<PAGE>
FIXED INCOME
LOOMIS SAYLES BOND FUND
LOOMIS SAYLES GLOBAL BOND FUND
LOOMIS SAYLES HIGH YIELD FUND
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
LOOMIS SAYLES MUNICIPAL BOND FUND
LOOMIS SAYLES SHORT-TERM BOND FUND
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND
[LOGO] LOOMIS SAYLES FUNDS
ANNUAL REPORT
SEPTEMBER 30, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Corporate Overview 1
Letter from the President 2
Economic and Market Overview 4
Institutional Class Total Return vs. Lipper Category Average and Lipper
Category Index 8
Fund and Manager Reviews 10
Portfolio of Investments 26
Statements of Assets and Liabilities 72
Statements of Operations 74
Statements of Changes in Net Assets 76
Financial Highlights 84
Notes to Financial Statements 100
2000 U.S. Tax and Distribution Information 113
Shareholder Meeting Results 114
Report of Independent Accountants 115
</TABLE>
<PAGE>
CORPORATE OVERVIEW
LOOMIS SAYLES FUNDS
Loomis Sayles Funds is a Boston-based family of predominantly no-load mutual
funds advised by Loomis, Sayles & Company, L.P. At Loomis Sayles Funds, we
follow a simple strategy--we pay close attention to what we hear from our
clients and the marketplace, then work to deliver high-quality products and
services that exceed expectations.
Our "listening harder" creed lets us design products and services that truly
answer our clients' needs. We offer a broad range of predominantly no-load funds
to complement your investment objectives and strategies. We believe we run one
of the most responsive support organizations in the business, providing timely
information and insightful solutions.
Beyond that, we're structured to take advantage of our institutional heritage.
The research department at Loomis, Sayles & Company, L.P. provides our portfolio
managers with the fundamental research they need to make sound investment
decisions. Our portfolio managers not only manage mutual funds, they manage
large institutional accounts that demand and appreciate the style consistency
that follows from our disciplined investment approach.
FOR INFORMATION ABOUT:
- Establishing an account
- Account procedures and status
- Exchanges
- Shareholder services
PHONE 800-626-9390
FOR ALL OTHER INFORMATION ABOUT THE FUNDS
PHONE 800-633-3330
To request any of the following, press or say the number
1--Automated Account Balances, Last Transaction, and Distribution Information
2--Speak to a Customer Service Representative regarding an Existing Account
3--Net Asset Values and Yields
4--Speak to a Marketing Representative
5--Advisory and Broker/Dealer Services
6--Institutional and High Net Worth Operations, Trading and Client Services
AS ALWAYS, WE ARE INTERESTED IN YOUR COMMENTS ABOUT THE JOB WE ARE DOING AND IN
ANSWERING ANY QUESTIONS YOU MAY HAVE. FOR MORE COMPLETE INFORMATION ABOUT ANY OF
THE LOOMIS SAYLES FUNDS, INCLUDING CHARGES AND EXPENSES, PLEASE CALL LOOMIS
SAYLES DISTRIBUTORS, L.P. FOR A PROSPECTUS AT 800-633-3330 MONDAY THROUGH
FRIDAY, 8:45 A.M. TO 4:45 P.M. EST. READ IT CAREFULLY BEFORE YOU INVEST OR SEND
MONEY.
LOOMIS SAYLES FIXED INCOME FUNDS 1
<PAGE>
LETTER FROM THE PRESIDENT
[PHOTO]
DANIEL J. FUSS
PRESIDENT AND
PORTFOLIO MANAGER
DEAR SHAREHOLDERS:
The last twelve months ended September 30, 2000 gave investors a volatile stock
market and an improving bond market. Valuation concerns triggered a sharp
sell-off in the large-cap growth sector of the stock market, while a slowing
economy helped bolster the bond market.
The solid twelve-month return for the stock market (13.28 percent as measured by
the S&P 500 INDEX) somewhat masks the severe volatility and sector rotations
that started to occur during the year. Growth stocks, led by the powerful
technology sector, remained strong through the first half of the year. But, in
mid-March sentiment shifted quickly, as valuation and earnings concerns
triggered a sharp downturn among technology stocks and other growth sectors.
Eager to find good valuations and real earnings, investors rediscovered value
stocks.
In general, the Loomis Sayles Equity Funds offered attractive performance during
the year, as the two distinct market climates benefited both growth- and
value-oriented funds.
For most of the year, the bond market was faced with the anomaly of an inverted
Treasury yield curve. Short-term rates were on the rise, due to the Federal
Reserve Board's tightening policy, and long-term rates were on the decline, due
to the Treasury Department's buyback of long-term debt. The situation started to
stabilize during the summer, as signs of a slowing economy put the Federal
Reserve Board into a holding pattern.
Among the spread sectors, higher-quality, long-term bonds were the leading
performers for the year. Credit spreads remained volatile during the year, and
we took advantage of widening spreads to purchase attractive securities.
Overall, we continued to benefit from our research-driven insights into security
and sector selections, and the Loomis Sayles Fixed Income Funds offered
attractive performance for the period.
Looking ahead, the key factor influencing the financial markets is still with
us: peace. There are some situations to worry about as we look around the world,
but nothing requiring a large build-up of the military either here or elsewhere.
Another potential problem--stock market leverage--actually appears to have
lightened. The impact of rising energy prices and their influence on economies
and markets is still playing out.
<PAGE>
In fact, the situation may help the bond market by causing economic slowing that
more than offsets the inflationary impact of higher energy prices. Of course,
the central banks could respond by increasing the money supply, and inflation
would re-emerge. So far, this seems unlikely, but it is worth watching.
Sincerely,
/s/Dan Fuss
Daniel J. Fuss
President
Loomis Sayles Funds
LOOMIS SAYLES FIXED INCOME FUNDS 3
<PAGE>
ECONOMIC AND MARKET OVERVIEW
ANNUAL REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 2000
STOCK MARKET REVIEW
Concealed behind the stock market's solid total return of 13.3 percent for the
fiscal year (as measured by the S&P 500 INDEX) is a period of strong market
volatility and distinct sector rotations. All of the market's positive
performance came in the first six months of the period, when the S&P 500 INDEX
returned 17.6 percent. For the final six months of the year, the Index lost 3.8
percent.
The strongest common bond among the top performers for the final six months of
the year was that they had lousy performance in the first six months of the
year. In fact, nine of the S&P 500 INDEX'S 10 best performers for the six months
ended September 30, 2000, were down at least 10 percent for the six-month period
ended March 31, 2000.
After a lengthy, unprecedented reign as the favored style, large-cap growth
stocks relinquished that title, as value stocks and small- and
mid-capitalization growth stocks moved into the limelight. For the year, the
RUSSELL MIDCAP INDEX posted a total return of 31.6 percent and the RUSSELL 2000
INDEX offered a total return of 23.4 percent. The trend toward smaller companies
started in the fourth quarter of 1999 and continued throughout the year. The
shift toward the value style began in March 2000, due primarily to a strong
correction among the fastest-growing technology stocks. Although the Russell
growth indexes led the value indexes for the twelve-month period, most
under-performed their value counterparts for the six-month period ended
September 30, 2000.
Perhaps the biggest sector story for the year was in technology. After soaring
through the first five months of the fiscal year and driving much of the overall
market's strong performance, the technology bubble finally burst on March 10,
2000. Hardest hit were the dot-com stocks with bad earnings reports and
questionable earnings forecasts. The downdraft quickly spread to other
technology sectors, including PC manufacturers. Data indicated that the home PC
market was becoming saturated and that business use was shifting toward
workstations. That news hurt several big players, including Dell Computer, which
was down 43 percent for the six months ended September 30, 2000; Apple Computer,
down 62 percent; Intel, down 37 percent, Texas Instruments, down 41 percent;
Gateway, down 12 percent; and Hewlett-Packard, down 8 percent. In addition, the
government's antitrust suit against Microsoft pushed down the technology sector
as it caused the company's stock to drop 43 percent for the six-month period.
Nevertheless, there were several technology stocks that offered "real" earnings
and, consequently, excellent returns for the one-year period. For example, 3Com
was up 139 percent, and EMC was up 178 percent.
Financial stocks across the board enjoyed a strong year, as stabilizing interest
rates and a slowing economy contributed to solid returns. The healthcare sector
was another good performer. Specifically, HMOs and long-term care providers
benefited from the federal budget surplus and its impact on improved Medicare
funding.
<PAGE>
While the slowing economy was good news for financial stocks, it was bad news
for the retail sector, contributing to earnings disappointments and poor
performance.
In the international arena, performance was disappointing. After a stellar 1999,
international stocks retreated beginning in the first quarter of 2000. The
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA AND FAR EAST (EAFE) INDEX
posted a total return of 3.2 percent for the twelve-month period ended September
30, 2000.
The declining value of the Euro was a large contributor to the poor performance.
From a value of approximately $1 in December 1999, the Euro fell to 85 cents in
September 2000. The rising cost of oil was another factor working against
European nations, which are completely dependent on foreign sources of oil. Even
the United Kingdom, the only European nation that does any oil drilling, is a
net importer of oil. On the other hand, rising oil prices were a positive event
for the emerging-market, oil-exporting nations of Mexico and Venezuela.
In Japan, the economic recovery hit a roadblock, which affected the rest of Asia
as well. In one unusual and ineffective move, the Japanese government initiated
a bailout of a major department store. This proved to be an unpopular effort
with the Japanese people, who were not comfortable with their government
salvaging a private-sector enterprise. The expectation is that the government
will continue to guarantee bank deposits but not the financial solvency of
private enterprise.
BOND MARKET REVIEW
After a dismal 1999, the bond market started to rebound in the first quarter of
2000. The bond market was bolstered throughout the first nine months of 2000 by
the U.S. Treasury Department's announcement that it was buying back long-term
debt. This created huge demand for long-term Treasuries and led to an inverted
yield curve, with rates peaking at about the 10-year range. As the fiscal year
winded down, the inversion started to subside somewhat, and securities in the
intermediate-maturity range were the primary beneficiaries.
High-quality, longer-term bonds were the favored fixed-income securities during
the year. High-yield bonds excelled in the fourth quarter of 1999, when
investors showed a strong willingness to take on credit risk. But, that
sentiment quickly changed in the face of higher interest rates. For lower-rated
credits, investors worried that higher interest rates would make it more costly
to raise capital.
For the entire twelve-month period, government bonds outperformed all other
fixed-income securities with a return of 7.2 percent, as measured by the LEHMAN
BROTHERS GOVERNMENT BOND INDEX. Mortgage-backed securities were up 7.4 percent,
according to the LEHMAN BROTHERS FIXED RATE MORTGAGE-BACKED INDEX, and
investment-grade corporate securities, as measured by LEHMAN BROTHERS
GOVERNMENT/CREDIT BOND INDEX, were up 6.7 percent. High yield bonds, as measured
by the LEHMAN BROTHERS HIGH YIELD BOND INDEX, finished the twelve-month period
up 1.0 percent.
LOOMIS SAYLES FIXED INCOME FUNDS 5
<PAGE>
ECONOMIC AND MARKET OVERVIEW (CONTINUED)
U.S. AND GLOBAL ECONOMIC REVIEW
The Federal Reserve Board maintained its proactive stance against inflation with
a series of interest rate hikes through May 2000, when it imposed a 0.5
percentage-point increase. That proved to be the final rate hike for the
twelve-month period, as the Federal Reserve Board's tightening policy finally
started to have a slowing effect on the economy. Growth remained positive and
moved into the more sustainable range of 2.0-2.5 percent.
After the May rate hike, short-term interest rates remained stable for the rest
of the year, and some Federal Reserve Board watchers anticipated that the next
move would be a cut in rates. The last time the Federal Reserve Board cut
interest rates was more than two years ago. A typical interest rate cycle is 17
months, so there remains modest optimism for lower interest rates going forward.
In Europe, price stability remains the primary goal for the European Central
Bank (ECB). As such, it is expected that the ECB will let the Euro float freely,
even if it means that it continues to fall against the U.S. dollar. The outlook
for Germany remains especially positive, as new tax reforms should promote good
growth. France, Sweden, Finland and The Netherlands also remain positioned for
good growth, because their economies are reflective of the "new economy."
Higher oil prices remain a catalyst for potentially higher inflation figures for
the United States and the rest of the world. In particular, Europe remains
vulnerable to higher oil prices, as most European nations import all of their
oil. In fact, the United Kingdom is the only nation that has any domestic
drilling effort. Emerging markets, such as Mexico and Venezuela, stand to
benefit from the trend toward higher oil prices due to their significant
oil-exportation industries.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
LOOMIS SAYLES FIXED INCOME FUNDS 7
<PAGE>
INSTITUTIONAL CLASS
<TABLE>
<CAPTION>
TOTAL RETURN(1) VS. LIPPER CATEGORY AVERAGE AND LIPPER CATEGORY INDEX(2) FOR PERIODS ENDED SEPTEMBER 30, 2000
--------------------------------------------------------------------------------------------------------------------
MODIFIED ACTUAL
1 YEAR 3 YEARS 5 YEARS INCEPTION(3) INCEPTION(4)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LOOMIS SAYLES BOND FUND 6.74% 4.58% 8.53% 11.38% 11.27%
Lipper Corporate Debt Funds BBB-Rated Average 4.98% 3.89% 5.65% 7.98% NA
Rank 30/137 39/92 1/64 1/24 NA
Percentile 22 42 2 4 NA
Lipper Corporate Debt Funds BBB-Rated Index 5.29% 4.13% 5.78% 7.54% NA
LOOMIS SAYLES GLOBAL BOND FUND -4.99% 1.96% 6.77% 7.52% 7.47%
Lipper Global Income Funds Average 0.58% 1.10% 4.16% 5.66% NA
Rank 97/122 37/110 11/77 3/22 NA
Percentile 79 34 15 14 NA
Lipper Global Income Funds Index -0.11% 1.22% 4.32% 5.77% NA
LOOMIS SAYLES HIGH YIELD FUND 14.30% 4.31% NA 7.26% 7.51%
Lipper High Current Yield Funds Average -0.02% 0.49% NA 4.00% NA
Rank 4/352 14/211 NA 10/158 NA
Percentile 2 7 NA 7 NA
Lipper High Current Yield Funds Index -0.06% 1.14% NA 4.52% NA
LOOMIS SAYLES INTERMEDIATE
MATURITY BOND FUND 7.28% 4.63% NA 5.38% 5.38%
Lipper Intermediate Investment Grade Debt Funds Average 5.75% 4.85% NA 5.51% NA
Rank 23/287 130/212 NA 93/179 NA
Percentile 8 62 NA 52 NA
Lipper Intermediate Investment Grade Debt Funds Index 6.12% 5.17% NA 5.80% NA
</TABLE>
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
(1) TOTAL RETURN FOR PERIODS GREATER THAN ONE YEAR REPRESENTS AVERAGE ANNUAL
TOTAL RETURN. TOTAL RETURNS SHOWN REFLECT, IF ANY, THE EFFECT OF FEE
WAIVERS AND/OR EXPENSE REIMBURSEMENTS. WITHOUT SUCH WAIVERS AND/OR EXPENSE
REIMBURSEMENTS, PERFORMANCE AND RANKINGS WOULD HAVE BEEN LOWER.
(2) THE LIPPER CATEGORY AVERAGE TOTAL RETURN REPRESENTS THE AVERAGE ANNUAL TOTAL
RETURN FOR ALL FUNDS IN EACH FUND'S CORRESPONDING INVESTMENT CATEGORY AS
DETERMINED BY LIPPER INC. THE LIPPER CATEGORY INDEX TOTAL RETURN REPRESENTS
THE AVERAGE ANNUAL TOTAL RETURN OF 30 FUNDS IN EACH FUND'S CORRESPONDING
INVESTMENT CATEGORY AS DETERMINED BY LIPPER RANKINGS ARE BASED ON THE TOTAL
RETUN OF EACH FUND FOR THE PERIOD RELATIVE TO THE TOTAL RETURN OF ALL FUNDS
IN THAT FUND'S CORRESPONDING INVESTMENT CATEGORY. SOURCE: LIPPER INC.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
MODIFIED ACTUAL
1 YEAR 3 YEARS 5 YEARS INCEPTION(3) INCEPTION(4)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LOOMIS SAYLES INVESTMENT GRADE BOND FUND 7.17% 5.05% NA 7.42% 7.42%
Lipper Corporate Debt Funds BBB-Rated Average 4.98% 3.89% NA 5.10% NA
Rank 14/137 21/92 NA 2/84 NA
Percentile 11 23 NA 3 NA
Lipper Corporate Debt Funds BBB-Rated Index 5.29% 4.13% NA 5.30% NA
LOOMIS SAYLES MUNICIPAL BOND FUND 5.53% 3.86% 5.25% 6.42% 6.45%
Lipper General Municipal Debt Funds Average 4.74% 3.19% 4.76% 6.21% NA
Rank 59/263 33/225 41/183 27/88 NA
Percentile 23 15 23 31 NA
Lipper General Municipal Debt Funds Index 4.99% 3.54% 5.08% 6.31% NA
LOOMIS SAYLES SHORT-TERM BOND FUND 6.15% 5.48% 5.80% 5.71% 5.70%
Lipper Short Investment Grade Debt Funds Average 5.73% 5.05% 5.42% 5.29% NA
Rank 32/110 18/96 16/70 6/28 NA
Percentile 28 19 23 21 NA
Lipper Short Investment Grade Debt Funds Index 5.79% 5.13% 5.57% 5.42% NA
LOOMIS SAYLES U.S. GOVERNMENT
SECURITIES FUND 9.07% 6.40% 6.77% 8.80% 8.81%
Lipper General U.S. Government Debt Funds Average 6.12% 4.93% 5.37% 6.58% NA
Rank 4/184 7/164 6/130 1/53 NA
Percentile 3 5 5 2 NA
Lipper General U.S. Government Debt Funds Index 6.21% 4.89% 5.43% 6.33% NA
</TABLE>
(3) MODIFIED INCEPTION REFLECTS THE NEAREST LIPPER REPORTING PERIOD FOLLOWING
ACTUAL INCEPTION. LIPPER PERFORMANCE IS REPORTED AS OF THE MONTH END.
(4) ACTUAL INCEPTION DATES:
BOND FUND MAY 16, 1991
GLOBAL BOND FUND MAY 10, 1991
HIGH YIELD FUND SEPTEMBER 11, 1996
INTERMEDIATE MATURITY BOND FUND DECEMBER 31, 1996
INVESTMENT GRADE BOND FUND DECEMBER 31, 1996
MUNICIPAL BOND FUND MAY 29, 1991
SHORT-TERM BOND FUND AUGUST 3, 1992
U.S. GOVERNMENT SECURITIES FUND MAY 21, 1991
LOOMIS SAYLES FIXED INCOME FUNDS 9
<PAGE>
FUND AND MANAGER REVIEW
[PHOTO]
DANIEL J. FUSS
[PHOTO]
KATHLEEN C. GAFFNEY
LOOMIS SAYLES BOND FUND
KEY FUND FACTS
OBJECTIVE High total investment return
STRATEGY Invests in investment grade fixed income securities, although up to 20%
of total assets may be in preferred stocks
FUND INCEPTION DATE 5/16/91
COMMENCEMENT OF OPERATIONS OF CLASS Institutional: 5/16/91;
Retail: 1/2/97; Admin: 1/2/98
EXPENSE RATIO Institutional: 0.75%; Retail: 1.00%; Admin: 1.25%
TOTAL NET ASSETS (ALL CLASSES) $1,752.6 Million
--------------------------------------------------------------------------------
PERFORMANCE
For the twelve-month period ended September 30, 2000, the Institutional, Retail
and Admin classes of the Bond Fund returned 6.74%, 6.47% and 6.21%,
respectively, compared to the 6.74% return for the Fund's benchmark, the Lehman
Brothers Government/Credit Bond Index. The average corporate debt BBB-rated
fund, as measured by Lipper Inc., posted a total return of 4.98% for the same
period.
PORTFOLIO REVIEW
The broad bond market did not fare well early in the period, but sentiment
changed in the second fiscal quarter. In particular, investment grade credits
moved into positive territory and, despite some short-term spread volatility,
remained there throughout the rest of the fiscal year. Treasuries were among the
strongest performing bonds, though, due to the Treasury Department's bond
buyback program. The high yield sector was the year's laggard as investors had
to consider long-term risk factors and an abundance of corporate downgrades.
The Fund benefited throughout the year from its convertible and emerging market
securities, which were affected by fluctuations in equity markets here and
abroad. In general, Latin American and Asian sectors stabilized politically and
economically during the year. Canadian credits remained positive contributors,
as the country was able to sustain its growth relative to the U.S. economy. The
Fund also benefited from its energy and oil holdings in an environment of rising
energy prices. The financial sector became a strong performer for the Fund after
it appeared likely that the Federal Reserve Board's tightening campaign had
ended and that economic growth was slowing.
PORTFOLIO POSITIONING
We continue to favor discounted credits with fairly long maturities. Our goal is
to find value in the marketplace through fundamental bond analysis in
conjunction with relative value analysis. Although we are aware of the
short-term technical factors in the market, the current yield environment and
economic fundamentals, our approach emphasizes individual security selection and
long-term capital and price appreciation.
/s/Dan Fuss /s/Kathleen C. Gaffney
Daniel J. Fuss Kathleen C. Gaffney
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS-PERIODS ENDED SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------
Since
1 Year 3 Years 5 Years Inception(a)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOOMIS SAYLES BOND FUND (INSTITUTIONAL) 6.74% 4.58% 8.53% 11.27%
LOOMIS SAYLES BOND FUND (RETAIL)(b) 6.47% 4.31% 8.25% 11.00%
LOOMIS SAYLES BOND FUND (ADMIN) 6.21% NA NA 4.04%
Lipper Corporate Debt Funds BBB-Rated Index(c) 5.29% 4.13% 5.78% 7.54%
Lehman Brothers Government/Credit Bond Index(d) 6.74% 5.82% 6.30% 7.61%
</TABLE>
CUMULATIVE PERFORMANCE-MAY 31, 1991 TO SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
[GRAPH]
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Lipper Corporate Lehman Brothers
Loomis Sayles Debt Funds BBB- Government/Corporate
Bond Fund(e) Rated Index Bond Index
<S> <C> <C> <C>
5/91 $10,000 $10,000 $10,000
6/91 $9,849 $9,975 $9,989
7/91 $10,090 $10,084 $10,114
8/91 $10,502 $10,327 $10,348
9/91 $10,522 $10,551 $10,564
10/91 $10,815 $10,648 $10,658
11/91 $10,702 $10,734 $10,764
12/91 $10,931 $11,137 $11,127
1/92 $11,102 $11,001 $10,962
2/92 $11,380 $11,062 $11,021
3/92 $11,294 $11,025 $10,960
4/92 $11,456 $11,083 $11,026
5/92 $11,794 $11,308 $11,240
6/92 $11,838 $11,473 $11,404
7/92 $12,222 $11,789 $11,696
8/92 $12,333 $11,897 $11,801
9/92 $12,399 $12,041 $11,962
10/92 $12,255 $11,830 $11,779
11/92 $12,380 $11,843 $11,770
12/92 $12,493 $12,040 $11,971
1/93 $12,927 $12,303 $12,231
2/93 $13,180 $12,593 $12,485
3/93 $13,446 $12,671 $12,528
4/93 $13,650 $12,766 $12,624
5/93 $13,871 $12,796 $12,617
6/93 $14,164 $13,084 $12,904
7/93 $14,508 $13,206 $12,986
8/93 $14,770 $13,513 $13,284
9/93 $14,795 $13,553 $13,331
10/93 $15,018 $13,647 $13,385
11/93 $15,081 $13,490 $13,234
12/93 $15,269 $13,581 $13,292
1/94 $15,873 $13,816 $13,492
2/94 $15,604 $13,515 $13,198
3/94 $15,040 $13,130 $12,875
4/94 $14,703 $12,971 $12,769
5/94 $14,648 $12,938 $12,745
6/94 $14,607 $12,885 $12,715
7/94 $14,830 $13,105 $12,969
8/94 $15,052 $13,157 $12,975
9/94 $14,872 $12,975 $12,778
10/94 $14,803 $12,934 $12,764
11/94 $14,605 $12,899 $12,741
12/94 $14,647 $12,964 $12,825
1/95 $14,953 $13,173 $13,072
2/95 $15,390 $13,474 $13,375
3/95 $15,725 $13,580 $13,464
4/95 $16,300 $13,824 $13,652
5/95 $17,174 $14,420 $14,224
6/95 $17,411 $14,529 $14,338
7/95 $17,362 $14,495 $14,283
8/95 $17,723 $14,708 $14,465
9/95 $18,160 $14,880 $14,612
10/95 $18,340 $15,079 $14,827
11/95 $18,890 $15,326 $15,071
12/95 $19,328 $15,579 $15,293
1/96 $19,721 $15,705 $15,388
2/96 $19,124 $15,375 $15,062
3/96 $19,139 $15,261 $14,935
4/96 $18,984 $15,164 $14,833
5/96 $19,192 $15,153 $14,808
6/96 $19,448 $15,327 $15,006
7/96 $19,438 $15,365 $15,041
8/96 $19,600 $15,357 $15,004
9/96 $20,209 $15,665 $15,270
10/96 $20,884 $16,041 $15,627
11/96 $21,696 $16,398 $15,915
12/96 $21,318 $16,240 $15,737
1/97 $21,300 $16,291 $15,756
2/97 $21,610 $16,384 $15,789
3/97 $21,266 $16,131 $15,601
4/97 $21,543 $16,369 $15,830
5/97 $22,017 $16,557 $15,977
6/97 $22,508 $16,804 $16,169
7/97 $23,666 $17,385 $16,664
8/97 $23,148 $17,155 $16,477
9/97 $23,898 $17,456 $16,736
10/97 $23,818 $17,634 $17,004
11/97 $23,945 $17,720 $17,093
12/97 $24,024 $17,910 $17,273
1/98 $24,323 $18,138 $17,516
2/98 $24,585 $18,132 $17,481
3/98 $24,941 $18,224 $17,534
4/98 $25,036 $18,302 $17,623
5/98 $25,036 $18,458 $17,812
6/98 $25,055 $18,594 $17,993
7/98 $24,788 $18,579 $18,008
8/98 $23,007 $18,444 $18,359
9/98 $23,801 $18,825 $18,884
10/98 $23,731 $18,592 $18,751
11/98 $25,182 $18,936 $18,863
12/98 $25,152 $18,983 $18,909
1/99 $25,615 $19,148 $19,043
2/99 $25,152 $18,734 $18,591
3/99 $26,057 $18,943 $18,683
4/99 $26,955 $19,079 $18,729
5/99 $26,333 $18,821 $18,536
6/99 $26,161 $18,722 $18,478
7/99 $25,764 $18,628 $18,427
8/99 $25,524 $18,559 $18,412
9/99 $25,611 $18,719 $18,578
10/99 $25,631 $18,755 $18,627
11/99 $25,876 $18,801 $18,616
12/99 $26,284 $18,770 $18,503
1/00 $26,238 $18,715 $18,498
2/00 $27,037 $18,946 $18,730
3/00 $27,402 $19,120 $19,000
4/00 $26,662 $18,888 $18,908
5/00 $26,290 $18,744 $18,890
6/00 $27,127 $19,219 $19,276
7/00 $27,243 $19,301 $19,480
8/00 $27,859 $19,653 $19,755
9/00 $27,338 $19,709 $19,830
</TABLE>
Foreign investments involve special risks including greater economic, political
and currency fluctuation risks, which may be even greater in emerging markets.
In addition, foreign countries may have different accounting standards than
those of the U.S., which may adversely affect the value of the Fund. High yield
securities are subject to a high degree of market and credit risk. In addition,
the secondary market for these securities may lack liquidity which, in turn, may
adversely affect the value of these securities and that of the Fund.
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE DATA REFLECTS CERTAIN
FEE WAIVERS AND REIMBURSEMENTS. WITHOUT SUCH WAIVERS, PERFORMANCE AND RANKINGS
WOULD BE LOWER.
(a) INCEPTION DATE OF THE INSTITUTIONAL CLASS OF SHARES IS MAY 16, 1991.
SINCE LIPPER CORPORATE DEBT FUNDS BBB-RATED INDEX AND LEHMAN BROTHERS
GOVERNMENT/CREDIT BOND INDEX PERFORMANCE DATA IS NOT AVAILABLE COINCIDENT
WITH THIS DATE, COMPARATIVE PERFORMANCE IS PRESENTED FROM MAY 31, 1991.
INCEPTION DATES OF THE RETAIL AND ADMIN CLASSES OF SHARES ARE DECEMBER 31,
1996 AND JANUARY 2, 1998, RESPECTIVELY. PERFORMANCE FOR THE ADMIN CLASS OF
SHARES IS PRESENTED FROM COMMENCEMENT OF CLASS OPERATIONS ON JANUARY 2,
1998.
(b) PERFORMANCE SHOWN FOR PERIODS PRIOR TO THE INCEPTION DATE OF THE RETAIL
CLASS (DECEMBER 31, 1996) REPRESENT THE PERFORMANCE OF THE INSTITUTIONAL
CLASS OF SHARES SINCE INCEPTION DURING THE PERIODS SHOWN, ADJUSTED TO
REFLECT THE CURRENT FEE PAYABLE BY THE RESPECTIVE CLASS OF SHARES (I.E. A
.25% 12b-1 FEE).
(c) THE LIPPER CORPORATE DEBT FUNDS BBB-RATED INDEX IS AN EQUALLY WEIGHTED
UNMANAGED INDEX OF TYPICALLY THE 30 LARGEST MUTUAL FUNDS WITHIN THE
CORPORATE DEBT FUNDS BBB-RATED INVESTMENT OBJECTIVE. RETURNS ARE ADJUSTED
FOR THE REINVESTMENT OF CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS.
SOURCE: LIPPER INC.
(d) LEHMAN BROTHERS GOVERNMENT/CREDIT BOND INDEX IS AN UNMANAGED COMPOSITE OF
APPROXIMATELY 5,300 CORPORATE AND GOVERNMENT ISSUES WITH AT LEAST $100
MILLION OUTSTANDING FOR GOVERNMENT ISSUES AND $25 MILLION FOR CORPORATES,
AND GREATER THAN 1 YEAR MATURITY. THE INDEX RETURNS HAVE NOT BEEN LOWERED
FOR ONGOING MANAGEMENT AND OPERATING EXPENSES APPLICABLE TO MUTUAL FUND
INVESTMENTS. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.
(e) CUMULATIVE PERFORMANCE IS SHOWN FOR THE INSTITUTIONAL CLASS OF SHARES.
CUMULATIVE PERFORMANCE OF THE RETAIL AND ADMIN CLASSES OF SHARES WOULD, DUE
TO THE HIGHER FEES PAID BY THE RETAIL AND ADMIN CLASSES OF SHARES, BE LOWER.
LOOMIS SAYLES FIXED INCOME FUNDS 11
<PAGE>
FUND AND MANAGER REVIEW
[PHOTO]
KEN BUNTROCK
[PHOTO]
DAVID ROLLEY
LOOMIS SAYLES GLOBAL BOND FUND
KEY FUND FACTS
OBJECTIVE High total investment return
STRATEGY Invests primarily in investment grade fixed income securities worldwide
FUND INCEPTION DATE 5/10/91
COMMENCEMENT OF OPERATIONS OF CLASS Institutional: 5/10/91;
Retail: 1/2/97
EXPENSE RATIO Institutional: 0.90%; Retail: 1.15%
TOTAL NET ASSETS (ALL CLASSES) $48.8 Million
--------------------------------------------------------------------------------
PERFORMANCE
For the twelve-month period ended September 30, 2000, the Institutional and
Retail classes of the Global Bond Fund returned -4.99% and -5.16%, respectively,
compared to the -3.90% return for the Fund's benchmark, the Salomon Brothers
World Government Bond Index. The average global income fund, as measured by
Lipper Inc., posted a total return of 0.58% for the same period.
PORTFOLIO REVIEW
Currency valuations played a large role in the Fund's performance during the
fiscal year. In particular, the overall strength of the U.S. dollar relative to
the Australian dollar, the New Zealand dollar and the euro was a negative
influence on Fund performance. It had been our view that the recovery in Asia
would benefit both Australia and New Zealand. Indeed, the Australian dollar
performed very well in 1999 as the recovery began, but the currency gave back
all of those gains when concerns arose about the momentum in the economy,
partially due to the introduction of a goods and services tax on July 1, 2000.
The Fund's relative performance also suffered due to the Fund's overexposure to
Australia and New Zealand securities and underexposure to Japanese securities.
Surprisingly, the Yen increased in value and boosted Japanese bonds. The
majority of the Fund's Asian securities were in U.S. dollar-denominated bonds.
Emerging market bonds were strong performers in the first half of the fiscal
year, but they gave back some of their gains later in the period.
PORTFOLIO POSITIONING
Loomis Sayles' commitment to the corporate sector has increased steadily as
global corporate issuance has increased. We remain optimistic toward British
sterling-denominated bonds, because we anticipate that the United Kingdom's
entry into the European Monetary system will be delayed and that the higher
yielding sterling bonds will outperform.
/s/Ken Buntrock /s/David Rolley
Ken Buntrock David Rolley
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS-PERIODS ENDED SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------
Since
1 Year 3 Years 5 Years Inception(a)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOOMIS SAYLES GLOBAL BOND FUND (INSTITUTIONAL) -4.99% 1.96% 6.77% 7.47%
LOOMIS SAYLES GLOBAL BOND FUND (RETAIL)(b) -5.16% 1.68% 6.58% 7.37%
Lipper Global Income Funds Index(c) -0.11% 1.22% 4.32% 5.77%
Salomon Brothers World Government Bond Index(d) -3.90% 2.52% 2.83% 7.00%
</TABLE>
CUMULATIVE PERFORMANCE-MAY 31, 1991 TO SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
[GRAPH]
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Loomis Sayles Lipper Global Salomon Brothers
Global Bond Income Funds World Government
Fund(e) Index Bond Index
<S> <C> <C> <C>
5/91 $10,000 $10,000 $10,000
6/91 $9,560 $9,829 $9,895
7/91 $9,860 $9,979 $10,107
8/91 $10,000 $10,125 $10,302
9/91 $10,530 $10,453 $10,706
10/91 $10,581 $10,566 $10,818
11/91 $10,822 $10,577 $10,987
12/91 $11,687 $10,940 $11,558
1/92 $11,266 $10,759 $11,353
2/92 $11,174 $10,808 $11,290
3/92 $11,112 $10,750 $11,170
4/92 $11,215 $10,832 $11,250
5/92 $11,604 $11,059 $11,595
6/92 $12,045 $11,225 $11,920
7/92 $12,351 $11,418 $12,197
8/92 $12,222 $11,492 $12,539
9/92 $11,846 $11,356 $12,664
10/92 $11,995 $11,338 $12,321
11/92 $11,732 $11,224 $12,125
12/92 $11,786 $11,325 $12,197
1/93 $11,809 $11,476 $12,410
2/93 $12,060 $11,740 $12,654
3/93 $12,357 $11,860 $12,849
4/93 $12,735 $12,005 $13,120
5/93 $12,816 $12,136 $13,252
6/93 $12,388 $12,292 $13,223
7/93 $12,249 $12,435 $13,263
8/93 $12,900 $12,733 $13,660
9/93 $13,190 $12,724 $13,822
10/93 $13,422 $12,896 $13,798
11/93 $13,294 $12,812 $13,699
12/93 $13,508 $13,095 $13,816
1/94 $13,765 $13,256 $13,927
2/94 $13,362 $12,810 $13,836
3/94 $13,007 $12,411 $13,816
4/94 $12,922 $12,315 $13,832
5/94 $12,638 $12,226 $13,711
6/94 $12,192 $12,122 $13,909
7/94 $12,268 $12,220 $14,019
8/94 $12,218 $12,222 $13,971
9/94 $12,155 $12,255 $14,072
10/94 $12,193 $12,374 $14,298
11/94 $12,343 $12,320 $14,101
12/94 $12,331 $12,152 $14,140
1/95 $12,256 $12,169 $14,437
2/95 $12,230 $12,340 $14,806
3/95 $11,967 $12,660 $15,686
4/95 $12,507 $12,965 $15,976
5/95 $13,260 $13,394 $16,426
6/95 $13,109 $13,383 $16,522
7/95 $13,461 $13,484 $16,561
8/95 $13,900 $13,435 $15,992
9/95 $14,177 $13,660 $16,349
10/95 $14,340 $13,786 $16,471
11/95 $14,943 $14,022 $16,657
12/95 $15,279 $14,308 $16,832
1/96 $15,641 $14,476 $16,624
2/96 $15,319 $14,223 $16,539
3/96 $15,400 $14,234 $16,516
4/96 $15,695 $14,356 $16,450
5/96 $15,789 $14,397 $16,454
6/96 $16,151 $14,537 $16,583
7/96 $16,124 $14,686 $16,901
8/96 $16,298 $14,820 $16,967
9/96 $16,792 $15,101 $17,036
10/96 $17,197 $15,407 $17,355
11/96 $17,736 $15,782 $17,583
12/96 $17,574 $15,742 $17,441
1/97 $17,360 $15,608 $16,975
2/97 $17,645 $15,619 $16,848
3/97 $17,488 $15,425 $16,720
4/97 $17,403 $15,470 $16,573
5/97 $17,801 $15,692 $17,023
6/97 $18,200 $15,882 $17,226
7/97 $18,399 $16,016 $17,092
8/97 $18,186 $15,934 $17,082
9/97 $18,556 $16,274 $17,446
10/97 $18,300 $16,257 $17,808
11/97 $18,243 $16,258 $17,535
12/97 $17,979 $16,312 $17,482
1/98 $18,374 $16,432 $17,652
2/98 $18,724 $16,573 $17,795
3/98 $18,511 $16,643 $17,619
4/98 $18,754 $16,775 $17,901
5/98 $18,694 $16,756 $17,943
6/98 $18,314 $16,705 $17,969
7/98 $18,481 $16,778 $17,993
8/98 $17,387 $16,176 $18,483
9/98 $18,131 $16,839 $19,466
10/98 $19,165 $16,983 $20,042
11/98 $19,955 $17,162 $19,759
12/98 $19,883 $17,344 $20,157
1/99 $20,278 $17,381 $19,972
2/99 $19,998 $16,935 $19,330
3/99 $20,655 $17,070 $19,379
4/99 $21,461 $17,225 $19,371
5/99 $20,935 $16,881 $19,045
6/99 $20,705 $16,722 $18,711
7/99 $20,803 $16,781 $19,170
8/99 $20,557 $16,746 $19,259
9/99 $20,705 $16,898 $19,559
10/99 $20,623 $16,875 $19,549
11/99 $20,477 $16,788 $19,345
12/99 $20,643 $16,868 $19,297
1/00 $20,121 $16,591 $18,886
2/00 $20,229 $16,729 $18,750
3/00 $20,463 $16,929 $19,331
4/00 $19,743 $16,608 $18,700
5/00 $19,797 $16,601 $18,846
6/00 $20,319 $16,964 $19,303
7/00 $20,103 $16,913 $18,976
8/00 $19,887 $16,903 $18,833
9/00 $19,671 $16,879 $18,796
</TABLE>
Foreign investments involve special risks including greater economic, political
and currency fluctuation risks, which may be even greater in emerging markets.
