and when the Shares become
disqualified under the Standards of Selection of Foreign Investment
Fund Securities under the Rules of Foreign Securities Transactions
as adopted froom time to time by JSDA; and
(v) To carry out on behalf of the Fund any and all acts and things
incidental to or necessary for 's performance of any of the above
enumerated functions.
(b) In order for to perform efficiently its obligations as such Agent
Company for the Fund in the manner stated above, the Trust agrees to furnish
from time to time with such information and materials as may reasonably request
or the Trust may find relevant in this connection. agrees to furnish the Trust
from time to time with such information relating to the requirements under the
aforesaid Rules of JSDA and other relevant laws and regulations of Japan
1
<PAGE>
as the Trust may reasonably request or may find relevant in connection with the
subject of this paragraph 1.
(c) It is the intent of the parties hereto that the Fund will pay, upon
request, out-of-pocket expenses reasonably incurred in connection with the
services to be rendered by in this capacity. shall submit to the Fund a
statement of the estimated expenses together with a breakdown of such expenses.
2. The Trust's Legal Representative in Japan
-----------------------------------------
The Trust shall appoint and maintain a legal representative in Japan, for
as long as is required under the laws and regulations of Japan and the
applicable Rules of JSDA, with respect to any and all matters regarding the
transactions relating to the Shares including representation of the Trust before
the courts.
3. Documents to be Furnished by the Trust
--------------------------------------
The Trust will promptly, at the expense of the Trust, furnish with copies
of (a) all public documents relating to the Fund filed by the Trust (i) under
the Securities and Exchange Law of Japan or (ii) under the laws of The
Commonwealth of Massachusetts, Investment Company Act of 1940, Securities Act of
1933 and Securities Exchange Act of 1934, or other laws and regulations
pertaining to the operation of the Fund, (b) notices and reports to holders of
Shares or to the public given or furnished for inspection by the Fund, (c)
reports on the additional issue of the Shares, the number of the Shares resold
and repurchased during each month, (d) a summary of portfolio securities and a
breakdown of net assets as of the end of each month, and (e) any other documents
which may reasonably request in writing from time to time including, but not
limited to, the total amount of net assets, amount of bonds, stocks, cash and
other information necessary to prepare annual, semi-annual, extraordinary
securities reports and securities registration statements, to be filed with the
Director of Kanto Local Finance Bureau; provided, however, that the Trust shall
have no obligation to furnish with Japanese language translations of any
documents except as the Fund or is required to furnish such translations under
paragraph 4 below or under the laws and regulations of Japan or the Rules of
JSDA.
4. Documents in Japanese Language to be Furnished by the Trust
-----------------------------------------------------------
The Trust will prepare, in accordance with the forms required under the
laws and regulations of Japan and the Rules of JSDA, and provide promptly and at
the charge of the Fund copies in the Japanese language, in reasonable
quantities, not exceeding 110% of the number of beneficial holders in Japan of
the Shares, of the notices and reports given or furnished for inspection by the
Fund to beneficial holders of the Shares or to the public, so long as the Trust
is required under the Securities and Exchange Law of Japan or the Rules of JSDA
and the Agreement for Opening of Foreign Securities Transaction Account to make
continuous disclosure of the operations of the Fund for distribution thereof to
the beneficial holders in Japan of the Shares who may purchase the Shares in
accordance with the Distributions, Repurchase and Shareholder Servicing
Agreement to be entered into between Loomis Sayles Distributors, L.P.
2
<PAGE>
and undertakes to assist the Trust, at the expense of the Trust, in providing
all required translations into the Japanese language.
5. Termination
-----------
(a) This Agreement shall be effective until termination upon notice, three
(3) months prior to the termination date, in writing to the other party to this
Agreement, to the addresses listed below, subject to the appointment of a
successor agent company for the Trust in Japan insofar as such appointment is
required in Japan.
(b) The Trust agrees that its obligations for the benefit of the beneficial
holders of the Shares, as provided in this Agreement, shall survive any
termination of this Agreement, insofar as such obligations are required in Japan
to be fulfilled.
6. Notice
------
All communications and notices hereunder shall be in writing and except as
otherwise provided shall be delivered directly or mailed, cabled, or telexed to
the following addresses:
If to the Trust
LOOMIS SAYLES FUNDS,
on behalf of its Loomis Sayles Fund series
Attn: Mark W. Holland
If to
--------------------------------------
--------------------------------------
--------------------------------------
Attn:
7. Applicable Laws
---------------
This Agreement shall be governed by and construed in accordance with the
laws of Japan.
IN WITNESS WHEREOF, the Trust and have caused their respective duly
authorized representative or attorney to execute this Agreement on the date
stated at the beginning hereof.
3
<PAGE>
A copy of the Agreement and Declaration of Trust establishing the Trust is
on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the
Trust's Loomis Sayles Fund series on behalf of the Trust by its duly authorized
attorney and that the obligations of or arising out of this Agreement are not
binding upon any of Trustees, officers or shareholders individually but are
binding only upon the assets and property belonging to the Fund.
The Trust
LOOMIS SAYLES FUNDS,
on behalf of its Loomis Sayles
Fund series
By:_________________________________________
Lauren B. Pitalis
Vice President
SECURITIES CO., LTD.
By:_________________________________________
4
<PAGE>
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
DISTRIBUTION, REPURCHASE AND SHAREHOLDER SERVICING AGREEMENT
This Distribution, Repurchase and Shareholder Servicing Agreement (the
"Agreement") is made and entered into in Boston, Massachusetts as of
________________ , 1999 by and between Loomis Sayles Distributors, L.P. ("LSD"),
a Delaware limited partnership, and _________________________________________, a
company organized under the laws of Japan and having its head office at
________________________________________________________________________________
____________ concerning the distribution and repurchase in Japan of the Class
shares (the "Shares") of the Loomis Sayles
__________________________________________ Fund (the "Fund").
WHEREAS, Loomis Sayles Funds (the "Trust") has appointed LSD as its
exclusive agent to sell and distribute the Shares, which are distributed by LSD
and sold by the Fund at their net asset value plus a sales charge;
WHEREAS, LSD and desire that participate as a selected dealer in the
distribution of the Shares; and
WHEREAS, pursuant to the Agent Company Agreement between Securities Co.,
Ltd. ( ) and the Fund dated ____________________________, 1999, has been
appointed the Agent Company for the Fund in Japan.
