<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 18, 2000
REGISTRATION NOS. 33-39133 AND 811-6241
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 25 /X/
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 27 /X/
(CHECK APPROPRIATE BOX OR BOXES)
-------------------------
LOOMIS SAYLES FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
ONE FINANCIAL CENTER, BOSTON, MA 02111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 482-2450
NAME AND ADDRESS
OF AGENT FOR SERVICE COPY TO
-------------------- -------
SHEILA M. BARRY, ESQ. TRUMAN S. CASNER, ESQ.
LOOMIS, SAYLES & COMPANY, L.P. ROPES & GRAY
ONE FINANCIAL CENTER ONE INTERNATIONAL PLACE
BOSTON, MA 02111 BOSTON, MA 02110
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B) OF RULE 485
/ / ON _______________ PURSUANT TO PARAGRAPH (B)
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1)
/ / ON _______________ PURSUANT TO PARAGRAPH (A)(1)
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)
/X/ ON AUGUST 1, 2000 PURSUANT TO PARAGRAPH (A)(2)
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
-------------------
<PAGE>
PROSPECTUS
[LOGO] AUGUST 1, 2000
EQUITY FUNDS
LOOMIS SAYLES RESEARCH FUND
Loomis, Sayles & Company, L.P., which has been an investment adviser since 1926,
is the investment adviser of the Fund.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIME.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
RISK/RETURN SUMMARY 1
General Information 1
Loomis Sayles Research Fund 2
Summary of Principal Risks 3
EXPENSES OF THE FUND 5
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
AND RISK CONSIDERATIONS 7
MANAGEMENT 12
Investment Adviser 12
Portfolio Managers 12
Distribution Plan and Other Fees 13
GENERAL INFORMATION 14
Pricing 14
How to Purchase Shares 14
How to Redeem Shares 16
How to Exchange Shares 17
Dividends and Distributions 18
Tax Consequences 19
</TABLE>
<PAGE>
RISK/RETURN SUMMARY
GENERAL INFORMATION
The following is a summary of certain key information about the Loomis Sayles
Research Fund. You will find additional information about the Fund, including a
detailed description of the risks of an investment in the Fund, after this
summary.
This Risk/Return summary describes the Fund's objectives, principal investment
strategies, and principal risks. The summary includes a short discussion of some
of the principal risks of investing in the Fund. A further discussion of these
and other principal risks begins after this summary.
A more detailed description of the Fund, including some of the additional risks
associated with investing in the Fund, can be found further back in this
Prospectus after the Summary of Principal Risks. Please be sure to read this
additional information before you invest.
You can lose money by investing in the Fund. The Fund may not achieve its
objective and is not intended to be a complete investment program. An investment
in the Fund is not a deposit of a bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
LOOMIS SAYLES FUNDS 1
<PAGE>
LOOMIS SAYLES RESEARCH FUND
INVESTMENT OBJECTIVE The Fund's investment objective is long-term growth.
PRINCIPAL INVESTMENT STRATEGIES The Fund invests substantially all of its assets
in common stocks or their equivalent. The Fund focuses on stocks of large
capitalization companies, but may invest in companies of any size.
Loomis Sayles industry research analysts, who are grouped in teams representing
the sectors of the S&P 500, meet by team to decide which securities to buy and
sell. The teams meet regularly to compare fundamental trends across the various
industries in the sector and use this information along with common valuation
procedures to determine the most attractive investment opportunities. The
analysts seek companies with favorable fundamental characteristics including:
strong revenue growth, improving profit margins, accelerating earnings growth,
or other areas of intrinsic value that the analysts believe are not correctly
valued by the market. Sell decisions are made when there is a deterioration in
fundamentals, a stock reaches a target price, or when a more attractive
opportunity is found. The fund allocates its assets across sectors in weightings
that are relatively similar to the S&P 500. It expects to rebalance as needed on
a quarterly basis. The Fund's portfolio typically will consist of 40 to 60
issuers.
The Fund may invest any portion of its assets in securities of Canadian issuers
and up to 20% of its assets in other foreign securities, including emerging
markets securities. The Fund may engage in foreign currency hedging transactions
options and futures transactions, and securities lending. The Fund may also
invest in Rule 144A securities.
PRINCIPAL RISKS Among the principal risks of investing in the Fund are the
following:
- - market risk (the risk that the value of the Fund's investments will fall as a
result of movements in financial markets generally);
- - liquidity risk (the risk that the Fund may be unable to find a buyer for its
investments when it seeks to sell them);
- - management risk (the risk that Loomis Sayles' investment techniques will be
unsuccessful and may cause the Fund to incur losses);
- - foreign risk (the risk that the value of the Fund's foreign investments will
fall as a result of foreign political, social, or economic changes); and
- - currency risk (the risk that the value of the Fund's investments will fall as
a result of changes in exchange rates).
PERFORMANCE No performance information is available for the Fund because it has
not yet been in operation for a full calendar year.