In addition, foreign countries may have different accounting standards than
those of the U.S., which may adversely affect the value of the Fund. High yield
securities are subject to a high degree of market and credit risk. In addition,
the secondary market for these securities may lack liquidity which, in turn, may
adversely affect the value of these securities and that of the Fund.
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE DATA REFLECTS CERTAIN
FEE WAIVERS AND REIMBURSEMENT. WITHOUT SUCH WAIVERS, PERFORMANCE AND RANKINGS
WOULD BE LOWER.
(a) INCEPTION DATE OF THE INSTITUTIONAL CLASS OF SHARES IS MAY 10, 1991. SINCE
LIPPER GLOBAL INCOME FUNDS INDEX AND SALOMON BROTHERS WORLD GOVERNMENT BOND
INDEX PERFORMANCE DATA IS NOT AVAILABLE COINCIDENT WITH THIS DATE,
COMPARATIVE PERFORMANCE IS PRESENTED FROM MAY 31, 1991. INCEPTION DATE OF
THE RETAIL CLASS OF SHARES IS DECEMBER 31, 1996.
(b) PERFORMANCE SHOWN FOR PERIODS PRIOR TO THE INCEPTION DATE OF THE RETAIL
CLASS (DECEMBER 31, 1996) REPRESENT THE PERFORMANCE OF THE INSTITUTIONAL
CLASS SINCE INCEPTION OF SHARES DURING THE PERIOD SHOWN, ADJUSTED TO REFLECT
THE CURRENT LEVELS OF MANAGEMENT AND 12b-1 FEES PAYABLE BY THE RESPECTIVE
CLASS OF SHARES.
(c) THE LIPPER GLOBAL INCOME FUNDS INDEX IS AN EQUALLY WEIGHTED UNMANAGED INDEX
OF TYPICALLY THE 30 LARGEST MUTUAL FUNDS WITHIN THE GLOBAL INCOME FUNDS
INVESTMENT OBJECTIVE. RETURNS ARE ADJUSTED FOR THE REINVESTMENT OF CAPITAL
GAINS DISTRIBUTIONS AND INCOME DIVIDENDS. SOURCE: LIPPER INC.
(d) SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX IS A CAPITALIZATION-WEIGHTED
UNMANAGED INDEX WHICH TRACKS THE PERFORMANCE OF 14 GOVERNMENT BOND MARKETS.
THE INDEX RETURNS HAVE NOT BEEN REDUCED FOR ONGOING MANAGEMENT AND OPERATING
EXPENSES APPLICABLE TO MUTUAL FUND INVESTMENTS. IT IS NOT POSSIBLE TO INVEST
DIRECTLY IN AN INDEX.
(e) CUMULATIVE PERFORMANCE IS SHOWN FOR THE INSTITUTIONAL CLASS OF SHARES.
CUMULATIVE PERFORMANCE OF THE RETAIL CLASS OF SHARES WOULD, DUE TO THE
HIGHER FEES PAID BY THE RETAIL CLASS OF SHARES, BE LOWER.
LOOMIS SAYLES FIXED INCOME FUNDS 13
<PAGE>
FUND AND MANAGER REVIEW
[PHOTO]
DANIEL J. FUSS
[PHOTO]
KATHLEEN C. GAFFNEY
LOOMIS SAYLES HIGH YIELD FUND
KEY FUND FACTS
OBJECTIVE High total investment return
STRATEGY Invests in lower rated fixed income securities, although up to 20% of
total assets may be in preferred stocks and up to 10% in common stocks
FUND INCEPTION DATE 9/11/96
COMMENCEMENT OF OPERATIONS OF CLASS Institutional: 9/11/96
EXPENSE RATIO Institutional: 0.75%
TOTAL NET ASSETS $24.1 Million
--------------------------------------------------------------------------------
PERFORMANCE
For the twelve-month period ended September 30, 2000, the Institutional class of
the High Yield Fund returned 14.30%, compared to the 1.23% return for the Fund's
benchmark, the Merrill Lynch High Yield Master Index. The average high current
yield fund, as measured by Lipper Inc., posted a total return of -0.02% for the
same period.
PORTFOLIO REVIEW
In general, the high yield sector underperformed other fixed income sectors
during the fiscal year, due to equity market jitters, a rising number of
corporate defaults, relentless mutual fund outflows and poor liquidity. Oil also
was a factor, as rising oil prices fueled inflation fears. On the bright side,
emerging market debts continued to rally on positive economic and political
news.
Despite the challenges in the high yield marketplace, the Fund was able to offer
attractive returns due to the continued recovery of emerging markets and
strength in convertible securities. The Fund held 31 percent in emerging markets
and 26 percent in convertible securities at fiscal year end. The Fund's oil and
gas holdings also have been important contributors to performance. Rising energy
prices have benefited the bond market by providing an economic slowdown that's
likely to more than offset the inflationary impact of higher energy prices.
PORTFOLIO POSITIONING
The Fund remains well diversified and focused on long-term capital appreciation
and current income. We believe it also has excellent call protection and
moderate upgrade potential. We believe that this is a good time to be in the
corporate bond market, and we will continue to purchase discounted credits with
fairly long maturities. We remain focused on extracting value through
fundamental bond analysis in conjunction with relative value analysis.
/s/Dan Fuss /s/Kathleen C. Gaffney
Daniel J. Fuss Kathleen C. Gaffney
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS-PERIODS ENDED SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------
Since
1 Year 3 Years Inception(a)
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
LOOMIS SAYLES HIGH YIELD FUND (INSTITUTIONAL) 14.30% 4.31% 7.51%
Lipper High Current Yield Funds Index(b) -0.06% 1.14% 4.52%
Merrill Lynch High Yield Master Index(c) 1.23% 2.65% 5.45%
</TABLE>
CUMULATIVE PERFORMANCE-SEPTEMBER 30, 1996 TO SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
[GRAPH]
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Lipper High Merrill Lynch
Loomis Sayles Current Yield High Yield
High Yield Fund Funds Index Master Index
<S> <C> <C> <C>
09/96 $10,000 $10,000 $10,000
10/96 $9,931 $10,048 $10,110
11/96 $10,148 $10,221 $10,314
12/96 $10,173 $10,347 $10,393
01/97 $10,193 $10,449 $10,473
02/97 $10,213 $10,625 $10,620
03/97 $10,153 $10,395 $10,502
04/97 $10,212 $10,483 $10,622
05/97 $10,489 $10,761 $10,836
06/97 $10,756 $10,945 $11,001
07/97 $11,265 $11,237 $11,265
08/97 $11,276 $11,262 $11,245
09/97 $11,663 $11,535 $11,431
10/97 $11,354 $11,490 $11,507
11/97 $11,482 $11,573 $11,616
12/97 $11,333 $11,710 $11,726
01/98 $11,400 $11,937 $11,901
02/98 $11,725 $12,050 $11,950
03/98 $12,083 $12,224 $12,053
04/98 $12,029 $12,263 $12,110
05/98 $11,766 $12,249 $12,195
06/98 $11,515 $12,271 $12,255
07/98 $11,384 $12,354 $12,325
08/98 $9,674 $11,413 $11,793
09/98 $9,568 $11,344 $11,817
10/98 $9,753 $11,087 $11,622
11/98 $10,533 $11,738 $12,152
12/98 $10,290 $11,701 $12,156
01/99 $10,583 $11,913 $12,276
02/99 $10,609 $11,865 $12,182
03/99 $11,119 $12,074 $12,287
04/99 $11,844 $12,387 $12,480
05/99 $11,556 $12,151 $12,393
06/99 $11,817 $12,153 $12,370
07/99 $11,715 $12,157 $12,388
08/99 $11,527 $12,034 $12,267
09/99 $11,581 $11,940 $12,215
10/99 $11,854 $11,905 $12,144
11/99 $12,148 $12,115 $12,283
12/99 $12,450 $12,261 $12,347
01/00 $12,465 $12,201 $12,286
02/00 $12,850 $12,287 $12,296
03/00 $12,935 $12,075 $12,124
04/00 $12,790 $12,022 $12,129
05/00 $12,498 $11,808 $11,995
06/00 $12,878 $12,026 $12,200
07/00 $12,890 $12,048 $12,288
08/00 $13,492 $12,111 $12,438
09/00 $13,236 $11,933 $12,366
</TABLE>
Foreign investments involve special risks including greater economic, political
and currency fluctuation risks, which may be even greater in emerging markets.
In addition, foreign countries may have different accounting standards than
those of the U.S., which may adversely affect the value of the Fund. High yield
securities are subject to a high degree of market and credit risk. In addition,
the secondary market for these securities may lack liquidity which, in turn, may
adversely affect the value of these securities and that of the Fund.
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE DATA REFLECTS CERTAIN
FEE WAIVERS AND REIMBURSEMENTS. WITHOUT SUCH WAIVERS, PERFORMANCE AND RANKINGS
WOULD BE LOWER.
(a) INCEPTION DATE OF THE INSTITUTIONAL CLASS OF SHARES IS SEPTEMBER 11, 1996.
SINCE LIPPER HIGH CURRENT YIELD FUNDS INDEX AND MERRILL LYNCH HIGH YIELD
MASTER INDEX PERFORMANCE DATA IS NOT AVAILABLE COINCIDENT WITH THIS DATE,
COMPARATIVE PERFORMANCE IS PRESENTED FROM SEPTEMBER 30, 1996.
(b) THE LIPPER HIGH CURRENT YIELD FUNDS INDEX IS AN EQUALLY WEIGHTED UNMANAGED
INDEX OF TYPICALLY THE 30 LARGEST MUTUAL FUNDS WITHIN THE HIGH CURRENT YIELD
FUNDS INVESTMENT OBJECTIVE. RETURNS ARE ADJUSTED FOR THE REINVESTMENT OF
CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS. SOURCE: LIPPER INC.
(c) MERRILL LYNCH HIGH YIELD MASTER INDEX IS AN UNMANAGED INDEX CONSISTING OF
FIXED-RATE, COUPON-BEARING BONDS WITH AN OUTSTANDING PAR WHICH IS GREATER
THAN OR EQUAL TO $50 MILLION, A MATURITY RANGE GREATER THAN OR EQUAL TO ONE
YEAR AND MUST BE LESS THAN BBB/BAA3 RATED BUT NOT IN DEFAULT. THE INDEX
RETURNS HAVE NOT BEEN REDUCED FOR ONGOING MANAGEMENT AND OPERATING EXPENSES
APPLICABLE TO MUTUAL FUND INVESTMENTS. IT IS NOT POSSIBLE TO INVEST DIRECTLY
IN AN INDEX.
LOOMIS SAYLES FIXED INCOME FUNDS 15
<PAGE>
FUND AND MANAGER REVIEW
[PHOTO]
ANTHONY J. WILKINS
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND
KEY FUND FACTS
OBJECTIVE High total investment return
STRATEGY Invests in investment grade fixed income securities, with a
dollar-weighted average maturity between three and ten years
FUND INCEPTION DATE 12/31/96
COMMENCEMENT OF OPERATIONS OF CLASS Institutional: 1/2/97; Retail: 1/2/97
EXPENSE RATIO Institutional: 0.55%; Retail: 0.80%
TOTAL NET ASSETS (ALL CLASSES) $13.3 Million
--------------------------------------------------------------------------------
PERFORMANCE
For the twelve-month period ended September 30, 2000, the Institutional and
Retail classes of the Intermediate Maturity Bond Fund returned 7.28% and 7.01%,
respectively, compared to the 6.25% return for the Fund's benchmark, the Lehman
Brothers Government/Credit Intermediate Bond Index. The average intermediate
investment grade debt fund, as measured by Lipper Inc., posted a total return of
5.75% for the same period.
PORTFOLIO REVIEW
The Treasury yield curve remained inverted for most of the fiscal year, and
yields on shorter-term securities were higher than yields on longer-term
securities. Nevertheless, the inversion moderated slightly by the end of the
period. Short-term interest rates continued on the upswing until the summer,
as signs of a slowing economy emerged. As a result, market consensus shifted,
as the implication was that the Federal Reserve Board was finished tightening
for the near term. This helped make shorter-term securities more attractive.
The Fund's over-weighting in Yankee bonds (U.S. dollar-denominated foreign
bonds) continued to positively affect Fund performance. In addition, a financial
overweight, particularly among banking and REITs (real estate investment
trusts), also proved beneficial, particularly throughout the first three fiscal
quarters, when the tightening of short-term rates continued. The energy sector
also was a positive contributor to performance, due to rising prices. Oil prices
rallied to a ten-year high during the year, which helped to slow economic
growth--a positive overall factor for the bond market.
PORTFOLIO POSITIONING
Our approach continues to focus on identifying undervalued credits to create a
flexible balance between high current income and the potential for capital
appreciation. We continue to capitalize on the value in the bond market by
diligently analyzing individual credits and paying particular attention to
reinvestment risk, as we believe that the world generally remains a deflationary
place.
/s/Anthony J. Wilkins
Anthony J. Wilkins
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS-PERIODS ENDED SEPTEMBER 30, 2000
-----------------------------------------------------------------------------------------------------
Since
1 Year 3 Years Inception(a)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND (INSTITUTIONAL) 7.28% 4.63% 5.38%
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND (RETAIL) 7.01% 4.37% 5.12%
Lipper Intermediate Investment Grade Debt Funds Index(b) 6.12% 5.17% 5.80%
Lehman Brothers Government/Credit Intermediate Bond Index(c) 6.25% 5.69% 6.06%
</TABLE>
CUMULATIVE PERFORMANCE-DECEMBER 31, 1996 TO SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
[GRAPH]
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Loomis Sayles Lipper Intermediate Lehman Brothers
Intermediate Maturity Investment Grade Government/Credit
Bond Fund(d) Debt Funds Index Intermediate Bond Index
<S> <C> <C> <C>
12/96 $10,000 $10,000 $10,000
1/97 $10,060 $10,031 $10,039
2/97 $10,080 $10,056 $10,058
3/97 $9,990 $9,948 $9,989
4/97 $10,106 $10,084 $10,106
5/97 $10,228 $10,174 $10,190
6/97 $10,340 $10,294 $10,283
7/97 $10,574 $10,566 $10,492
8/97 $10,502 $10,470 $10,439
9/97 $10,625 $10,621 $10,561
10/97 $10,586 $10,749 $10,678
11/97 $10,607 $10,780 $10,701
12/97 $10,643 $10,878 $10,787
1/98 $10,759 $11,023 $10,928
2/98 $10,812 $11,007 $10,920
3/98 $10,918 $11,047 $10,955
4/98 $10,969 $11,099 $11,010
5/98 $11,023 $11,199 $11,091
6/98 $11,034 $11,288 $11,161
7/98 $11,059 $11,311 $11,201
8/98 $10,895 $11,465 $11,377
9/98 $11,016 $11,722 $11,663
10/98 $10,969 $11,627 $11,651
11/98 $11,080 $11,685 $11,650
12/98 $11,068 $11,735 $11,697
1/99 $11,125 $11,808 $11,761
2/99 $11,033 $11,597 $11,588
3/99 $11,228 $11,688 $11,675
4/99 $11,409 $11,727 $11,711
5/99 $11,281 $11,608 $11,621
6/99 $11,304 $11,569 $11,629
7/99 $11,273 $11,528 $11,618
8/99 $11,202 $11,516 $11,627
9/99 $11,344 $11,642 $11,736
10/99 $11,388 $11,660 $11,766
11/99 $11,449 $11,674 $11,781
12/99 $11,502 $11,620 $11,742
1/00 $11,465 $11,579 $11,699
2/00 $11,563 $11,704 $11,796
3/00 $11,698 $11,849 $11,919
4/00 $11,603 $11,776 $11,892
5/00 $11,565 $11,754 $11,910
6/00 $11,827 $12,003 $12,120
7/00 $11,928 $12,106 $12,212
8/00 $12,030 $12,273 $12,357
9/00 $12,169 $12,355 $12,469
</TABLE>
Foreign investments involve special risks including greater economic, political
and currency fluctuation risks, which may be even greater in emerging markets.
In addition, foreign countries may have different accounting standards than
those of the U.S., which may adversely affect the value of the Fund.
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE DATA REFLECTS CERTAIN
FEE WAIVERS AND REIMBURSEMENTS. WITHOUT SUCH WAIVERS, PERFORMANCE AND RANKINGS
WOULD BE LOWER.
(a) INCEPTION DATE OF THE INSTITUTIONAL AND RETAIL CLASSES OF SHARES IS
DECEMBER 31, 1996.
(b) THE LIPPER INTERMEDIATE INVESTMENT GRADE DEBT FUNDS INDEX IS AN EQUALLY
WEIGHTED UNMANAGED INDEX OF TYPICALLY THE 30 LARGEST MUTUAL FUNDS WITHIN THE
INTERMEDIATE INVESTMENT GRADE DEBT FUNDS INVESTMENT OBJECTIVE. RETURNS ARE
ADJUSTED FOR THE REINVESTMENT OF CAPITAL GAINS DISTRIBUTIONS AND INCOME
DIVIDENDS. SOURCE: LIPPER INC.
(c) LEHMAN BROTHERS GOVERNMENT/CREDIT INTERMEDIATE BOND INDEX IS AN UNMANAGED
INDEX CONSISTING OF THOSE BONDS HELD WITHIN THE LEHMAN BROTHERS
GOVERNMENT/CREDIT BOND INDEX WHICH HAVE AN AVERAGE MATURITY OF 1-10 YEARS.
THE LEHMAN BROTHERS GOVERNMENT/CREDIT BOND INDEX CONSISTS OF APPROXIMATELY
5,300 CORPORATE AND GOVERNMENT ISSUES WITH AT LEAST $100 MILLION OUTSTANDING
FOR GOVERNMENT ISSUES AND $25 MILLION FOR CORPORATES, AND GREATER THAN 1
YEAR MATURITY. THE INDEX RETURNS HAVE NOT BEEN LOWERED FOR ONGOING
MANAGEMENT AND OPERATING EXPENSES APPLICABLE TO MUTUAL FUND INVESTMENTS. IT
IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.
(d) CUMULATIVE PERFORMANCE IS SHOWN FOR THE INSTITUTIONAL CLASS OF SHARES.
CUMULATIVE PERFORMANCE OF THE RETAIL CLASS OF SHARES WOULD, DUE TO THE
HIGHER FEES PAID BY THE RETAIL CLASS OF SHARES, BE LOWER.
LOOMIS SAYLES FIXED INCOME FUNDS 17
<PAGE>
FUND AND MANAGER REVIEW
[PHOTO]
DANIEL J. FUSS
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
KEY FUND FACTS
OBJECTIVE High total investment return
STRATEGY Invests in investment grade fixed income securities, including
convertibles, although up to 20% of assets may be in preferred stocks
FUND INCEPTION DATE 12/31/96
COMMENCEMENT OF OPERATIONS OF CLASS Institutional: 1/2/97; Retail: 1/2/97;
J: 5/24/99
EXPENSE RATIO Institutional: 0.55%; Retail: 0.80%; J: 1.30%
TOTAL NET ASSETS (ALL CLASSES) $35.4 Million
--------------------------------------------------------------------------------
PERFORMANCE
For the twelve-month period ended September 30, 2000, the Institutional, Retail
and J classes of the Investment Grade Bond Fund returned 7.17%, 6.89% and
6.36%(before deducting the maximum 3.50% front end sales charge), respectively,
compared to the 6.74% return for the Fund's benchmark, the Lehman Brothers
Government/Credit Bond Index. The average corporate debt BBB-rated fund, as
measured by Lipper Inc., posted a total return of 4.98% for the same period.
PORTFOLIO REVIEW
Approximately half way through the fiscal year, investors started to regain
confidence in the bond market, with signs of a slowing economy and interest rate
stability alleviating their concerns. Although inflation fears from higher oil
prices weighed heavy on the bond market, the economic slowdown resulting from
higher oil prices could more than offset the inflationary impact of higher
energy prices.
The Fund continued to benefit from its energy and oil bonds, as
oil prices hit a ten-year high late in the period. In the second half of the
fiscal year, real estate issues benefited from the relaxed state of the economy
and from the resulting stability associated with level interest rates and a
neutral outlook from the Federal Reserve Board. The Fund also benefited from
strength among convertible securities, which comprised approximately ten percent
of the Fund on September 30, 2000.
The Fund's strong performance also was due in part to the continued recovery of
emerging markets, which comprised twelve percent of the Fund at fiscal year-end.
In particular, emerging markets rallied in the first half of the fiscal year, as
a reformed Indonesian government, an upgraded Korea and Malaysia and a
restructuring of Thailand markets contributed to strong investor sentiment.
Latin American markets benefited from rising oil prices, and Mexico moved to
"investment-grade" status.
PORTFOLIO POSITIONING
We believe that this is a good time to be in the corporate bond market. We will
continue to purchase longer-term discounted bonds for the added yield and call
protection they provide. Our approach is to uncover value through fundamental
bond analysis combined with relative value analysis.
/s/Dan Fuss
Daniel J. Fuss
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS-PERIODS ENDED SEPTEMBER 30, 2000
-----------------------------------------------------------------------------------------------------
Since
1 Year 3 Years Inception(a)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (INSTITUTIONAL) 7.17% 5.05% 7.42%
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (RETAIL) 6.89% 4.77% 7.15%
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (J CLASS)(b) 2.65% NA 0.87%
Lipper Corporate Debt Funds BBB-Rated Index(c) 5.29% 4.13% 5.30%
Lehman Brothers Government/Credit Bond Index(d) 6.74% 5.82% 6.36%
</TABLE>
CUMULATIVE PERFORMANCE-DECEMBER 31, 1996 TO SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
[GRAPH]
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Loomis Sayles Lipper Corporate Lehman Brothers
Investment Grade Debt Funds BBB- Government/Corporate
Bond Fund(e) Rated Index Bond Index
<S> <C> <C> <C>
12/96 $10,000 $10,000 $10,000
1/97 $9,950 $10,032 $10,012
2/97 $10,150 $10,089 $10,033
3/97 $9,940 $9,933 $9,914
4/97 $10,133 $10,080 $10,059
5/97 $10,325 $10,195 $10,153
6/97 $10,599 $10,347 $10,274
7/97 $11,281 $10,705 $10,589
8/97 $10,972 $10,563 $10,470
9/97 $11,281 $10,749 $10,635
10/97 $11,443 $10,858 $10,805
11/97 $11,422 $10,911 $10,862
12/97 $11,451 $11,029 $10,976
1/98 $11,570 $11,169 $11,130
2/98 $11,602 $11,165 $11,108
3/98 $11,743 $11,222 $11,142
4/98 $11,785 $11,270 $11,198
5/98 $11,862 $11,365 $11,318
6/98 $11,851 $11,450 $11,434
7/98 $11,700 $11,441 $11,443
8/98 $11,199 $11,358 $11,666
9/98 $11,455 $11,592 $12,000
10/98 $11,347 $11,449 $11,915
11/98 $11,723 $11,660 $11,986
12/98 $11,829 $11,689 $12,016
1/99 $12,018 $11,791 $12,101
2/99 $11,876 $11,536 $11,813
3/99 $12,148 $11,665 $11,872
4/99 $12,433 $11,748 $11,901
5/99 $12,337 $11,590 $11,779
6/99 $12,289 $11,529 $11,742
7/99 $12,078 $11,471 $11,709
8/99 $12,035 $11,428 $11,700
9/99 $12,203 $11,526 $11,805
10/99 $12,202 $11,549 $11,836
11/99 $12,252 $11,577 $11,829
12/99 $12,293 $11,558 $11,757
1/00 $12,281 $11,524 $11,754
2/00 $12,673 $11,666 $11,902
3/00 $12,864 $11,774 $12,074
4/00 $12,522 $11,631 $12,015
5/00 $12,405 $11,542 $12,004
6/00 $12,769 $11,834 $12,249
7/00 $12,924 $11,885 $12,379
8/00 $13,170 $12,102 $12,553
9/00 $13,078 $12,136 $12,601
</TABLE>
Foreign investments involve special risks including greater economic, political
and currency fluctuation risks, which may be even greater in emerging markets.
In addition, foreign countries may have different accounting standards than
those of the U.S., which may adversely affect the value of the Fund.
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE DATA REFLECTS CERTAIN
FEE WAIVERS AND REIMBURSEMENTS. WITHOUT SUCH WAIVERS, PERFORMANCE AND RANKINGS
WOULD BE LOWER.
(a) INCEPTION DATE OF THE INSTITUTIONAL AND RETAIL CLASSES OF SHARES IS DECEMBER
31, 1996. INCEPTION DATE OF THE J CLASS IS MAY 24, 1999. PERFORMANCE FOR THE
J CLASS IS PRESENTED FROM COMMENCEMENT OF CLASS OPERATIONS ON MAY 24, 1999.
(b) PERFORMANCE FOR J CLASS SHARES INCLUDE THE EFFECT OF THE MAXIMUM 3.50% FRONT
END SALES CHARGE.
(c) THE LIPPER CORPORATE DEBT FUNDS BBB-RATED INDEX IS AN EQUALLY WEIGHTED
UNMANAGED INDEX OF TYPICALLY THE 30 LARGEST MUTUAL FUNDS WITHIN THE
CORPORATE DEBT FUNDS BBB-RATED INVESTMENT OBJECTIVE. RETURNS ARE ADJUSTED
FOR THE REINVESTMENT OF CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS.
SOURCE: LIPPER INC.
(d) LEHMAN BROTHERS GOVERNMENT/CREDIT BOND INDEX IS AN UNMANAGED INDEX
CONSISTING OF APPROXIMATELY 5,300 CORPORATE AND GOVERNMENT ISSUES WITH AT
LEAST $100 MILLION OUTSTANDING FOR GOVERNMENT ISSUES AND $25 MILLION FOR
CORPORATES, AND GREATER THAN 1 YEAR MATURITY. THE INDEX RETURNS HAVE NOT
BEEN LOWERED FOR ONGOING MANAGEMENT AND OPERATING EXPENSES APPLICABLE TO
MUTUAL FUND INVESTMENTS. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.
(e) CUMULATIVE PERFORMANCE IS SHOWN FOR THE INSTITUTIONAL CLASS OF SHARES.
CUMULATIVE PERFORMANCE OF THE RETAIL AND J CLASSES OF SHARES WOULD, DUE TO
THE HIGHER FEES PAID BY THE RETAIL AND J CLASSES OF SHARES AND THE SALES
CHARGE OF THE J CLASS, BE LOWER. J CLASS OF SHARES ARE NOT OFFERED FOR SALE
IN THE UNITED STATES AND ARE NOT ELIGIBLE FOR SALE TO U.S. INVESTORS.
LOOMIS SAYLES FIXED INCOME FUNDS 19
<PAGE>
FUND AND MANAGER REVIEW
[PHOTO]
MARTHA F. HODGMAN
LOOMIS SAYLES MUNICIPAL BOND FUND
KEY FUND FACTS
OBJECTIVE Current income
STRATEGY Invests in investment grade fixed income securities the income of which
is exempt from federal income tax
FUND INCEPTION DATE 5/29/91
COMMENCEMENT OF OPERATIONS OF CLASS Institutional: 5/29/91
EXPENSE RATIO Institutional: 0.50%
TOTAL NET ASSETS $6.1 Million
--------------------------------------------------------------------------------
PERFORMANCE
For the twelve-month period ended September 30, 2000, the Institutional class of
the Municipal Bond Fund returned 5.53%, compared to the 6.17% return for the
Fund's benchmark, the Lehman Brothers Municipal Bond Index. The average general
municipal debt fund, as measured by Lipper Inc., posted a total return of 4.74%
for the same period.
PORTFOLIO REVIEW
Investor interest in municipal bonds and municipal bond funds remained weak
during the fiscal year. Overall, funds experienced net redemptions during the
period, as investors remained captivated by the stock market or found the higher
yields in corporate bonds more attractive. On the bright side, lack of supply
has prevented further weakness in the market. Municipalities' balance sheets are
in very good shape due to the robust economy, and this translated to increased
tax receipts and less need to raise capital via the bond market.
Late in the fiscal year, the municipal market rallied, as it seemed that
additional Federal Reserve Board tightening would not be required, that growth
was continuing but at a slower, more manageable pace, and that inflation was
under control. But the rally came to a halt in September, with oil prices
continuing to rise, inflation concerns returning and worries creeping into the
equity market that the Federal Reserve Board tightening was working more
strongly and growth was slowing more than had been anticipated. Municipal yields
rose along with other interest rates.
PORTFOLIO POSITIONING
Our overall portfolio strategy remains unchanged. The portfolio's structure
remains somewhat longer than that of the index, with a greater percentage of
long discount issues. But, because we continue to see net redemptions in the
Fund, we have kept more cash on hand to meet those needs. In addition, we are
focusing on more liquid general market names for flexibility. When supply has
been thin and demand high, we have taken advantage of opportunities to sell some
illiquid issues, such as specialty-state issues.
On October 18, 2000, the Trustees voted to liquidate the Municipal Bond Fund on
or about December 18, 2000.
/s/Martha F. Hodgman
Martha F. Hodgman
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS-PERIODS ENDED SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------
Since
1 Year 3 Years 5 Years Inception(a)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOOMIS SAYLES MUNICIPAL BOND FUND (INSTITUTIONAL) 5.53% 3.86% 5.25% 6.45%
Lipper General Municipal Debt Funds Index(b) 4.99% 3.54% 5.08% 6.31%
Lehman Brothers Municipal Bond Index(c) 6.17% 4.65% 5.79% 6.86%
</TABLE>
CUMULATIVE PERFORMANCE-MAY 31, 1991 TO SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
[GRAPH]
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Loomis Sayles Lipper General Lehman Brothers
Municipal Bond Municipal Debt Municipal
Fund Funds Index Bond Index
<S> <C> <C> <C>
5/91 $10,000 $10,000 $10,000
6/91 $10,011 $9,971 $9,990
7/91 $10,131 $10,097 $10,112
8/91 $10,300 $10,228 $10,245
9/91 $10,418 $10,366 $10,379
10/91 $10,528 $10,463 $10,472
11/91 $10,521 $10,476 $10,501
12/91 $10,780 $10,727 $10,726
1/92 $10,764 $10,721 $10,751
2/92 $10,797 $10,736 $10,755
3/92 $10,777 $10,741 $10,759
4/92 $10,877 $10,843 $10,854
5/92 $11,058 $10,993 $10,982
6/92 $11,237 $11,200 $11,165
7/92 $11,707 $11,593 $11,501
8/92 $11,500 $11,407 $11,389
9/92 $11,541 $11,453 $11,463
10/92 $11,315 $11,251 $11,351
11/92 $11,668 $11,537 $11,554
12/92 $11,791 $11,682 $11,672
1/93 $11,922 $11,820 $11,808
2/93 $12,367 $12,293 $12,235
3/93 $12,176 $12,152 $12,105
4/93 $12,344 $12,280 $12,227
5/93 $12,413 $12,345 $12,296
6/93 $12,625 $12,563 $12,502
7/93 $12,594 $12,556 $12,518
8/93 $12,895 $12,838 $12,779
9/93 $13,065 $12,986 $12,924
10/93 $13,080 $13,007 $12,949
11/93 $12,915 $12,876 $12,835
12/93 $13,149 $13,134 $13,106
1/94 $13,311 $13,279 $13,256
2/94 $12,971 $12,954 $12,912
3/94 $12,422 $12,412 $12,386
4/94 $12,493 $12,453 $12,492
5/94 $12,647 $12,563 $12,600
6/94 $12,581 $12,484 $12,523
7/94 $12,829 $12,699 $12,752
8/94 $12,833 $12,739 $12,796
9/94 $12,614 $12,542 $12,609
10/94 $12,359 $12,302 $12,385
11/94 $12,139 $12,049 $12,161
12/94 $12,441 $12,342 $12,428
1/95 $12,804 $12,717 $12,784
2/95 $13,180 $13,096 $13,155
3/95 $13,256 $13,217 $13,397
4/95 $13,260 $13,217 $13,322
5/95 $13,664 $13,639 $13,747
6/95 $13,499 $13,486 $13,627
7/95 $13,614 $13,574 $13,756
8/95 $13,742 $13,729 $13,931
9/95 $13,834 $13,815 $14,019
10/95 $14,049 $14,034 $14,223
11/95 $14,340 $14,314 $14,459
12/95 $14,499 $14,478 $14,598
1/96 $14,616 $14,548 $14,708
2/96 $14,469 $14,442 $14,609
3/96 $14,232 $14,221 $14,422
4/96 $14,160 $14,161 $14,381
5/96 $14,164 $14,170 $14,376
6/96 $14,283 $14,301 $14,532
7/96 $14,455 $14,424 $14,664
8/96 $14,421 $14,417 $14,661
9/96 $14,603 $14,637 $14,865
10/96 $14,777 $14,800 $15,033
11/96 $15,070 $15,049 $15,309
12/96 $14,983 $14,996 $15,244
1/97 $14,992 $14,994 $15,273
2/97 $15,121 $15,126 $15,413
3/97 $14,902 $14,939 $15,208
4/97 $15,032 $15,067 $15,335
5/97 $15,283 $15,284 $15,566
6/97 $15,442 $15,465 $15,732
7/97 $15,950 $15,929 $16,167
8/97 $15,726 $15,747 $16,016
9/97 $15,956 $15,945 $16,206
10/97 $16,034 $16,051 $16,310
11/97 $16,153 $16,143 $16,406
12/97 $16,456 $16,404 $16,645
1/98 $16,618 $16,562 $16,817
2/98 $16,598 $16,562 $16,822
3/98 $16,577 $16,579 $16,837
4/98 $16,455 $16,478 $16,761
5/98 $16,762 $16,746 $17,026
6/98 $16,812 $16,806 $17,094
7/98 $16,848 $16,839 $17,136
8/98 $17,172 $17,101 $17,401
9/98 $17,431 $17,304 $17,618
10/98 $17,349 $17,241 $17,618
11/98 $17,398 $17,299 $17,679
12/98 $17,471 $17,329 $17,724
1/99 $17,715 $17,518 $17,935
2/99 $17,556 $17,420 $17,857
3/99 $17,516 $17,127 $17,881
4/99 $17,583 $17,475 $17,926
5/99 $17,406 $17,351 $17,822
6/99 $17,060 $17,076 $17,565
7/99 $17,173 $17,107 $17,629
8/99 $16,994 $16,903 $17,488
9/99 $16,936 $16,859 $17,495
10/99 $16,739 $16,625 $17,306
11/99 $16,944 $16,783 $17,490
12/99 $16,776 $16,623 $17,359
1/00 $16,638 $16,490 $17,284
2/00 $16,890 $16,723 $17,485
3/00 $17,256 $17,090 $17,867
4/00 $17,128 $16,973 $17,761
5/00 $17,021 $16,859 $17,669
6/00 $17,461 $17,293 $18,137
7/00 $17,709 $17,534 $18,389
8/00 $18,007 $17,811 $18,673
9/00 $17,871 $17,700 $18,576
</TABLE>
A portion of the Fund's income may be subject to state taxes and/or the Federal
alternative minimum tax.