NOW, THEREFORE, LSD and agree to the following terms and conditions:
1. Distribution of Shares in Japan
-------------------------------
(a) will offer and sell Shares only at the public offering price which
shall be currently in effect, in accordance with the terms of the Fund's then
current Japanese Securities Registration Statements, including any amendments
thereto (the "Securities Registration Statements") and the Japanese prospectus,
including any amendments thereto (the "Japanese Prospectus"), both of which are
based upon the Fund's then current U.S. prospectus and statement of additional
information (the "U.S. Prospectus") as part of the initial or continuous public
offering of the Shares in Japan (hereinafter referred to, each as the "Public
Offering," and collectively as the "Public Offerings"). All orders are subject
to acceptance by the Trust and become effective only upon confirmation by LSD to
on behalf of the Trust.
(b) is hereby authorized (i) to place orders through LSD with the Fund for
Shares to be sold by the Fund to subject to the applicable terms and conditions
of this Agreement and subject to the terms set forth in the Securities
Registration Statements and the Japanese Prospectus, and (ii) to tender Shares
directly to the Fund or its agent for redemption subject to the applicable terms
and conditions set forth in this Agreement, the Securities Registration
Statements and the Japanese Prospectus.
(c) may offer and sell in Japan any Shares so delivered to it, through
Sales Handling Companies or otherwise, in any manner as may determine from time
to time, provided that such manner is not inconsistent with or violative of the
provisions of this Agreement, Japanese law, the
1
<PAGE>
rules of the Japan Securities Dealers Association (hereinafter referred to as
"JSDA"), any applicable U.S. laws, rules or regulations, including regulations
of NASD Regulation, Inc., or the Securities Registration Statements and the
Japanese Prospectus. will furnish to each person to whom any such sale or offer
is made a copy of the Japanese Prospectus. will use its best efforts in the
development and promotion of sales of Shares and will be responsible for the
proper instruction and training of all sales personnel employed by it.
(d) It is agreed and understood that no Shares shall be offered or sold by
under any of the provisions of this Agreement and no orders for the purchase of
such Shares hereunder shall be forwarded by LSD to the Fund for acceptance if
and so long as the effectiveness of the applicable Securities Registration
Statement or any necessary amendments thereto shall be suspended under any of
the provisions of the Securities and Exchange Law of Japan (Law No. 25, 1948, as
amended), and if and so long as Shares and/or the Fund do not or cease to meet
the requirements of the Standards of Selection of JSDA with respect to the
qualification of foreign investment fund securities for distribution in Japan;
provided, however that nothing contained in this sub-section (d) shall in any
way restrict or be applied to or bear upon the Fund's obligation to repurchase
Shares from any Shareholder in accordance with the procedures set forth in the
Securities Registration Statement and the Japanese Prospectus.
(e) LSD agrees immediately to notify of the non-acceptance or delay
together with the reasons therefor, if the Fund does not (i) accept orders for
the issue or order for repurchase of Shares immediately after receipt of such
order, (ii) deliver Shares or the confirmation in writing in accordance with
Section 4 hereof or (iii) make payment for repurchase of Shares in accordance
with Section 5 hereof.
(f) shall not be obligated to sell or make arrangements for sale of any
certain number of Shares in connection with any Public Offering.
(g) LSD, as agent for the Fund, shall not accept from any conditional
orders for Shares. Delivery of certificates, if any, for Shares purchased shall
be made by a Fund only against receipt of the purchase price, and only upon
request. If payment for the Shares purchased and all necessary applications and
documents required by the applicable Fund or LSD are not received within three
business days or such shorter time as may be required by law, the sale may be
canceled forthwith without any responsibility or liability on LSD's part or on
the part of the Fund (in which case will be responsible for any loss, including
loss of profit, suffered by the Fund resulting from 's failure to make such
payments or provide such documents), or, at LSD's option, LSD may cause the
Shares ordered to be redeemed by the relevant Fund (in which case LSD and the
Fund may hold responsible for any loss suffered by either of them in connection
with or as a result of such redemption).
(h) No person is authorized to make any representations concerning Shares
except those contained in the Securities Registration Statements and the
Japanese Prospectus. agrees not to use other advertising or sales material
relating to the Funds, unless approved in writing by LSD in advance of such use.
Any printed information furnished by LSD, other than the Securities Registration
Statements, the Japanese Prospectus and the U.S. Prospectus and any periodic
reports and proxy solicitation materials of the Trust, are LSD's sole
responsibility and not the responsibility
2
<PAGE>
of the Trust, and agrees that the Trust shall have no liability or
responsibility to in these respects unless expressly assumed in connection
therewith.
2. Offering
--------
The Public Offering shall be made only after the Fund shall have duly
obtained any and all required approvals, licenses or registrations prior to such
offerings under then applicable Japanese and U.S. laws and regulations.
3. Payment and Delivery
--------------------
(a) With respect to Shares purchased by the investors in Japan, will pay or
cause to be paid in U.S. Dollars the aggregate Sales Price of such Shares
purchased by the investors in Japan. The certificates or confirmations in
writing evidencing such Shares shall be received by or to the order of in
exchange for the payment therefor.
(b) The payment of the Sales Price in respect of the initial Public
Offering (less any amount which is authorized to retain pursuant to Section 3(b)
hereof) shall be made on ____________, 1999 (hereinafter referred to as the
"Closing Date"). The payment of the Sales Price in respect of any other Public
Offering (less any amount which is authorized to retain pursuant to Section 1(a)
hereof) shall be made within three (3) days on which the New York Stock Exchange
is open for trading ("Fund Business Days") counting from the day when the Fund
accepts the relevant purchase order.
4. Repurchase
----------
(a) Any of the Shares, in full or fractional amounts, may be tendered for
repurchase at any time, in accordance with the provisions of the Securities
Registration Statements and the Japanese Prospectus.
(b) When shall reasonably deem necessary, such suspension shall be
publicized and notified in Japan by the Fund, at the expense of the Fund,
through the Agent Company in Japan.
(c) The Fund shall pay or cause to be paid to or to its order within at
least three (3) Fund Business Days counting from and including the date of
acceptance of any repurchase order by the Fund, the total amount of the
repurchase price calculated as set forth in the Securities Registration
Statements and the Japanese Prospectus.
5. Shareholder Services
--------------------
(a) agrees to use its best efforts to make available, to its customers who
from time to time beneficially own Shares in accounts for which is the dealer of
record as reflected in the records of LSD ("Accounts"), such personal services
and information as are customarily provided by full-service securities brokers
to their customers with respect to such customers' investments in mutual funds
for which such brokers are the dealers of record. In recognition of 's
provision of such services to such customers of , LSD agrees, subject to the
provisions of subsection (b) below, to pay,
3
<PAGE>
with respect to each calendar quarter during which this Agreement is in effect,
a fee at the annual rate of _________%, applied to the average daily net asset
value of all Shares that are held during such quarter by Accounts. Such fee will
be accrued daily and paid no less often than quarterly by the 45th day of the
subsequent calendar quarter. The annual rate at which fees are to be paid
pursuant to this Section 6 is subject to change by LSD from time to time, upon
10 days' written notice, and any orders to purchase Shares that are received by
the Trust after the effective date of such change will be subject to the rate(s)
in effect at the time of receipt of such order by the Funds. agrees that the
Agent Company will retain _______% of the ___________% paid to under the
Agreement.
(b) acknowledges that LSD shall pay any compensation to described in
subsection (a) above only out of such monies as may be received for such purpose
by LSD from either the Fund or Loomis, Sayles & Company, L.P.; accordingly, any
obligation of LSD to pay any such compensation shall not arise unless and until
receipt by LSD from the Fund or Loomis, Sayles & Company, L.P. of monies
intended to be used by LSD for such purpose and in amounts sufficient for such
purpose.
6. Expenses
--------
LSD shall pay or cause to be paid (by the Fund or otherwise) all of the
following costs and expenses relating to the Shares:
i. Costs and expenses of the preparation and printing of the Share
certificates or confirmations in writing of Share transactions;
ii. Costs and expenses of the preparation and printing, all in the
Japanese language, of the Securities Registration Statements,
securities report, annual reports, semi-annual reports and
extraordinary reports to be filed with the Director of Kanto
Local Finance Bureau of the Ministry of Finance ("MOF") of Japan
pursuant to the Securities and Exchange Law of Japan, and the
Registration Statement to be filed with the Commissioner of the
Financial Supervisory Agency pursuant to the Law regarding
Securities Investment Fund and Securities Investment Company;
iii. Costs and expenses of the preparation and printing, in the
Japanese language, of the Japanese Prospectus to be prepared
under the applicable Japanese laws and regulations and/or the
agreements and regulations of JSDA;
iv. Costs and expenses of the preparation, printing and distribution,
in the Japanese language, of the Fund's annual reports, semi-
annual reports and other Fund documents required to be given to
beneficial or record owners of Shares in Japan by law or which
LSD agrees under this Agreement, and the Fund under the Agent
Company Agreement between the Trust, on behalf of the Fund, and
(the "Agent Agreement"), dated _____________________, to furnish
to the beneficial holders of the Shares in Japan;
4
<PAGE>
v. Fees and expenses of independent public accountants for the Fund;
vi. Fees and expenses of legal counsel for the Fund in Japan or
elsewhere;
vii. Other costs and expenses of the preparation of documents as may
be required under the applicable Japanese laws and regulations
and the agreements and regulations of JSDA;
viii. Costs and expenses of the printing and distribution to brokers
and Sales Handling Companies in Japan of such copies of annual
reports and other documents of the Fund, prepared in the Japanese
language, for distribution to the investors in Japan as may
reasonably be commercially used by;
ix. Costs and expenses of the printing and distribution in Japan of
such copies of the annual reports, semi-annual reports and other
documents of the Fund prepared in the Japanese language for
distribution to shareholders and brokers upon their request for
informational purposes only, in an aggregate quantity not to
exceed ________% of the number of beneficial holders in Japan of
Shares registered in the name of.
7. Representations, Warranties and Covenants of the Parties; Indemnification
-------------------------------------------------------------------------
(a) At all times when is distributing the Shares, LSD represents and
warrants to, and covenants with that:
i. LSD is a Delaware limited partnership and is duly registered with
the U.S. Securities and Exchange Commission (the "SEC") as a
broker-dealer.
ii. The Fund is a series of a business trust duly created pursuant to
the laws of The Commonwealth of Massachusetts and is being duly
operated in accordance with applicable statutory and common law
requirements.
iii. The Trust is duly registered with the SEC as an open-ended
management investment company under the U.S. Investment Company
Act of 1940, as amended (the "1940 Act"), and the Shares are duly
registered with the SEC under the U.S. Securities Act of 1933, as
amended, for offer and sale.
iv. The Fund has full power and authority to conduct its business as
described in the Securities Registration Statements, Japanese
Prospectus, U.S. Prospectus and its Post-Effective Amendment
filings made with the SEC, including, but not limited to, full
power and authority to issue and sell the Shares and to take any
other action and to do all acts necessary to fulfill its
obligations as set forth in the Trust Deed and Bylaws.
5
<PAGE>
v. The Fund has taken no action contrary to the laws, regulations
and decrees set forth in sub-sections (ii), (iii) and (xii) of
this Section 7 or the Trust Deed and Bylaws.
vi. As of the signing date of this Agreement, all authorizations and
consents necessary for the execution and delivery by or on behalf
of LSD of this Agreement, and for the sale and delivery of the
Shares hereunder, have been given, and LSD has full right, power
and authority to enter into this Agreement.
vii. Upon delivery of the Shares and payment therefor pursuant hereto,
legal and valid title to fully paid Shares, non-assessable by the
Fund, free and clear of all liens and encumbrances, will pass to
or their clients, as the case may be. The Shares conform in all
material respects to statements made in the then-current
Prospectus and the issue of Shares is not subject to pre-emptive
rights.
viii. Neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor
compliance with the terms, conditions or provisions hereof, will
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any agreement or instrument to
which LSD is a party or by which it, or any of the existing
property of LSD is bound, or any statute or the Articles of
Incorporation and Bylaws of LSD, or any order, rule or regulation
of any court or governmental agency or body having jurisdiction
over LSD or over its properties.
ix. LSD agrees to give prior notice to of any material change in the
Trust Deed and Bylaws of the Fund, in the structure, operation or
management of the Fund if and when such change would disqualify
the Shares for distribution in Japan.
x. There is no known material action, suit or proceeding pending
against or affecting LSD which could result in a material adverse
change in the condition, financial or otherwise, of LSD or which
might materially adversely affect the assets of LSD.
xi. The Japanese Prospectus does not contain an untrue statement of a
material fact or an omission of a material fact necessary in
order to make a statement therein not misleading; provided,
however, that this representation and warranty shall not apply to
statements in or omissions from the Japanese Prospectus made in
reliance upon and conformity with information furnished to LSD by
for use in the Japanese Prospectus.