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE DATA REFLECTS CERTAIN
FEE WAIVERS AND REIMBURSEMENTS. WITHOUT SUCH WAIVERS, PERFORMANCE AND RANKINGS
WOULD BE LOWER.
(a) INCEPTION DATE OF THE LOOMIS SAYLES MUNICIPAL BOND FUND IS MAY 29, 1991.
SINCE LIPPER GENERAL MUNICIPAL DEBT FUNDS INDEX AND LEHMAN BROTHERS
MUNICIPAL BOND INDEX PERFORMANCE DATA IS NOT AVAILABLE COINCIDENT WITH THIS
DATE, COMPARATIVE PERFORMANCE IS PRESENTED FROM MAY 31, 1991.
(b) THE LIPPER GENERAL MUNICIPAL DEBT FUNDS INDEX IS AN EQUALLY WEIGHTED
UNMANAGED INDEX OF TYPICALLY THE 30 LARGEST MUTUAL FUNDS WITHIN THE GENERAL
MUNICIPAL DEBT FUNDS INVESTMENT OBJECTIVE. RETURNS ARE ADJUSTED FOR THE
REINVESTMENT OF CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS.
SOURCE: LIPPER INC.
(c) LEHMAN BROTHERS MUNICIPAL BOND INDEX IS AN UNMANAGED INDEX COMPUTED FROM
PRICES ON APPROXIMATELY 21,000 BONDS CONSISTING OF ROUGHLY 30% REVENUE
BONDS, 30% GOVERNMENT OBLIGATIONS BONDS, 27% INSURED AND 13% PREREFUNDED
BONDS. THE INDEX RETURNS HAVE NOT BEEN REDUCED FOR ONGOING MANAGEMENT AND
OPERATING EXPENSES APPLICABLE TO MUTUAL FUND INVESTMENTS. IT IS NOT POSSIBLE
TO INVEST DIRECTLY IN AN INDEX.
LOOMIS SAYLES FIXED INCOME FUNDS 21
<PAGE>
FUND AND MANAGER REVIEW
[PHOTO]
JOHN HYLL
LOOMIS SAYLES SHORT-TERM BOND FUND
KEY FUND FACTS
OBJECTIVE High total investment return through a combination of current income
and capital appreciation with relatively low fluctuation in net asset value
STRATEGY Invests in investment grade fixed income securities, although up to 20%
may be invested in non-convertible preferred stocks
FUND INCEPTION DATE 8/3/92
COMMENCEMENT OF OPERATIONS OF CLASS Institutional: 8/3/92; Retail: 1/2/97
EXPENSE RATIO Institutional: 0.44%; Retail: 0.68%
TOTAL NET ASSETS (ALL CLASSES) $30.1 Million
--------------------------------------------------------------------------------
PERFORMANCE
For the twelve-month period ended September 30, 2000, the Institutional and
Retail classes of the Short-Term Bond Fund returned 6.15% and 6.00%,
respectively, compared to the 5.99% return for the Fund's benchmark, the Lehman
Brothers 1-3 Year Government/Credit Bond Index. The average short-term
investment-grade debt fund, as measured by Lipper Inc., posted a total return of
5.73% for the same period.
PORTFOLIO REVIEW
Early in the period, the Treasury Department's bond buyback program triggered an
inverted yield curve, whereby yields on shorter-term bonds were higher than
yields on longer-term bonds. But, in the fiscal year's third quarter, the curve
started to normalize somewhat, and yields on shorter-maturity bonds started
declining. This trend continued into the final three months of the fiscal year.
The Fund's yield curve positioning benefited from this, as the largest decline
in yields occurred within the two- to five-year area.
Performance among corporate bonds was mixed during the year, with spreads
tightening and widening throughout the period. As spreads widened, we took
advantage of cheaper valuations and increased the Fund's allocation to corporate
bonds. During the end of the fiscal year, spreads had tightened, providing solid
returns for corporate bonds. The Fund's return for the year relative to the
Index was enhanced by a strong yield advantage and favorable security selection.
Mortgage-backed securities also provided good performance throughout the period.
PORTFOLIO POSITIONING
We plan to maintain over-weighted positions in corporate and mortgage-backed
securities and a longer average maturity relative to the benchmark. Given the
continued attractive valuations in the corporate market and the shape of the
yield curve, we believe that the Fund is well positioned for a contraction of
yield spreads and normalization of the yield curve.
/s/ John Hyll
John Hyll
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS-PERIODS ENDED SEPTEMBER 30, 2000
-------------------------------------------------------------------------------------------------------
Since
1 Year 3 Years 5 Years(a) Inception(a)
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOOMIS SAYLES SHORT-TERM BOND FUND (INSTITUTIONAL) 6.15% 5.48% 5.80% 5.70%
LOOMIS SAYLES SHORT-TERM BOND FUND (RETAIL)(b) 6.00% 5.21% 5.60% 5.58%
Lipper Short Investment Grade Debt Funds Index(c) 5.79% 5.13% 5.57% 5.42%
Lehman Brothers 1-3 Year Government/Credit Bond Index(d) 5.99% 5.72% 5.96% 5.59%
</TABLE>
CUMULATIVE PERFORMANCE-AUGUST 31, 1992 TO SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
[GRAPH]
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Loomis Sayles Lipper Short Lehman Brothers 1-3 Year
Short-Term Bond Investment Grade Government/Credit
Fund(e) Debt Funds Index Bond Index
<S> <C> <C> <C>
8/92 $10,000 $10,000 $10,000
9/92 $10,103 $10,066 $10,095
10/92 $10,020 $10,011 $10,034
11/92 $9,984 $10,024 $10,020
12/92 $10,052 $10,100 $10,115
1/93 $10,181 $10,219 $10,223
2/93 $10,334 $10,330 $10,307
3/93 $10,377 $10,380 $10,340
4/93 $10,442 $10,435 $10,405
5/93 $10,443 $10,454 $10,381
6/93 $10,519 $10,544 $10,460
7/93 $10,542 $10,603 $10,484
8/93 $10,639 $10,699 $10,572
9/93 $10,669 $10,734 $10,606
10/93 $10,721 $10,788 $10,630
11/93 $10,720 $10,793 $10,633
12/93 $10,751 $10,863 $10,677
1/94 $10,825 $10,934 $10,745
2/94 $10,759 $10,873 $10,680
3/94 $10,702 $10,790 $10,624
4/94 $10,670 $10,748 $10,584
5/94 $10,686 $10,760 $10,599
6/94 $10,729 $10,769 $10,626
7/94 $10,840 $10,831 $10,723
8/94 $10,894 $10,888 $10,759
9/94 $10,884 $10,873 $10,736
10/94 $10,916 $10,891 $10,760
11/94 $10,926 $10,872 $10,715
12/94 $10,943 $10,846 $10,735
1/95 $11,064 $10,957 $10,883
2/95 $11,221 $11,087 $11,033
3/95 $11,298 $11,148 $11,096
4/95 $11,384 $11,244 $11,195
5/95 $11,575 $11,449 $11,384
6/95 $11,650 $11,520 $11,453
7/95 $11,666 $11,557 $11,499
8/95 $11,752 $11,634 $11,569
9/95 $11,814 $11,690 $11,626
10/95 $11,899 $11,800 $11,723
11/95 $12,021 $11,900 $11,823
12/95 $12,103 $11,982 $11,913
1/96 $12,232 $12,090 $12,015
2/96 $12,149 $12,046 $11,969
3/96 $12,117 $11,992 $11,961
4/96 $12,122 $12,001 $11,973
5/96 $12,093 $12,025 $12,000
6/96 $12,215 $12,111 $12,088
7/96 $12,237 $12,161 $12,135
8/96 $12,259 $12,204 $12,180
9/96 $12,409 $12,321 $12,291
10/96 $12,473 $12,453 $12,294
11/96 $12,700 $12,557 $12,523
12/96 $12,670 $12,582 $12,525
1/97 $12,723 $12,626 $12,586
2/97 $12,763 $12,669 $12,617
3/97 $12,725 $12,656 $12,607
4/97 $12,833 $12,757 $12,711
5/97 $12,928 $12,843 $12,799
6/97 $13,035 $12,932 $12,889
7/97 $13,221 $13,079 $13,032
8/97 $13,208 $13,089 $13,044
9/97 $13,345 $13,191 $13,141
10/97 $13,455 $13,272 $13,239
11/97 $13,501 $13,305 $13,272
12/97 $13,575 $13,385 $13,360
1/98 $13,741 $13,501 $13,489
2/98 $13,736 $13,519 $13,500
3/98 $13,791 $13,575 $13,552
4/98 $13,845 $13,638 $13,619
5/98 $13,929 $13,711 $13,694
6/98 $14,012 $13,773 $13,764
7/98 $14,067 $13,834 $13,828
8/98 $14,224 $13,928 $13,987
9/98 $14,496 $14,075 $14,175
10/98 $14,405 $14,056 $14,237
11/98 $14,431 $14,093 $14,234
12/98 $14,479 $14,153 $14,289
1/99 $14,524 $14,225 $14,350
2/99 $14,359 $14,178 $14,290
3/99 $14,499 $14,288 $14,391
4/99 $14,578 $14,340 $14,440
5/99 $14,523 $14,321 $14,429
6/99 $14,572 $14,348 $14,471
7/99 $14,591 $14,364 $14,513
8/99 $14,626 $14,392 $14,551
9/99 $14,753 $14,488 $14,649
10/99 $14,783 $14,519 $14,692
11/99 $14,844 $14,567 $14,725
12/99 $14,766 $14,598 $14,740
1/00 $14,831 $14,604 $14,740
2/00 $14,961 $14,699 $14,842
3/00 $15,030 $14,775 $14,926
4/00 $14,999 $14,778 $14,955
5/00 $15,002 $14,831 $15,009
6/00 $15,234 $14,995 $15,175
7/00 $15,412 $15,087 $15,278
8/00 $15,512 $15,197 $15,399
9/00 $15,661 $15,326 $15,526
</TABLE>
Foreign investments involve special risks including greater economic, political
and currency fluctuation risks, which may be even greater in emerging markets.
In addition, foreign countries may have different accounting standards than
those of the U.S., which may adversely affect the value of the fund.
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE DATA REFLECTS CERTAIN
FEE WAIVERS AND REIMBURSEMENTS. WITHOUT SUCH WAIVERS, PERFORMANCE AND RANKINGS
WOULD BE LOWER.
(a) INCEPTION DATE OF THE INSTITUTIONAL CLASS OF SHARES IS AUGUST 3, 1992.
SINCE LIPPER SHORT INVESTMENT GRADE DEBT FUNDS INDEX AND LEHMAN BROTHERS
1-3 YEAR GOVERNMENT/CREDIT BOND INDEX PERFORMANCE DATA IS NOT AVAILABLE
COINCIDENT WITH THIS DATE, COMPARATIVE PERFORMANCE IS PRESENTED FROM AUGUST
31, 1992. INCEPTION DATE OF THE RETAIL CLASS OF SHARES IS DECEMBER 31,
1996.
(b) PERFORMANCE SHOWN FOR PERIODS PRIOR TO THE INCEPTION DATE OF THE RETAIL
CLASS (DECEMBER 31, 1996) REPRESENT THE PERFORMANCE OF THE INSTITUTIONAL
CLASS OF SHARES SINCE INCEPTION DURING THE PERIOD SHOWN, ADJUSTED TO
REFLECT THE CURRENT LEVELS OF MANAGEMENT AND 12b-1 FEES PAYABLE BY THE
RESPECTIVE CLASS OF SHARES.
(c) THE LIPPER SHORT INVESTMENT GRADE DEBT FUNDS INDEX IS AN EQUALLY WEIGHTED
UNMANAGED INDEX OF TYPICALLY THE 30 LARGEST MUTUAL FUNDS WITHIN THE SHORT
INVESTMENT GRADE DEBT FUNDS INVESTMENT OBJECTIVE. RETURNS ARE ADJUSTED FOR
THE REINVESTMENT OF CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS.
SOURCE: LIPPER INC.
(d) LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX IS AN UNMANAGED
INDEX CONSISTING OF FIXED RATE DEBT ISSUES RATED INVESTMENT GRADE OR
HIGHER. ALL ISSUES HAVE AT LEAST ONE YEAR TO THREE YEARS TO MATURITY AND AN
OUTSTANDING PAR VALUE OF AT LEAST $100 MILLION FOR U.S. GOVERNMENT ISSUES.
THE INDEX RETURNS HAVE NOT BEEN REDUCED FOR ONGOING MANAGEMENT AND
OPERATING EXPENSES APPLICABLE TO MUTUAL FUND INVESTMENTS. IT IS NOT
POSSIBLE TO INVEST DIRECTLY IN AN INDEX.
(e) CUMULATIVE PERFORMANCE IS SHOWN FOR THE INSTITUTIONAL CLASS OF SHARES.
CUMULATIVE PERFORMANCE OF THE RETAIL CLASS OF SHARES WOULD, DUE TO THE
HIGHER FEES PAID BY THE RETAIL CLASS OF SHARES, BE LOWER.
LOOMIS SAYLES FIXED INCOME FUNDS 23
<PAGE>
FUND AND MANAGER REVIEW
[PHOTO]
KENT P. NEWMARK
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND
KEY FUND FACTS
OBJECTIVE High total investment return
STRATEGY Invests in securities issued or guaranteed by the U.S. Government or
its authorities, agencies or instrumentalities.
FUND INCEPTION DATE 5/21/91
COMMENCEMENT OF OPERATIONS OF CLASS Institutional: 5/21/91
EXPENSE RATIO Institutional: 0.50%
TOTAL NET ASSETS (ALL CLASSES) $11.5 Million
--------------------------------------------------------------------------------
PERFORMANCE
For the twelve-month period ended September 30, 2000, the Institutional class of
the U.S. Government Securities Fund returned 9.07%, compared to the 7.18% return
for the Fund's benchmark, the Lehman Brothers Government Bond Index. The average
general U.S. government debt fund, as measured by Lipper Inc., posted a total
return of 6.12% for the same period.
PORTFOLIO REVIEW
Treasuries remained strong during the fiscal year, primarily due to the Treasury
Department's bond buy-back program launched in January 2000. This caused yields
on longer-term Treasuries to drop dramatically. At the same time, short-term
rates remained on the upswing, as the Federal Reserve Board maintained its
tightening course through the first two calendar quarters of 2000. This created
an inverted yield curve that remained in place through the end of the fiscal
year.
But, the curve did start to flatten somewhat as the year wore on, in response to
changing Federal Reserve policy and slowing economic growth. Securities in the
intermediate range of the yield curve were the prime beneficiaries of this
shift.
PORTFOLIO POSITIONING
The inverted yield curve contributed to strong returns for long bond funds, such
as the Loomis Sayles U.S. Government Securities Fund. Overall, the Fund's longer
duration, relative to the peer group, enhanced performance as long-term interest
rates declined. In addition, the extra yield provided by the Fund's GNMA
(Government National Mortgage Association) holdings helped the Fund's overall
performance.
/s/ Kent P. Newmark
Kent P. Newmark
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS-PERIODS ENDED SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------------------------------
Since
1 Year 3 Years 5 Years Inception(a)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND (INSTITUTIONAL) 9.07% 6.40% 6.77% 8.81%
Lipper General U.S. Government Debt Funds Index(b) 6.21% 4.89% 5.43% 6.33%
Lehman Brothers Government Bond Index(c) 7.18% 6.17% 6.41% 7.53%
</TABLE>
CUMULATIVE PERFORMANCE-MAY 31, 1991 TO SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
[GRAPH]
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
Loomis Sayles Lipper General Lehman Brothers
U.S. Government U.S. Government Debt Government
Securities Fund Funds Index Bond Index
<S> <C> <C> <C>
5/91 $10,000 $10,000 $10,000
6/91 $9,970 $9,975 $9,986
7/91 $10,120 $10,111 $10,104
8/91 $10,399 $10,334 $10,339
9/91 $10,688 $10,544 $10,555
10/91 $10,769 $10,637 $10,648
11/91 $10,880 $10,707 $10,755
12/91 $11,494 $11,073 $11,121
1/92 $11,099 $10,883 $10,948
2/92 $11,259 $10,942 $10,991
3/92 $11,110 $10,875 $10,926
4/92 $11,057 $10,934 $10,995
5/92 $11,393 $11,129 $11,198
6/92 $11,588 $11,275 $11,359
7/92 $12,034 $11,503 $11,645
8/92 $12,144 $11,598 $11,753
9/92 $12,397 $11,716 $11,920
10/92 $12,098 $11,562 $11,748
11/92 $12,143 $11,570 $11,730
12/92 $12,500 $11,749 $11,925
1/93 $12,788 $11,943 $12,178
2/93 $13,206 $12,121 $12,422
3/93 $13,218 $12,164 $12,464
4/93 $13,322 $12,239 $12,559
5/93 $13,347 $12,247 $12,546
6/93 $13,832 $12,472 $12,824
7/93 $14,042 $12,540 $12,902
8/93 $14,547 $12,752 $13,190
9/93 $14,597 $12,766 $13,241
10/93 $14,620 $12,799 $13,291
11/93 $14,408 $12,660 $13,145
12/93 $14,465 $12,726 $13,196
1/94 $14,836 $12,891 $13,376
2/94 $14,314 $12,649 $13,093
3/94 $13,710 $12,329 $12,799
4/94 $13,487 $12,187 $12,698
5/94 $13,403 $12,141 $12,682
6/94 $13,333 $12,089 $12,653
7/94 $13,732 $12,290 $12,885
8/94 $13,718 $12,292 $12,888
9/94 $13,320 $12,106 $12,706
10/94 $13,251 $12,070 $12,696
11/94 $13,309 $12,038 $12,673
12/94 $13,561 $12,123 $12,750
1/95 $13,914 $12,336 $12,988
2/95 $14,223 $12,612 $13,267
3/95 $14,326 $12,670 $13,350
4/95 $14,519 $12,827 $13,525
5/95 $15,252 $13,292 $14,070
6/95 $15,371 $13,373 $14,178
7/95 $15,306 $13,325 $14,126
8/95 $15,610 $13,481 $14,292
9/95 $15,838 $13,607 $14,430
10/95 $16,067 $13,787 $14,650
11/95 $16,360 $13,982 $14,878
12/95 $16,685 $14,177 $15,089
1/96 $16,700 $14,249 $15,181
2/96 $16,120 $13,957 $14,872
3/96 $15,901 $13,839 $14,748
4/96 $15,699 $13,744 $14,654
5/96 $15,618 $13,693 $14,629
6/96 $15,906 $13,852 $14,818
7/96 $15,945 $13,879 $14,855
8/96 $15,750 $13,842 $14,822
9/96 $16,188 $14,075 $15,068
10/96 $16,776 $14,380 $15,399
11/96 $17,237 $14,633 $15,667
12/96 $16,905 $14,482 $15,507
1/97 $16,854 $14,513 $15,524
2/97 $16,854 $14,544 $15,546
3/97 $16,486 $14,372 $15,381
4/97 $16,893 $14,585 $15,603
5/97 $17,081 $14,706 $15,738
6/97 $17,354 $14,880 $15,914
7/97 $18,161 $15,291 $16,366
8/97 $17,849 $15,131 $16,204
9/97 $18,248 $15,362 $16,448
10/97 $18,613 $15,588 $16,732
11/97 $18,824 $15,644 $16,818
12/97 $19,058 $15,803 $16,994
1/98 $19,343 $16,003 $17,248
2/98 $19,272 $15,972 $17,201
3/98 $19,308 $16,012 $17,250
4/98 $19,432 $16,074 $17,328
5/98 $19,666 $16,224 $17,506
6/98 $19,901 $16,382 $17,705
7/98 $19,929 $16,386 $17,732
8/98 $20,387 $16,707 $18,193
9/98 $20,881 $17,085 $18,684
10/98 $20,723 $16,958 $18,620
11/98 $20,871 $16,996 $18,626
12/98 $20,827 $17,042 $18,668
1/99 $21,015 $17,140 $18,776
2/99 $20,414 $16,770 $18,330
3/99 $20,414 $16,856 $18,402
4/99 $20,520 $16,900 $18,444
5/99 $20,272 $16,714 $18,282
6/99 $20,082 $16,628 $18,245
7/99 $19,976 $16,533 $18,218
8/99 $19,918 $16,488 $18,215
9/99 $20,151 $16,690 $18,386
10/99 $20,224 $16,716 $18,395
11/99 $20,126 $16,702 $18,370
12/99 $19,899 $16,589 $18,251
1/00 $19,999 $16,538 $18,277
2/00 $20,479 $16,748 $18,537
3/00 $21,039 $17,000 $18,862
4/00 $20,943 $16,937 $18,810
5/00 $20,862 $16,919 $18,822
6/00 $21,350 $17,259 $19,158
7/00 $21,564 $17,393 $19,343
8/00 $21,998 $17,661 $19,629
9/00 $21,969 $17,727 $19,685
</TABLE>
NOTE: PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. TOTAL RETURN
ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT IN THE FUND WILL
FLUCTUATE SO THAT INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST. PERFORMANCE DATA REFLECTS CERTAIN FEE WAIVERS AND
REIMBURSEMENTS, AND THAT, WITHOUT SUCH WAIVERS, PERFORMANCE, AND THEREFORE
RANKINGS, WOULD BE LOWER.
(a) INCEPTION DATE OF THE LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND IS MAY
21, 1991. SINCE LIPPER GENERAL U.S. GOVERNMENT FUNDS INDEX AND LEHMAN
BROTHERS GOVERNMENT BOND INDEX PERFORMANCE DATA IS NOT AVAILABLE COINCIDENT
WITH THIS DATE, COMPARATIVE PERFORMANCE IS PRESENTED FROM MAY 31, 1991.
(b) THE LIPPER GENERAL U.S. GOVERNMENT FUNDS INDEX IS AN EQUALLY WEIGHTED
UNMANAGED INDEX OF TYPICALLY THE 30 LARGEST MUTUAL FUNDS WITHIN THE GENERAL
U.S. GOVERNMENT FUNDS INVESTMENT OBJECTIVE. RETURNS ARE ADJUSTED FOR THE
REINVESTMENT OF CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS. SOURCE:
LIPPER INC.
(c) LEHMAN BROTHERS GOVERNMENT BOND INDEX IS AN UNMANAGED INDEX COMPOSED OF ALL
PUBLICLY ISSUED, NONCONVERTIBLE, DOMESTIC DEBT OF THE U.S. GOVERNMENT OR
ANY OF ITS AGENCIES, QUASI-FEDERAL CORPORATIONS, OR CORPORATE DEBT
GUARANTEED BY THE U.S. GOVERNMENT. THE INDEX RETURNS HAVE NOT BEEN REDUCED
FOR ONGOING MANAGEMENT AND OPERATING EXPENSES APPLICABLE TO MUTUAL FUND
INVESTMENTS. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX.
LOOMIS SAYLES FIXED INCOME FUNDS 25
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-94.5% OF NET ASSETS
NON-CONVERTIBLE BONDS--77.9%
AEROSPACE/DEFENSE--1.6%
Lockheed Martin Corp., 7.750%, 5/01/26 USD 2,500,000 $ 2,414,525
Loral Corp., 7.000%, 9/15/23 3,270,000 2,881,230
Raytheon Co., 6.400%, 12/15/18 18,000,000 15,265,620
Raytheon Co., 7.000%, 11/01/28 3,450,000 2,943,091
Raytheon Co., 7.200%, 8/15/27 5,000,000 4,385,750
--------------
27,890,216
--------------
AIRLINES--0.2%
Delta Air Lines, Inc., 8.300%, 12/15/29 3,690,000 3,335,133
NWA Trust, 9.360%, 3/10/06 598,500 632,894
--------------
3,968,027
--------------
AUTO & RELATED--1.4%
Dana Corp., 7.000%, 3/01/29 4,250,000 3,412,495
Delphi Automotive Systems Corp., 7.125%, 5/01/29 6,550,000 5,577,587
Federal-Mogul Corp., 7.500%, 1/15/09 1,000,000 380,000
TRW, Inc., 6.650%, 1/15/28 3,350,000 2,661,273
TRW, Inc., 7.750%, 6/01/29 13,000,000 11,726,858
--------------
23,758,213
--------------
BANKS/SAVINGS & LOANS--0.4%
First Union Institutional Trust, 7.850%, 1/01/27 2,000,000 1,739,580
Keycorp Capital II, 6.875%, 3/17/29 6,500,000 5,054,205
--------------
6,793,785
--------------
BROADCASTING--0.2%
CBS, Inc., 7.125%, 11/01/23 1,435,000 1,299,522
Fox Family Worldwide, Inc., Zero Coupon Bond,
11/01/07 (step to 10.250% on 11/01/02) # 2,975,000 2,164,312
--------------
3,463,834
--------------
BUILDING MATERIALS--0.2%
Owens Corning, 7.500%, 8/01/18 ^ 9,175,000 2,637,812
Owens Corning, 7.700%, 5/01/08 ^ 1,000,000 330,000
--------------
2,967,812
--------------
CANADIAN--18.3%
Call-Net Enterprises, Inc., Zero Coupon Bond, 8/15/07 5,000,000 2,000,000
Canadian Government, Zero Coupon Bond, 6/01/22 CAD 33,350,000 6,224,358
Canadian Government, Zero Coupon Bond, 6/01/25 276,510,000 45,958,160
Clearnet Communications, Inc., Zero Coupon Bond,
8/13/07 (step to 11.750% on 8/13/02) # 38,000,000 22,231,086
Clearnet Communications, Inc., Zero Coupon Bond,
5/15/08 (step to 10.400% on 5/15/03) # 4,160,000 2,361,122
Clearnet Communications, Inc., Zero Coupon Bond,
2/15/09 (step to 10.750% on 2/15/04) # 2,400,000 1,292,382
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
CANADIAN--CONTINUED
Microcell Telecommunications, Inc., Zero Coupon Bond,
10/15/07 (step to 11.125% on 10/15/02) # CAD 5,000,000 $ 2,542,880
Milit-Air, Inc., 5.750%, 6/30/19 6,950,000 4,432,901
New Brunswick FM Project, Zero Coupon Bond,
11/30/27 (step to 6.470% on 5/30/03) 144A # 10,000,000 5,476,998
Ontario Hydro, Zero Coupon Bond, 11/27/20 1,507,000 275,983
Ontario Hydro, Zero Coupon Bond, 10/15/21 119,125,000 20,617,605
Province of Alberta, 5.000%, 12/16/08 6,375,000 3,962,273
Province of Alberta, 5.394%, 6/14/13 15,169,005 9,656,652
Province of Alberta, 5.400%, 6/15/10 4,655,000 2,952,809
Province of Alberta, 5.930%, 9/16/16 30,024,647 19,625,604
Province of British Columbia, Zero Coupon Bond, 8/23/13 25,000,000 7,255,352
Province of British Columbia, Zero Coupon Bond, 6/09/14 10,000,000 2,757,612
Province of British Columbia, Zero Coupon Bond, 9/05/20 65,000,000 11,797,401
Province of British Columbia, Zero Coupon Bond, 6/09/22 96,208,000 15,735,975
Province of British Columbia, Zero Coupon Bond, 8/19/22 31,387,000 5,073,835
Province of British Columbia, Zero Coupon Bond, 9/08/23 37,950,000 5,751,032
Province of British Columbia, Zero Coupon Bond, 8/23/24 122,250,000 17,486,578
Province of British Columbia, Zero Coupon Bond, 11/19/27 41,600,000 5,085,643
Province of Manitoba, Zero Coupon Bond, 7/22/13 2,500,000 739,346
Province of Manitoba, Zero Coupon Bond, 3/05/31 36,929,000 3,927,113
Province of Manitoba, 6.500%, 9/22/17 34,300,000 23,158,543
Province of Manitoba, 7.750%, 12/22/25 39,245,000 30,354,476
Province of Newfoundland, 6.150%, 4/17/28 2,500,000 1,567,395
Province of Ontario, Zero Coupon Bond, 7/13/22 13,000,000 2,168,222
Province of Ontario, Zero Coupon Bond, 6/02/27 167,775,000 21,890,388
Province of Ontario, Zero Coupon Bond, 3/08/29 18,600,000 2,239,617
Province of Ontario (Certificate of Deposit),
Zero Coupon Bond, 12/02/25 7,650,000 1,054,532
Province of Saskatchewan, Zero Coupon Bond, 4/10/14 27,000,000 7,564,200
Province of Saskatchewan (Certificate of Deposit),
Zero Coupon Bond, 2/04/22 2,350,000 389,385
Province of Saskatchewan (Certificate of Deposit),
Zero Coupon Bond, 5/30/25 36,780,000 5,106,948
--------------
320,714,406
--------------
CHEMICALS--SPECIALTY--0.3%
Methanex Corp., 7.750%, 8/15/05 USD 5,000,000 4,450,000
--------------
COMMUNICATIONS--0.3%
Century Communications Corp., 8.375%, 11/15/17 5,000,000 3,750,000
Charter Communications Holdings, Zero Coupon Bond,
4/01/11 (step to 9.920% on 4/04/04) # 1,500,000 870,000
--------------
4,620,000
--------------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 27
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
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BONDS AND NOTES-CONTINUED
COMPUTER HARDWARE--1.2%
Seagate Technology, Inc., 7.370%, 3/01/07 USD 6,000,000 $ 5,435,820
Seagate Technology, Inc., 7.450%, 3/01/37 5,237,000 5,052,045
Seagate Technology, Inc., 7.875%, 3/01/17 10,250,000 9,897,841
--------------
20,385,706
--------------
COMPUTER SERVICES--0.2%
Rhythms NetConnections, Inc., Series B, Zero Coupon
Bond, 5/15/08 (step to 13.500% on 5/15/03) # 9,000,000 3,420,000
Rhythms NetConnections, Inc., Series B, 14.000%,
2/15/10 1,500,000 960,000
--------------
4,380,000
--------------
ELECTRONIC COMPONENTS--0.9%
Westinghouse Electric Corp., 7.875%, 9/01/23 15,350,000 15,200,644
Zenith Electronics Corp., 8.190%, 11/01/09 1,161,000 336,690
--------------
15,537,334
--------------
ELECTRONIC COMPONENTS--SEMICONDUCTORS--0.2%
Micron Technology, Inc., 6.500%, 9/30/05 144A 3,000,000 2,565,000
Pioneer Standard Electronics, Inc., 8.500%, 8/01/06 1,000,000 955,518
--------------
3,520,518
--------------
ENTERTAINMENT--3.7%
Boston Celtics Ltd., 6.000%, 6/30/38 1,549,000 882,930
Time Warner Entertainment Co., 6.875%, 6/15/18 8,710,000 7,878,805
Time Warner Entertainment Co., 6.950%, 1/15/28 38,900,000 34,461,899
Time Warner Entertainment Co., 7.570%, 2/01/24 17,170,000 16,105,975
Time Warner, Inc., 6.625%, 5/15/29 7,500,000 6,358,725
--------------
65,688,334
--------------
FINANCIAL SERVICES--2.2%
Finova Capital Corp., 7.250%, 11/08/04 2,300,000 1,725,000
Merey Sweeny LP, 8.850%, 12/18/19 144A 5,000,000 5,002,900
Security Capital Group, Inc., 7.700%, 6/15/28 16,725,000 13,771,365
US West Capital Funding, Inc., 6.500%, 11/15/18 2,000,000 1,759,480
US West Capital Funding, Inc., 6.875%, 7/15/28 18,550,000 16,586,297
--------------
38,845,042
--------------
FOOD & BEVERAGE--1.8%
Borden, Inc., 7.875%, 2/15/23 5,500,000 4,093,485
ConAgra, Inc., 7.000%, 10/01/28 23,375,000 20,138,965
Pepsi Bottling Group, Inc., 7.000%, 3/01/29 8,500,000 7,790,675
--------------
32,023,125
--------------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
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BONDS AND NOTES-CONTINUED
FOREIGN GOVERNMENT/AGENCY--6.9%
Escom, 11.000%, 6/01/08 ZAR 43,250,000 $ 5,182,802
Republic of Argentina, 6.000%, 3/31/23 USD 1,000,000 686,000
Republic of Argentina, 8.875%, 3/01/29 1,000,000 664,670
Republic of Argentina, 9.750%, 9/19/27 1,500,000 1,191,000
Republic of Brazil, 10.125%, 5/15/27 36,181,000 28,040,275
Republic of Brazil C Bond, 8.000%, 4/15/14 PIK 46,300,875 35,420,169
Republic of Ecuador, 4.000%, 8/15/30 144A 376,000 137,240
Republic of Ecuador, 12.000%, 11/15/12 144A 459,000 321,300
Republic of Panama, 4.500%, 7/17/14
(step to 4.750% on 7/17/01) # 950,000 760,199
Republic of Peru, 3.750%, 3/07/17
(step to 4.000% on 3/07/01) # 6,250,000 3,515,625
Republic of Philippines, 10.625%, 3/16/25 3,000,000 2,535,000
Republic of South Africa, 12.500%, 12/21/06 ZAR 42,450,000 5,704,127
Republic of South Africa, 13.000%, 8/31/10 20,700,000 2,775,442
Republic of South Africa, 13.500%, 9/15/15 93,550,000 12,933,628
Republic of Venezuela, 9.250%, 9/15/27 USD 31,350,000 21,202,005
--------------
121,069,482
--------------
FOREIGN ISSUER--10.0%
APP China Group Ltd., 14.000%, 3/15/10 144A 5,800,000 2,668,000
Bangko Sentral Pilipinas, 8.600%, 6/15/27 3,000,000 1,995,000
Bangkok Bank Public Co. Ltd., 9.025%, 3/15/29 144A 44,935,000 35,273,975
Cerro Negro Finance Ltd., 7.900%, 12/01/20 144A 10,500,000 8,597,505
Compania de Alimentos Fargo SA, 13.250%, 8/01/08 3,000,000 2,400,000
Espirito Santo Centrais Eletricas SA, 10.000%, 7/15/07 7,850,000 6,437,000
Hyundai Semiconductor, 8.625%, 5/15/07 144A 500,000 425,537
Indah Kiat Finance Mauritius Ltd., 10.000%, 7/01/07 1,250,000 612,500
Jazztel Plc, 13.250%, 12/15/09 EUR 3,250,000 2,555,223
Jazztel Plc, 14.000%, 7/15/10 144A 3,750,000 3,211,549
Korea Electric Power Corp., 7.400%, 4/01/16 USD 11,303,081 10,404,712
Multicanal SA, 10.500%, 4/15/18 4,000,000 2,720,000
PDVSA Finance Ltd., 7.400%, 8/15/16 3,000,000 2,418,750
PDVSA Finance Ltd., 7.500%, 11/15/28 1,000,000 750,000
Perez Companc SA, 8.125%, 7/15/07 144A 3,590,000 3,087,400
Petroleos Mexicanos, 8.625%, 12/01/23 144A 3,100,000 2,790,000
Petroleos Mexicanos, 9.250%, 3/30/18 2,500,000 2,434,375
Pindo Deli Finance Mauritius Ltd., 10.750%, 10/01/07 13,210,000 6,472,900
Pindo Deli Finance Mauritius Ltd., 10.875%, 10/01/27 16,500,000 6,270,000
Pindo Deli Finance Mauritius Ltd., 11.750%, 10/01/17 2,200,000 902,000
Quezon Power Philippines Co., 8.860%, 6/15/17 7,875,000 6,300,000
Samsung Electronics Co. Ltd., 7.700%, 10/01/27 144A 12,500,000 9,542,500
Siam Commercial Bank Public Co. Ltd., 7.500%,
3/15/06 144A 7,000,000 6,020,000
Tenaga Nasional Berhad, 7.500%, 11/01/25 144A 10,525,000 8,899,056
TFM SA de CV, Zero Coupon Bond, 6/15/09
(step to 11.750% on 6/15/02) # 5,650,000 4,265,750
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 29
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
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BONDS AND NOTES-CONTINUED
FOREIGN ISSUER--CONTINUED
Thai Farmers Bank Plc, 8.250%, 8/21/16 144A USD 18,140,000 $ 14,149,200
Tjiwi Kimia Mauritius Ltd., 10.000%, 8/01/04 17,200,000 9,976,000
Total Access Communication Public Co. Ltd.,
8.375%, 11/04/06 144A 12,575,000 11,066,000
Transener SA, 9.250%, 4/01/08 144A 2,250,000 2,047,500
Transportacion Maritima Mexicana SA de CV, 10.000%,
11/15/06 1,050,000 777,000
--------------
175,469,432
--------------
FOREST & PAPER PRODUCTS--0.8%
Georgia-Pacific Corp. (Timber Group), 7.250%, 6/01/28 3,050,000 2,624,159
Georgia-Pacific Group, 7.375%, 12/01/25 5,400,000 4,743,630
Georgia-Pacific Group, 7.750%, 11/15/29 3,000,000 2,734,800
International Paper Co., 6.875%, 4/15/29 4,000,000 3,400,720
--------------
13,503,309
--------------
GOVERNMENT AGENCIES--5.1%
Federal Home Loan Mortgage Corp., 5.750%, 12/15/25 5,276,200 4,709,009
Federal Home Loan Mortgage Corp., 6.000%, 4/15/28 5,000,000 4,431,250
Federal National Mortgage Association, Zero Coupon
Bond, 10/29/07 NZD 103,925,000 25,025,334
Federal National Mortgage Association,
6.000%, 7/01/29 USD 4,672,860 4,364,779
Federal National Mortgage Association,
6.250%, 5/15/29 23,000,000 21,210,370
Federal National Mortgage Association,
6.375%, 8/15/07 AUD 17,500,000 9,264,085
Federal National Mortgage Association,
6.625%, 9/15/09 USD 20,000,000 19,762,400
--------------
88,767,227
--------------
HEALTHCARE--PRODUCTS--0.4%
Bausch & Lomb, Inc., 7.125%, 8/01/28 10,200,000 6,233,118
--------------
HEALTHCARE--SERVICES--0.9%
Columbia/HCA Healthcare Corp., 7.050%, 12/01/27 6,300,000 4,819,500
Columbia/HCA Healthcare Corp., 7.190%, 11/15/15 4,000,000 3,380,000
Columbia/HCA Healthcare Corp., 7.500%, 12/15/23 1,965,000 1,709,550
Columbia/HCA Healthcare Corp., 7.580%, 9/15/25 1,300,000 1,092,000
Columbia/HCA Healthcare Corp., 7.690%, 6/15/25 5,000,000 4,187,500
Columbia/HCA Healthcare Corp., 7.750%, 7/15/36 1,000,000 805,060
--------------
15,993,610
--------------
HOME BUILDERS--0.3%
Pulte Corp., 7.300%, 10/24/05 1,000,000 917,900
Pulte Corp., 7.625%, 10/15/17 5,000,000 3,997,500
--------------
4,915,400
--------------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
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BONDS AND NOTES-CONTINUED
HOTELS--0.1%
ITT Corp., 7.375%, 11/15/15 USD 2,500,000 $ 2,175,175
--------------
INSURANCE--0.1%
Conseco, Inc., 8.500%, 10/15/02 2,000,000 1,590,000
--------------
OIL & GAS--3.0%
Anadarko Petroleum Corp., 6.625%, 1/15/28 3,000,000 2,499,120
Chesapeake Energy Corp., 8.500%, 3/15/12 3,575,000 3,137,062
Global Marine, Inc., 7.000%, 6/01/28 1,000,000 892,460
Hvide Marine, Inc., 12.500%, 6/30/07 5,454,382 4,690,769
Pennzoil-Quaker State Co., 7.375%, 4/01/29 3,421,000 2,561,850
Phillips 66 Capital Trust II, 8.000%, 1/15/37 1,000,000 883,970
Pioneer Natural Resources Co., 6.500%, 1/15/08 1,000,000 875,110
Pioneer Natural Resources Co., 7.200%, 1/15/28 3,000,000 2,385,000
Seagull Energy Corp., 7.500%, 9/15/27 3,850,000 3,291,750
Tennessee Gas Pipeline Co., 7.000%, 10/15/28 8,000,000 7,134,480
Union Pacific Resources Group, Inc., 7.150%, 5/15/28 11,500,000 10,576,205
Union Pacific Resources Group, Inc., 7.500%, 10/15/26 10,400,000 9,989,200
Union Pacific Resources Group, Inc., 7.950%, 4/15/29 3,950,000 3,995,899
--------------
52,912,875
--------------
OIL & GAS DRILLING EQUIPMENT--1.0%
R & B Falcon Corp., 6.750%, 4/15/05 2,500,000 2,350,000
R & B Falcon Corp., Series B, 7.375%, 4/15/18 18,000,000 16,042,500
--------------
18,392,500
--------------
OIL & GAS EXPLORATION--0.3%
Anadarko Petroleum Corp., 7.200%, 3/15/29 4,935,000 4,583,875
--------------
RAIL--TRANSPORT--0.1%
Missouri Pacific Railroad Co., 5.000%, 1/01/45 3,389,000 1,758,044
--------------
REAL ESTATE INVESTMENT TRUSTS--3.5%
AMB Property Corp., 7.500%, 6/30/18 7,500,000 6,662,175
CarrAmerica Realty Corp., 6.875%, 3/01/08 1,500,000 1,364,715
EOP Operating LP, 7.500%, 4/19/29 3,500,000 3,086,930
First Industrial, 7.500%, 12/01/17 8,400,000 7,269,024
First Industrial, 7.600%, 7/15/28 18,750,000 15,725,812
Highwoods Realty LP, 7.500%, 4/15/18 3,750,000 3,110,775
Meditrust Corp., 7.000%, 8/15/07 5,500,000 3,795,000
Security Capital Industrial Trust, 7.625%, 7/01/17 3,375,000 2,987,618
Spieker Properties, Inc., 7.500%, 10/01/27 2,098,000 1,853,919
Susa Partnership LP, 7.450%, 7/01/18 6,500,000 5,583,890
Susa Partnership LP, 7.500%, 12/01/27 7,905,000 6,563,759
Susa Partnership LP, 8.200%, 6/01/17 760,000 701,206
TriNet Corporate Realty Trust, Inc., 7.700%, 7/15/17 5,000,000 3,466,995
--------------
62,171,818
--------------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 31
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
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BONDS AND NOTES-CONTINUED
RETAIL--GENERAL--1.6%
Dillard's, Inc., 6.430%, 8/01/04 USD 3,500,000 $ 2,836,155
Dillard's, Inc., 7.130%, 8/01/18 500,000 306,990
Dillon Read Structured Finance Corp., 7.430%, 8/15/18 2,000,000 1,290,000
Dillon Read Structured Finance Corp., 7.600%, 8/15/07 179,005 152,763
Dillon Read Structured Finance Corp., 8.550%, 8/15/19 500,000 338,250
Dillon Read Structured Finance Corp., Series A,
6.660%, 8/15/10 2,201,942 1,695,275
J.C. Penney Co., Inc., 6.875%, 10/15/15 500,000 322,035
J.C. Penney Co., Inc., 7.125%, 11/15/23 4,650,000 2,815,947
J.C. Penney Co., Inc., 7.650%, 8/15/16 1,020,000 703,392
J.C. Penney Co., Inc., 7.950%, 4/01/17 2,425,000 1,711,444
J.C. Penney Co., Inc., 8.125%, 4/01/27 1,000,000 665,840
J.C. Penney Co., Inc., 8.250%, 8/15/22 500,000 365,000
K Mart Corp., 7.950%, 2/01/23 16,015,000 10,716,277
K Mart Corp., 9.350%, 1/02/20 2,000,000 1,462,440
Woolworth Corp., 8.500%, 1/15/22 4,475,000 2,908,750
--------------
28,290,558
--------------
STEEL--0.0%
Geneva Steel Co., 9.500%, 1/15/04 ^ 3,500,000 542,500
--------------
SUPRANATIONAL--2.6%
International Bank for Reconstruction & Development,
Zero Coupon Bond, 8/20/07 NZD 152,375,000 37,780,230
International Bank for Reconstruction & Development,
8.000%, 5/23/07 19,000,000 7,945,781
--------------
45,726,011
--------------
TAXABLE MUNICIPAL--0.1%
Orange County, California Pension Obligation,
Zero Coupon Bond, 9/01/16 USD 5,000,000 1,499,150
--------------
TELECOMMUNICATIONS--3.8%
Call-Net Enterprises, Inc., Zero Coupon Bond, 8/15/08
(step to 8.940% on 08/15/03) # 3,890,000 1,205,900
Covad Communications Group, Inc., 12.000%,
2/15/10 1,000,000 735,000
Hyperion Telecommunications, Inc., Series B, Zero
Coupon Bond, 4/15/03 (step to 13.000% on 4/15/01) # 1,000,000 812,500
Intermedia Communications, Inc., Zero Coupon Bond,
3/01/09 (step to 12.250% on 3/01/04) # 10,000,000 6,700,000
Level 3 Communications, Inc., Zero Coupon Bond,
12/01/08 (step to 10.500% on 12/01/03) # 1,000,000 590,000
Level 3 Communications, Inc., 10.750%,
3/15/08 EUR 250,000 203,067
McCaw International Ltd., Zero Coupon Bond,
4/15/07 (step to 13.000% on 4/15/02) # USD 2,250,000 1,732,500
Nextel Communications, Inc., Zero Coupon Bond,
10/31/07 (step to 9.750% on 10/31/02) # 8,880,000 6,926,400
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
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BONDS AND NOTES-CONTINUED
TELECOMMUNICATIONS--CONTINUED
Nextel International, Inc., Zero Coupon Bond,
4/15/08 (step to 12.125% on 4/15/03) # USD 25,525,000 $ 16,527,438
Nextlink Communications, Inc., Zero Coupon Bond,
6/01/09 (step to 12.250% on 6/01/04) # 6,000,000 3,390,000
Nextlink Communications, Inc., Zero Coupon Bond,
12/01/09 (step to 12.125% on 12/01/04) # 625,000 334,375
Nextlink Communications, Inc., Zero Coupon Bond,
4/15/08 (step to 9.450% on 4/15/03) # 5,000,000 2,925,000
RCN Corp., Zero Coupon Bond, 10/15/07
(step to 11.125% on 10/15/02) # 9,350,000 5,049,000
RCN Corp., Zero Coupon Bond, 2/15/08
(step to 9.800% on 2/15/03) # 8,170,000 4,003,300
RCN Corp., Zero Coupon Bond, 7/01/08
(step to 11.000% on 7/01/03) # 15,650,000 7,512,000
Teligent, Inc., Zero Coupon Bond, 3/01/08
(step to 11.500% on 3/01/03) # 30,375,000 8,505,000
--------------
67,151,480
--------------
TEXTILE & APPAREL--0.5%
Burlington Industries, Inc., 7.250%, 9/15/05 5,000,000 2,375,000
Burlington Industries, Inc., 7.250%, 8/01/27 9,000,000 3,960,000
Kellwood Co., 7.625%, 10/15/17 2,500,000 1,379,175
Phillips Van Heusen Corp., 7.750%, 11/15/23 1,000,000 722,500
--------------
8,436,675
--------------
TOBACCO--2.5%
Philip Morris Cos., Inc., 7.750%, 1/15/27 50,235,000 43,954,620
--------------
TRANSPORTATION--0.0%
American President Cos. Ltd., 8.000%, 1/15/24 1,425,000 712,500
--------------
UTILITIES--1.2%
AES Corp., 8.875%, 11/01/27 5,000,000 4,325,000
Boston Edison Co., 7.800%, 3/15/23 1,000,000 934,180
Commonwealth Edison Co., 4.750%, 12/01/11 770,000 639,100
KN Capital Trust, 7.630%, 4/15/28 15,750,000 13,679,032
Texas-New Mexico Power Co., 6.250%, 1/15/09 1,000,000 878,730
--------------
20,456,042
--------------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $1,494,310,858) 1,365,311,753
--------------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 33
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
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BONDS AND NOTES-CONTINUED
CONVERTIBLE BONDS--16.6%
AUTO & RELATED--0.5%
Exide Corp., 2.900%, 12/15/05 144A USD 5,625,000 $ 2,615,625
Magna International, Inc. Class A, 4.875%, 2/15/05 6,035,000 5,363,606
--------------
7,979,231
--------------
CANADIAN--0.2%
Rogers Communications, Inc., 2.000%, 11/26/05 3,000,000 2,711,040
--------------
COMMUNICATIONS EQUIPMENT--0.0%
Efficient Networks, Inc., 5.000%, 3/15/05 144A 1,000,000 635,000
--------------
COMPUTERS--0.6%
Cray Research, Inc., 6.125%, 2/01/11 635,000 273,050
Hutchinson Technology, Inc., 6.000%, 3/15/05 2,400,000 2,199,000
Maxtor Corp., 5.750%, 3/01/12 6,950,000 4,865,000
Quantum Corp. - DLT & Storage Systems,
7.000%, 8/01/04 881,000 718,015
Silicon Graphics, Inc., 5.250%, 9/01/04 1,275,000 873,375
Telxon Corp., 5.750%, 1/01/03 225,000 199,406
Western Digital, Zero Coupon Bond, 2/18/18 4,150,000 1,099,750
--------------
10,227,596
--------------
DIVERSIFIED OPERATIONS--1.7%
Ogden Corp., 5.750%, 10/20/02 1,750,000 1,529,381
Thermo Electron Corp., 4.250%, 1/01/03 144A 30,325,000 28,808,750
--------------
30,338,131
--------------
ELECTRONIC COMPONENTS--0.4%
EDO Corp., 7.000%, 12/15/11 934,000 723,850
Kent Electronics Corp., 4.500%, 9/01/04 7,175,000 5,914,066
--------------
6,637,916
--------------
ELECTRONIC COMPONENTS--SEMICONDUCTORS--0.1%
Park Electrochemical Corp., 5.500%, 3/01/06 1,000,000 1,350,000
Richardson Electronics Ltd., 7.250%, 12/15/06 450,000 369,000
--------------
1,719,000
--------------
ELECTRONIC MEASURING INSTRUMENTS--0.0%
Thermedics, Inc., Zero Coupon Bond, 6/01/03 950,000 665,000
--------------
ENVIRONMENTAL SERVICES--0.3%
Thermo TerraTech, Inc., 4.625%, 5/01/03 400,000 377,000
Thermo TerraTech, Inc., 4.625%, 5/01/03 144A 5,648,000 5,323,240
--------------
5,700,240
--------------
FINANCIAL SERVICES--0.6%
Bell Atlantic Financial Services, 5.750%, 4/01/03 10,450,000 10,130,230
--------------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
FOREIGN ISSUER--1.7%
APP Finance VII Mauritius Ltd., Zero Coupon Bond,
11/18/12 USD 8,000,000 $ 970,000
APP Finance VII Mauritius Ltd., 3.500%, 4/30/03 8,820,000 4,806,900
APP Finance VII Mauritius Ltd., 3.500%,
4/30/03 144A 8,125,000 4,428,125
Bangkok Bank Public Co. Ltd., 4.589%, 3/03/04 15,100,000 7,587,750
Burns, Philp, 5.500%, 4/30/04 4,480,000 2,956,800
Empresas ICA Sociedad, 5.000%, 3/15/04 3,700,000 1,979,500
Loxley Public Co. Ltd., 2.500%, 4/04/01 ^ 7,700,000 2,772,000
Siam Commercial Bank Public Co. Ltd.,
3.250%, 1/24/04 3,075,000 1,495,219
Ssangyong Oil Refining Co., Inc., 3.000%, 12/31/04 1,930,000 1,399,250
Versatel Telecom International NV, 4.000%, 12/17/04 EUR 1,600,000 1,240,510
--------------
29,636,054
--------------
FREIGHT TRANSPORTATION--0.1%
Builders Transportation, Inc., 8.000%, 8/15/05 ^ USD 1,000,000 1,250
Preston Corp., 7.000%, 5/01/11 750,000 577,500
Worldway Corp., 6.250%, 4/15/11 1,288,000 1,043,280
--------------
1,622,030
--------------
HEALTHCARE--BIOTECHNOLOGY--0.4%
Affymetrix, Inc., 4.750%, 2/15/07 144A 1,000,000 596,250
Human Genome Sciences, Inc., 3.750%, 3/15/07 144A 7,250,000 7,023,437
--------------
7,619,687
--------------
HEALTHCARE--DRUGS--0.4%
Dura Pharmaceuticals, Inc., 3.500%, 7/15/02 2,540,000 2,492,375
Glycomed, Inc., 7.500%, 1/01/03 1,348,100 1,091,961
NABI, Inc., 6.500%, 2/01/03 4,750,000 3,562,500
--------------
7,146,836
--------------
HEALTHCARE--PRODUCTS--0.1%
Centocor, Inc., 4.750%, 2/15/05 1,750,000 2,240,000
--------------
HEALTHCARE--SERVICES--0.2%
Healthsouth Corp., 3.250%, 4/01/03 3,000,000 2,520,000
Medical Care International, Inc., 6.750%, 10/01/06 1,500,000 1,365,000
--------------
3,885,000
--------------
HOME BUILDERS--0.0%
Schuler Homes, Inc., 6.500%, 1/15/03 750,000 667,500
--------------
INDUSTRIAL EQUIPMENT--0.1%
MascoTech, Inc., 4.500%, 12/15/03 2,375,000 1,662,500
--------------
INSURANCE--4.1%
Loews Corp., 3.125%, 9/15/07 80,700,000 72,405,654
--------------
LEISURE--0.0%
Bell Sports Corp., 4.250%, 11/15/00 96,000 95,146
--------------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 35
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
MACHINERY--0.0%
Intevac, Inc., 6.500%, 3/01/04 USD 1,250,000 $ 620,313
--------------
MANUFACTURING--0.2%
FMC Corp., 6.750%, 1/16/05 1,325,000 1,086,500
Hexcel Corp., 7.000%, 8/01/11 1,775,000 1,366,750
--------------
2,453,250
--------------
MULTI-INDUSTRY--0.4%
Thermo Instrument Systems, Inc., 4.500%,
10/15/03 144A 7,243,000 6,790,312
--------------
OFFICE EQUIPMENT--0.7%
Xerox Corp., 0.570%, 4/21/18 24,000,000 12,344,880
--------------
OIL & GAS--2.7%
Baker Hughes, Inc., Zero Coupon Bond, 5/05/08 45,772,000 37,661,202
Diamond Offshore Drilling, Inc., 3.750%, 2/15/07 5,175,000 5,836,106
Key Energy Group, Inc., 5.000%, 9/15/04 2,950,000 2,419,000
Noram Energy Corp., 6.000%, 3/15/12 447,500 416,175
--------------
46,332,483
--------------
PUBLISHING--0.2%
Scholastic Corp., 5.000%, 8/15/05 144A 2,550,000 2,760,375
--------------
REAL ESTATE INVESTMENT TRUSTS--0.5%
Federal Realty Investors Trust, 5.250%, 10/28/03 2,250,000 1,949,062
Rockerfeller Properties, Zero Coupon Bond, 12/31/00 7,000,000 5,915,000
Sizeler Property Investors, Inc., 8.000%, 7/15/03 1,175,000 1,051,625
--------------
8,915,687
--------------
RESTAURANTS--0.1%
Einstein/Noah Bagel Corp., 7.250%, 6/01/04 ^ 2,880,000 1,641,600
--------------
RETAIL--SPECIALTY--0.0%
CML Group, Inc., 5.500%, 1/15/03 ^ 1,224,000 771
Jacobson Stores, Inc., 6.750%, 12/15/11 540,000 378,000
--------------
378,771
--------------
TELECOMMUNICATIONS--0.3%
At Home Corp., 4.750%, 12/15/06 500,000 334,375
Broadband Technologies, Inc., 5.000%, 5/15/01 9,800,000 3,920,000
NTL Communications, Inc., 5.750%, 12/15/09 2,000,000 1,385,000
--------------
5,639,375
--------------
TEXTILE & APPAREL--0.0%
Dixie Yarns, Inc., 7.000%, 5/15/12 248,000 146,010
--------------
TOTAL CONVERTIBLE BONDS
(Identified Cost $302,630,630) 291,746,847
--------------
TOTAL BONDS AND NOTES
(Identified Cost $1,796,941,488) 1,657,058,600
--------------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS-0.3% OF NET ASSETS
OIL & GAS--0.3%
Chesapeake Energy Corp. * 588,500 $ 4,229,844
Hvide Marine, Inc. * 45,939 350,285
--------------
4,580,129
--------------
RESTAURANTS--0.0%
Advantica Restaurant Group, Inc. * 631,448 374,922
--------------
TOTAL COMMON STOCKS
(Identified Cost $15,493,611) 4,955,051
--------------
PREFERRED STOCKS-2.9% OF NET ASSETS
NON-CONVERTIBLE PREFERRED STOCKS--1.8%
CHEMICALS--MAJOR--0.0%
E.I. du Pont DeNemours & Co., $3.50 3,775 201,962
--------------
REAL ESTATE INVESTMENT TRUSTS--1.0%
AMB Property Corp., 8.50% 21,600 511,650
Archstone Communities Trust, Series C, 8.625% 6,900 166,463
CarrAmerica Realty Corp., Series B, 8.570% 126,800 2,726,200
CarrAmerica Realty Corp., Series C, 8.550% 28,150 605,225
Developers Diversified Realty Corp., 9.440% 34,500 789,187
Developers Diversified Realty Corp., 9.500% 52,000 1,218,750
Developers Diversified Realty Corp., Class C, 8.375% 3,000 63,188
Duke-Weeks Realty Corp., Series F, 8.000% 8,103 175,227
Equity Office Properties Trust, Series C, 8.625% 29,300 721,513
Equity Residential Properties Trust, Series L, 7.625% 72,068 1,576,487
First Industrial Realty Trust, Inc., Series D, 7.950% 32,700 682,612
First Industrial Realty Trust, Inc., Series E, 7.900% 154,200 3,238,200
Highwoods Properties, Inc., Series B, 8.000% 60,500 1,259,156
Highwoods Properties, Inc., Series D, 8.000% 12,000 244,500
Liberty Property Trust, Series A, 8.800% 5,300 119,250
New Plan Excel Realty Trust, Inc., Series B, 8.625% 30,700 690,750
ProLogis Trust, Series D, 7.920% 45,500 972,563
ProLogis Trust, Series E, 8.750% 10,000 235,625
Public Storage, Inc., Series K, 8.250% 18,750 448,828
Public Storage, Inc., Series L, 8.250% 35,000 844,375
Shurgard Storage Centers, Inc., Series C, 8.700% 5,000 110,000
Spieker Properties, Inc., 8.000% 6,600 150,563
--------------
17,550,312
--------------
TELECOMMUNICATIONS--0.6%
Adelphia Business Solutions, Inc., Series B, 12.875% PIK 18,569 9,284,285
Nextel Communications, Inc., 11.125% PIK 1,632 1,582,958
--------------
10,867,243
--------------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 37
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCKS-CONTINUED
UTILITIES--0.2%
Central Maine Power Co., 3.500% 2,230 $ 100,350
Connecticut Light & Power Co., $1.90 2,925 74,131
Entergy Louisiana, Inc., 4.160% 2,600 134,225
Jersey Central Power & Light Co., 4.000% 2,020 120,190
MDU Resources Group, Inc., 5.100% 3,790 337,310
Niagara Mohawk Power Corp., 4.850% 5,000 340,000
Pacific Gas & Electric Corp., Series D, 5.000% 75,000 1,068,750
PECO Energy Co., $3.80 300 16,256
Public Service Co., 4.000% 360 20,880
Southern California Edison Co., 4.320% 50,000 675,000
Xcel Energy, Inc., $3.60 1,100 54,862
--------------
2,941,954
--------------
TOTAL NON-CONVERTIBLE PREFERRED STOCKS
(Identified Cost $36,632,959) 31,561,471
--------------
CONVERTIBLE PREFERRED STOCKS--1.1%
AEROSPACE/DEFENSE--0.2%
Coltec Capital Trust, 5.250% 88,500 4,248,000
--------------
AUTO & RELATED--0.0%
Federal-Mogul Corp. , 7.000% 27,500 206,250
--------------
BUILDING MATERIALS--0.0%
Owens Corning, 6.500% ^ 133,000 897,750
--------------
FINANCIAL SERVICES--0.0%
Newell Financial Trust I, 5.250% 15,000 551,250
--------------
FOREIGN ISSUER--0.1%
Philippine Long Distance Telephone Co., $3.50 GDS 41,800 1,510,025
--------------
FREIGHT TRANSPORTATION--0.1%
Arkansas Best Corp., $2.875 25,000 1,106,250
--------------
METALS--0.1%
Bethlehem Steel Corp., $3.50 109,050 1,417,650
--------------
OIL & GAS--0.4%
EVI, Inc., 5.000% 109,500 5,242,313
Western Gas Resources, Inc., $2.625 25,000 946,875
--------------
6,189,188
--------------
REAL ESTATE INVESTMENT TRUSTS--0.1%
Camden Property Trust, $2.25 13,500 336,656
Equity Residential Properties Trust, 7.250% 69,200 1,565,650
--------------
1,902,306
--------------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCKS-CONTINUED
RETAIL--GENERAL--0.1%
K Mart Financing Corp., 7.750% 30,000 $ 933,750
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified Cost $23,837,774) 18,962,419
--------------
TOTAL PREFERRED STOCKS
(Identified Cost $60,470,733) 50,523,890
--------------
WARRANTS-0.1% OF NET ASSETS
FOREST & PAPER PRODUCTS--0.0%
Asia Pulp & Paper Ltd., expiring 03/15/05 4,800 0
--------------
OIL & GAS--0.1%
Hvide Marine, Inc., expiring 06/30/07 144A* 30,619 61,238
Hvide Marine, Inc., expiring 12/15/03 * 4,212 10,530
R & B Falcon Corp., expiring 5/01/09 144A* 2,800 1,960,000
--------------
2,031,768
--------------
TOTAL WARRANTS
(Identified Cost $483,908) 2,031,768
--------------
<CAPTION>
FACE
AMOUNT
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT-1.0% OF NET ASSETS
Repurchase Agreement with State Street Bank
and Trust Co., dated 9/29/00 at 5.250% to be repurchased
at $17,721,750 on 10/02/00 collateralized by
$17,960,000 U.S. Treasury Note, 6.500% due
8/31/01 with a value of $18,072,250 USD 17,714,000 17,714,000
--------------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $17,714,000) 17,714,000
--------------
TOTAL INVESTMENTS--98.8%
(IDENTIFIED COST $1,891,103,740) @ 1,732,283,309
Cash and Other Assets, Less Liabilities--1.2% 20,317,447
--------------
NET ASSETS--100% $1,752,600,756
==============
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 39
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
+ See Note 1.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
144A Securities exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
PIK All or a portion of income may be received as additional securities.
^ Security in default
* Non-income producing security
@ At September 30, 2000, the net unrealized depreciation on investments
based on cost of $1,891,783,933 for federal income tax purposes was as
follows: Aggregate gross unrealized appreciation for all securities in
which there is an excess of value over tax cost and aggregate gross
unrealized depreciation for all securities in which there is an excess of
tax cost over value were $69,737,679 and $229,238,303, respectively,
resulting in net unrealized depreciation of $159,500,624.
Key to Abbreviations:
AUD: Australian Dollar
CAD: Canadian Dollar
EUR: Euro
GDS: Global Depositary Shares
NZD: New Zealand Dollar
USD: United States Dollar
ZAR: South African Rand
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES GLOBAL BOND FUND
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-93.4% OF NET ASSETS
NON-CONVERTIBLE BONDS--80.1%
AUSTRALIA--5.9%
New South Wales Trust, 6.500%, 5/01/06 AUD 1,900,000 $ 1,028,510
Queensland Treasury, 6.000%, 7/14/09 760,000 396,756
Queensland Treasury, 8.000%, 9/14/07 1,600,000 939,955
South Australia Government Finance Authority,
Zero Coupon Bond, 12/21/15 2,750,000 524,829
--------------
2,890,050
--------------
BRAZIL--1.0%
Republic of Brazil C Bond, 8.000%, 4/15/14 PIK USD 615,705 471,014
--------------
CANADA--3.0%
Government of Canada, 8.750%, 12/01/05 CAD 700,000 525,796
Province of Ontario, 5.700%, 12/01/08 1,425,000 922,290
--------------
1,448,086
--------------
FINLAND--2.2%
Republic of Finland, 6.000%, 4/25/08 EUR 1,177,315 1,075,209
--------------
GERMANY--15.4%
Allgemeine HypothekenBank AG, 4.250%, 1/20/14 2,525,000 1,886,007
Bayerische Vereinsbank, 6.000%, 1/23/06 1,022,583 917,284
Deutsche Ausgleichsbank, 4.000%, 7/04/09 1,850,000 1,495,346
Eurohypo AG--Europaeische Hypothekenbank
der Deutschen Bank, 4.000%, 2/01/07 950,000 763,686
Federal Republic of Germany, 4.750%, 7/04/28 1,075,000 835,223
Kreditanstalt Wierdarauf, 6.000%, 2/09/06 1,062,421 959,586
Westdt Landesbank, 5.250%, 10/14/05 766,937 667,243
--------------
7,524,375
--------------
IRELAND--5.3%
Republic of Ireland, 3.500%, 10/18/05 1,335,000 1,084,142
Republic of Ireland, 4.600%, 4/18/16 1,875,000 1,487,742
--------------
2,571,884
--------------
MALAYSIA--4.1%
Tenaga Nasional Berhad, 7.500%, 11/01/25 144A USD 2,375,000 2,008,100
--------------
NETHERLANDS--7.5%
Deutsche Finance BV, 7.500%, 2/10/03 EUR 2,300,000 1,075,851
Deutsche Telekom AG, 5.250%, 5/20/08 1,369,196 1,123,034
Government of Netherlands, 5.750%, 9/15/02 907,560 810,099
Mannesmann Finance BV, 4.750%, 5/27/09 855,000 670,748
--------------
3,679,732
--------------
NEW ZEALAND--3.7%
Government of New Zealand, 6.000%, 11/15/11 NZD 1,375,000 526,801
Government of New Zealand, 7.000%, 7/15/09 1,820,000 752,958
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 41
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES GLOBAL BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
NEW ZEALAND--CONTINUED
Government of New Zealand, 8.000%, 11/15/06 NZD 1,200,000 $ 518,722
--------------
1,798,481
--------------
PANAMA--3.1%
Republic of Panama, 8.875%, 9/30/27 USD 1,775,000 1,491,000
--------------
PERU--1.1%
Republic of Peru, 3.750%, 3/07/17
(step to 4.000% on 3/07/01) # 960,000 540,000
--------------
PHILIPPINES--1.8%
Bangko Sentral Pilipinas, 8.600%, 6/15/27 1,300,000 884,000
--------------
SOUTH AFRICA--5.4%
Escom, 11.000%, 6/01/08 ZAR 6,000,000 719,001
Republic of South Africa, 8.500%, 6/23/17 USD 1,400,000 1,277,500
Republic of South Africa, 13.500%, 9/15/15 ZAR 4,600,000 635,967
--------------
2,632,468
--------------
SOUTH KOREA--0.5%
Samsung Electronics Co. Ltd., 5.375%, 12/16/01 EUR 500,000 222,042
--------------
SUPRANATIONAL--6.1%
European Investment Bank, 6.000%, 11/26/04 GBP 925,000 1,352,607
Inter-American Development Bank, 5.500%, 3/30/10 EUR 1,450,000 1,257,161
International Bank for Reconstruction & Development,
Zero Coupon Bond, 8/20/07 NZD 1,500,000 371,914
--------------
2,981,682
--------------
THAILAND--2.6%
Thai Farmers Bank Plc, 8.250%, 8/21/16 144A USD 1,650,000 1,287,000
--------------
TRINIDAD AND TOBAGO--2.0%
Republic of Trinidad & Tobago, 9.750%, 7/01/20 950,000 966,625
--------------
UNITED KINGDOM--1.0%
Dolphin Telecom Plc, Zero Coupon Bond, 6/01/08
(step to 11.625% on 6/01/03) # EUR 1,605,000 469,754
--------------
UNITED STATES--8.4%
Federal National Mortgage Association,
6.375%, 8/15/07 AUD 975,000 516,142
Fort James Corp., 4.750%, 6/29/04 USD 2,150,000 1,773,901
Household Finance Corp., 5.125%, 6/24/09 EUR 825,000 654,752
News America Holdings, Inc., 8.625%, 2/07/14 AUD 1,240,000 670,685
United States Treasury Notes, 5.625%, 5/15/08 USD 500,000 490,625
--------------
4,106,105
--------------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $45,541,287) 39,047,607
--------------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES GLOBAL BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
CONVERTIBLE BONDS--13.3%
CANADA--1.1%
Magna International, Inc. Class A, 4.875%, 2/15/05 USD 600,000 $ 533,250
--------------
CAYMAN ISLAND--2.0%
FLI Capital Cayman, 6.250%, 2/01/02 900,000 981,000
--------------
HONG KONG--3.9%
Bangkok Bank Public Co. Ltd., 4.589%, 3/03/04 3,750,000 1,884,375
--------------
JAPAN--2.6%
MBL International Finance (Bermuda),
3.000%, 11/30/02 300,000 308,625
MBL International Finance (Bermuda),
3.000%, 11/30/02 950,000 977,313
--------------
1,285,938
--------------
PHILIPPINES--1.4%
MBI Finance Ltd., Zero Coupon Bond, 12/18/01 800,000 712,000
--------------
THAILAND--0.5%
Loxley Public Co. Ltd., 2.500%, 4/04/01 ^ 700,000 252,000
--------------
UNITED KINGDOM--1.8%
Sappi BVI Finance, 7.500%, 8/01/02 900,000 866,250
--------------
TOTAL CONVERTIBLE BONDS
(Identified Cost $7,112,338) 6,514,813
--------------
TOTAL BONDS AND NOTES
(Identified Cost $52,653,625) 45,562,420
--------------
<CAPTION>
SHARES VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCKS-2.2% OF NET ASSETS
BERMUDA--2.2%
Sanwa International Ltd. (Bermuda), 1.25% 99,000,000 1,049,632
--------------
TOTAL PREFERRED STOCKS
(Identified Cost $954,267) 1,049,632
--------------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 43
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES GLOBAL BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT-2.1% OF NET ASSETS
Repurchase Agreement with State Street
Bank and Trust Co., dated 9/29/00 at
5.250% to be repurchased at $1,000,438
on 10/02/00 collateralized by $740,000
U.S. Treasury Bond, 12.000% due
8/15/13 with a value of $1,021,200 USD 1,000,000 $ 1,000,000
--------------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $1,000,000) 1,000,000
--------------
TOTAL INVESTMENTS--97.7%
(IDENTIFIED COST $54,607,892) @ 47,612,052
Cash and Other Assets, Less Liabilities - 2.3% 1,144,122
--------------
NET ASSETS--100% $48,756,174
==============
</TABLE>
+ See Note 1.
PIK All or a portion of income may be received as additional securities.
144A Securities exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
^ Security in default
@ At September 30, 2000, the net unrealized depreciation on investments
based on cost of $54,616,734 for federal income tax purposes was as
follows: Aggregate gross unrealized appreciation for all securities in
which there is an excess of value over tax cost and aggregate gross
unrealized depreciation for all securities in which there is an excess
of tax cost over value were $1,412,817 and $8,417,499, respectively,
resulting in net unrealized depreciation of $7,004,682.