6
<PAGE>
xii. At the time the Securities Registration Statement becomes
effective and at all times during the Public Offerings, the
Securities Registration Statement and the Japanese Prospectus
contained therein will comply in all material respects with the
requirements of Japanese law and the standards of the Japan
Securities Dealers Association to the extent the same have been
brought to the attention of LSD by or its counsel.
xiii. The Fund intends to elect to be, and to qualify each year for
treatment as, a regulated investment company with the meaning of
Section 851 of Internal Revenue Code of 1986, as amended.
(b) represents and warrants to, and covenants with LSD that:
i. is a corporation duly organized under the laws of Japan and is
duly registered with the MOF of Japan as a broker-dealer.
ii. has full power and authority to conduct its business as described
in the Japanese Securities Registration Statement, including, but
not limited to, full power and authority to distribute the Shares
and to take any other action and to do all acts necessary to
fulfill its obligations under this Agreement.
iii. As of the signing date of this Agreement, all authorizations and
consents necessary for the execution and delivery by or on behalf
of this Agreement, and for the distribution of the Shares
hereunder, have been given, and has full right, power and
authority to enter into this Agreement.
iv. Neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor
compliance with the terms, conditions or provisions hereof, will
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any agreement or instrument to
which is a party or by which it, or any of the existing property
of is bound, or any statute or the Articles of Incorporation and
Bylaws of , or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over or over its
properties.
Each of LSD and agrees to notify the other party if any of their respective
representations, warranties or covenants set forth in this Section 7 shall no
longer be true. The representations contained in this Section 7 shall survive
the termination of this Agreement.
8. Further Undertaking
-------------------
(a) LSD agrees to advise in writing reasonably in advance of the proposed
liquidation of the Fund, if such is ever contemplated, so that may arrange for
public notice thereof to be posted in a leading newspaper in Japan three (3)
months prior thereto. LSD agrees to pay or cause to be paid the expenses for
such public notice.
7
<PAGE>
(b) LSD shall deliver to 's counsel all sales material (excluding the
Securities Registration Statement and Japanese Prospectus) relating to Shares
for review prior to distribution of such materials to 's representatives or
clients. LSD further agrees that it shall not distribute to 's representatives
or clients any materials to which 's counsel shall reasonably and in good faith
object.
(c) agrees:
i. To purchase Shares only from the Trust through LSD or only from
's customers.
ii. To purchase Shares from the Trust only for the purpose of
covering purchase orders already received or for 's bona fide
investment.
iii. In each instance in which 's customer or a nominee thereof will
be a shareholder of record of the Trust, to provide such
customer's certified copy of the family register or resident
card, and/or such other information and documents as the Trust
may reasonably require for purposes of compliance with applicable
tax withholding requirements, in connection with opening any
shareholder account for such customer or nominee.
iv. That will not purchase any Shares from 's customers at prices
lower than the redemption or repurchase prices next quoted by the
Fund. shall be permitted to sell Shares to the Fund at the
applicable repurchase price.
v. That will not intentionally withhold placing customers' orders
for Shares so as to profit as a result of such withholding.
vi. That will not make any sales of Shares to purchasers within the
United States except for any sales made in conformance with the
Conduct Rules of the National Association of Securities Dealers,
Inc. (the "NASD") as though were a member of the NASD.
9. Additional Obligations of
--------------------------
i. shall file with the Director of Kanto Local Finance Bureau of the
Ministry of Finance of Japan such Securities Registration
Statements and Japanese Prospectuses as are required by the
Securities and Exchange Law and regulations of Japan, and the
Registration Statement under the Law regarding Securities
Investment Fund and Securities Investment Company with the
Commissioner of the Financial Supervisory Agency.
ii. shall be solely responsible for complying with all applicable tax
withholding and tax reporting laws, rules and regulations
applicable to with respect to each of its customers who own or
purchase shares of the Fund as anticipated under this Agreement.
8
<PAGE>
10. Conditions Precedent to 's Obligation to Offer Shares in the Initial Public
---------------------------------------------------------------------------
Offering
--------
The obligation of under this Agreement to offer Shares for the purposes of
making the initial Public Offerings is subject to (1) the accuracy of the
statements of an official of the Fund made pursuant to the provisions of
Subparagraph (vi) herein below, and (2) the following additional conditions with
respect to the Fund:
i. On the Closing Date and the relevant Commencement Date, the
Securities Registration Statement has become effective and no
notice has been given of any proceeding from which an order
suspending the effectiveness thereof or requiring the filing an
amendment thereto may result;
ii. On the Closing Date and the relevant Commencement Date, there
shall have been delivered to the opinion of counsel for LSD,
dated the Closing Date or the relevant Commencement Date in form
and substance reasonably satisfactory to substantially to the
effect that:
(A) LSD is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is
duly registered with the SEC as a broker-dealer.
(B) This Agreement and the Agent Agreement have been duly
authorized and validly executed and constitute valid and
legally binding obligations of LSD enforceable in accordance
with their terms, except as such enforceability may be
limited by bankruptcy, composition, reorganization or other
similar laws relating to or affecting the enforcement of
creditors' rights generally.
iii. On the Closing Date and the relevant Commencement Date, there
shall have been delivered to the opinion of counsel for the Fund,
dated the Closing Date or the relevant Commencement Date in form
and substance reasonably satisfactory to substantially to the
effect that:
(A) The Trust is a business trust duly organized under the laws
of The Commonwealth of Massachusetts.
(B) The Trust is duly registered with the SEC as an open-end
management investment company under the 1940 Act.
(C) The Trust and the Fund each have full power and authority to
conduct its business as described in the English translation
of the Japanese Securities Registration Statement and the
U.S. Prospectus, including, but not limited to, full power
and authority to issue and sell and repurchase the Shares
and to take any other action.
9
<PAGE>
(D) A U.S. registration statement relating to the Trust is
effective under the Securities Act of 1933, as amended (the
"1933 Act") and the 1940 Act. To the best of his knowledge
and information, no proceedings for a stop order have been
instituted or are pending or threatened against the Trust or
Fund, and all required orders which are necessary in order
to make the public offering of the Shares in Japan and
consummate the sale of the Shares pursuant to this Agreement
under the 1940 Act, if any, have been obtained, and all
requisite legal action in the United States by the Fund, if
any, for the sale of the Shares to for the Public Offering
in Japan has been duly taken.
(E) The consummation of the transactions in connection with the
Public Offering, sale and repurchase of the Shares sold in
Japan and the fulfillment of the terms of this Agreement and
the Agent Agreement do not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, the Trust's Agreement and Declaration of
Trust and Bylaws or any existing applicable law, rule or
regulation in the United States.
(F) When the Fund has received consideration equal to the
applicable net asset value of the Shares and such Shares
have been duly issued and delivered, all the Shares so
issued and sold will be validly issued and outstanding,
fully paid and, except as described in the U.S. Prospectus,
non-assessable by the Fund.
(G) The statements relating to the applicable laws of the United
States and the Trust's Agreement and Declaration of Trust
and Bylaws contained in the Securities Registration
Statement are true and accurate descriptions of the laws or
documents referred to therein.
iv. On the Closing Date and relevant Commencement Date, there shall
have been delivered to the opinion of Hamada & Matsumoto, counsel
for the Fund in Japan, dated the Closing Date or the relevant
Commencement Date, in form and substance reasonably satisfactory
to substantially to the effect that:
(A) The form of the Securities Registration Statement is in
accordance with the applicable Japanese laws and
regulations.
(B) There have been obtained on or prior to the Closing Date or
the relevant Commencement Date any and all licenses or
approvals necessary under the applicable laws and
regulations of Japan for the offering by of the Shares for
the purpose of Public Offering of Shares.
(C) The statements with respect to Japanese laws contained in
the Securities Registration Statement are true and accurate.
10
<PAGE>
(D) This Agreement and the Agent Agreement have been duly
authorized and validly executed on behalf of the parties
hereto and thereto and in accordance with applicable
Japanese law and constitute valid, binding and enforceable
agreements.
(E) To the best of the knowledge and information of such
counsel, the Securities Registration Statement as of the
time of filing and at all times thereafter up to and as of
the Closing Date or the relevant Commencement Date does not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(F) The appointment of the legal representative in Japan in the
Agent Agreement and the consent by the Fund to the
jurisdiction of the courts in Japan thereunder are binding
on the Fund to the extent provided therein.
v. In rendering their respective opinions under this Agreement,
counsel to the Fund and counsel to LSD may rely upon the opinions
of Messrs. Hamada & Matsumoto as to matters concerning Japanese
law, and Messrs. Hamada & Matsumoto may rely upon the opinions of
counsel to the Fund and counsel to LSD as to matters concerning
the laws of the United States.
vi. On the Closing Date and on the relevant Commencement Date, there
shall have been delivered to a certificate or certificates by
duly authorized representatives of LSD, dated the Closing Date,
to the effect that (A) the representations and warranties of LSD
contained in Section 7 hereof are true and correct as of the
Closing Date or the relevant Commencement Date, and (B) the
factual representations contained in Sub-Paragraph (ii) of this
Section are true and correct.
11. Term and Termination of this Agreement
--------------------------------------
(a) This Agreement may be terminated by either party upon three (3) months'
prior notice in writing to the other party to this Agreement, to the addresses
listed herein below.
(b) shall have the right to suspend or cancel any Public Offering by giving
notice to LSD at any time prior to the Closing Date or the relevant Commencement
Date:
i. if there shall have been, since the date as of which information
is given in the Securities Registration Statement, any material
adverse change in the financial or other condition of LSD or the
Fund; or
ii. if in 's good faith judgment there shall have occurred a material
adverse change in national or international political, financial,
economic or other
11
<PAGE>
conditions or any currency exchange rate which
would be likely to prejudice materially the success of the
proposed Public Offering by of the Shares.
(c) This Agreement shall not be assigned by any party hereto without the
consent thereto in writing of the other party hereto.
12. Notice
------
All communications and notices hereunder shall be in writing and, except as
otherwise provided, shall be delivered, mailed, cabled or telexed to the
following addresses:
If to LSD:
Loomis Sayles Distributors, L.P.
One Financial Center
Boston, Massachusetts 02111 USA
Attn: Lauren B. Pitalis
If to :
----------------------------------------------
----------------------------------------------
----------------------------------------------
Attn: _____________________________________
13. Applicable Laws
---------------
This Agreement shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts, United States of America.
12
<PAGE>
14. Counterparts
------------
This Agreement may be executed in counterparts by the parties.
IN WITNESS WHEREOF, LSD and have caused their duly authorized
representatives to execute this Agreement on the date and at the place stated
above.
LOOMIS SAYLES DISTRIBUTORS, L.P.
By:_________________________________
Lauren B. Pitalis
Vice President
SECURITIES CO., LTD.
By:_________________________________
13
<PAGE>
Exhibit 9(f)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
and
STATE STREET BANK AND TRUST COPMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Terms of Appointment; Duties of the Bank ............................ 1
2. Fees and Expenses ................................................... 3
3. Representations and Warranties of the Bank .......................... 4
4. Representations and Warranties of the Fund .......................... 4
5. Data Access and Proprietary Information ............................. 5
6. Indemnification ..................................................... 6
7. Standard of Care .................................................... 7
8. Covenants of the Fund and the Bank .................................. 8
9. Termination of Agreement ............................................ 9
10. Additional Funds .................................................... 9
11. Assignment .......................................................... 9
12. Amendment ........................................................... 9
13. Massachusetts Law to Apply .......................................... 10
14. Force Majeure ....................................................... 10
15. Consequential Damages ............................................... 10
16. Merger of Agreement ................................................. 10
17. Limitations of Liability of the Trustees
or Shareholders ................................................... 10
18. Counterparts ........................................................ 10
19. Reproduction of Documents ........................................... 11
</TABLE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 27th day of April, 1999 by and between Loomis Sayles
Funds, a Massachusetts business trust, having its principal office and place of
business at One International Place, Boston, Massachusetts (the "Fund"), on
behalf of the J Class Shares of the Loomis Sayles Investment Grade Bond Fund and
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its
principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate Class of securities and other
assets; and
WHEREAS, the Fund intends to offer Class J shares in the Loomis Sayles
Investment Grade Bond Fund (the "Class").