Key to Abbreviations:
AUD: Australian Dollar
CAD: Canadian Dollar
GBP: Great British Pound
EUR: Euro
NZD: New Zealand Dollar
USD: United States Dollar
ZAR: South African Rand
TEN LARGEST SECTOR HOLDINGS AT SEPTEMBER 30, 2000
AS A PERCENTAGE OF NET ASSETS
<TABLE>
<S> <C>
Foreign Government/Agency 33.0%
Foreign Issuer 27.5%
Banking & Finance 11.3%
Financial Services 9.6%
Forest & Paper Products 3.6%
Canadian 3.0%
Telecommunications 2.3%
Government Agencies 2.1%
Media & Entertainment 1.4%
Auto & Related 1.1%
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES HIGH YIELD FUND
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-86.3% OF NET ASSETS
NON-CONVERTIBLE BONDS--62.6%
AUTO & RELATED--0.2%
Federal-Mogul Corp., 7.875%, 7/01/10 USD 100,000 $ 38,000
--------------
BUILDING MATERIALS--0.1%
Owens Corning, 7.500%, 8/01/18 ^ 100,000 28,750
--------------
CANADIAN--6.0%
Call-Net Enterprises, Inc., Zero Coupon Bond, 8/15/07 200,000 80,000
Call-Net Enterprises, Inc., Zero Coupon Bond, 5/15/09
(step to 10.800% on 5/15/04) # 250,000 73,750
Clearnet Communications, Inc., Zero Coupon Bond,
2/15/09 (step to 10.750% on 2/15/04) # CAD 850,000 457,718
Clearnet Communications, Inc., Zero Coupon Bond,
8/13/07 (step to 11.750% on 8/13/02) # 300,000 175,509
Clearnet Communications, Inc., Zero Coupon Bond,
5/15/08 (step to 10.400% on 5/15/03) # 300,000 170,273
Microcell Telecommunications, Inc., Zero Coupon Bond,
10/15/07 (step to 11.125% on 10/15/02) # 985,000 500,948
--------------
1,458,198
--------------
COMPUTER HARDWARE--0.2%
Seagate Technology, Inc., 7.875%, 3/01/17 USD 50,000 48,282
--------------
COMPUTER SERVICES--0.2%
Rhythms NetConnections, Inc., Series B,
Zero Coupon Bond, 5/15/08 (step to 13.500% on
5/15/03) # 150,000 57,000
--------------
ELECTRONIC COMPONENTS--0.2%
Zenith Electronics Corp., 8.190%, 11/01/09 169,000 49,010
--------------
ENTERTAINMENT--0.6%
Boston Celtics Ltd., 6.000%, 6/30/38 263,000 149,910
--------------
FINANCIAL SERVICES--0.3%
Finova Capital Corp., 7.250%, 11/08/04 100,000 75,000
--------------
FOOD & BEVERAGE--0.8%
Borden, Inc., 7.875%, 2/15/23 250,000 186,067
--------------
FOREIGN GOVERNMENT/AGENCY--10.6%
City of Buenos Aires, 10.500%, 5/28/04 144A ARS 150,000 130,500
Escom, 11.000%, 6/01/08 ZAR 1,275,000 152,788
Ivory Coast, Inc., 2.000%, 3/29/18
(step to 2.500% on 3/31/05) ^ USD 500,000 85,000
Ivory Coast, Inc., 2.000%, 3/29/18
(step to 3.000% on 3/31/08) ^ 950,000 171,000
Republic of Argentina, 8.875%, 3/01/29 375,000 249,251
Republic of Argentina, 11.750%, 2/12/07 200,000 176,113
Republic of Brazil C Bond, 8.000%, 4/15/14 PIK 1,139,052 871,375
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 45
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
FOREIGN GOVERNMENT/AGENCY--CONTINUED
Republic of Panama, 4.500%, 7/17/14
(step to 4.750% on 7/17/01) # USD 250,000 $ 200,052
Republic of Panama, 8.875%, 9/30/27 125,000 105,000
Republic of South Africa, 12.500%, 12/21/06 ZAR 1,000,000 134,373
Republic of Venezuela, 9.250%, 9/15/27 USD 425,000 287,427
--------------
2,562,879
--------------
FOREIGN ISSUER--17.1%
Bangko Sentral Pilipinas, 8.600%, 6/15/27 350,000 238,000
Bangkok Bank Public Co. Ltd., 9.025%, 3/15/29 144A 500,000 392,500
Cerro Negro Finance Ltd., 7.900%, 12/01/20 144A 100,000 81,881
Compania de Alimentos Fargo SA, 13.250%, 8/01/08 100,000 80,000
Espirito Santo Centrais Eletricas SA, 10.000%, 7/15/07 350,000 287,000
Indah Kiat Finance Mauritius Ltd., 10.000%, 7/01/07 300,000 147,000
Jazztel Plc, 14.000%, 7/15/10 144A EUR 250,000 214,104
Korea Electric Power Corp., 7.400%, 4/01/16 USD 224,267 206,442
Multicanal SA, 10.500%, 2/01/07 125,000 96,250
Multicanal SA, 10.500%, 4/15/18 250,000 170,000
Murrin Murrin Holdings Property Ltd., 9.375%, 8/31/07 50,000 45,000
Philippine Long Distance Telephone Co.,
8.350%, 3/06/17 200,000 134,803
Pindo Deli Finance Mauritius Ltd., 10.750%, 10/01/07 450,000 220,500
Pindo Deli Finance Mauritius Ltd., 10.875%, 10/01/27 410,000 155,800
Quezon Power Philippines Co., 8.860%, 6/15/17 550,000 440,000
Siam Commercial Bank Public Co. Ltd.,
7.500%, 3/15/06 144A 100,000 86,000
Tata Electric Co., 8.500%, 8/19/17 144A 200,000 165,396
TFM SA de CV, Zero Coupon Bond, 6/15/09
(step to 11.750% on 6/15/02) # 250,000 188,750
Tjiwi Kimia Mauritius Ltd., 10.000%, 8/01/04 400,000 232,000
Total Access Communication Public Co. Ltd.,
8.375%, 11/04/06 144A 400,000 352,000
Transportacion Maritima Mexicana SA de CV,
10.000%, 11/15/06 250,000 185,000
--------------
4,118,426
--------------
HEALTHCARE--SERVICES--2.8%
Columbia/HCA Healthcare Corp., 7.050%, 12/01/27 75,000 57,375
Columbia/HCA Healthcare Corp., 7.690%, 6/15/25 250,000 209,375
Columbia/HCA Healthcare Corp., 7.750%, 7/15/36 500,000 402,530
--------------
669,280
--------------
OIL & GAS--3.3%
Chesapeake Energy Corp., 8.500%, 3/15/12 250,000 219,375
Chesapeake Energy Corp., Series B, 7.875%, 3/15/04 100,000 94,000
Hvide Marine, Inc., 12.500%, 6/30/07 125,677 108,082
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
OIL & GAS--CONTINUED
Pioneer Natural Resources Co., 7.200%, 1/15/28 USD 350,000 $ 278,250
Seagull Energy Corp., 7.500%, 9/15/27 125,000 106,875
--------------
806,582
--------------
OIL & GAS DRILLING EQUIPMENT--1.8%
R & B Falcon Corp., Series B, 7.375%, 4/15/18 500,000 445,625
--------------
RAIL--TRANSPORT--0.1%
Missouri Pacific Railroad Co., 4.750%, 1/01/20 30,000 18,187
--------------
REAL ESTATE INVESTMENT TRUSTS--1.0%
Meditrust Corp., 7.000%, 8/15/07 100,000 69,000
TriNet Corporate Realty Trust, Inc., 7.700%, 7/15/17 250,000 173,350
--------------
242,350
--------------
RETAIL--GENERAL--2.2%
Dillon Read Structured Finance Corp., 7.430%, 8/15/18 300,000 193,500
Woolworth Corp., 8.500%, 1/15/22 500,000 325,000
--------------
518,500
--------------
RETAIL--SPECIALTY--0.3%
Musicland Group, Inc., Series B, 9.875%, 3/15/08 100,000 83,500
--------------
STEEL--0.1%
Geneva Steel Co., 9.500%, 1/15/04 ^ 150,000 23,250
--------------
TELECOMMUNICATIONS--11.1%
Covad Communications Group, Inc.,
12.500%, 2/15/09 144A 100,000 75,500
Focal Communications Corp., Series B,
Zero Coupon Bond, 2/15/08
(step to 12.125% on 2/15/03) # 250,000 125,000
Hyperion Telecommunications, Inc., Series B,
Zero Coupon Bond, 4/15/03
(step to 13.000% on 4/15/01) # 125,000 101,563
Level 3 Communications, Inc ., Zero Coupon Bond,
12/01/08 (step to 10.500% on 12/01/03) # 250,000 147,500
Level 3 Communications, Inc., Zero Coupon Bond,
3/15/10 (step to 12.875% on 03/15/05) # 350,000 187,250
Nextel Communications, Inc., Zero Coupon Bond,
10/31/07 (step to 9.750% on 10/31/02) # 100,000 78,000
Nextel Communications, Inc., Zero Coupon Bond,
2/15/08 (step to 9.950% on 2/15/03) # 100,000 76,000
Nextel International, Inc., Zero Coupon Bond, 4/15/08
(step to 12.125% on 4/15/03) # 500,000 323,750
Nextlink Communications, Inc., Zero Coupon Bond,
6/01/09 (step to 12.250% on 6/01/04) # 250,000 141,250
Nextlink Communications, Inc., Zero Coupon Bond,
4/15/08 (step to 9.450% on 4/15/03) # 100,000 58,500
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 47
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
TELECOMMUNICATIONS--CONTINUED
NTL Communications Corp., Series B,
Zero Coupon Bond, 4/15/09
(step to 9.750% on 4/15/04) # GBP 100,000 $ 71,984
NTL Communications Corp., Series B,
Zero Coupon Bond, 11/15/09
(step to 11.500% on 11/15/04) # USD 250,000 112,570
RCN Corp., Zero Coupon Bond, 10/15/07
(step to 11.125% on 10/15/02) # 375,000 202,500
RCN Corp., Zero Coupon Bond, 2/15/08
(step to 9.800% on 2/15/03) # 550,000 269,500
RCN Corp., Zero Coupon Bond, 7/01/08
(step to 11.000% on 7/01/03) # 100,000 48,000
Rhythms NetConnections, Inc., 12.750%, 4/15/09 100,000 62,000
Teligent, Inc., Zero Coupon Bond, 3/01/08
(step to 11.500% on 3/01/03) # 500,000 140,000
Triton Communications LLC, Zero Coupon Bond,
5/01/08 (step to 11.000% on 5/01/03) # 600,000 456,000
--------------
2,676,867
--------------
TEXTILE & APPAREL--1.0%
Phillips Van Heusen Corp., 7.750%, 11/15/23 330,000 238,425
--------------
TOBACCO--0.8%
R.J. Reynolds Tobacco Holdings, Inc., 8.750%, 8/15/05 148,000 140,996
R.J. Reynolds Tobacco Holdings, Inc., 9.250%, 8/15/13 64,000 56,320
--------------
197,316
--------------
TRANSPORTATION--0.5%
American President Cos. Ltd., 8.000%, 1/15/24 235,000 117,500
--------------
UTILITIES--1.3%
AES Corp., 8.875%, 11/01/27 350,000 302,750
--------------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $16,260,586) 15,111,654
--------------
CONVERTIBLE BONDS--23.7%
AUTO & RELATED--0.8%
Exide Corp., 2.900%, 12/15/05 144A 425,000 197,625
--------------
COMMUNICATIONS EQUIPMENT--0.3%
Efficient Networks, Inc., 5.000%, 3/15/05 144A 100,000 63,500
--------------
COMPUTERS--3.5%
Cray Research, Inc., 6.125%, 2/01/11 113,000 48,590
Hutchinson Technology, Inc., 6.000%, 3/15/05 100,000 91,625
Maxtor Corp., 5.750%, 3/01/12 500,000 350,000
Quantum Corp.--DLT & Storage Systems,
7.000%, 8/01/04 125,000 101,875
S3, Inc., 5.750%, 10/01/03 200,000 176,500
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
COMPUTERS--CONTINUED
Telxon Corp., 5.750%, 1/01/03 USD 50,000 $ 44,312
Western Digital, Zero Coupon Bond, 2/18/18 150,000 39,750
--------------
852,652
--------------
ELECTRONIC COMPONENTS--1.3%
EDO Corp., 7.000%, 12/15/11 50,000 38,750
Kent Electronics Corp., 4.500%, 9/01/04 325,000 267,885
--------------
306,635
--------------
ELECTRONIC COMPONENTS--SEMICONDUCTORS--2.2%
Kulicke and Soffa Industries, Inc., 4.750%, 12/15/06 100,000 84,625
Park Electrochemical Corp., 5.500%, 3/01/06 300,000 405,000
Richardson Electronics Ltd., 7.250%, 12/15/06 50,000 41,000
--------------
530,625
--------------
FOREIGN ISSUER--3.2%
APP Finance VII Mauritius Ltd., 3.500%, 4/30/03 200,000 109,000
APP Finance VII Mauritius Ltd., 3.500%, 4/30/03 144A 125,000 68,125
Bangkok Bank Public Co. Ltd., 4.589%, 3/03/04 225,000 113,063
Burns, Philp, 5.500%, 4/30/04 50,000 33,000
Loxley Public Co. Ltd., 2.500%, 4/04/01 ^ 100,000 36,000
Siam Commercial Bank Public Co. Ltd.,
3.250%, 1/24/04 250,000 121,562
Ssangyong Oil Refining Co., Inc., 3.000%, 12/31/04 125,000 90,625
Versatel Telecom International NV, 4.000%, 12/17/04 EUR 250,000 193,830
--------------
765,205
--------------
FREIGHT TRANSPORTATION--0.2%
Builders Transportation, Inc., 8.000%, 8/15/05 ^ USD 75,000 94
Worldway Corp., 6.250%, 4/15/11 55,000 44,550
--------------
44,644
--------------
HEALTHCARE--BIOTECHNOLOGY--1.0%
Affymetrix, Inc., 4.750%, 2/15/07 144A 100,000 59,625
Human Genome Sciences, Inc., 3.750%, 3/15/07 144A 200,000 193,750
--------------
253,375
--------------
HEALTHCARE--DRUGS--2.9%
Dura Pharmaceuticals, Inc., 3.500%, 7/15/02 450,000 441,562
Glycomed, Inc., 7.500%, 1/01/03 200,000 162,000
NABI, Inc., 6.500%, 2/01/03 125,000 93,750
--------------
697,312
--------------
HEALTHCARE--PRODUCTS--0.5%
Centocor, Inc., 4.750%, 2/15/05 100,000 128,000
--------------
HEALTHCARE--SERVICES--0.3%
Tenet Healthcare Corp., 6.000%, 12/01/05 75,000 63,375
--------------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 49
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
HOME BUILDERS--0.5%
Lennar Corp., Zero Coupon Bond, 7/29/18 USD 100,000 $ 47,875
Schuler Homes, Inc., 6.500%, 1/15/03 70,000 62,300
--------------
110,175
--------------
HOTELS--0.3%
Hilton Hotels Corp., 5.000%, 5/15/06 100,000 84,250
--------------
INDUSTRIAL EQUIPMENT--0.6%
MascoTech, Inc., 4.500%, 12/15/03 200,000 140,000
--------------
INSURANCE--0.9%
Loews Corp., 3.125%, 9/15/07 250,000 224,305
--------------
MACHINERY--0.1%
Intevac, Inc., 6.500%, 3/01/04 25,000 12,406
--------------
MANUFACTURING--1.9%
Hexcel Corp., 7.000%, 8/01/03 350,000 357,000
Hexcel Corp., 7.000%, 8/01/11 125,000 96,250
--------------
453,250
--------------
OIL & GAS--2.2%
Key Energy Group, Inc., 5.000%, 9/15/04 550,000 451,000
Pogo Producing Co., 5.500%, 6/15/06 100,000 85,930
--------------
536,930
--------------
REAL ESTATE INVESTMENT TRUSTS--0.1%
Sizeler Property Investors, Inc., 8.000%, 7/15/03 15,000 13,425
--------------
RESTAURANTS--0.1%
Einstein/Noah Bagel Corp., 7.250%, 6/01/04 ^ 50,000 28,500
--------------
RETAIL--SPECIALTY--0.4%
CML Group, Inc., 5.500%, 1/15/03 ^ 100,000 63
Jacobson Stores, Inc., 6.750%, 12/15/11 150,000 105,000
--------------
105,063
--------------
TELECOMMUNICATIONS--0.4%
At Home Corp., 4.750%, 12/15/06 100,000 66,875
Broadband Technologies, Inc., 5.000%, 5/15/01 100,000 40,000
--------------
106,875
--------------
TOTAL CONVERTIBLE BONDS
(Identified Cost $5,844,369) 5,718,127
--------------
TOTAL BONDS AND NOTES
(Identified Cost $22,104,955) 20,829,781
--------------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS-5.0% OF NET ASSETS
FOREIGN ISSUER--0.9%
Sappi Ltd. ADR 29,500 $ 215,719
--------------
OIL & GAS--2.8%
Chesapeake Energy Corp. * 78,575 564,758
Hvide Marine, Inc. * 13,066 99,628
--------------
664,386
--------------
REAL ESTATE INVESTMENT TRUSTS--0.8%
Associated Estates Realty Corp. 15,500 124,969
Developers Diversified Realty Corp. 4,825 62,122
--------------
187,091
--------------
UTILITIES--0.5%
Ohio Edison Co. 200 11,000
Wisconsin Energy Corp. 6,000 119,625
--------------
130,625
--------------
TOTAL COMMON STOCKS
(Identified Cost $1,299,300) 1,197,821
--------------
PREFERRED STOCKS-4.8% OF NET ASSETS
NON-CONVERTIBLE PREFERRED STOCKS--2.5%
FOREIGN ISSUER--0.0%
Siam Commercial Bank Public Co. Ltd., 5.250% 144A* 20,000 7,714
--------------
REAL ESTATE INVESTMENT TRUSTS--0.9%
AMB Property Corp., 8.50% 4,700 111,331
JDN Realty Corp., Series A, 9.375% 2,000 41,875
Meditrust Corp., Series A, 9.00% 3,650 56,119
--------------
209,325
--------------
TELECOMMUNICATIONS--1.3%
Adelphia Business Solutions, Inc., Series B, 12.875% PIK 382 191,045
Nextel Communications, Inc., 11.125% PIK 117 113,409
--------------
304,454
--------------
UTILITIES--0.3%
Central Maine Power Co., 3.500% 1,460 65,700
Entergy Gulf States, Inc., 4.400% 270 14,816
--------------
80,516
--------------
TOTAL NON-CONVERTIBLE PREFERRED STOCKS
(Identified Cost $667,353) 602,009
--------------
CONVERTIBLE PREFERRED STOCKS--2.3%
AUTO & RELATED--0.1%
Federal-Mogul Corp. , 7.000% 2,500 18,750
--------------
BUILDING MATERIALS--0.2%
Owens Corning, 6.500% ^ 6,000 40,500
--------------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 51
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREFERRED STOCKS-CONTINUED
FINANCIAL SERVICES--0.9%
Hercules Trust I, 6.500% 375 $ 219,375
--------------
FOREIGN ISSUER--0.3%
Philippine Long Distance Telephone Co., $3.50 GDS 2,000 72,250
--------------
METALS--0.6%
Bethlehem Steel Corp., $3.50 11,000 143,000
--------------
OIL & GAS--0.2%
Western Gas Resources, Inc., $2.625 1,500 56,812
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified Cost $774,768) 550,687
--------------
TOTAL PREFERRED STOCKS
(Identified Cost $1,442,121) 1,152,696
--------------
WARRANTS-0.3% OF NET ASSETS
FOREIGN ISSUER--0.0%
Siam Commercial Bank Public Co. Ltd.,
expiring 5/10/02 * 20,000 1,424
--------------
OIL & GAS--0.3%
Hvide Marine, Inc., expiring 6/30/07 144A* 706 1,412
R & B Falcon Corp., expiring 5/01/09 144A* 100 70,000
--------------
71,412
--------------
TOTAL WARRANTS
(Identified Cost $15,986) 72,836
--------------
<CAPTION>
FACE
AMOUNT
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT-1.1% OF NET ASSETS
Repurchase Agreement with State Street Bank and
Trust Co., dated 9/29/00 at 5.250% to be repurchased
at $275,120 on 10/02/00 collateralized by $265,000
U.S. Treasury Bond, 8.375% due 8/15/08 with a
value of $282,556 USD 275,000 275,000
--------------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $275,000) 275,000
--------------
TOTAL INVESTMENTS--97.5%
(IDENTIFIED COST $25,137,362) @ 23,528,134
Cash and Other Assets, Less Liabilities--2.5% 600,653
--------------
NET ASSETS--100% $ 24,128,787
==============
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES HIGH YIELD FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
+ See Note 1.
^ Security in default.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
144A Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
PIK All or a portion of income may be received as additional securities.
* Non-income producing security
@ At September 30, 2000, the net unrealized depreciation on investments
based on cost of $25,122,942 for federal income tax purposes was as
follows: Aggregate gross unrealized appreciation for all securities in
which there is an excess of value over tax cost and aggregate gross
unrealized depreciation for all securities in which there is an excess of
tax cost over value were $1,700,736 and $3,295,544, respectively,
resulting in net unrealized depreciation of $1,594,808.
Key to Abbreviations:
ADR: American Depositary Receipts
ARS: Argentina Peso
CAD: Canadian Dollar
EUR: Euro
GDS: Global Depositary Shares
GBP: Great British Pound
USD: United States Dollar
ZAR: South African Rand
See accompanying notes to financial statements.
LOOMIS SAYLES FIXED INCOME FUNDS 53
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 3O, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-97.2% OF NET ASSETS
NON-CONVERTIBLE BONDS-95.4%
AEROSPACE/DEFENSE--3.6%
Lockheed Martin Corp., 7.700%, 6/15/08 USD 200,000 $ 201,296
Raytheon Co., 6.150%, 11/01/08 150,000 134,863
Raytheon Co., 6.550%, 3/15/10 150,000 138,552
--------------
474,711
--------------
AUTO & RELATED--4.3%
Cummins Engine Co., Inc., 6.250%, 3/01/03 250,000 239,550
Dana Corp., 6.250%, 3/01/04 150,000 142,904
Delphi Automotive Systems Corp., 6.125%, 5/01/04 100,000 95,438
TRW, Inc., 6.625%, 6/01/04 100,000 96,432
--------------
574,324
--------------
BANKS/SAVINGS & LOANS--2.6%
Capital One Bank, 5.950%, 2/15/01 200,000 198,670
Capital One Bank, 6.375%, 2/15/03 100,000 97,466
NationsBank Corp., 7.000%, 9/15/01 55,000 55,017
--------------
351,153
--------------
BEVERAGES--1.4%
Whitman Corp., 6.000%, 5/01/04 200,000 190,094
--------------
BROADCASTING--1.7%
Comcast Cable Communications, 6.200%, 11/15/08 250,000 229,618
--------------
CANADIAN--1.8%
MacMillan Bloedel Ltd., 6.750%, 2/15/06 150,000 145,806
Province of Alberta, 5.400%, 6/15/10 CAD 139,650 88,584
--------------
234,390
--------------
CHEMICALS--MAJOR--1.1%
Rohm & Haas Co., 6.950%, 7/15/04 USD 150,000 149,748
--------------
COMPUTER HARDWARE--2.5%
Dell Computer Corp., 6.550%, 4/15/08 250,000 237,188
Sun Microsystems, Inc., 7.350%, 8/15/04 90,000 90,275
--------------
327,463
--------------
DATA PROCESSING SERVICES--1.5%
Ceridian Corp., 7.250%, 6/01/04 200,000 193,951
--------------
ENTERTAINMENT--1.2%
Time Warner Entertainment Co., 7.750%, 6/15/05 155,000 158,829
--------------
FINANCIAL SERVICES--17.3%
Associates Corporation of North America,
6.250%, 11/01/08 250,000 233,627
Associates Manufactured Housing, 6.475%, 3/15/28 48,542 48,352
CIT Group, Inc., 5.800%, 2/26/01 230,000 228,710
Duke Capital Corp., 7.250%, 10/01/04 100,000 100,646
Finova Capital Corp., 7.250%, 11/08/04 200,000 150,000
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 3O, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
FINANCIAL SERVICES--CONTINUED
Ford Motor Credit Co., 5.800%, 1/12/09 USD 450,000 $ 398,151
Ford Motor Credit Co. Class B, 7.370%, 7/15/04 300,000 303,708
Green Tree Financial Corp., 6.950%, 3/15/27 173,011 161,927
Household Finance Corp., 5.875%, 9/25/04 350,000 335,713
Vanderbilt Mortgage & Finance, Inc., 6.545%, 4/07/18 350,000 340,060
--------------
2,300,894
--------------
FOREIGN GOVERNMENT/AGENCY--2.9%
Republic of Brazil C Bond, 8.000%, 4/15/14 PIK 184,711 141,304
Republic of South Africa, 8.375%, 10/17/06 250,000 246,562
--------------
387,866
--------------
FOREIGN ISSUER--10.5%
Espirito Santo Centrais Eletricas SA, 10.000%, 7/15/07 150,000 123,000
Gruma SA de CV, 7.625%, 10/15/07 200,000 159,000
Korea Development Bank, 6.750%, 12/01/05 100,000 95,618
Korea Electric Power Corp., 7.750%, 4/01/13 150,000 142,096
PDVSDA Finance Ltd., 6.450%, 2/15/04 250,000 232,766
Pemex Finance Ltd., 9.140%, 8/15/04 100,000 102,926
Perez Companc SA, 8.125%, 7/15/07 144A 250,000 215,000
Tenaga Nasional Berhad, 7.625%, 4/29/07 144A 125,000 121,399
Total Access Communication Public Co. Ltd.,
8.375%, 11/04/06 144A 220,000 193,600
YPF SA, 7.000%, 10/26/02 14,676 14,536
--------------
1,399,941
--------------
FOREST & PAPER PRODUCTS--0.7%
Temple-Inland, Inc., 6.750%, 3/01/09 100,000 93,299
--------------
GOVERNMENT AGENCIES--2.3%
Federal Home Loan Mortgage Corp., 6.250%, 10/15/07 55,000 54,261
Federal National Mortgage Association, 5.500%, 4/25/06 158,162 155,936
Federal National Mortgage Association, 6.000%, 5/25/08 94,607 92,981
--------------
303,178
--------------
HEALTHCARE--PRODUCTS--1.6%
Bausch & Lomb, Inc., 6.500%, 8/01/05 250,000 209,750
--------------
NETWORKING PRODUCTS--1.0%
Lucent Technologies, Inc., 5.500%, 11/15/08 150,000 132,936
--------------
OIL & GAS--3.1%
Kinder Morgan, Inc., 6.650%, 3/01/05 200,000 195,046
Pioneer Natural Resources Co., 6.500%, 1/15/08 250,000 218,777
--------------
413,823
--------------
OIL & GAS DRILLING EQUIPMENT--2.5%
R & B Falcon Corp., 6.750%, 4/15/05 350,000 329,000
--------------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 55
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 3O, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
RAIL--TRANSPORT--1.3%
Burlington Northern Santa Fe Corp., 6.125%, 3/15/09 USD 200,000 $ 180,104
--------------
REAL ESTATE INVESTMENT TRUSTS--13.1%
American Health Properties, Inc., 7.050%, 1/15/02 65,000 63,525
American Health Properties, Inc., 7.500%, 1/15/07 275,000 247,921
Excel Realty Trust, Inc., 6.875%, 10/15/04 165,000 157,452
First Industrial, 7.000%, 12/01/06 250,000 233,533
Highwoods Realty LP, 6.750%, 12/01/03 350,000 336,759
Oasis Residential, Inc., 6.750%, 11/15/01 350,000 344,991
Trinet Corporate Realty Trust, Inc., 6.750%, 3/01/13 335,000 309,021
Trinet Corporate Realty Trust, Inc., 7.300%, 5/15/01 55,000 54,215
--------------
1,747,417
--------------
RETAIL--GENERAL--1.2%
J.C. Penney Co., Inc., 7.600%, 4/01/07 200,000 161,682
--------------
SECURITIES--4.5%
Bear Stearns Cos., Inc., 6.125%, 2/01/03 250,000 245,012
Lehman Brothers Holdings, Inc., 6.125%, 2/01/01 60,000 59,785
Lehman Brothers Holdings, Inc., 7.125%, 9/15/03 100,000 100,181
Morgan Stanley Dean Witter & Co., 5.625%, 1/20/04 200,000 192,458
--------------
597,436
--------------
TELECOMMUNICATIONS--7.0%
Cox Communications, Inc., 6.500%, 11/15/02 165,000 162,779
Intermedia Communications, Inc., 8.600%, 6/01/08 125,000 119,375
Sprint Capital Corp., 5.875%, 5/01/04 100,000 95,598
Sprint Capital Corp., 6.125%, 11/15/08 200,000 180,660
Sprint Capital Corp., 6.375%, 5/01/09 100,000 91,196
TCI Communications, Inc., 6.875%, 2/15/06 290,000 283,342
--------------
932,950
--------------
TEXTILE & APPAREL--1.2%
Tommy Hilfiger Corp., 6.500%, 6/01/03 200,000 161,203
--------------
TOBACCO--0.5%
Philip Morris Cos., Inc., 7.250%, 9/15/01 65,000 64,562
--------------
TRUCKING & LEASING--1.5%
Amerco, 7.490%, 9/18/01 200,000 200,668
--------------
UTILITIES--1.5%
Texas Utilities Co., 5.940%, 10/15/01 200,000 197,734
--------------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $13,081,701) 12,698,724
--------------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 3O, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE +
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BONDS AND NOTES-CONTINUED
CONVERTIBLE BONDS--1.8%
AUTO & RELATED--0.9%
Magna International, Inc. Class A, 4.875%, 2/15/05 USD 125,000 $ 111,486
--------------
DIVERSIFIED OPERATIONS--0.9%
Thermo Electron Corp., 4.250%, 1/01/03 144A 125,000 118,750
--------------
TOTAL CONVERTIBLE BONDS
(Identified Cost $225,502) 230,236
--------------
TOTAL BONDS AND NOTES
(Identified Cost $13,307,203) 12,928,960
--------------
TOTAL INVESTMENTS--97.2%
(IDENTIFIED COST $13,307,203) @ 12,928,960
Cash and Other Assets, Less Liabilities--2.8% 378,477
--------------
NET ASSETS--100% $ 13,307,437
--------------
--------------
</TABLE>
+ See Note 1.
PIK All or a portion of income may be received as additional securities.
144A Securities exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
@ At September 30, 2000, the net unrealized depreciation on investments
based on cost of $13,312,673 for federal income tax purposes was as
follows: Aggregate gross unrealized appreciation for all securities in
which there is an excess of value over tax cost and aggregate gross
unrealized depreciation for all securities in which there is an excess
of tax cost over value were $112,162 and $495,875, respectively,
resulting in net unrealized depreciation of $383,713.
Key to Abbreviations:
CAD: Canadian Dollar
USD: United States Dollar
See accompanying notes to financial statements.
LOOMIS SAYLES FIXED INCOME FUNDS 57
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
-----------------------------------------------------------------------------------------
BONDS AND NOTES-84.1% OF NET ASSETS
NON-CONVERTIBLE BONDS--75.5%
AEROSPACE/DEFENSE--3.5%
<S> <C> <C>
Lockheed Martin Corp., 7.750%, 5/01/26 USD 325,000 $ 313,888
Raytheon Co., 6.400%, 12/15/18 700,000 593,663
Raytheon Co., 7.200%, 8/15/27 250,000 219,287
Raytheon Co., 7.375%, 7/15/25 145,000 127,992
----------
1,254,830
----------
AUTO & RELATED--5.0%
Cummins Engine Co., Inc., 7.125%, 3/01/28 250,000 207,725
Delphi Automotive Systems Corp., 7.125%, 5/01/29 800,000 681,232
Ford Motor Co., 6.375%, 2/01/29 750,000 603,757
TRW, Inc., 6.650%, 1/15/28 225,000 178,742
TRW, Inc., 7.750%, 6/01/29 100,000 90,207
----------
1,761,663
----------
BANKS/SAVINGS & LOANS--0.9%
Key Bank NA, 6.950%, 2/01/28 100,000 88,229
Keycorp Capital III, 7.750%, 7/15/29 250,000 216,462
----------
304,691
----------
BUILDING MATERIALS--0.2%
Owens Corning, 7.500%, 8/01/18 ^ 250,000 71,875
----------
CANADIAN--15.8%
Canadian Government, Zero Coupon Bond, 6/01/21 CAD 150,000 30,197
Canadian Government, Zero Coupon Bond, 6/01/25 5,290,000 879,240
New Brunswick FM Project, Zero Coupon Bond,
11/30/27 (step to 6.470% on 5/30/03) 144A # 75,000 41,077
Ontario Hydro, Zero Coupon Bond, 11/15/21 4,000,000 692,302
Province of Alberta, 5.394%, 6/14/13 230,250 146,578
Province of Alberta, 5.930%, 9/16/16 45,450 29,709
Province of British Columbia, Zero Coupon Bond, 9/05/20 2,250,000 408,372
Province of British Columbia, Zero Coupon Bond, 6/09/22 250,000 40,890
Province of British Columbia, Zero Coupon Bond, 8/19/22 605,000 97,801
Province of British Columbia, Zero Coupon Bond, 8/23/24 4,850,000 693,741
Province of Manitoba, Zero Coupon Bond, 3/05/31 11,100,000 1,180,399
Province of Manitoba, 6.500%, 9/22/17 25,000 16,880
Province of Manitoba, 7.750%, 12/22/25 55,000 42,540
Province of Nova Scotia, 6.600%, 6/01/27 500,000 332,329
Province of Ontario, Zero Coupon Bond, 6/02/27 4,700,000 613,231
Province of Saskatchewan, 5.750%, 3/05/29 350,000 214,449
Province of Saskatchewan (Certificate of Deposit),
Zero Coupon Bond, 2/04/22 650,000 107,702
Province of Saskatchewan (Certificate of Deposit),
Zero Coupon Bond, 5/30/25 215,000 29,853
----------
5,597,290
----------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
----------------------------------------------------------------------------------
BONDS AND NOTES-CONTINUED
COMPUTER HARDWARE--0.7%
<S> <C> <C>
Seagate Technology, Inc., 7.450%, 3/01/37 USD 175,000 $ 168,820
Seagate Technology, Inc., 7.875%, 3/01/17 75,000 72,423
----------
241,243
----------
ENTERTAINMENT--2.0%
Time Warner, Inc., 6.625%, 5/15/29 840,000 712,177
----------
FINANCIAL SERVICES--1.6%
Merey Sweeny LP, 8.850%, 12/18/19 144A 100,000 100,058
Security Capital Group, Inc., 7.700%, 6/15/28 225,000 185,265
US West Capital Funding, Inc., 6.875%, 7/15/28 300,000 268,242
----------
553,565
----------
FOOD & BEVERAGE--0.8%
Pepsi Bottling Group, Inc., 7.000%, 3/01/29 300,000 274,965
----------
FOREIGN GOVERNMENT/AGENCY--3.4%
Republic of Brazil, 10.125%, 5/15/27 10,000 7,750
Republic of Brazil C Bond, 8.000%, 4/15/14 PIK 800,414 612,317
Republic of South Africa, 8.500%, 6/23/17 200,000 182,500
Republic of South Africa, 12.500%, 12/21/06 ZAR 400,000 53,749
Republic of South Africa, 13.000%, 8/31/10 125,000 16,760
Republic of South Africa, 13.500%, 9/15/15 150,000 20,738
Republic of Venezuela, 9.250%, 9/15/27 USD 200,000 135,260
South Australia Government Finance Authority,
Zero Coupon Bond, 12/21/15 AUD 1,000,000 190,847
----------
1,219,921
----------
FOREIGN ISSUER--8.0%
Bangkok Bank Public Co. Ltd., 9.025%, 3/15/29 144A USD 50,000 39,250
Cerro Negro Finance Ltd., 7.900%, 12/01/20 144A 50,000 40,941
Embotelladora Andina SA, 7.625%, 10/01/27 125,000 104,739
Empresa Nacional de Electricidad SA (Endesa),
7.875%, 2/01/27 500,000 439,355
Enersis SA, 7.400%, 12/01/16 200,000 175,998
Espirito Santo Centrais Eletricas SA, 10.000%, 7/15/07 150,000 123,000
Korea Electric Power Corp., 7.750%, 4/01/13 150,000 142,096
PDVSA Finance Ltd., 7.400%, 8/15/16 100,000 80,625
PDVSA Finance Ltd., 7.500%, 11/15/28 200,000 150,000
Petroleos Mexicanos, 8.625%, 12/01/23 144A 315,000 283,500
Petrozuata Finance, Inc., 8.220%, 4/01/17 144A 200,000 165,000
Pindo Deli Finance Mauritius Ltd., 10.750%, 10/01/07 100,000 49,000
Pindo Deli Finance Mauritius Ltd., 10.875%, 10/01/27 100,000 38,000
Quezon Power Philippines Co., 8.860%, 6/15/17 50,000 40,000
Samsung Electronics Co. Ltd., 7.700%, 10/01/27 144A 100,000 76,340
Telekom Malaysia Berhad, 7.875%, 8/01/25 144A 500,000 452,618
Tenaga Nasional Berhad, 7.500%, 11/01/25 144A 400,000 338,206
Total Access Communication Public Co. Ltd.,
8.375%, 11/04/06 144A 25,000 22,000
Transgas De Occidente SA, 9.790%, 11/01/10 144A 97,053 75,702
----------
2,836,370
----------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 59
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS - AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
--------------------------------------------------------------------------------------------
BONDS AND NOTES-CONTINUED
FOREST & PAPER PRODUCTS--1.1%
<S> <C> <C>
International Paper Co., 6.875%, 4/15/29 USD 375,000 $ 318,817
Westvaco Corp., 7.000%, 8/15/23 100,000 82,664
----------
401,481
----------
GOVERNMENT AGENCIES--17.9%
Federal National Mortgage Association,
Zero Coupon Bond, 10/29/07 NZD 700,000 168,561
Federal National Mortgage Association, 6.000%, 7/01/29 USD 467,286 436,478
Federal National Mortgage Association, 6.250%, 5/15/29 5,375,000 4,956,771
Federal National Mortgage Association, 6.375%, 8/15/07 AUD 1,500,000 794,065
----------
6,355,875
----------
HEALTHCARE--PRODUCTS--0.3%
Bausch & Lomb, Inc., 7.125%, 8/01/28 USD 150,000 91,664
----------
HOME BUILDERS--0.7%
Lennar Corp., 7.625%, 3/01/09 250,000 212,182
Pulte Corp., 7.625%, 10/15/17 25,000 19,988
----------
232,170
----------
OIL & GAS--5.2%
Anadarko Petroleum Corp., 6.625%, 1/15/28 250,000 208,260
Ensco International, Inc., 6.750%, 11/15/07 250,000 238,445
Ensco International, Inc., 7.200%, 11/15/27 250,000 226,247
Global Marine, Inc., 7.000%, 6/01/28 250,000 223,115
Kerr-McGee Corp., 7.125%, 10/15/27 200,000 179,792
Pennzoil-Quaker State Co., 7.375%, 4/01/29 250,000 187,215
Pioneer Natural Resources Co., 7.200%, 1/15/28 40,000 31,800
Union Pacific Resources Group, Inc., 7.150%, 5/15/28 600,000 551,802
----------
1,846,676
----------
OIL & GAS DRILLING EQUIPMENT--0.2%
R & B Falcon Corp., Series B, 7.375%, 4/15/18 100,000 89,125
----------
RAIL--TRANSPORT--0.4%
Louisville & Nashville Railroad Co., 2.875%, 4/01/03 4,000 3,614
Louisville & Nashville Railroad Co., 3.375%, 4/01/03 12,000 10,975
Missouri Pacific Railroad Co., 4.250%, 1/01/05 39,000 34,660
Missouri Pacific Railroad Co., 4.750%, 1/01/20 46,000 27,887
Missouri Pacific Railroad Co., 4.750%, 1/01/30 86,000 50,095
Missouri Pacific Railroad Co., 5.000%, 1/01/45 50,000 25,938
----------
153,169
----------
REAL ESTATE INVESTMENT TRUSTS--1.6%
First Industrial, 7.500%, 12/01/17 100,000 86,536
First Industrial, 7.600%, 7/15/28 150,000 125,806
Highwoods Realty LP, 7.500%, 4/15/18 50,000 41,477
Security Capital Industrial Trust, 7.625%, 7/01/17 75,000 66,392
Susa Partnership LP, 7.500%, 12/01/27 125,000 103,791
TriNet Corporate Realty Trust, Inc., 7.700%, 7/15/17 200,000 138,680
----------
562,682
----------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
---------------------------------------------------------------------------------------------
BONDS AND NOTES-CONTINUED
RETAIL-GENERAL--0.7%
<S> <C> <C>
J.C. Penney Co., Inc., 7.650%, 8/15/16 USD 150,000 $ 103,440
K Mart Corp., 7.950%, 2/01/23 200,000 133,828
----------
237,268
----------
SECURITIES--0.7%
Lehman Brothers Inc., 6.500%, 4/15/08 250,000 233,685
----------
SUPRANATIONAL--2.5%
International Bank for Reconstruction & Development,
Zero Coupon Bond, 8/20/07 NZD 2,085,000 516,960
International Bank for Reconstruction & Development,
5.500%, 11/03/08 1,000,000 363,350
International Bank for Reconstruction & Development,
8.000%, 5/23/07 45,000 18,819
----------
899,129
----------
TELECOMMUNICATIONS--0.4%
Sprint Capital Corp., 6.875%, 11/15/28 USD 150,000 129,482
----------
TEXTILE & APPAREL--0.0%
Kellwood Co., 7.625%, 10/15/17 25,000 13,792
----------
TOBACCO--1.9%
Philip Morris Cos., Inc., 7.750%, 1/15/27 750,000 656,235
----------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $27,472,894) 26,731,023
----------
CONVERTIBLE BONDS--8.6%
AUTO & RELATED--0.4%
Magna International, Inc. Class A, 4.875%, 2/15/05 150,000 133,313
----------
COMPUTERS--0.0%
Maxtor Corp., 5.750%, 3/01/12 10,000 7,000
----------
DIVERSIFIED OPERATIONS--1.5%
Thermo Electron Corp., 4.250%, 1/01/03 144A 550,000 522,500
----------
ELECTRONIC COMPONENTS--0.1%
Kent Electronics Corp., 4.500%, 9/01/04 50,000 41,213
----------
ELECTRONIC MEASURING INSTRUMENTS--0.2%
Thermedics, Inc., Zero Coupon Bond, 6/01/03 100,000 70,000
----------
ENVIRONMENTAL SERVICES--0.3%
Thermo TerraTech, Inc., 4.625%, 5/01/03 144A 110,000 103,675
----------
FINANCIAL SERVICES--0.3%
Bell Atlantic Financial Services, 5.750%, 4/01/03 100,000 96,940
----------
FOREIGN ISSUER--0.1%
Burns, Philp, 5.500%, 4/30/04 20,000 13,200
Ssangyong Oil Refining Co., Inc., 3.000%, 12/31/04 30,000 21,750
----------
34,950
----------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 61
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
-------------------------------------------------------------------------------------------
BONDS AND NOTES-CONTINUED
HEALTHCARE-SERVICES--0.4%
<S> <C> <C>
Healthsouth Corp., 3.250%, 4/01/03 USD 150,000 $ 126,000
------------
INDUSTRIAL EQUIPMENT--0.1%
MascoTech, Inc., 4.500%, 12/15/03 75,000 52,500
------------
INSURANCE--1.5%
Loews Corp., 3.125%, 9/15/07 590,000 529,360
------------
MULTI-INDUSTRY--0.7%
Thermo Instrument Systems, Inc., 4.500%, 10/15/03 144A 250,000 234,375
------------
OFFICE EQUIPMENT--1.7%
Xerox Corp., 0.570%, 4/21/18 1,200,000 617,244
------------
OIL & GAS--1.2%
Baker Hughes, Inc., Zero Coupon Bond, 5/05/08 400,000 329,120
Diamond Offshore Drilling, Inc., 3.750%, 2/15/07 50,000 56,387
Noram Energy Corp., 6.000%, 3/15/12 60,000 55,800
------------
441,307
------------
PUBLISHING--0.1%
Scholastic Corp., 5.000%, 8/15/05 144A 50,000 54,125
------------
TOTAL CONVERTIBLE BONDS
(Identified Cost $3,030,283) 3,064,502
------------
TOTAL BONDS AND NOTES
(Identified Cost $30,503,177) 29,795,525
------------
<CAPTION>
SHARES
------------------------------------------------------------------------------------------
PREFERRED STOCKS-2.0% OF NET ASSETS
NON-CONVERTIBLE PREFERRED STOCKS--1.1%
REAL ESTATE INVESTMENT TRUSTS--0.9%
<S> <C> <C>
CarrAmerica Realty Corp., Series C, 8.550% 500 10,750
CarrAmerica Realty Corp., Series D, 8.450% 1,300 27,625
Equity Residential Properties Trust, Series L, 7.625% 1,200 26,250
First Industrial Realty Trust, Inc., Series D, 7.950% 1,000 20,875
First Industrial Realty Trust, Inc., Series E, 7.900% 3,100 65,100
New Plan Excel Realty Trust, Inc., Series B, 8.625% 6,500 146,250
ProLogis Trust, Series D, 7.920% 900 19,237
---------
316,087
---------
UTILITIES--0.2%
Duquesne Light Co., 4.000% 1,110 29,415
Illinois Power Co., 4.080% 200 5,888
New York State Electric & Gas Corp., 3.750% 100 4,150
Pacific Gas & Electric Corp., 4.50% 100 1,688
Pacific Gas & Electric Corp., Series C, 5.00% 100 1,575
Southern California Edison Co., 4.320% 200 2,700
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
SHARES VALUE+
-----------------------------------------------------------------------------------
PREFERRED STOCKS-CONTINUED
<S> <C> <C>
UTILITIES--CONTINUED
Wisconsin Power & Light Co., 4.500% 110 $ 6,792
Xcel Energy, Inc., $3.60 300 14,962
------------
67,170
------------
TOTAL NON-CONVERTIBLE PREFERRED STOCKS
(Identified Cost $371,956) 383,257
------------
CONVERTIBLE PREFERRED STOCKS--0.9%
AEROSPACE/DEFENSE--0.1%
Coltec Capital Trust, 5.250% 1,000 48,000
------------
OIL & GAS--0.4%
EVI, Inc. , 5.000% 3,000 143,625
------------
REAL ESTATE INVESTMENT TRUSTS--0.4%
Camden Property Trust, $2.25 250 6,235
Equity Residential Properties Trust, 7.250% 6,050 136,881
------------
143,116
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified Cost $268,873) 334,741
------------
TOTAL PREFERRED STOCKS
(Identified Cost $640,829) 717,998
------------
<CAPTION>
FACE
AMOUNT
----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT-11.5% OF NET ASSETS
<S> <C> <C>
Repurchase Agreement with State Street Bank and Trust Co.,
dated 9/29/00 at 5.250% to be repurchased at $4,065,778
on 10/02/00 collateralized by $3,165,000 U.S. Treasury
Bond, 8.875% due 2/15/19 with a value of $4,151,322 USD 4,064,000 4,064,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $4,064,000) 4,064,000
-----------
TOTAL INVESTMENTS--97.6%
(IDENTIFIED COST $35,208,006) @ 34,577,523
Cash and Other Assets, Less Liabilities--2.4% 840,744
-----------
NET ASSETS--100% $35,418,267
===========
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 63
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES INVESTMENT GRADE BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
-------------------------------------------------------------------------------
+ See Note 1.
^ Security in default
144A Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
PIK All or a portion of income may be received as additional securities.
@ At September 30, 2000, the net unrealized depreciation on investments based
on cost of $35,208,006 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $642,869 and $1,273,352, respectively, resulting in net
unrealized depreciation of $630,483.
Key to Abbreviations:
AUD: Australian Dollar
CAD: Canadian Dollar
NZD: New Zealand Dollar
USD: United States Dollar
ZAR: South African Rand
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
---------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES-92.9% OF NET ASSETS
<S> <C> <C>
ARIZONA--2.6%
Phoenix Street & Highway User, 6.250%, 7/01/11 $ 150,000 $ 156,497
---------
FLORIDA--4.6%
Florida State Board of Education,
Capital Outlay, 5.000%, 6/01/19 300,000 278,967
---------
HAWAII--4.4%
Hawaii State, (MBIA Insured), 4.750%, 4/01/18 300,000 265,650
---------
ILLINOIS--2.6%
Illinois State Sales Tax Revenue, 6.375%, 6/15/14 150,000 161,780
---------
KENTUCKY--4.1%
Kentucky State Property & Building
Commission Revenue, 4.500%, 5/01/03 250,000 249,687
---------
MASSACHUSETTS--7.6%
Massachusetts State College Building Authority,
(MBIA Insured), 5.125%, 5/01/19 250,000 235,883
Massachusetts State Consolidated Loan,
Series C, 4.500%, 9/01/04 100,000 99,926
Massachusetts State Revenue, Grant Anticipation Notes,
Series A (MBIA Insured), 5.250%, 12/15/12 125,000 126,906
---------
462,715
---------
MICHIGAN--3.6%
Michigan State Trunk Line, Refunding Series A,
(MBIA Insured), 4.750%, 11/01/20 250,000 218,810
---------
NEW JERSEY--3.6%
New Jersey State Turnpike Authority, 6.500%, 1/01/08 200,000 218,176
---------
NEW YORK--27.4%
Long Island Power Authority New York,
(FSA Insured), 5.000%, 12/01/18 250,000 233,282
New York City Housing Development Corp.,
5.625%, 5/01/12 145,000 145,747
New York City Transitional Finance Authority,
5.000%, 8/15/13 200,000 195,534
New York State Dormitory Authority, 5.100%, 2/15/12 250,000 245,125
New York State Dormitory Authority, 6.500%, 5/15/05 250,000 269,365
New York State Dormitory Authority,
Series A, 6.000%, 7/01/11 200,000 210,340
New York State Environmental Pollution Control,
5.150%, 6/15/13 125,000 125,006
Tsasc Inc., 5.125%, 7/15/09 250,000 247,975
---------
1,672,374
---------
NORTH CAROLINA--1.8%
North Carolina Eastern Municipal Power,
Refunding Series C, 5.375%, 1/01/05 110,000 110,218
---------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 65
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES MUNICIPAL BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
---------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES-CONTINUED
<S> <C> <C>
PENNSYLVANIA--3.7%
Philadelphia Pennsylvania, General Obligation
(FGIC Insured), 4.750%, 5/15/16 $ 250,000 $ 224,672
----------
PUERTO RICO--4.0%
Puerto Rico Electric Power Authority, 6.125%, 7/01/09 225,000 246,762
----------
SOUTH CAROLINA--3.9%
Georgetown County Pollution Control,
Refunding Project Series A, 5.125%, 2/01/12 250,000 235,090
----------
TENNESSEE--4.5%
Shelby County, General Obligation
Series A, 4.750%, 5/01/15 300,000 275,355
----------
TEXAS--6.2%
San Antonio Electric & Gas Revenue,
Refunding Series A, 5.000%, 2/01/18 250,000 230,347
University Texas University Revenue,
Financing Systems Series B, 5.700%, 8/15/20 150,000 150,923
----------
381,270
----------
VIRGINIA--4.4%
Pocahontas Parkway Association Virginia Toll,
5.000%, 8/15/11 300,000 267,210
----------
WISCONSIN--3.9%
Wisconsin State Transportation Revenue,
Unrefunded Series B, 5.500%, 7/01/22 250,000 239,580
----------
TOTAL MUNICIPAL BONDS AND NOTES
(Identified Cost $5,792,729) 5,664,813
----------
<CAPTION>
-----------------------------------------------------------------------------------
SHORT-TERM INVESTMENT-6.1% OF NET ASSETS
<S> <C> <C>
Repurchase Agreement with State Street Bank
and Trust Co., dated 9/29/00 at 5.250% to
be repurchased at $370,162 on 10/02/00
collateralized by $360,000 U.S Treasury Note,
6.625% due 5/15/07 with a value of $382,559 370,000 370,000
----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $370,000) 370,000
----------
TOTAL INVESTMENTS--99.0%
(IDENTIFIED COST $6,162,729) @ 6,034,813
Cash and Other Assets, Less Liabilities--1.0% 63,057
----------
NET ASSETS--100% $6,097,870
==========
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES MUNICIPAL BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
------------------------------------------------------------------------------
+ See Note 1.
@ At September 30, 2000, the net unrealized depreciation on investments based
on cost of $ 6,162,729 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $ 66,198 and $ 194,114, respectively, resulting in net
unrealized depreciation of $ 127,916.
Key to Abbreviations:
FGIC: Federal Guaranty Insurance Corporation
FSA: Financial Security Assurance
MBIA: Municipal Bond Insurance Association
See accompanying notes to financial statements.
LOOMIS SAYLES FIXED INCOME FUNDS 67
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
-------------------------------------------------------------------------------------
<S> <C> <C>
BONDS AND NOTES-96.6% OF NET ASSETS
AIRLINES--1.3%
Northwest Airlines Corp., 8.375%, 3/15/04 $ 400,000 $ 383,164
----------
BROADCASTING--3.3%
Adelphia Communications Corp., Series B, 9.250%, 10/01/02 1,000,000 992,500
----------
CHEMICALS--3.3%
ICI Wilmington, Inc., 8.750%, 5/01/01 1,000,000 1,004,870
----------
DIVERSIFIED OPERATIONS--3.3%
Textron, Inc., 6.750%, 9/15/02 1,000,000 995,310
----------
FINANCIAL SERVICES--21.6%
BankBoston Home Equity Loan Trust, 6.140%, 1/25/19 550,000 517,924
CIT Group, Inc., 5.500%, 2/15/04 1,000,000 947,370
Finova Capital Corp., 6.824%, 3/09/01 1,000,000 887,420
Fleetwood Credit Grantor Trust, 6.900%, 3/15/12 166,400 165,873
Ford Motor Credit Co., 7.500%, 6/15/03 700,000 706,937
General Motors Acceptance Corp., 5.750%, 11/10/03 1,000,000 965,070
Heller Financial, Inc., 7.875%, 5/15/03 1,000,000 1,016,800
Household Finance Corp., 6.000%, 5/01/04 1,000,000 967,750
Sears Roebuck Acceptance Corp., 6.950%, 5/15/02 340,000 337,875
----------
6,513,019
----------
FOREIGN ISSUER--7.1%
Alestra SA de RL de CV, 12.125%, 5/15/06 600,000 582,000
PDVSA Finance Ltd., 6.650%, 2/15/06 645,000 578,232
Philippine Long Distance Telephone Co., 10.625%, 6/02/04 980,000 970,200
----------
2,130,432
----------
FOREST & PAPER PRODUCTS--1.2%
Fort James Corp., 6.625%, 9/15/04 360,000 347,537
----------
GOVERNMENT AGENCIES--1.2%
Federal Home Loan Mortgage Corp., 6.500%, 5/15/08 355,264 349,821
----------
INSURANCE--2.1%
Allstate Corp., 7.875%, 5/01/05 600,000 619,320
----------
MANUFACTURING--6.5%
FMC Corp., 7.125%, 11/25/02 975,000 967,825
IMC Global, Inc., 7.400%, 11/01/02 1,000,000 983,810
----------
1,951,635
----------
MORTGAGE RELATED--11.2%
Countrywide Home Loans, Inc., 6.850%, 6/15/04 1,000,000 985,370
Federal National Mortgage Association, 8.000%, 6/01/15 1,707,974 1,738,923
Residential Funding Mortgage, Inc., 6.750%, 12/25/14 659,979 647,928
----------
3,372,221
----------
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES SHORT-TERM BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
-------------------------------------------------------------------------------
<S> <C> <C>
BONDS AND NOTES-CONTINUED
OIL & GAS--5.0%
Occidental Petroleum Corp., 6.400%, 4/01/03 $ 500,000 $ 491,645
Tosco Corp., 7.625%, 5/15/06 1,000,000 1,015,020
-----------
1,506,665
-----------
OIL & GAS EXPLORATION--0.9%
Parker & Parsley Petroleum Co., 8.875%, 4/15/05 275,000 272,489
-----------
PACKAGING--3.3%
Stone Container Corp., 12.250%, 4/01/02 1,000,000 1,010,000
-----------
REAL ESTATE INVESTMENT TRUSTS--2.5%
Host Marriot Corp., Series A, 7.875%, 8/01/05 600,000 567,000
Oasis Residential, Inc., 7.000%, 11/15/03 200,000 194,592
-----------
761,592
-----------
RESTAURANTS--2.1%
Tricon Global Restaurants, Inc., 7.450%, 5/15/05 680,000 644,497
-----------
RETAIL--GENERAL--0.9%
Dillard's, Inc., 6.430%, 8/01/04 335,000 272,298
-----------
SECURITIES--3.3%
Morgan Stanley Dean Witter & Co., 7.125%, 1/15/03 1,000,000 1,004,680
-----------
TELECOMMUNICATIONS--7.7%
A T & T Corp., 6.800%, 2/01/01 1,000,000 998,640
Sprint Spectrum LP, Zero Coupon Bond, 8/15/06
(step to 12.500% on 8/15/01) # 560,000 551,130
WorldCom, Inc., 8.000%, 5/15/06 750,000 780,052
-----------
2,329,822
-----------
TRUCKING & LEASING--1.3%
Amerco, 7.850%, 5/15/03 420,000 395,409
-----------
U.S. GOVERNMENT--4.3%
U.S. Treasury Notes, 5.250%, 8/15/03 243,000 238,483
U.S. Treasury Notes, 5.875%, 2/15/04 300,000 299,532
U.S. Treasury Strips, Zero Coupon Bond, 11/15/01 800,000 746,816
-----------
1,284,831
-----------
WASTE MANAGEMENT--3.2%
Waste Management, Inc., 6.000%, 5/15/01 1,000,000 978,940
-----------
TOTAL BONDS AND NOTES
(Identified Cost $29,424,468) 29,121,052
-----------
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 69
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES SHORT-TERM BOND FUND (CONTINUED)
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
--------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENT-1.2% OF NET ASSETS
Repurchase Agreement with State Street Bank and Trust Co.,
dated 9/29/00 at 5.250% to be repurchased at $353,154 on
10/02/00 collateralized by $275,000 U.S. Treasury Bond,
8.875% due 2/15/19 with a value of $360,699 $353,000 $ 353,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $353,000) 353,000
-----------
TOTAL INVESTMENTS--97.8%
(IDENTIFIED COST $29,777,468) @ 29,474,052
Cash and Other Assets, Less Liabilities--2.2% 667,481
-----------
NET ASSETS--100% $30,141,533
===========
</TABLE>
+ See Note 1
# Step Bond: Coupon is zero or below market rate for an initial period and
then increases at a specified date and rate.
@ At September 30, 2000, the net unrealized depreciation on investments based
on cost of $29,790,827 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $219,848 and $536,623, respectively, resulting in net
unrealized depreciation of $316,775.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS-AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE+
---------------------------------------------------------------------------------------
<S> <C> <C>
BONDS AND NOTES-98.1% OF NET ASSETS
GOVERNMENT AGENCIES--13.8%
Federal National Mortgage Association, 6.250%, 5/15/29 $ 900,000 $ 829,971
Government National Mortgage Association, 7.000%, 1/15/28 765,044 753,569
-----------
1,583,540
-----------
U.S. GOVERNMENT--84.3%
U.S. Treasury Bonds, 6.000%, 2/15/26 2,800,000 2,776,368
U.S. Treasury Bonds, 7.250%, 5/15/16 3,300,000 3,671,778
U.S. Treasury Bonds, 7.500%, 11/15/24 1,050,000 1,236,375
U.S. Treasury Notes, 6.000%, 8/15/09 2,000,000 2,010,000
-----------
9,694,521
-----------
TOTAL BONDS AND NOTES
(Identified Cost $11,055,046) 11,278,061
-----------
TOTAL INVESTMENTS--98.1%
(IDENTIFIED COST $11,055,046) @ 11,278,061
Cash and Other Assets, Less Liabilities--1.9% 216,790
-----------
NET ASSETS--100% $11,494,851
===========
</TABLE>
+ See Note 1.
@ At September 30, 2000, the net unrealized appreciation on investments based
on cost of $11,220,781 for federal income tax purposes was as follows:
Aggregate gross unrealized appreciation for all securities in which there
is an excess of value over tax cost and aggregate gross unrealized
depreciation for all securities in which there is an excess of tax cost
over value were $78,199 and $20,919, respectively, resulting in net
unrealized appreciation of $57,280.
See accompanying notes to financial statements.
LOOMIS SAYLES FIXED INCOME FUNDS 71
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
GLOBAL
BOND BOND
FUND FUND
--------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Investments at value $ 1,714,569,309 $ 46,612,052
Repurchase Agreements at value 17,714,000 1,000,000
Cash 1,158,438 534
Foreign currency at value 1,537,751 89,134
Receivable for:
Fund shares sold 3,727,822 24,123
Securities sold 284,219 979,519
Forward foreign currency exchange contracts (Note 1D) 0 31,674
Dividends and interest 28,013,907 1,135,135
Due from the adviser (Note 3) 177,742 22,892
Other assets (Note 1I) 0 0
--------------- ---------------
1,767,183,188 49,895,063
--------------- ---------------
LIABILITIES
Payable for:
Securities purchased 11,391,497 958,607
Fund shares redeemed 1,882,186 98,232
Dividends declared 0 0
Accrued expenses:
Management fees (Note 3) 870,315 23,947
Trustees' fees (Note 3A) 611 612
Administrative fees (Note 3) 101,554 2,929
12b-1 fees payable 17,259 2,390
Other (Note 3) 319,010 52,172
--------------- ---------------
14,582,432 1,138,889
--------------- ---------------
NET ASSETS $ 1,752,600,756 $ 48,756,174
=============== ===============
Net Assets consist of:
Capital paid in $ 1,897,922,720 $ 53,775,699
Undistributed (or Distribution in excess of)
net investment income 37,932,526 1,800,248
Accumulated net realized gain (loss) (24,359,419) 177,170
Unrealized appreciation (depreciation) on:
Investments* (158,820,431) (6,995,840)
Foreign currency translations (74,640) (1,103)
--------------- ---------------
NET ASSETS $ 1,752,600,756 $ 48,756,174
=============== ===============
INSTITUTIONAL CLASS:
Net assets $ 1,670,825,204 $ 37,035,472
Shares of beneficial interest outstanding, no par value 144,856,336 3,388,329
Net asset value and redemption price** $ 11.53 $ 10.93
RETAIL CLASS:
Net assets $ 78,039,295 $ 11,720,702
Shares of beneficial interest outstanding, no par value 6,771,592 1,074,661
Net asset value and redemption price $ 11.52 $ 10.91
ADMIN CLASS:
Net assets $ 3,736,257 --
Shares of beneficial interest outstanding, no par value 324,432 --
Net asset value and redemption price $ 11.52 --
J CLASS:
Net assets -- --
Shares of beneficial interest outstanding, no par value -- --
Net asset value and redemption price -- --
Maximum offering price per share (net asset value/96.50%) -- --
Identified cost of investments $ 1,891,103,740 $ 54,607,892
=============== ===============
</TABLE>
* NET OF CAPITAL GAIN WITHHOLDING TAXES OF $212 FOR THE HIGH YIELD FUND.
** THE REDEMPTION PRICE PER SHARE FOR THE INSTITUTIONAL CLASS OF THE HIGH
YIELD FUND FOR SHARES HELD LESS THAN ONE YEAR IS EQUAL TO NET ASSET VALUE
LESS 2% OF THE AMOUNT REDEEMED. (SEE NOTE 1H).
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
HIGH INTERMEDIATE INVESTMENT MUNICIPAL
YIELD MATURITY BOND GRADE BOND BOND
FUND FUND FUND FUND
------------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C>
Investments at value $ 23,253,134 $ 12,928,960 $ 30,513,523 $ 5,664,813
Repurchase Agreements at value 275,000 0 4,064,000 370,000
Cash 455 160,243 533 847
Foreign currency at value 0 6,874 1,067 0
Receivable for:
Fund shares sold 5,254 0 1,380,452 0
Securities sold 281,406 0 169,781 0
Forward foreign currency exchange contracts (Note 1D) 0 0 0 0
Dividends and interest 439,784 240,285 545,898 90,681
Due from the adviser (Note 3) 11,173 16,223 81,510 13,776
Other assets (Note 1I) 1,751 0 0 0
------------ ------------ ------------ ------------
24,267,957 13,352,585 36,756,764 6,140,117
------------ ------------ ------------ ------------
LIABILITIES
Payable for:
Securities purchased 80,700 0 1,235,308 0
Fund shares redeemed 310 0 51,276 0
Dividends declared 0 0 0 7,674
Accrued expenses:
Management fees (Note 3) 11,721 4,403 10,676 1,512
Trustees' fees (Note 3A) 592 609 589 528
Administrative fees (Note 3) 1,201 990 2,196 541
12b-1 fees payable 0 458 17,268 0
Other (Note 3) 44,646 38,688 21,184 31,992
------------ ------------ ------------ ------------
139,170 45,148 1,338,497 42,247
------------ ------------ ------------ ------------
NET ASSETS $ 24,128,787 $ 13,307,437 $ 35,418,267 $ 6,097,870
============ ============ ============ ============
Net Assets consist of:
Capital paid in $ 25,535,460 $ 13,727,813 $ 36,113,150 $ 6,263,562
Undistributed (or Distribution in excess of)
net investment income 795,559 226,834 166,171 47,539
Accumulated net realized gain (loss) (592,378) (268,810) (230,244) (85,315)
Unrealized appreciation (depreciation) on:
Investments* (1,609,440) (378,243) (630,483) (127,916)
Foreign currency translations (414) (157) (327) 0
------------ ------------ ------------ ------------
NET ASSETS $ 24,128,787 $ 13,307,437 $ 35,418,267 $ 6,097,870
============ ============ ============ ============
INSTITUTIONAL CLASS:
Net assets $ 24,128,787 $ 11,238,928 $ 2,904,787 $ 6,097,870
Shares of beneficial interest outstanding, no par value 2,742,246 1,173,614 292,960 555,173
Net asset value and redemption price** $ 8.80 $ 9.58 $ 9.92 $ 10.98
RETAIL CLASS:
Net assets -- $ 2,068,509 $ 2,249,728 --
Shares of beneficial interest outstanding, no par value -- 216,173 226,935 --
Net asset value and redemption price -- $ 9.57 $ 9.91 --
ADMIN CLASS:
Net assets -- -- -- --
Shares of beneficial interest outstanding, no par value -- -- -- --
Net asset value and redemption price -- -- -- --
J CLASS:
Net assets -- -- $ 30,263,752 --
Shares of beneficial interest outstanding, no par value -- -- 3,054,100 --
Net asset value and redemption price -- -- $ 9.91 --
Maximum offering price per share (net asset value/96.50%) -- -- $ 10.26 --
Identified cost of investments $ 25,137,362 $ 13,307,203 $ 35,208,006 $ 6,162,729
============ ============ ============ ============
<PAGE>
<CAPTION>
SHORT-TERM GOVERNMENT
BOND SECURITIES
FUND FUND
--------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Investments at value $ 29,121,052 $ 11,278,061
Repurchase Agreements at value 353,000 0
Cash 449 60,255
Foreign currency at value 0 0
Receivable for:
Fund shares sold 1,289 1,361
Securities sold 61,581 0
Forward foreign currency exchange contracts (Note 1D) 0 0
Dividends and interest 651,813 182,609
Due from the adviser (Note 3) 17,080 13,551
Other assets (Note 1I) 0 0
------------ ------------
30,206,264 11,535,837
------------ ------------
LIABILITIES
Payable for:
Securities purchased 0 0
Fund shares redeemed 1,567 3,042
Dividends declared 16,353 0
Accrued expenses:
Management fees (Note 3) 6,122 2,810
Trustees' fees (Note 3A) 622 625
Administrative fees (Note 3) 2,342 803
12b-1 fees payable 189 0
Other (Note 3) 37,536 33,706
------------ ------------
64,731 40,986
------------ ------------
NET ASSETS $ 30,141,533 $ 11,494,851
============ ============
Net Assets consist of:
Capital paid in $ 31,452,055 $ 12,060,528
Undistributed (or Distribution in excess of)
net investment income 10,549 170,742
Accumulated net realized gain (loss) (1,017,655) (959,434)
Unrealized appreciation (depreciation) on:
Investments* (303,416) 223,015
Foreign currency translations 0 0
------------ ------------
NET ASSETS $ 30,141,533 $ 11,494,851
============ ============
INSTITUTIONAL CLASS:
Net assets $ 29,211,086 $ 11,494,851
Shares of beneficial interest outstanding, no par value 3,097,309 1,082,034
Net asset value and redemption price** $ 9.43 $ 10.62
RETAIL CLASS:
Net assets $ 930,447 --
Shares of beneficial interest outstanding, no par value 98,657 --
Net asset value and redemption price $ 9.43 --
ADMIN CLASS:
Net assets -- --
Shares of beneficial interest outstanding, no par value -- --
Net asset value and redemption price -- --
J CLASS:
Net assets -- --
Shares of beneficial interest outstanding, no par value -- --
Net asset value and redemption price -- --
Maximum offering price per share (net asset value/96.50%) -- --
Identified cost of investments $ 29,777,468 $ 11,055,046
============ ============
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 73
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
GLOBAL
BOND BOND
FUND FUND
------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C>
Dividends* $ 5,870,778 $ 4,711
Interest 145,553,174 3,374,101
------------- -------------
151,423,952 3,378,812
------------- -------------
Expenses
Management fees (Note 3) 10,016,448 268,763
12b-1 fees (Retail Class) 171,269 24,348
12b-1 fees (Admin Class) 6,889 0
12b-1 fees (J Class) 0 0
Shareholder service fees (Admin Class) 6,889 0
Shareholder service fees (J Class) 0 0
Trustees' fees and expenses (Note 3A) 4,432 4,432
Administrative fees (Note 3) 884,491 29,517
Custodian and accounting fees 461,213 75,138
Transfer agent fees (Institutional Class) (Note 3) 742,813 27,653
Transfer agent fees (Retail Class) (Note 3) 77,119 20,117
Transfer agent fees (Admin Class) 20,773 0
Transfer agent fees (J Class) (Note 3) 0 0
Audit and tax services fees 59,471 32,197
Registration fees 76,638 23,628
Printing fees 342,935 21,378
Amortization of organization expenses (Note 1I):
Institutional Class 0 0
Other expenses 81,219 12,957
------------- -------------
Total expenses 12,952,599 540,128
Less expenses waived and reimbursed by the
investment adviser (Note 3) (246,999) (112,636)
------------- -------------
Net expenses 12,705,600 427,492
------------- -------------
Net investment income 138,718,352 2,951,320
------------- -------------
NET REALIZED GAIN (LOSS) ON:
Investments (23,033,371) (193,597)
Foreign currency transactions (212,775) (100,427)
------------- -------------
Total net realized gain (loss) (23,246,146) (294,024)
------------- -------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:
Investments ** (9,134,620) (5,053,347)
Foreign currency translations (83,684) 40,358
------------- -------------
Total net change in unrealized appreciation (depreciation) (9,218,304) (5,012,989)
------------- -------------
Total net realized gain (loss) and change
in unrealized appreciation (depreciation) (32,464,450) (5,307,013)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 106,253,902 $ (2,355,693)
============= =============
</TABLE>
* NET OF FOREIGN WITHHOLDING TAXES OF $12,368, $1,178 AND $772 FOR THE BOND,
GLOBAL BOND AND HIGH YIELD FUNDS, RESPECTIVELY.