WHEREAS, the Fund on behalf of the Class desires to appoint the Bank as its
transfer agent, dividend disbursing agent, custodian of certain retirement plans
and agent in connection with certain other activities, and the Bank desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Terms of Appointment; Duties of the Bank
----------------------------------------
1.1 Subject to the terms and conditions set forth in this Agreement, the
Fund, on behalf of the Class, hereby employs and appoints the Bank to act as,
and the Bank agrees to act as its transfer agent for the Fund's authorized and
issued shares of its common stock, $ par value, ("Shares"), dividend
disbursing agent, custodian of certain retirement plans and agent in connection
with any accumulation, open-account or similar plans provided to the
shareholders of the respective Class of the Fund ("Shareholders") and set out in
the currently effective prospectus and statement of additional information
("prospectus") of the Fund on behalf of the Class, including without limitation
any periodic investment plan or periodic withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of the Class, as applicable and
the Bank, the Bank shall:
1
<PAGE>
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof
to the Custodian of the Fund authorized pursuant to the
Declaration of Trust of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(iv) In respect to the transactions in items (i), (ii), and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over
or cause to be paid over in the appropriate manner such monies
as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the Class;
(viii) Issue replacement certificates for those certificates alleged
to have been lost, stolen or destroyed upon receipt by the
Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at its option,
may issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. The
Bank shall also provide the Fund on a regular basis with the
total number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or
to take cognizance of any laws
2
<PAGE>
relating to the issue or sale of such Shares, which functions
shall be the sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services act forth in the above paragraph (a), the Bank shall: (i)
perform the customary services of a transfer agent, dividend
disbursing agent, custodian of certain retirement plans and, as
relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic investment
plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, mailing Shareholder reports and prospectuses
to current Shareholders, withholding taxes on U.S. resident and non-
resident alien accounts, preparing and filing U.S. Treasury Department
Forms 1099 and other appropriate forms required with respect to
dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements
of account to Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and providing
Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each
State.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between
the Fund on behalf of the Class and the Bank per the attached service
responsibility schedule. The Bank may at times perform only a portion
of these services and the Fund or its agent may perform these services
on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund (i.e.
escheatment services) which may be agreed upon in writing between the
Fund and the Bank.
3
<PAGE>
2. Fees and Expenses
-----------------
2.1 For the performance by the Bank pursuant to this Agreement, the Fund agrees
on behalf of the Class to pay the Bank an annual maintenance fee for each
Shareholder account as set out in the initial fee schedule attached hereto. Such
fees and out-of-pocket expensed and advances identified under Section 2.2 below
may be changed from time to time subject to mutual written agreement between the
Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on
behalf of the Class to reimburse the Bank for out-of-pocket expenses, including
but not limited to confirmation production, postage, forms, telephone,
microfilm, microfiche, tabulating proxies, records storage, or advances incurred
by the Bank for the items set out in the fee schedule attached hereto. In
addition, any other expenses incurred by the Bank at the request or with the
consent of the Fund, will be reimbursed by the Fund on behalf of the applicable
Class.
2.3 The Fund agrees on behalf of the Class to pay all fees and reimbursable
expenses within five days following the receipt of the respective billing
notice. Postage for mailing of dividends, proxies, Fund reports and other
mailings to all shareholder accounts shall be advanced to the Bank by the Fund
at least seven (7) days prior to the mailing date of such materials.
3. Representations and Warranties of the Bank
------------------------------------------
The Bank represents and warrants to the Fund that:
3.1 It is a trust company fully organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
4. Representations and Warranties of the Fund
------------------------------------------
4
<PAGE>
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good standing
under the laws of the State of
4.2 It is empowered under applicable laws and by its Declaration of Trust and
By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Declaration of Trust and By-Laws
have been taken to authorize it to enter into and perform this Agreement.
4.4 It is an open-end and diversified management investment company registered
under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended on
behalf of the Class is currently effective and will remain effective, and
appropriate state securities law filings have been made and will continue to be
made, with respect to all Shares of the Class being offered for sale.
5. Data Access and Proprietary Information
---------------------------------------
5.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank on
data bases under the control and ownership of the Bank or other third party
("Data Access Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of substantial
value to the Bank or other third party. In no event shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it shall not
divulge any Proprietary Information to any person or organization except as may
be provided hereunder. Without limiting the foregoing, the Fund agrees for
itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform in a timely manner of such fact and dispose of such
information in accordance with the Bank's instructions;
5
<PAGE>
(d) to refrain from causing or allowing the data acquired hereunder from
being retransmitted to any other computer facility or other location,
except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized transactions
agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under other
federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section shall
survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access Services do not
operate in material compliance with the most recently issued user documentation
for such services, the Bank shall endeavor in a timely manner to correct such
failure. Organizations from which the Bank may obtain certain data included in
the Data Access Services are solely responsible for the contents of such data
and the Fund agrees to make no claim against the Bank arising out of the
contents of such third-party data, including, but not limited to, the accuracy
thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS
AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE
EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
merchantability AND FITNESS FOR A PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to originate
electronic instructions to the Bank in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or other
information, then in such event the Bank shall be entitled to rely on the
validity and authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with security
procedures established by the Bank from time to time.
6. Indemnification
---------------
6.1 The Bank shall not be responsible for, and the Fund shall on behalf of the
Class indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
6
<PAGE>
(a) All actions of the Bank or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records, documents or services which (i) are received by
the Bank or its agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer
agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund on behalf
of the Class.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
(f) The negotiation and processing by the Bank of checks not made payable
to the order of the Bank, the Fund, the Fund's management company,
transfer agent or distributor or the retirement account custodian or
trustee for a plan account investing in Shares, which checks are
tendered to the Bank for the purchase of Shares (i.e., checks made
payable to prospective or existing Shareholders, such checks are
commonly known as "third party checks").
6.2 At any time the Bank may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services to be performed by the Bank under this Agreement,
and the Bank and its agents or subcontractors shall not be liable and shall be
indemnified by the Fund on behalf of the Class for any action taken or omitted
by it in reliance upon such instructions or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and indemnified in
acting upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper person
or persons, or upon any instruction, information, data, records or documents
provided the Bank or its agents or subcontractors by machine readable input,
telex, CRT data entry or other similar means authorized by the Fund, and shall
not be held to have notice of any change of authority of any person, until
receipt of written notice thereof from the Fund. The Bank, its agents and
subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
7
<PAGE>
facsimile signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former registrar, or of a
co-transfer agent or co-registrar.
6.3 In order that the indemnification provisions contained in this Section 6
shall apply, upon the assertion of a claim for which the Fund may be required to
indemnify the Bank, the Bank shall promptly notify the Fund of such assertion,
and shall keep the Fund advised with respect to all developments concerning
such claim. The Fund shall have the option to participate with the Bank in the
defense of such claim or to defend against said claim in its own name or in the
name of the Bank. The Bank shall in no case confess any claim or make any
compromise in any case in which the Fund may be required to indemnify the Bank
except with the Fund's prior written consent.
7. Standard of Care
----------------
The Bank shall at all times act in good faith and agrees to use its best efforts
within reasonable limits to insure the accuracy of all services performed under
this Agreement, but assumes no responsibility and shall not be liable for loss
or damage due to errors unless said errors are caused by its negligence, bad
faith, or willful misconduct or that of its employees.
8. Covenants of the Fund and the Bank
----------------------------------
8.1 The Fund shall on behalf of the Class promptly furnish to the Bank the
following:
(a) A certified copy of the resolution of the Board of Trustees of the
Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and all
amendments thereto.
8.2 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates, check
forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms and
devices.
8.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved,
8
<PAGE>
maintained and made available in accordance with such Section and Rules, and
will be surrendered promptly to the Fund on and in accordance with its request.
8.4 The Bank and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required by law.
8.5 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to secure
instructions from an authorized officer of the Fund as to such inspection. The
Bank reserves the right, however, to exhibit the Shareholder records to any
person whenever it is advised by its counsel that it may be held liable for the
failure to exhibit the Shareholder records to such person.
9. Termination of Agreement
------------------------
9.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
9.2 Should the Fund exercise its right to terminate, all out-of-pocket expenses
associated with the movement of records and material will be borne by the Fund
on behalf of the applicable Class(s). Additionally, the Bank reserves the right
to charge for any other reasonable expenses associated with such termination
and/or a charge equivalent to the average of three (3) months' fees.
10. Assignment
----------
10.1 Except as provided in Section 11.3 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
10.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
10.3 The Bank may, without further consent on the part of the Fund, subcontract
for the performance hereof with (i) Boston Financial Data Services, Inc., a
Massachusetts corporation ("BFDS") which is duly registered as a transfer agent
pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934, as amended
("Section 17A(c)(2)"), (ii) a BFDS subsidiary duly registered as a transfer
agent pursuant to Section 17A(c)(2) or (iii) a BFDS affiliate; provided,
however, that the Bank shall be as fully responsible to the
9
<PAGE>
Fund for the nets and omissions of any subcontractor as it is for its own acts
and omissions.
11. Amendment
---------
This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Board of
Trustees of the Fund.
12. Massachusetts Law to Apply
--------------------------
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
13. Force Majeure
-------------
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, such party shall
not be liable for damages to the other for any damages resulting from such
failure to perform or otherwise from such causes.
14. Consequential Damages
---------------------
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
15. Merger Agreement
----------------
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof
whether oral or written.
16. Limitations of Liability of the Trustees and Shareholders
---------------------------------------------------------
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Trustees of the Trust as Trustees
and not individually and that the obligations of this instrument are not binding
upon any of the Trustees or Shareholders individually but are binding only upon
the assets and property of the Fund.
10
<PAGE>
17. Counterparts
------------
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
18. Reproduction of Documents
-------------------------
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on behalf by and through their duly authorized officers, as
of the day and year first above written.
Loomis Sayles Funds on behalf of the
Loomis Sayles Investement Grade Bond Fund Series
BY:
------------------------------------
ATTEST:
- -----------------------------
STATE STREET BANK AND TRUST
COMPANY
BY:
------------------------------------
ATTEST:
- -----------------------------
12
<PAGE>
<TABLE>
<CAPTION>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
<S> <C> <C>
1. Receives orders for the purchase
of Shares. X
2. Issue Shares and hold Shares in
Shareholders accounts. X
3. Receive redemption requests. X
4. Effect transactions 1-3 above
directly with broker-dealers. N/A
5. Pay over monies to redeeming
Shareholders. X
6. Effect transfers of Shares. X
7. Prepare and transmit dividends
and distributions. X
8. Issue Replacement Certificates. N/A
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and
accurate control book for each
issue of securities. N/A
12. Mail proxies. X
13. Mail Shareholder reports. X
14. Mail prospectuses to current
Shareholders. X
15. Withhold taxes on U.S. resident
and non-resident alien accounts. X
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
<S> <C> <C>
16. Prepare and file U.S. Treasury
Department forms. X
17. Prepare and mail account and
confirmation statements for
Shareholders. X
18. Provide Shareholder account
information. X
19. Blue sky reporting. N/A
</TABLE>
* Such services are more fully described in Section 1.2(a), (b) and (c) of the
Agreement.
Loomis Sayles Funds on behalf of the
Loomis Sayles Investment Grade Bond Fund Series
By:
------------------------------------------
ATTEST:
--------------------------
STATE STREET BANK AND TRUST COMPANY
By:
------------------------------------------
ATTEST:
--------------------------
14
<PAGE>
LOOMIS SAYLES FUNDS
Amended and Restated Plan
-------------------------
pursuant to Rule 18f-3(d) under the Investment Company Act of 1940
------------------------------------------------------------------
Effective May 3, 1999
Each of the series of Loomis Sayles Funds (the "Trust") managed by Loomis,
Sayles & Company, L.P. ("Loomis Sayles") (each a "Fund" and, together, the
"Funds") may from time to time issue one or more of the following classes of
shares: Retail Class shares, Institutional Class shares, Admin Class shares and
Class J shares. Each class is subject to such investment minimums and other
conditions of eligibility as are set forth in the Funds' registration statements
as from time to time in effect. The differences in expenses among these classes
of shares, and the conversion and exchange features of each class of shares, are
set forth below in this Plan. Expenses are allocated among the classes of
shares of each Fund based upon the net assets of each Fund attributable to
shares of each class, except (1) as noted below and (2) each class may bear
Omnibus Account Expenses relating to holders of shares of such class. Omnibus
Account Expenses include payments made for sub-accounting, recordkeeping,
investor communications, investor servicing, proxy or voting instruction
solicitation or tabulation and similar functions and services performed or
provided to or with respect to investors who hold shares of such class through
any kind of omnibus, "street name," nominee or similar account (that is, an
account of record that represents ownership by a beneficial owner or owners
other than the owner of record).