** NET OF CHANGE IN CAPITAL GAIN WITHHOLDING TAXES OF $212 FOR HIGH YIELD
FUND.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
HIGH INTERMEDIATE INVESTMENT MUNICIPAL
YIELD MATURITY BOND GRADE BOND BOND
FUND FUND FUND FUND
------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Dividends* $ 307,635 $ 0 $ 34,393 $ 0
Interest 2,467,588 938,688 1,770,695 421,137
----------- ----------- ----------- -----------
2,775,223 938,688 1,805,088 421,137
----------- ----------- ----------- -----------
Expenses
Management fees (Note 3) 134,648 50,314 91,373 23,723
12b-1 fees (Retail Class) 0 4,906 6,259 0
12b-1 fees (Admin Class) 0 0 0 0
12b-1 fees (J Class) 0 0 57,108 0
Shareholder service fees (Admin Class) 0 0 0 0
Shareholder service fees (J Class) 0 0 76,672 0
Trustees' fees and expenses (Note 3A) 4,411 4,432 4,432 4,351
Administrative fees (Note 3) 13,002 11,293 27,520 3,886
Custodian and accounting fees 57,735 61,423 75,857 45,518
Transfer agent fees (Institutional Class) (Note 3) 27,928 23,064 29,842 31,028
Transfer agent fees (Retail Class) (Note 3) 0 19,062 19,090 0
Transfer agent fees (Admin Class) 0 0 7,852 0
Transfer agent fees (J Class) (Note 3) 0 0 0 0
Audit and tax services fees 26,607 12,140 42,510 10,541
Registration fees 4,278 23,601 26,052 16,726
Printing fees 14,697 8,207 129,622 9,080
Amortization of organization expenses (Note 1I):
Institutional Class 1,706 0 0 0
Other expenses 11,887 11,445 90,942 11,007
----------- ----------- ----------- -----------
Total expenses 296,899 229,887 685,131 155,860
Less expenses waived and reimbursed by the
investment adviser (Note 3) (128,589) (155,799) (419,453) (116,321)
----------- ----------- ----------- -----------
Net expenses 168,310 74,088 265,678 39,539
----------- ----------- ----------- -----------
Net investment income 2,606,913 864,600 1,539,410 381,598
----------- ----------- ----------- -----------
NET REALIZED GAIN (LOSS) ON:
Investments (405,298) (24,498) (136,215) (47,389)
Foreign currency transactions (1,158) (46) (853) 0
----------- ----------- ----------- -----------
Total net realized gain (loss) (406,456) (24,544) (137,068) (47,389)
----------- ----------- ----------- -----------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:
Investments ** 714,145 70,640 (30,073) 29,009
Foreign currency translations (524) (173) (456) 0
----------- ----------- ----------- -----------
Total net change in unrealized appreciation (depreciation) 713,621 70,467 (30,529) 29,009
----------- ----------- ----------- -----------
Total net realized gain (loss) and change
in unrealized appreciation (depreciation) 307,165 45,923 (167,597) (18,380)
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 2,914,078 $ 910,523 $ 1,371,813 $ 363,218
=========== =========== =========== ===========
<PAGE>
<CAPTION>
U.S.
SHORT-TERM GOVERNMENT
BOND SECURITIES
FUND FUND
----------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C>
Dividends* $ 0 $ 0
Interest 2,392,763 911,337
----------- -----------
2,392,763 911,337
----------- -----------
Expenses
Management fees (Note 3) 82,347 40,960
12b-1 fees (Retail Class) 1,799 0
12b-1 fees (Admin Class) 0 0
12b-1 fees (J Class) 0 0
Shareholder service fees (Admin Class) 0 0
Shareholder service fees (J Class) 0 0
Trustees' fees and expenses (Note 3A) 4,432 4,432
Administrative fees (Note 3) 22,132 6,587
Custodian and accounting fees 56,387 39,658
Transfer agent fees (Institutional Class) (Note 3) 34,189 27,339
Transfer agent fees (Retail Class) (Note 3) 18,753 0
Transfer agent fees (Admin Class) 0 0
Transfer agent fees (J Class) (Note 3) 0 0
Audit and tax services fees 14,408 11,945
Registration fees 23,852 13,618
Printing fees 12,911 12,831
Amortization of organization expenses (Note 1I):
Institutional Class 0 0
Other expenses 11,316 11,504
----------- -----------
Total expenses 282,526 168,874
Less expenses waived and reimbursed by the
investment adviser (Note 3) (136,519) (100,607)
----------- -----------
Net expenses 146,007 68,267
----------- -----------
Net investment income 2,246,756 843,070
----------- -----------
NET REALIZED GAIN (LOSS) ON:
Investments (470,444) (526,594)
Foreign currency transactions 0 0
----------- -----------
Total net realized gain (loss) (470,444) (526,594)
----------- -----------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:
Investments ** 159,553 756,211
Foreign currency translations 0 0
----------- -----------
Total net change in unrealized appreciation (depreciation) 159,553 756,211
----------- -----------
Total net realized gain (loss) and change
in unrealized appreciation (depreciation) (310,891) 229,617
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 1,935,865 $ 1,072,687
=========== ===========
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 75
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
BOND FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
-------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 138,718,352 $ 128,881,830
Net realized gain (loss) (23,246,146) 18,870,044
Change in unrealized appreciation
(depreciation) (9,218,304) (35,325,692)
--------------- ---------------
Increase (decrease) in net assets from
operations 106,253,902 112,426,182
--------------- ---------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income (125,893,967) (122,784,914)
Net realized gain on investments 0 (61,875,293)
RETAIL CLASS
Net investment income (5,062,287) (4,275,392)
Net realized gain on investments 0 (2,285,658)
ADMIN CLASS
Net investment income (184,601) (90,938)
Net realized gain on investments 0 (52,035)
--------------- ---------------
(131,140,855) (191,364,230)
--------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 7)
Increase (decrease) in net assets derived from
capital share transactions 178,615,994 167,959,892
--------------- ---------------
Total increase (decrease) in net assets 153,729,041 89,021,844
NET ASSETS
Beginning of the period 1,598,871,715 1,509,849,871
--------------- ---------------
End of the period $ 1,752,600,756 $ 1,598,871,715
=============== ===============
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period $ 37,932,526 $ 31,716,557
=============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
GLOBAL BOND FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
---------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 2,951,320 $ 2,515,205
Net realized gain (loss) (294,024) 883,182
Change in unrealized appreciation
(depreciation) (5,012,989) 1,728,984
------------ ------------
Increase (decrease) in net assets from
operations (2,355,693) 5,127,371
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income (1,914,609) (1,752,877)
Net realized gain on investments (1,173,369) (736,862)
RETAIL CLASS
Net investment income (425,871) (288,728)
Net realized gain on investments (265,483) (127,023)
------------ ------------
(3,779,332) (2,905,490)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 7)
Increase (decrease) in net assets derived
from capital share transactions 13,631,766 2,802,005
------------ ------------
Total increase (decrease) in net assets 7,496,741 5,023,886
NET ASSETS
Beginning of the period 41,259,433 36,235,547
------------ ------------
End of the period $ 48,756,174 $ 41,259,433
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period $ 1,800,248 $ 1,670,561
============ ============
</TABLE>
See accompanying notes to financial statements.
LOOMIS SAYLES FIXED INCOME FUNDS 77
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
HIGH YIELD FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
-------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 2,606,913 $ 2,102,109
Net realized gain (loss) (406,456) (187,724)
Change in unrealized appreciation
(depreciation) 713,621 1,138,430
------------ ------------
Increase (decrease) in net assets from
operations 2,914,078 3,052,815
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income (2,406,069) (1,560,761)
Net realized gain on investments (2,459) (238,840)
RETAIL CLASS
Net investment income 0 (270,450)
Net realized gain on investments 0 (125,847)
------------ ------------
(2,408,528) (2,195,898)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 7)
Increase (decrease) in net assets derived
from capital share transactions 3,472,108 8,611,790
------------ ------------
Redemption Fees (Note 1H) 1,549 36,460
------------ ------------
Total increase (decrease) in net assets 3,979,207 9,505,167
NET ASSETS
Beginning of the period 20,149,580 10,644,413
------------ ------------
End of the period $ 24,128,787 $ 20,149,580
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period $ 795,559 $ 598,927
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
INTERMEDIATE MATURITY BOND FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
-------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 864,600 $ 696,954
Net realized gain (loss) (24,544) (219,936)
Change in unrealized appreciation
(depreciation) 70,467 (188,090)
------------ ------------
Increase (decrease) in net assets from
operations 910,523 288,928
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income (694,006) (636,123)
Net realized gain on investments 0 (77,718)
RETAIL CLASS
Net investment income (127,051) (60,288)
Net realized gain on investments 0 (6,918)
------------ ------------
(821,057) (781,047)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 7)
Increase (decrease) in net assets derived
from capital share transactions 2,460,242 1,985,972
------------ ------------
Total increase (decrease) in net assets 2,549,708 1,493,853
NET ASSETS
Beginning of the period 10,757,729 9,263,876
------------ ------------
End of the period $ 13,307,437 $ 10,757,729
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period $ 226,834 $ 179,258
============ ============
</TABLE>
See accompanying notes to financial statements.
LOOMIS SAYLES FIXED INCOME FUNDS 79
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
INVESTMENT GRADE BOND FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
----------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 1,539,410 $ 651,731
Net realized gain (loss) (137,068) (29,646)
Change in unrealized appreciation
(depreciation) (30,529) (410,003)
------------ ------------
Increase (decrease) in net assets from
operations 1,371,813 212,082
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income (182,374) (194,834)
Net realized gain on investments 0 (69,604)
RETAIL CLASS
Net investment income (177,798) (158,241)
Net realized gain on investments 0 (64,811)
J CLASS
Net investment income (1,124,657) (258,512)
------------ ------------
(1,484,829) (746,002)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 7)
Increase (decrease) in net assets derived
from capital share transactions 14,236,222 17,308,327
------------ ------------
Total increase (decrease) in net assets 14,123,206 16,774,407
NET ASSETS
Beginning of the period 21,295,061 4,520,654
------------ ------------
End of the period $ 35,418,267 $ 21,295,061
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period $ 166,171 $ 114,023
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
---------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 381,598 $ 464,723
Net realized gain (loss) (47,389) 31,069
Change in unrealized appreciation
(depreciation) 29,009 (784,422)
------------ ------------
Increase (decrease) in net assets from
operations 363,218 (288,630)
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income (381,598) (464,723)
Net realized gain on investments (8,414) (163,734)
------------ ------------
(390,012) (628,457)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 7)
Increase (decrease) in net assets derived
from capital share transactions (3,697,861) 683,252
------------ ------------
Total increase (decrease) in net assets (3,724,655) (233,835)
NET ASSETS
Beginning of the period 9,822,525 10,056,360
------------ ------------
End of the period $ 6,097,870 $ 9,822,525
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period $ 47,539 $ 12,106
============ ============
</TABLE>
See accompanying notes to financial statements.
LOOMIS SAYLES FIXED INCOME FUNDS 81
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
SHORT-TERM BOND FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
---------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 2,246,756 $ 1,772,846
Net realized gain (loss) (470,444) (142,500)
Change in unrealized appreciation
(depreciation) 159,553 (1,150,808)
------------ ------------
Increase (decrease) in net assets from
operations 1,935,865 479,538
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income (2,199,043) (1,735,033)
RETAIL CLASS
Net investment income (47,713) (37,813)
------------ ------------
(2,246,756) (1,772,846)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 7)
Increase (decrease) in net assets derived
from capital share transactions 2,816,850 867,559
------------ ------------
Total increase (decrease) in net assets 2,505,959 (425,749)
NET ASSETS
Beginning of the period 27,635,574 28,061,323
------------ ------------
End of the period $ 30,141,533 $ 27,635,574
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period $ 10,549 $ 8,047
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
U.S. GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
--------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment income $ 843,070 $ 1,137,504
Net realized gain (loss) (526,594) (28,225)
Change in unrealized appreciation
(depreciation) 756,211 (1,901,732)
------------ ------------
Increase (decrease) in net assets from
operations 1,072,687 (792,453)
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
INSTITUTIONAL CLASS
Net investment income (886,542) (1,273,767)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 7)
Increase (decrease) in net assets derived
from capital share transactions (4,832,750) (11,038,231)
------------ ------------
Total increase (decrease) in net assets (4,646,605) (13,104,451)
NET ASSETS
Beginning of the period 16,141,456 29,245,907
------------ ------------
End of the period $ 11,494,851 $ 16,141,456
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME
End of the period $ 170,742 $ 214,176
============ ============
</TABLE>
See accompanying notes to financial statements.
LOOMIS SAYLES FIXED INCOME FUNDS 83
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
FINANCIAL HIGHLIGHTS
BOND FUND
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
--------------------------------------------------------------------------------------
NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ ------------- -----------------------
2000 1999 1998 1997 1996 1995
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 11.70 $ 12.30 $ 12.83 $ 12.38 $ 12.29 $ 10.05
----------- ------------ ----------- ----------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS--
Net investment income (loss) 0.96 0.98 0.69 0.86 0.86 0.82
Net realized and unrealized
gain (loss) on investments (0.20) (0.06) (0.78) 0.67 0.35 2.32
----------- ------------ ----------- ----------- --------- ---------
Total from investment
operations 0.76 0.92 (0.09) 1.53 1.21 3.14
----------- ------------ ----------- ----------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net
investment income (0.93) (1.00) (0.44) (0.86) (0.86) (0.82)
Distributions from net
realized capital gains 0.00 (0.52) 0.00 (0.22) (0.26) (0.08)
----------- ------------ ----------- ----------- --------- ---------
Total distributions (0.93) (1.52) (0.44) (1.08) (1.12) (0.90)
----------- ------------ ----------- ----------- --------- ---------
Net asset value, end of period $ 11.53 $ 11.70 $ 12.30 $ 12.83 $ 12.38 $ 12.29
=========== ============ =========== =========== ========= =========
Total return (%)(a) 6.7 7.6 (0.9) 12.7 10.3 32.0
Net assets, end of period (000) $ 1,670,825 $ 1,541,834 $ 1,455,312 $ 1,261,910 $ 541,244 $ 255,710
Ratios to average net assets:
Net expenses (%)(b)(c) 0.75 0.75 0.75 0.75 0.75 0.79
Gross expenses (%)(c) 0.76 0.75 0.76 0.77 0.75 0.79
Net investment
income (loss) (%)(c) 8.32 8.15 7.34 7.36 7.93 8.34
Portfolio turnover rate (%) 17 33 24 41 42 35
</TABLE>
* FROM COMMENCEMENT OF CLASS OPERATIONS ON JANUARY 2, 1997 THROUGH DECEMBER
31, 1997.
** FROM COMMENCEMENT OF CLASS OPERATIONS ON JANUARY 2, 1998 THROUGH SEPTEMBER
30, 1998.
(a) TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED ITS
ADVISORY FEES AND/OR BORNE OTHER OPERATING EXPENSES. PERIODS LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
(b) THE ADVISER HAS AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT THE FUND'S RATIO OF OPERATING
EXPENSES WOULD HAVE BEEN HIGHER.
(c) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(d) PER SHARE NET INVESTMENT INCOME HAS BEEN DETERMINED ON THE BASIS OF THE
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD.
<PAGE>
<TABLE>
<CAPTION>
RETAIL CLASS ADMIN CLASS
----------------------------------------------------- --------------------------------------
NINE MONTHS PERIOD
ENDED PERIOD ENDED ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------- ------------ ------------------------ -------------
2000 1999 1998 1997* 2000 1999 1998**
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 11.69 $ 12.29 $ 12.82 $ 12.38 $ 11.69 $ 12.28 $ 12.83
--------- --------- ------- --------- --------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS--
Net investment income (loss) 0.92 0.96 0.66 0.84(d) 0.86 0.92(d) 0.47
Net realized and unrealized
gain (loss) on investments (0.19) (0.08) (0.77) 0.65 (0.16) (0.06) (0.62)
--------- --------- ------- --------- --------- -------- -------
Total from investment
operations 0.73 0.88 (0.11) 1.49 0.70 0.86 (0.15)
--------- --------- ------- --------- --------- -------- -------
LESS DISTRIBUTIONS--
Dividends from net
investment income (0.90) (0.96) (0.42) (0.83) (0.87) (0.93) (0.40)
Distributions from net
realized capital gains 0.00 (0.52) 0.00 (0.22) 0.00 (0.52) 0.00
--------- --------- ------- --------- --------- -------- -------
Total distributions (0.90) (1.48) (0.42) (1.05) (0.87) (1.45) (0.40)
--------- --------- ------- --------- --------- -------- -------
Net asset value, end of period $ 11.52 $ 11.69 $ 12.29 $ 12.82 $ 11.52 $ 11.69 $ 12.28
========= ========= ======= ========= ========= ======== =======
Total return (%)(a) 6.5 7.3 (1.1) 12.4 6.2 7.1 (1.3)
Net assets, end of period (000) $ 78,039 $ 55,490 $ 53,908 $ 33,240 $ 3,736 $ 1,548 $ 630
Ratios to average net assets:
Net expenses (%)(b)(c) 1.00 1.00 1.00 1.00 1.25 1.25 1.25
Gross expenses (%)(c) 1.08 1.04 1.06 1.20 1.98 2.38 6.32
Net investment
income (loss) (%)(c) 8.10 7.90 7.13 7.09 7.90 7.66 7.45
Portfolio turnover rate (%) 17 33 24 41 17 33 24
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 85
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
FINANCIAL HIGHLIGHTS
GLOBAL BOND FUND
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
-----------------------------------------
NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
------------------------ -------------
2000 1999 1998
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.60 $ 11.93 $ 11.83
--------- --------- --------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.76(d) 0.79 0.53
Net realized and unrealized gain
(loss) on investments (1.33) 0.87 (0.43)
--------- --------- --------
Total from investment operations (0.57) 1.66 0.10
LESS DISTRIBUTIONS--
Dividends from net investment income (0.67) (0.70) 0.00
Distributions in excess of net investment income 0.00 0.00 0.00
Distributions from net realized capital gains (0.43) (0.29) 0.00
--------- --------- --------
Total distributions (1.10) (0.99) 0.00
--------- --------- --------
Net asset value, end of period $ 10.93 $ 12.60 $ 11.93
========= ========= ========
Total return (%)(a) (5.0) 14.2 0.9
Net assets, end of period (000) $ 37,035 $ 34,154 $ 29,860
Ratios to average net assets:
Net expenses (%)(b)(c) 0.90 0.90 0.90
Gross expenses (%)(c) 1.12 1.10 1.18
Net investment income (loss) (%)(c) 6.64 6.32 6.00
Portfolio turnover rate (%) 17 42 28
</TABLE>
* FROM COMMENCEMENT OF CLASS OPERATIONS ON JANUARY 2, 1997 THROUGH DECEMBER
31, 1997.
(a) TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED ITS
ADVISORY FEES AND/OR BORNE OTHER OPERATING EXPENSES. PERIODS LESS THAN ONE
YEAR ARE NOT ANNUALIZED.
(b) THE ADVISER HAS AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT THE FUND'S RATIO OF OPERATING
EXPENSES WOULD HAVE BEEN HIGHER.
(c) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(d) PER SHARE NET INVESTMENT INCOME HAS BEEN DETERMINED ON THE BASIS OF THE
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD.
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
-----------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
-------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 12.35 $ 11.39 $ 9.82
-------- -------- -------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.71 0.44 1.04
Net realized and unrealized gain
(loss) on investments (0.42) 1.27 1.31
-------- -------- -------
Total from investment operations 0.29 1.71 2.35
-------- -------- -------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.69) (0.75) (0.78)
Distributions in excess of net investment income (0.12) 0.00 0.00
Distributions from net realized capital gains 0.00 0.00 0.00
-------- -------- -------
Total distributions (0.81) (0.75) (0.78)
-------- -------- -------
Net asset value, end of period $ 11.83 $ 12.35 $ 11.39
======== ======== =======
Total return (%)(a) 2.3 15.0 23.9
Net assets, end of period (000) $ 28,401 $ 26,513 $10,304
Ratios to average net assets:
Net expenses (%)(b)(c) 0.90 1.50 1.50
Gross expenses (%)(c) 1.22 1.77 1.69
Net investment income (loss) (%)(c) 5.88 6.37 8.17
Portfolio turnover rate (%) 75 131 148
<CAPTION>
RETAIL CLASS
--------------------------------------------------------
NINE MONTHS
ENDED PERIOD ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
------------------------ ---------------- ------------
2000 1999 1998 1997*
--------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.57 $ 11.91 $ 11.83 $ 12.35
---------- ------------- ------------ ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.73(d) 0.76(d) 0.44 0.63(d)
Net realized and unrealized gain
(loss) on investments (1.32) 0.86 (0.36) (0.37)
---------- ------------- ------------ ---------
Total from investment operations (0.59) 1.62 0.08 0.26
---------- ------------- ------------ ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.64) (0.67) 0.00 (0.69)
Distributions in excess of net investment income 0.00 0.00 0.00 (0.09)
Distributions from net realized capital gains (0.43) (0.29) 0.00 0.00
---------- ------------- ------------ ---------
Total distributions (1.07) (0.96) 0.00 (0.78)
---------- ------------- ------------ ---------
Net asset value, end of period $ 10.91 $ 12.57 $ 11.91 $ 11.83
========== ============= ============ =========
Total return (%)(a) (5.2) 13.8 0.7 2.0
Net assets, end of period (000) $ 11,721 $ 7,106 $ 6,376 $ 4,694
Ratios to average net assets:
Net expenses (%)(b)(c) 1.15 1.15 1.15 1.15
Gross expenses (%)(c) 1.51 1.61 1.78 2.44
Net investment income (loss) (%)(c) 6.41 6.08 5.77 5.60
Portfolio turnover rate (%) 17 42 28 75
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 87
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
FINANCIAL HIGHLIGHTS
HIGH YIELD FUND
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
-------------------
YEAR ENDED SEPTEMBER 30,
------------------------
2000 1999
-------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 8.61 $ 8.17
--------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 1.01 0.91
Net realized and unrealized gain (loss) on investments 0.15 0.68
--------- ---------
Total from investment operations 1.16 1.59
--------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.97) (0.96)
Distributions from net realized capital gains 0.00(e) (0.21)
--------- ---------
Total distributions (0.97) (1.17)
--------- ---------
Redemption fees 0.00(e) 0.02
--------- ---------
Net asset value, end of period $ 8.80 $ 8.61
========= =========
Total return (%)(a) 14.3 21.0
Net assets, end of period (000) $ 24,129 $ 20,150
Ratios to average net assets:
Net expenses (%)(b)(c) 0.75 0.75
Gross expenses (%)(c) 1.32 1.81
Net investment income (loss) (%)(c) 11.62 11.61
Portfolio turnover rate (%) 30 24
</TABLE>
* FROM COMMENCEMENT OF FUND OPERATIONS ON SEPTEMBER 11, 1996 THROUGH
DECEMBER 31, 1996.
(a) TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED ITS ADVISORY
FEES AND/OR BORNE OTHER OPERATING EXPENSES. PERIODS LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
(b) THE ADVISER HAS AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT THE FUND'S RATIO OF OPERATING
EXPENSES WOULD HAVE BEEN HIGHER.
(c) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(d) PER SHARE NET INVESTMENT INCOME HAS BEEN DETERMINED ON THE BASIS OF THE
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD.
(e) AMOUNT IS LESS THAN $0.01 PER SHARE.
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------
NINE MONTHS YEAR PERIOD
ENDED ENDED ENDED
SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
------------- ------------ ------------
1998 1997 1996*
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.12 $ 10.11 $ 10.00
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.78(d) 0.83 0.20
Net realized and unrealized gain (loss) on investments (2.28) 0.27 0.11
--------- --------- ---------
Total from investment operations (1.50) 1.10 0.31
--------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.46) (0.86) (0.20)
Distributions from net realized capital gains 0.00 (0.26) 0.00
--------- --------- ---------
Total distributions (0.46) (1.12) (0.20)
--------- --------- ---------
Redemption fees 0.01 0.03 0.00
--------- --------- ---------
Net asset value, end of period $ 8.17 $ 10.12 $ 10.11
========= ========= =========
Total return (%)(a) (15.6) 11.4 3.1
Net assets, end of period (000) $ 6,624 $ 5,266 $ 1,939
Ratios to average net assets:
Net expenses (%)(b)(c) 0.75 0.75 0.75
Gross expenses (%)(c) 2.42 3.81 12.06
Net investment income (loss) (%)(c) 10.54 8.96 8.85
Portfolio turnover rate (%) 33 68 0
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 89
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
FINANCIAL HIGHLIGHTS
INTERMEDIATE MATURITY BOND FUND
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------
YEAR ENDED SEPTEMBER 30,
------------------------
2000 1999
--------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 9.56 $ 10.06
--------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.64 0.67
Net realized and unrealized gain (loss) on investments 0.02 (0.38)
--------- ---------
Total from investment operations 0.66 0.29
--------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.64) (0.70)
Distributions in excess of net investment income 0.00 0.00
Distributions from net realized capital gains 0.00 (0.09)
--------- ---------
Total distributions (0.64) (0.79)
--------- ---------
Net asset value, end of period $ 9.58 $ 9.56
========= =========
Total return (%)(a) 7.3 3.0
Net assets, end of period (000) $ 11,239 $ 8,978
Ratios to average net assets:
Net expenses (%)(b)(c) 0.55 0.55
Gross expenses (%)(c) 1.67 1.92
Net investment income (loss) (%)(c) 6.91 6.98
Portfolio turnover rate (%) 32 16
</TABLE>
* COMMENCEMENT OF FUND OPERATIONS ON JANUARY 2, 1997 THROUGH
DECEMBER 31, 1997.
(a) TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED ITS ADVISORY
FEES AND/OR BORNE OTHER OPERATING EXPENSES. PERIODS LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
(b) THE ADVISER HAS AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT THE FUND'S RATIO OF OPERATING
EXPENSES WOULD HAVE BEEN HIGHER.
(c) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(d) PER SHARE NET INVESTMENT INCOME HAS BEEN DETERMINED ON THE BASIS OF THE
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
FINANCIAL HIGHLIGHTS
INTERMEDIATE MATURITY BOND FUND
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS RETAIL CLASS
--------------------------- ---------------------------
NINE MONTHS
ENDED PERIOD ENDED
SEPTEMBER 30, DECEMBER 31, YEAR ENDED SEPTEMBER 30,
------------- ------------ ------------------------
1998 1997* 2000 1999
---------------------------------------------------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.03 $10.00 $ 9.55 $ 10.06
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.51(d) 0.64(d) 0.63 0.64
Net realized and unrealized gain (loss) on investments (0.16) 0.00 0.01 (0.38)
--------- --------- --------- ---------
Total from investment operations 0.35 0.64 0.64 0.26
--------- --------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.32) (0.56) (0.62) (0.68)
Distributions in excess of net investment income 0.00 (0.03) 0.00 0.00
Distributions from net realized capital gains 0.00 (0.02) 0.00 (0.09)
--------- --------- --------- ---------
Total distributions (0.32) (0.61) (0.62) (0.77)
--------- --------- --------- ---------
Net asset value, end of period $10.06 $10.03 $ 9.57 $ 9.55
========= ========= ========= =========
Total return (%)(a) 3.5 6.4 7.0 2.6
Net assets, end of period (000) $8,601 $6,305 $ 2,069 $ 1,780
Ratios to average net assets:
Net expenses (%)(b)(c) 0.55 0.55 0.80 0.80
Gross expenses (%)(c) 2.27 3.66 2.69 3.86
Net investment income (loss) (%)(c) 6.71 6.38 6.69 6.76
Portfolio turnover rate (%) 32 119 32 16
<CAPTION>
RETAIL CLASS
---------------------------
NINE MONTHS
ENDED PERIOD ENDED
SEPTEMBER 30, DECEMBER 31,
------------- ------------
1998 1997*
---------------------------
<S> <C> <C>
Net asset value, beginning of period $ 10.03 $ 10.00
--------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.49(d) 0.64(d)
Net realized and unrealized gain (loss) on investments (0.15) (0.02)
--------- ---------
Total from investment operations 0.34 0.62
--------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.31) (0.54)
Distributions in excess of net investment income 0.00 (0.03)
Distributions from net realized capital gains 0.00 (0.02)
--------- ---------
Total distributions (0.31) (0.59)
--------- ---------
Net asset value, end of period $ 10.06 $ 10.03
========= =========
Total return (%)(a) 3.4 6.2
Net assets, end of period (000) $ 663 $ 423
Ratios to average net assets:
Net expenses (%)(b)(c) 0.80 0.80
Gross expenses (%)(c) 5.64 14.56
Net investment income (loss) (%)(c) 6.47 6.13
Portfolio turnover rate (%) 32 119
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 91
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
FINANCIAL HIGHLIGHTS
INVESTMENT GRADE BOND FUND
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------------------
NINE MONTHS
ENDED PERIOD ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
------------------------ ------------- ------------
2000 1999 1998 1997*
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.96 $ 10.28 $ 10.59 $ 10.00
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.73(d) 0.76 0.52 0.65
Net realized and unrealized gain (loss)
on investments (0.05) (0.12) (0.50) 0.77
--------- --------- --------- ---------
Total from investment operations 0.68 0.64 0.02 1.42
--------- --------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.72) (0.70) (0.33) (0.63)
Distributions in excess of net investment income 0.00 0.00 0.00 (0.08)
Distributions from net realized capital gains 0.00 (0.26) 0.00 (0.12)
--------- --------- --------- ---------
Total distributions (0.72) (0.96) (0.33) (0.83)
--------- --------- --------- ---------
Net asset value, end of period $ 9.92 $ 9.96 $ 10.28 $ 10.59
========= ========= ========= =========
Total return (%)(a) 7.2 6.5 0.0 14.5
Net assets, end of period (000) $ 2,905 $ 2,427 $ 2,778 $ 2,445
Ratios to average net assets:
Net expenses (%)(b)(c) 0.55 0.55 0.55 0.55
Gross expenses (%)(c) 3.23 2.87 4.19 7.59
Net investment income (loss) (%)(c) 7.35 6.83 6.68 6.74
Portfolio turnover rate (%) 23 42 48 112
</TABLE>
* COMMENCEMENT OF FUND OPERATIONS ON JANUARY 2, 1997 THROUGH DECEMBER 31,1997.
** COMMENCEMENT OF CLASS OPERATIONS ON MAY 24, 1999 THROUGH SEPTEMBER 30, 1999.
(a) TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED ITS ADVISORY
FEES AND/OR BORNE OTHER OPERATING EXPENSES. PERIODS LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
(b) THE ADVISER HAS AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT THE FUND'S RATIO OF OPERATING
EXPENSES WOULD HAVE BEEN HIGHER.
(c) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
(d) PER SHARE NET INVESTMENT INCOME HAS BEEN DETERMINED ON THE BASIS OF THE
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD.
(e) TOTAL RETURN DOES NOT INCLUDE THE EFFECT OF ANY FRONT END SALES CHARGES FOR
THE J CLASS.
<PAGE>
<TABLE>
<CAPTION>
RETAIL CLASS
------------------------------------------------------
NINE MONTHS
ENDED PERIOD ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
------------------------ ------------- ------------
2000 1999 1998 1997*
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.95 $ 10.27 $ 10.59 $ 10.00
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.71(d) 0.64 0.48 0.62(d)
Net realized and unrealized gain (loss)
on investments (0.05) (0.03) (0.49) 0.78
--------- --------- --------- ---------
Total from investment operations 0.66 0.61 (0.01) 1.40
--------- --------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.70) (0.67) (0.31) (0.62)
Distributions in excess of net investment income 0.00 0.00 0.00 (0.07)
Distributions from net realized capital gains 0.00 (0.26) 0.00 (0.12)
--------- --------- --------- ---------
Total distributions (0.70) (0.93) (0.31) (0.81)
--------- --------- --------- ---------
Net asset value, end of period $ 9.91 $ 9.95 $ 10.27 $ 10.59
========= ========= ========= =========
Total return (%)(a) 6.9 6.2 (0.2) 14.3
Net assets, end of period (000) $ 2,250 $ 2,561 $ 1,743 $ 862
Ratios to average net assets:
Net expenses (%)(b)(c) 0.80 0.80 0.80 0.80
Gross expenses (%)(c) 3.01 3.20 5.25 10.95
Net investment income (loss) (%)(c) 7.16 6.60 6.43 6.51
Portfolio turnover rate (%) 23 42 48 112
<CAPTION>
J CLASS
----------------------------
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
2000 1999**
----------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 9.95 $ 10.29
--------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.65(d) 0.21
Net realized and unrealized gain (loss)
on investments (0.04) (0.36)
--------- ---------
Total from investment operations 0.61 (0.15)
--------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.65) (0.19)
Distributions in excess of net investment income 0.00 0.00
Distributions from net realized capital gains 0.00 0.00
--------- ---------
Total distributions (0.65) (0.19)
--------- ---------
Net asset value, end of period $ 9.91 $ 9.95
========= =========
Total return (%)(a) 6.4(e) (1.5)(e)
Net assets, end of period (000) $ 30,264 $ 16,307
Ratios to average net assets:
Net expenses (%)(b)(c) 1.30 1.30
Gross expenses (%)(c) 2.97 2.16
Net investment income (loss) (%)(c) 6.59 6.11
Portfolio turnover rate (%) 23 42
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 93
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
FINANCIAL HIGHLIGHTS
MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------
NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
--------------------------- -------------
2000 1999 1998
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.93 $ 11.96 $ 11.70
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.53 0.52 0.40
Net realized and unrealized gain (loss) on investments 0.05 (0.84) 0.27
--------- --------- ---------
Total from investment operations 0.58 (0.32) 0.67
--------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.52) (0.52) (0.40)
Distributions from net realized capital gains (0.01) (0.19) (0.01)
--------- --------- ---------
Total distributions (0.53) (0.71) (0.41)
--------- --------- ---------
Net asset value, end of period $ 10.98 $ 10.93 $ 11.96
========= ========= =========
Total return (%)(a) 5.5 (2.8) 5.9
Net assets, end of period (000) $ 6,098 $ 9,823 $ 10,056
Ratios to average net assets:
Net expenses (%)(b)(c) 0.50 0.54 0.60
Gross expenses (%)(c) 1.97 1.63 1.70
Net investment income (loss) (%)(c) 4.83 4.54 4.62
Portfolio turnover rate (%) 22 38 30
</TABLE>
(a) TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED ITS ADVISORY
FEES AND/OR BORNE OTHER OPERATING EXPENSES.PERIODS LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
(b) THE ADVISER HAS AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT THE FUND'S RATIO OF OPERATING
EXPENSES WOULD HAVE BEEN HIGHER.
(c) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.29 $ 11.53 $ 10.41
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.56 0.52 0.52
Net realized and unrealized gain (loss) on investments 0.51 (0.15) 1.16
--------- --------- ---------
Total from investment operations 1.07 0.37 1.68
--------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.56) (0.52) (0.52)
Distributions from net realized capital gains (0.10) (0.09) (0.04)
--------- --------- ---------
Total distributions (0.66) (0.61) (0.56)
--------- --------- ---------
Net asset value, end of period $ 11.70 $ 11.29 $ 11.53
========= ========= =========
Total return (%)(a) 9.8 3.3 16.5
Net assets, end of period (000) $ 8,752 $ 8,701 $ 7,961
Ratios to average net assets:
Net expenses (%)(b)(c) 0.60 1.00 1.00
Gross expenses (%)(c) 1.80 2.31 2.02
Net investment income (loss) (%)(c) 4.90 4.61 4.72
Portfolio turnover rate (%) 50 38 41
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 95
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
FINANCIAL HIGHLIGHTS
SHORT-TERM BOND FUND
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------
NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
------------------------------------------
2000 1999 1998
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.51 $ 9.96 $ 9.75
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.64 0.62 0.44
Net realized and unrealized gain (loss)
on investments (0.08) (0.45) 0.21
--------- --------- ---------
Total from investment operations 0.56 0.17 0.65
--------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.64) (0.62) (0.44)
--------- --------- ---------
Net asset value, end of period $ 9.43 $ 9.51 $ 9.96
========= ========= =========
Total return (%)(a) 6.2 1.8 6.8
Net assets, end of period (000) $ 29,211 $ 26,849 $ 27,288
Ratio to average net assets:
Net expenses (%)(b)(c) 0.44 0.27 0.50
Gross expenses (%)(c) 0.80 0.87 0.83
Net investment income (loss) (%)(c) 6.83 6.38 5.94
Portfolio turnover rate (%) 92 81 47
</TABLE>
* FROM COMMENCEMENT OF CLASS OPERATIONS ON JANUARY 2, 1997 THROUGH
DECEMBER 31, 1997.
(a) TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED ITS ADVISORY
FEES AND/OR BORNE OTHER OPERATING EXPENSES. PERIODS LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
(b) THE ADVISER HAS AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT THE FUND'S RATIO OF OPERATING
EXPENSES WOULD HAVE BEEN HIGHER.