This Plan is subject to change, to the extent permitted by law and by the
Agreement and Declaration of Trust and By-laws of each Fund, by action of the
Trustees of each Fund.
RETAIL CLASS SHARES
Distribution and Service Fees
- -----------------------------
Retail Class shares pay distribution and service fees pursuant to plans
(the "Plans") adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"). Retail Class shares also bear any costs associated with
obtaining shareholder approval of any amendments to a Plan. Pursuant to the
Plans, Retail Class shares may pay up to 0.25% of the relevant Fund's average
net assets attributable to the Retail Class shares (which percentage
1
<PAGE>
may be less for certain Funds, as described in the Funds' registration
statements as from time to time in effect). Amounts payable under the Plans are
subject to such further limitations as the Trustees may from time to time
determine and as set forth in the registration statement of each Fund as from
time to time in effect.
Exchange and Conversion Features
- --------------------------------
To the extent provided in the registration statement of the relevant Fund
as from time to time in effect, Retail Class shares of any Fund may be
exchanged, at the holder's option and subject to minimum investment
requirements, for Retail Class shares of any other Fund that offers Retail Class
shares, provided that Retail Class shares of such other Fund are available to
residents of the relevant state. Retail Class shares may also be exchanged for
shares of certain money market funds advised by New England Funds Management,
L.P., an affiliate of Loomis Sayles. The Funds reserve the right to terminate
or limit the exchange privilege of any shareholder who makes more than four
exchanges in a calendar year. The Funds may terminate or change the exchange
privilege at any time upon 60 days' notice to shareholders.
Retail Class shares do not convert to any other class of shares.
INSTITUTIONAL CLASS SHARES
Distribution Fees
- -----------------
Institutional Class shares pay no distribution fees.
Exchange and Conversion Features
- --------------------------------
To the extent provided in the registration statement of the relevant Fund
as from time to time in effect, Institutional Class shares of any Fund may be
exchanged, at the holder's option, for Institutional Class shares of any other
Fund that offers Institutional Class shares, provided that Institutional Class
shares of such other Fund are available to residents of the relevant state.
Institutional Class shares may also be exchanged for shares of certain money
market funds advised by New England Funds Management, L.P., an affiliate of
Loomis Sayles. The Funds reserve the right to terminate or limit the exchange
privilege of any shareholder who makes more than four exchanges in a calendar
year. The Funds may terminate or change the exchange privilege at any time upon
60 days' notice to shareholders.
2
<PAGE>
Institutional Class shares do not convert to any other class of shares.
ADMIN CLASS SHARES
Administrative Fees
- -------------------
Admin Class shares pay administrative fees to certain financial
intermediaries for providing personal service and account maintenance for their
customers who hold Admin Class shares. These fees are paid on the average daily
net assets attributable to Admin Class shares at the annual rate stated in the
Funds' registration statements as from time to time in effect.
Distribution and Service Fees
- -----------------------------
Admin Class shares pay distribution and service fees pursuant to plans (the
"Plans") adopted pursuant to Rule 12b-1 under the 1940 Act. Admin Class shares
also bear any costs associated with obtaining shareholder approval of any
amendments to a Plan. Pursuant to the Plans, Admin Class shares may pay up to
0.25% of the relevant Fund's average net assets attributable to the Admin Class
shares (which percentage may be less for certain Funds, as described in the
Funds' registration statements as from time to time in effect). Amounts payable
under the Plans are subject to such further limitations as the Trustees may from
time to time determine and as set forth in the registration statement of each
Fund as from time to time in effect.
Exchange and Conversion Features
- --------------------------------
To the extent provided in the registration statement of the relevant Fund
as from time to time in effect, Admin Class shares of any Fund may be exchanged,
at the holder's option and subject to minimum investment requirements, for Admin
Class shares of any other Fund that offers Admin Class shares, provided that
Admin Class shares of such other Fund are available to residents of the relevant
state. Admin Class shares may also be exchanged for shares of certain money
market funds advised by New England Funds Management, L.P., an affiliate of
Loomis Sayles. The Funds reserve the right to terminate or limit the exchange
privilege of any shareholder who makes more than four exchanges in a calendar
year. The Funds may terminate or change the exchange privilege at any time upon
60 days' notice to shareholders.
Admin Class shares do not convert to any other class of shares.
3
<PAGE>
CLASS J SHARES
Distribution and Service Fees
- -----------------------------
Class J shares pay distribution and service fees pursuant to plans (the
"Plans") adopted pursuant to Rule 12b-1 under the 1940 Act. Class J shares also
bear any costs associated with obtaining shareholder approval of any amendments
to a Plan. Pursuant to the Plans, Class J shares may pay up to 0.75% of the
relevant Fund's average net assets attributable to the Class J shares (which
percentage may be less for certain Funds, as described in the Funds'
registration statements as from time to time in effect). Amounts payable under
the Plans are subject to such further limitations as the Trustees may from time
to time determine and as set forth in the registration statement of each Fund as
from time to time in effect.
Exchange and Conversion Features
- --------------------------------
To the extent provided in the registration statement of the relevant Fund
as from time to time in effect, Class J shares of any Fund may be exchanged, at
the holder's option and subject to minimum investment requirements, for Class J
shares of any other Fund that offers Class J shares, provided that Class J
shares of such other Fund are available to residents of the relevant state. The
Funds reserve the right to terminate or limit the exchange privilege of any
shareholder who makes more than four exchanges in a calendar year. The Funds
may terminate or change the exchange privilege at any time upon 60 days' notice
to shareholders.
Class J shares do not convert to any other class of shares.
4