(c) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.70 $ 9.81 $ 9.46
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.61 0.55 0.63
Net realized and unrealized gain (loss)
on investments 0.06 (0.11) 0.35
--------- --------- ---------
Total from investment operations 0.67 0.44 0.98
--------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.62) (0.55) (0.63)
--------- --------- ---------
Net asset value, end of period $ 9.75 $ 9.70 $ 9.81
========= ========= =========
Total return (%)(a) 7.1 4.7 10.6
Net assets, end of period (000) $ 18,792 $ 18,229 $ 26,039
Ratio to average net assets:
Net expenses (%)(b)(c) 0.50 1.00 1.00
Gross expenses (%)(c) 1.19 1.17 1.03
Net investment income (loss) (%)(c) 6.34 5.69 6.46
Portfolio turnover rate (%) 91 120 214
<CAPTION>
RETAIL CLASS
-------------------------------------------------------
NINE MONTHS
ENDED PERIOD ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
-------------------------- ------------- ------------
2000 1999 1998 1997*
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.50 $ 9.96 $ 9.75 $ 9.70
--------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.62 0.59 0.42 0.59
Net realized and unrealized gain (loss)
on investments (0.07) (0.46) 0.21 0.06
--------- --------- --------- ---------
Total from investment operations 0.55 0.13 0.63 0.65
--------- --------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.62) (0.59) (0.42) (0.60)
--------- --------- --------- ---------
Net asset value, end of period $ 9.43 $ 9.50 $ 9.96 $ 9.75
========= ========= ========= =========
Total return (%)(a) 6.0 1.4 6.6 6.9
Net assets, end of period (000) $ 930 $ 786 $ 773 $ 285
Ratio to average net assets:
Net expenses (%)(b)(c) 0.68 0.52 0.75 0.75
Gross expenses (%)(c) 3.57 4.21 6.00 17.77
Net investment income (loss) (%)(c) 6.63 6.14 5.66 6.04
Portfolio turnover rate (%) 92 81 47 91
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 97
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------
NINE MONTHS
ENDED
YEAR ENDED SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -------------
2000 1999 1998
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.38 $ 11.41 $ 10.70
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.68 0.65 0.43
Net realized and unrealized gain (loss) on investments 0.22 (1.03) 0.58
--------- --------- ---------
Total from investment operations 0.90 (0.38) 1.01
--------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.66) (0.65) (0.30)
--------- --------- ---------
Net asset value, end of period $ 10.62 $ 10.38 $ 11.41
========= ========= =========
Total return (%)(a) 9.1 (3.5) 9.6
Net assets, end of period (000) $ 11,495 $ 16,141 $ 29,246
Ratio to average net assets:
Net expenses (%)(b)(c) 0.50 0.52 0.60
Gross expenses (%)(c) 1.24 1.03 0.97
Net investment income (loss) (%)(c) 6.17 5.75 5.61
Portfolio turnover rate (%) 86 75 84
</TABLE>
(a) TOTAL RETURNS WOULD HAVE BEEN LOWER HAD THE ADVISER NOT REDUCED ITS ADVISORY
FEES AND/OR BORNE OTHER OPERATING EXPENSES. PERIODS LESS THAN ONE YEAR ARE
NOT ANNUALIZED.
(b) THE ADVISER HAS AGREED TO REIMBURSE A PORTION OF THE FUND'S EXPENSES DURING
THE PERIOD. WITHOUT THIS REIMBURSEMENT THE FUND'S RATIO OF OPERATING
EXPENSES WOULD HAVE BEEN HIGHER.
(c) ANNUALIZED FOR PERIODS LESS THAN ONE YEAR.
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------
1997 1996 1995
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.08 $ 10.64 $ 9.22
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS--
Net investment income (loss) 0.63 0.68 0.66
Net realized and unrealized gain (loss) on investments 0.61 (0.57) 1.42
--------- --------- ---------
Total from investment operations 1.24 0.11 2.08
--------- --------- ---------
LESS DISTRIBUTIONS--
Dividends from net investment income (0.62) (0.67) (0.66)
--------- --------- ---------
Net asset value, end of period $ 10.70 $ 10.08 $ 10.64
========= ========= ==========
Total return (%)(a) 12.7 1.3 23.0
Net assets, end of period (000) $ 17,668 $ 14,192 $ 19,499
Ratio to average net assets:
Net expenses (%)(b)(c) 0.60 1.00 1.00
Gross expenses (%)(c) 1.23 1.19 1.22
Net investment income (loss) (%)(c) 6.29 6.23 6.47
Portfolio turnover rate (%) 156 137 169
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 99
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
1. The Loomis Sayles Funds is comprised of predominantly no-load mutual funds
(the "Funds").
Each Fund is a series of Loomis Sayles Funds (the "Trust"). The Trust is a
diversified, open-end management investment company registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended (the "1940 Act") and 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.
Each Fund is separately managed and has its own investment objective and
policies. Loomis, Sayles & Company, L.P. ("Loomis Sayles") is the investment
adviser of each Fund.
The Trust consists of the following Funds:
<TABLE>
<CAPTION>
FIXED INCOME FUNDS EQUITY FUNDS
------------------ ------------
<S> <C>
Loomis Sayles Bond Fund Loomis Sayles Aggressive Growth Fund
Loomis Sayles Global Bond Fund Loomis Sayles Core Value Fund
Loomis Sayles High Yield Fund Loomis Sayles Emerging Markets Fund
Loomis Sayles Intermediate Maturity Bond Fund Loomis Sayles Global Technology Fund
Loomis Sayles Investment Grade Bond Fund Loomis Sayles Growth Fund
Loomis Sayles Managed Bond Fund Loomis Sayles International Equity Fund
Loomis Sayles Municipal Bond Fund Loomis Sayles Mid-Cap Value Fund
Loomis Sayles Short-Term Bond Fund Loomis Sayles Research Fund
Loomis Sayles U.S. Government Securities Fund Loomis Sayles Small Cap Growth Fund
Loomis Sayles Small Cap Value Fund
Loomis Sayles Worldwide Fund
</TABLE>
The financial statements of Loomis Sayles Managed Bond Fund are presented
separately.
The Fixed Income Funds (excluding the High Yield Fund, the Municipal Bond and
U.S. Government Securities Funds, which only offer Institutional Class shares)
offer Institutional and Retail Class shares. The Bond Fund offers Admin Class
shares and the Investment Grade Bond Fund offers J Class shares. Each class of
shares has an equal pro rata interest in the assets of the relevant fund and
general voting privileges. Institutional, Retail, Admin and J Classes differ
with respect to distribution and certain other class-specific expenses and
expense reductions.
Purchases of the J Class shares are subject to a maximum sales charge of 3.50%.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates. The
following summarizes the significant accounting policies of the Fixed Income
Funds:
A. SECURITY VALUATION -- Long-term debt securities for which quotations are
readily available are valued by a pricing service, as approved by the Board of
Trustees, which generally uses the most recent bid prices in the principal
market in which such securities are normally traded. Municipal debt securities
are valued by a pricing service,
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
as approved by the Board of Trustees, which generally uses a computerized matrix
system or dealer supplied quotations that consider market transactions for
comparable securities. Equity securities for which quotations are readily
available are valued at their last sale price on the exchange where primarily
traded or, if there is no reported sale during the day, at the closing bid
price. Short-term securities with a remaining maturity of 60 days or less are
valued at amortized cost, which approximates market value. Other securities for
which quotations are not readily available (including restricted securities, if
any) are valued primarily using dealer supplied quotations or at their fair
values as determined in good faith under the general supervision of the Board of
Trustees.
B. REPURCHASE AGREEMENTS -- The Funds may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Funds take
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Funds to resell, the obligation at an agreed-upon
price and time. This arrangement results in a fixed rate of return that is not
subject to market fluctuations during the Funds' holding period. The Funds,
through their custodian, receive delivery of the underlying securities
collateralizing repurchase agreements. It is the Funds' policy that the market
value of the collateral be at least equal to 102% of the repurchase price. These
securities are marked-to-market daily. Loomis Sayles is responsible for
determining that the value of the collateral is at all times at least equal to
102% of the repurchase price. In connection with transactions in repurchase
agreements, if the seller defaults and the value of the collateral declines or
if the seller enters into insolvency proceedings, realization of the collateral
by the Funds may be delayed or limited.
C. FOREIGN CURRENCY TRANSLATION AND FOREIGN INVESTMENTS -- The books and records
of each of the Funds (including those Funds that invest in foreign investments)
are maintained in U.S. dollars. The value of investments, currencies and other
assets and liabilities denominated in currencies other than U.S. dollars is
translated into U.S. dollars based upon foreign exchange rates prevailing at the
end of each day. Purchases and sales of investments, income and expenses are
translated at prevailing exchange rates on the respective dates of such
transactions.
The results of operations resulting from changes in foreign exchange rates on
investments are not isolated from fluctuations arising from changes in market
prices of investments held. All such fluctuations are included with net realized
and unrealized gain or loss on investments.
Net realized gains and losses on foreign currency transactions represent net
gains and losses from sales of foreign currencies, currency gains or losses
realized between the trade and settlement dates on securities transactions, and
the differences between the amounts of dividends, interest and foreign
withholding taxes recorded on the Funds' books and the U.S. dollar equivalent of
the amounts actually received or paid. Net unrealized foreign exchange gains or
losses arise from changes in the value of assets and liabilities other than
investments in securities at year-end resulting from changes in exchange rates.
LOOMIS SAYLES FIXED INCOME FUNDS 101
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
Certain funds use foreign currency exchange contracts to facilitate transactions
in foreign-denominated investments. Losses may arise from changes in the value
of the foreign currency or if the counterparties do not perform under the
contracts' terms. The U.S. dollar value of foreign currency exchange contracts
is determined using contractual currency exchange rates established at the time
of each trade.
Each Fund (except the Municipal Bond and U.S. Government Securities Funds) may
purchase investments of foreign issuers. Investing in securities of foreign
companies and foreign governments involves special risks and considerations not
typically associated with investing in U.S. companies and securities of the U.S.
Government. These risks include revaluation of currencies and the risk of
appropriation. Moreover, the markets for securities of many foreign companies
and foreign governments and their markets may be less liquid and the prices of
such securities may be more volatile than those of securities of comparable U.S.
companies and the U.S. Government.
D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- Each Fund that may invest in
foreign investments may enter into forward foreign currency exchange contracts
to protect investments against changes in foreign exchange rates. A forward
foreign currency exchange contract is an agreement between two parties to buy or
sell currency at a set price on a future date.
The market value of the contract will fluctuate with changes in currency
exchange rates. The contract is marked-to-market daily using the forward
currency exchange rate and the change in market value is recorded as unrealized
appreciation (depreciation) on foreign currency translations in the Funds'
Statements of Assets and Liabilities. Realized gain or loss is recognized when
the contract is closed equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed and recorded
as realized gain (loss) on foreign currency transactions in the Funds'
Statements of Operations.
Risks may arise upon entering into forward foreign currency exchange contracts
from the potential inability of the counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar. At September 30, 2000, the Global Bond Fund had the
following open forward foreign currency exchange contracts:
<TABLE>
<CAPTION>
LOCAL AGGREGATE UNREALIZED
DELIVERY CURRENCY FACE TOTAL APPRECIATION
DATE AMOUNT AMOUNT VALUE (DEPRECIATION)
-------- ---------- --------- -------- --------------
<S> <C> <C> <C> <C> <C>
Japanese Yen (sell) 10/31/00 85,000,000 $816,209 $791,961 $24,248
Japanese Yen (sell) 10/31/00 5,500,000 53,372 51,245 2,127
Japanese Yen (sell) 10/31/00 30,280,000 287,423 282,124 5,299
-------
$31,674
=======
</TABLE>
E. SECURITY TRANSACTIONS, RELATED INVESTMENT INCOME AND EXPENSES -- Security
transactions are accounted for on the trade date (the date the buy or sell is
executed). Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Interest income is increased by the
accretion of discount.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
Discounts on zero coupon bonds, original issue discount bonds, step bonds and
payment in kind bonds are accreted according to a method that approximates the
effective interest method. Interest income on the Municipal Bond Fund is
decreased by the amortization of premium. Premiums are amortized using the yield
to maturity method. In determining net gain or loss on securities sold, the cost
of securities has been determined on the identified cost basis.
Most expenses of the Trust can be directly attributed to a particular fund.
Expenses which cannot be directly attributed to a particular fund are
apportioned among the Funds based on relative net assets. Investment income,
realized and unrealized gains and losses, and the common expenses of the fund
are allocated on a pro rata basis to each class based on the relative net assets
of each class to the total net assets of the fund.
F. FEDERAL INCOME TAXES -- Each Fund is a separate entity for Federal income tax
purposes. Each Fund intends to meet the requirements of the Internal Revenue
Code applicable to regulated investment companies, and to distribute to its
shareholders all of its net investment income and any net realized capital
gains. Accordingly, no provision for federal income tax or excise tax has been
made.
At September 30, 2000, the Bond Fund had available a capital loss carryforward
of $22,334,749, which will expire on September 30, 2008. The High Yield Fund had
available a capital loss carryforward of $567,081, which will expire on
September 30, 2008. The Intermediate Maturity Bond Fund had available a capital
loss carryforward of $244,698, which will expire on September 30, 2008. The
Investment Grade Bond Fund had available a capital loss carryforward of
$118,090, which will expire on September 30, 2008. The Short-Term Bond Fund had
available a capital loss carryforward of $544,698, of which $73,004 will expire
on September 30, 2002, $288,590 will expire on September 30, 2004 and $183,104
will expire on September 30, 2008. The U.S. Government Securities Fund had
available a capital loss carryforward of $430,335, of which $388,287 will expire
on September 30, 2004 and $42,048 will expire on September 30, 2008. The capital
losses are intended to be used to offset future capital gains.
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Municipal Bond Fund and
Short-Term Bond Fund declare dividends daily to shareholders of record at the
time and pay dividends monthly. The Investment Grade Bond Fund declares and pays
its net investment income to shareholders monthly. The Bond, High Yield,
Intermediate Maturity Bond, and U.S. Government Securities Funds declare and pay
their net investment income quarterly. The Global Bond Fund declares and pays
its net investment income to shareholders annually. Distributions from net
realized capital gains are declared and paid on an annual basis by all of the
Funds. Income and capital gain distributions are determined in accordance with
Federal income tax regulations which may differ from accounting principles
generally accepted in the United States of America. These differences, which may
result in reclassifications to a Fund's capital accounts to reflect income and
gains available for distribution, are primarily due to differing book and tax
treatments for litigation proceeds, foreign currency transactions, capital loss
carryforwards, non-deductible organization costs, deferred losses due to
LOOMIS SAYLES FIXED INCOME FUNDS 103
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
wash sales, excise tax regulations and net operating losses. Some of these
classifications may include temporary book and tax basis differences that will
reverse in subsequent periods. Dividends from net investment income are
determined on a class level. Capital gains distributions are determined on a
Fund level.
H. REDEMPTION FEES -- Institutional Shares held in the High Yield Fund less than
one year are subject to a redemption fee equal to 2% of the amount redeemed.
I. ORGANIZATION EXPENSE AND DEFERRED REGISTRATION COSTS -- Organization costs
incurred by the High Yield Fund are being amortized over 60 months.
2. PURCHASES AND SALES OF INVESTMENTS -- (excluding short-term investments) for
each Fund for the year ended September 30, 2000 were as follows:
<TABLE>
<CAPTION>
PURCHASES
-----------------------------------
U.S. GOVERNMENT OTHER
--------------- -----
<S> <C> <C>
Bond Fund ............................... $50,352,937 $363,626,622
Global Bond Fund ........................ 558,963 18,445,220
High Yield Fund ......................... 0 8,916,995
Intermediate Maturity Bond Fund ......... 2,448,134 4,391,395
Investment Grade Bond Fund .............. 5,870,153 9,194,683
Municipal Bond Fund ..................... 440,679 1,199,808
Short-Term Bond Fund .................... 19,381,127 16,765,837
U.S. Government Securities Fund ......... 11,349,193 0
<CAPTION>
SALES
-----------------------------------
U.S. GOVERNMENT OTHER
--------------- -----
<S> <C> <C>
Bond Fund ............................... $98,965,562 $177,755,886
Global Bond Fund ........................ 298,072 6,922,796
High Yield Fund ......................... 0 6,546,861
Intermediate Maturity Bond Fund ......... 3,601,394 306,862
Investment Grade Bond Fund .............. 1,724,652 3,337,237
Municipal Bond Fund ..................... 774,357 4,352,197
Short-Term Bond Fund .................... 23,074,425 4,756,000
U.S. Government Securities Fund ......... 15,158,844 0
</TABLE>
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES -- During the year
ended September 30, 2000, the Funds incurred management fees payable to Loomis
Sayles. Certain officers and employees of Loomis Sayles are also officers or
Trustees of the Trust. Loomis Sayles' general partner is indirectly owned by
Nvest, L.P., a publicly-traded limited partnership whose general partner is
indirectly owned by CDC Asset Management ("CDC AM") as of October 30, 2000. CDC
AM is part of the Caisse des Depots Consignations. Separate management
agreements for each Fund in effect during the year ended September 30, 2000
provided for fees at the following annual percentage rate of each Fund's average
daily net assets indicated below. Loomis Sayles has contractually agreed, until
February 1, 2001, to reduce its advisory fees and/or bear
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
other expenses, to the extent necessary to limit the total operating expenses of
each Fund to the following percentage rate of the Fund's average daily net
assets:
<TABLE>
<CAPTION>
MAXIMUM EXPENSE RATIOS
----------------------------------------
MANAGEMENT INSTITUTIONAL RETAIL ADMIN J
FUND FEES CLASS CLASS CLASS CLASS
---- ---------- ------------- ------ ----- -----
<S> <C> <C> <C> <C> <C>
Bond Fund ................ 0.60% 0.75% 1.00% 1.25% --
Global Bond Fund ......... 0.60% 0.90% 1.15% -- --
High Yield Fund .......... 0.60% 0.75% -- -- --
Intermediate Maturity
Bond Fund ............. 0.40% 0.55% 0.80% -- --
Investment Grade
Bond Fund ............. 0.40% 0.55% 0.80% -- 1.30%
Municipal Bond
Fund (1) .............. 0.30% 0.50% -- -- --
Short-Term Bond
Fund (2) .............. 0.25% 0.50% 0.75% -- --
U.S. Government
Securities Fund ....... 0.30% 0.50% -- -- --
</TABLE>
(1) Since February 1, 1999, and continuing through February 1, 2001, the
management fees of the Municipal Bond Fund have been reduced from 0.40%.
(2) Effective January 1, 2000, the management fees and expense limitations for
the Institutional and Retail Classes of the Short-Term Bond Fund were
increased to current rates shown. From October 27, 1998 through December 31,
1999, Loomis Sayles waived the management fee, and the expense limitations
were reduced to 0.25% and 0.50% for the Institutional and Retail Classes,
respectively.
Retail Class and Admin Class shares are subject to distribution fees payable to
Loomis Sayles Distributors L.P. (the "Distributor", a subsidiary of Loomis
Sayles) at an annual rate of 0.25% of the respective Class' average net assets,
pursuant to distribution plans adopted in accordance with Rule 12b-1 under the
Investment Company Act of 1940. The Admin Class shares are subject to a
shareholder service fee payable to the Distributor at an annual rate of 0.25% of
the Fund's average net assets attributable to the Admin Class. The J Class
shares are subject to a shareholder service fee at an annual rate of 0.25% and a
distribution fee payable to the Distributor at an annual rate of 0.50% of the
respective Class' average net assets, pursuant to a shareholder service and
distribution plan adopted under Rule 12b-1. Retail, Admin and J Class shares
have exclusive voting rights with respect to their distribution plans.
The Institutional, Retail, and J Classes of shares of the Funds may pay the
Distributor sub-transfer agency and shareholder servicing fees with respect to
omnibus Fund shareholder accounts in amounts that will not cause the Funds'
respective classes to exceed their expense limitations and that do not exceed
the amounts that the Funds' transfer agent would charge if the beneficial owners
of the omnibus accounts held Fund
LOOMIS SAYLES FIXED INCOME FUNDS 105
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
shares directly. As of September 30, 2000, the following amount was incurred
under this arrangement: Bond Fund Institutional Share class $384,748.
Effective May 8, 2000, the Adviser began charging the Funds for administrative
services. As of September 30, 2000, the following amounts were incurred to the
Adviser:
<TABLE>
<CAPTION>
Fund Amount
---- --------
<S> <C>
Bond Fund ......................................... $205,750
Global Bond Fund .................................. 5,806
High Yield Fund ................................... 2,743
Intermediate Maturity Bond Fund ................... 1,578
Investment Grade Bond Fund ........................ 2,985
Municipal Bond Fund ............................... 806
Short-Term Bond Fund .............................. 3,971
U.S. Government Securities Fund ................... 1,393
</TABLE>
A. TRUSTEES FEES AND EXPENSES -- The Trust does not pay any compensation
directly to its officers or trustees who are directors, officers or employees
of Loomis Sayles, CDC Asset Management or their affiliates. Each independent
trustee is compensated by the Trust on behalf of each Fund at the rate of
$1,250 per Fund per year, plus travel expenses for each meeting attended.
B. SHAREHOLDERS -- At September 30, 2000, the Loomis Sayles Distributor, L.P.
held 19,999 shares of the U.S. Government Securities Fund. In addition, Loomis,
Sayles & Company, L.P. Funded Pension Plan and Trust ("Pension Plan") and the
Loomis, Sayles & Company, L.P. Employees' Profit Sharing Retirement Plan and
Loomis Sayles Employees' Money Purchase Plan ("Defined Contribution Plans") held
shares of beneficial interest in the Funds as follows:
<TABLE>
<CAPTION>
Defined
Pension Contribution
Plan Plans
--------- ------------
<S> <C> <C>
Bond Fund .................................... 1,001,990 934,294
Global Bond Fund ............................. 730,224 150,829
High Yield Fund .............................. 414,605 536,649
Intermediate Maturity Bond Fund .............. 574,247 213,137
Investment Grade Bond Fund ................... 0 164,656
Short-Term Bond Fund ......................... 226,051 333,757
U.S. Government Securities Fund .............. 183,350 239,516
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
4. BENEFICIAL INTEREST -- The following Funds have shareholders, each owning
beneficially or of record 10% or more of a class of shares outstanding of a Fund
as of September 30, 2000 and the total percentage of the class of shares of the
Fund held by such shareholders.
<TABLE>
<CAPTION>
10% or Greater Shareholders
---------------------------
# of of
Fund Shareholders Shares Held
---- ------------ -----------
<S> <C> <C>
High Yield Fund 1 12%
Municipal Bond Fund 1 23%
</TABLE>
5. CREDIT RISK -- The Bond Fund may invest up to 35%, the High Yield Fund will
normally invest at least 65%, the Global Bond and Short-Term Bond Funds each may
invest up to 20%, the Intermediate Maturity Bond and the Investment Grade Bond
Funds each may invest up to 10%, and the Municipal Bond Fund may invest up to
25% of its assets in investments offering high current income, which generally
will be in the lower rating categories of recognized rating agencies. These
investments are regarded as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of the
obligations and will generally involve more credit risk than securities in the
higher rating categories. In addition, the trading market for high yield
investments may be relatively less liquid than the market for higher-rated
investments.
6. LINE OF CREDIT -- The Trust (except the Loomis Sayles Research Fund) has
entered into an agreement which enables each Fund to borrow under a $25 million
unsecured line of credit with several banks. Borrowings will be made solely to
temporarily finance the repurchase of capital shares. Interest is charged to
each participating Fund based on its borrowings at a rate per annum equal to the
Federal Funds rate plus 0.455%. In addition, a commitment fee of 0.08% per
annum, payable at the end of each calendar quarter, is accrued by the Trust and
apportioned among the Funds based on each Fund's average daily unused portion of
the line of credit. During the year ended September 30, 2000, the Funds had no
borrowings under the agreement.
LOOMIS SAYLES FIXED INCOME FUNDS 107
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
7. CAPITAL SHARE TRANSACTIONS -- The tables below summarize the transactions in
Fund shares for the periods indicated:
<TABLE>
<CAPTION>
LOOMIS SAYLES BOND FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------- --------------------
INSTITUTIONAL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
-------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 53,630,911 $ 622,694,086 45,186,642 $ 546,081,627
Issued in connection with
the reinvestment of
distributions ............. 9,506,821 109,612,134 11,973,285 144,036,419
Redeemed ..................... (50,051,911) (579,363,005) (43,681,014) (527,470,996)
------------- ------------- ------------- -------------
Net change ................... 13,085,821 $ 152,943,215 13,478,913 $ 162,647,050
============= ============= ============= =============
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 4,322,019 $ 50,092,646 2,061,328 $ 24,858,182
Issued in connection with
the reinvestment of
distributions ............. 403,433 4,651,344 503,055 6,047,054
Redeemed ..................... (2,699,392) (31,289,929) (2,205,035) (26,569,909)
------------- ------------- ------------- -------------
Net change ................... 2,026,060 $ 23,454,061 359,348 $ 4,335,327
============= ============= ============= =============
<CAPTION>
ADMIN CLASS SHARES SHARES AMOUNT SHARES AMOUNT
------------------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 302,105 $ 3,480,486 192,735 $ 2,291,952
Issued in connection with
the reinvestment of
distributions ............. 15,123 174,399 11,891 142,967
Redeemed ..................... (125,249) (1,436,167) (123,431) (1,457,404)
------------- ------------- ------------- -------------
Net change ................... 191,979 $ 2,218,718 81,195 $ 977,515
============= ============= ============= =============
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
LOOMIS SAYLES GLOBAL BOND FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------- --------------------
INSTITUTIONAL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
-------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 779,416 $ 8,859,434 374,228 $ 4,678,699
Issued in connection with
the reinvestment of
distributions ............. 246,308 2,903,411 192,759 2,349,727
Redeemed ..................... (348,281) (3,985,913) (358,078) (4,539,678)
------------- ------------- ------------- -------------
Net change ................... 677,443 $ 7,776,932 208,909 $ 2,488,748
============= ============= ============= =============
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
------------------- ------ ------ ------ ------
Issued from the sale
of shares ................. 688,653 $ 7,873,425 288,336 $ 3,620,204
Issued in connection with
the reinvestment of
distributions ............. 54,411 640,845 32,073 390,975
Redeemed ..................... (233,549) (2,659,436) (290,413) (3,697,922)
------------- ------------- ------------- -------------
Net change ................... 509,515 $ 5,854,834 29,996 $ 313,257
============= ============= ============= =============
<CAPTION>
LOOMIS SAYLES HIGH YIELD FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------- --------------------
INSTITUTIONAL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
-------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 1,021,535 $ 8,958,914 1,586,791 $ 13,266,474
Issued in connection with
the reinvestment of
distributions ............. 248,384 2,133,342 195,150 1,638,247
Redeemed ..................... (868,408) (7,620,148) (252,091) (2,173,082)
------------- ------------- ------------- -------------
Net change ................... 401,511 $ 3,472,108 1,529,850 $ 12,731,639
============= ============= ============= =============
<CAPTION>
RETAIL CLASS SHARES SHARES* AMOUNT*
------------------- ------- -------
<S> <C> <C>
Issued from the sale
of shares ................. 249,386 $ 2,039,291
Issued in connection with
the reinvestment of
distributions ............. 36,252 290,541
Redeemed ..................... (778,096) (6,449,681)
------------- -------------
Net change ................... (492,458) $ (4,119,849)
============= =============
</TABLE>
* THE HIGH YIELD RETAIL CLASS LIQUIDATED ON MARCH 1, 1999.
LOOMIS SAYLES FIXED INCOME FUNDS 109
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------- --------------------
INSTITUTIONAL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
-------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 348,747 $ 3,259,080 113,016 $ 1,094,638
Issued in connection with
the reinvestment of
distributions ............. 70,541 661,094 67,894 658,132
Redeemed ..................... (185,301) (1,738,759) (95,859) (927,086)
------------- ------------- ------------- -------------
Net change ................... 233,987 $ 2,181,415 85,051 $ 825,684
============= ============= ============= =============
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 265,857 $ 2,519,869 122,742 $ 1,181,866
Issued in connection with
the reinvestment of
distributions ............. 11,044 103,428 6,033 58,346
Redeemed ..................... (247,157) (2,344,470) (8,249) (79,924)
------------- ------------- ------------- -------------
Net change ................... 29,744 $ 278,827 120,526 $ 1,160,288
============= ============= ============= =============
<CAPTION>
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------- --------------------
INSTITUTIONAL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
-------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 197,500 $ 1,925,607 132,615 $ 1,341,490
Issued in connection with
the reinvestment of
distributions ............. 14,821 145,869 21,477 216,240
Redeemed ..................... (163,038) (1,620,957) (180,728) (1,824,504)
------------- ------------- ------------- -------------
Net change ................... 49,283 $ 450,519 (26,636) $ (266,774)
============= ============= ============= =============
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
-------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 88,906 $ 878,137 185,638 $ 1,869,371
Issued in connection with
the reinvestment of
distributions ............. 11,935 117,464 17,707 178,049
Redeemed ..................... (131,416) (1,266,523) (115,588) (1,161,421)
------------- ------------- ------------- -------------
Net change ................... (30,575) $ (270,922) 87,757 $ 885,999
============= ============= ============= =============
<CAPTION>
J CLASS SHARES SHARES AMOUNT SHARES* AMOUNT*
-------------------------- ------ ------ ------- -------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 1,982,500 $ 19,649,401 1,788,840 $ 18,214,195
Issued in connection with
the reinvestment of
distributions ............. 0 0 0 0
Redeemed ..................... (567,740) (5,592,776) (149,500) (1,525,093)
------------- ------------- ------------- -------------
Net change ................... 1,414,760 $ 14,056,625 1,639,340 $ 16,689,102
============= ============= ============= =============
</TABLE>
*FROM MAY 24, 1999 (COMMENCEMENT OF CLASS OPERATIONS)
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000.
<TABLE>
<CAPTION>
LOOMIS SAYLES MUNICIPAL BOND FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------- --------------------
INSTITUTIONAL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
-------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 42,009 $ 452,608 112,105 $ 1,290,401
Issued in connection with
the reinvestment of
distributions ............. 25,240 272,271 38,193 440,141
Redeemed ..................... (411,002) (4,422,740) (92,039) (1,047,290)
------------- ------------- ------------- -------------
Net change ................... (343,753) $ (3,697,861) 58,259 $ 683,252
============= ============= ============= =============
<CAPTION>
LOOMIS SAYLES SHORT-TERM BOND FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------- --------------------
INSTITUTIONAL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
-------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 3,247,938 $ 30,520,944 1,171,829 $ 11,357,676
Issued in connection with
the reinvestment of
distributions ............. 210,479 1,973,909 160,415 1,547,434
Redeemed ..................... (3,185,843) (29,826,494) (1,247,202) (12,080,617)
------------- ------------- ------------- -------------
Net change ................... 272,574 $ 2,668,359 85,042 $ 824,493
============= ============= ============= =============
<CAPTION>
RETAIL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 41,442 $ 388,235 61,280 $ 594,618
Issued in connection with
the reinvestment of
distributions ............. 4,436 41,651 3,749 36,056
Redeemed ..................... (29,957) (281,395) (59,909) (587,608)
------------- ------------- ------------- -------------
Net change ................... 15,921 $ 148,491 5,120 $ 43,066
============= ============= ============= =============
<CAPTION>
LOOMIS SAYLES U.S GOVERNMENT SECURITIES FUND
-----------------------------------------------------------
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 1999
-------------------- --------------------
INSTITUTIONAL CLASS SHARES SHARES AMOUNT SHARES AMOUNT
-------------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Issued from the sale
of shares ................. 310,987 $ 3,199,277 688,401 $ 7,460,731
Issued in connection with
the reinvestment of
distributions ............. 81,141 833,836 108,431 1,186,786
Redeemed ..................... (865,272) (8,865,863) (1,804,315) (19,685,748)
------------- ------------- ------------- -------------
Net change ................... (473,144) $ (4,832,750) (1,007,483) $ (11,038,231)
============= ============= ============= =============
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 111
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
8. SUBSEQUENT EVENTS -- On August 7, 2000, the Board of Trustees approved the
closing of the Retail Class for the Intermediate Maturity Bond, Investment Grade
Bond and Short-Term Bond Funds. It is expected that on or about December 18,
2000, the then outstanding Retail Class shares will be automatically converted
into Institutional Class shares having the same aggregate net asset value as the
shares converted.
On October 18, 2000, the Board of Trustees approved the termination of the
Municipal Bond Fund. It is expected that the Fund will terminate operations on
or about December 18, 2000.
On October 30, 2000, CDC Asset Management ("CDC AM") acquired Loomis Sayles'
parent company, Nvest Companies, L.P. and its subsidiaries. CDC AM is part of
the Caisse des Depots Consignations ("CDC"). CDC was created by the French
Government and currently is supervised by the French Parliament.
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
2000 U.S. TAX AND DISTRIBUTION INFORMATION TO SHAREHOLDERS (UNAUDITED)
EXEMPT INTEREST DIVIDENDS -- 87.23% of the dividends paid by the Municipal Bond
Fund from net investment income for the year ended September 30, 2000,
constituted exempt interest dividends for Federal income tax purposes.
CAPITAL GAINS DISTRIBUTIONS -- Pursuant to Internal Revenue Section 852(b), the
following Funds paid distributions, which have been designated as capital gains
distributions for the fiscal year ended September 30, 2000:
<TABLE>
<CAPTION>
DOLLAR
AMOUNT
--------
<S> <C>
Global Bond Fund ....................................... $672,140
High Yield Fund ........................................ 1,136
Municipal Bond Fund .................................... 8,121
</TABLE>
CORPORATE DIVIDENDS RECEIVED DEDUCTION -- For the fiscal year ended September
30, 2000, a percentage of dividends distributed by the Funds listed below
qualify for the dividends received deduction for corporate shareholders. These
percentages are as follows:
<TABLE>
<CAPTION>
QUALIFYING
PERCENTAGE
----------
<S> <C>
Bond Fund ............................................. 4.21%
High Yield Fund ....................................... 9.86%
Investment Grade Bond Fund ............................ 2.38%
</TABLE>
LOOMIS SAYLES FIXED INCOME FUNDS 113
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
SHAREHOLDER MEETING RESULTS (UNAUDITED)
At a special shareholders' meeting of the Loomis Sayles Funds held on October 5,
2000 shareholders of each Fund voted for the following proposal:
To approve new investment advisory agreements between the Trust on behalf of the
Fund and Loomis Sayles & Company, L.P.
<TABLE>
<CAPTION>
VOTED VOTED ABSTAINED TOTAL
FUND NAME FOR AGAINST VOTES VOTES
---------------- ----- ------- --------- -----
<S> <C> <C> <C> <C>
Loomis Sayles
Bond Fund ............... 78,083,272 817,607 1,754,588 80,655,467
Loomis Sayles Global
Bond Fund ............... 2,868,781 10,058 69,505 2,948,344
Loomis Sayles High
Yield Fund .............. 2,094,268 26,233 6,259 2,126,760
Loomis Sayles Intermediate
Maturity Bond Fund ...... 1,331,259 0 8,105 1,339,364
Loomis Sayles Investment
Grade Bond Fund ......... 2,045,792 5,400 573,811 2,625,003
Loomis Sayles Municipal
Bond Fund ............... 257,370 39,227 115 296,712
Loomis Sayles Short-Term
Bond Fund ............... 2,536,917 25,946 4,942 2,567,805
Loomis Sayles
U.S. Government
Securities Fund ......... 775,175 0 30,262 805,437
</TABLE>
<PAGE>
LOOMIS SAYLES FIXED INCOME FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of the Loomis Sayles Fixed Income
Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Loomis Sayles Fixed Income
Funds (consisting of the Loomis Sayles Bond Fund, Global Bond Fund, High Yield
Fund, Intermediate Maturity Bond Fund, Investment Grade Bond Fund, Municipal
Bond Fund, Short-Term Bond Fund and U.S. Government Securities Fund)
(collectively, the "Funds") at September 30, 2000, the results of each of their
operations, the changes in each of their net assets and the financial highlights
for the periods indicated therein, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 2000 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
As described in Note 8, the Trustees voted on October 18, 2000 to liquidate the
Municipal Bond Fund on or about December 18, 2000.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 15, 2000
LOOMIS SAYLES FIXED INCOME FUNDS 115
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
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LOOMIS SAYLES FUNDS
One Financial Center
Boston, MA 02111
Telephone: 800 633-3330
www.loomissayles.com