<PAGE>
SUMMARY OF PRINCIPAL RISKS
The value of your investment in the Fund will fluctuate with changes in the
values of the Fund's investments. Many factors can affect those values. This
section describes the principal risks that may affect the Fund's portfolio as a
whole. The Fund could be subject to additional principal risks because the types
of investments made by the Fund can change over time.
MARKET RISK
This is the risk that the value of the Fund's investments will change as
financial markets fluctuate and that prices overall may decline. The value of a
company's stock may fall as a result of factors that directly relate to that
company, such as decisions made by its management or lower demand for the
company's products or services. A stock's value also may fall because of factors
affecting not just the company, but companies in its industry or in a number of
different industries, such as increases in production costs. The value of a
company's stock also may be affected by changes in financial market conditions,
such as changes in interest rates or currency exchange rates. In addition, a
company's stock generally pays dividends only after the company makes required
payments to holders of its bonds or other debt. For this reason, the value of
the stock will usually react more strongly than bonds and other fixed income
securities to actual or perceived changes in the company's financial condition
or prospects.
Market risk generally is greater for the Fund when it invests substantially in
small and medium-sized companies, since these companies tend to be more
vulnerable to adverse developments than large companies.
MANAGEMENT RISK
Management risk is the risk that Loomis Sayles' investment techniques could fail
to achieve the Fund's objective and could cause your investment in the Fund to
lose value. The Fund is subject to management risk because the Fund is actively
managed by Loomis Sayles. Loomis Sayles will apply its investment techniques and
risk analyses in making investment decisions for it, but there can be no
guarantee that Loomis Sayles' decisions will produce the desired results. For
example, in some cases derivative and other investment techniques may be
unavailable or Loomis Sayles may determine not to use them, even under market
conditions where their use could have benefited the Fund.
LIQUIDITY RISK
Liquidity risk exists when particular investments are difficult to purchase or
sell, possibly preventing the Fund from selling out of these illiquid securities
at an advantageous price. Derivatives and securities that involve substantial
credit risk tend to involve greater liquidity risk. In addition, liquidity risk
tends to increase to the extent the Fund invests in securities whose sale may be
restricted by law or by contract, such as Rule 144A securities.
LOOMIS SAYLES FUNDS 3
<PAGE>
FOREIGN RISK
This is the risk associated with investments in issuers located in foreign
countries. The Fund's investments in foreign securities may experience more
rapid and extreme changes in value than investments in securities of U.S.
companies.
The securities markets of many foreign countries are relatively small, with a
limited number of issuers and a small number of securities. In addition, foreign
companies often are not subject to the same degree of regulation as U.S.
companies. Reporting, accounting, and auditing standards of foreign countries
differ, in some cases significantly, from U.S. standards. Nationalization,
expropriation or confiscatory taxation, currency blockage, political changes, or
diplomatic developments can cause the value of the Fund's investments in a
foreign country to decline. In the event of nationalization, expropriation, or
other confiscation, the Fund could lose its entire investment.
CURRENCY RISK
This is the risk that fluctuations in exchange rates between the U.S. dollar and
foreign currencies may cause the value of the Fund's investments to decline. The
Fund is subject to currency risk because it may invest in securities denominated
in, or receiving revenues in, foreign currencies.
<PAGE>
EXPENSES OF THE FUND
The following table presents the expenses that you would pay if you buy and hold
shares of the Fund.
The Fund does not impose a sales charge, a redemption fee, or an exchange fee.
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
Fee
Total Annual Waiver/
Management Distribution Other Fund Operating Reimburse- Net
Fund/Class Fees (12b-1) Fees Expenses* Expenses ment** Expenses**
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Loomis Sayles Research Fund
Institutional Class 0.75% none .44% 1.19% .04 1.15
Retail Class 0.75% .25% .48% 1.48% .08 1.40
- -------------------------------------------------------------------------------------------------------------------------------
* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.
** REFLECTS LOOMIS SAYLES' CONTRACTUAL OBLIGATION TO LIMIT THE FUND'S EXPENSES THROUGH FEBRUARY 1, 2001.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
LOOMIS SAYLES FUNDS 5
<PAGE>
EXAMPLE
The following example translates the "Total Annual Fund Operating Expenses"
column shown in the preceding table into dollar amounts. This example is
intended to help you compare the cost of investing in the Fund with the cost of
investing in other mutual funds.
This example makes certain assumptions. It assumes that you invest $10,000 in
the Fund for the time periods shown and then redeem all your shares at the end
of those periods. This example also assumes that your investment has a 5% return
each year and that the Fund's operating expenses remain the same. Please
remember that this example is hypothetical, so that your actual costs and
returns may be higher or lower.
<TABLE>
<CAPTION>
Fund/Class 1 year* 3 years*
<S> <C> <C>
- ---------------------------------------------------------------------
Loomis Sayles Research Fund
Institutional Class 117 374
Retail Class 143 460
- ---------------------------------------------------------------------
* EXPENSES SHOWN INCLUDE THE FEE WAIVER/REIMBURSEMENT FOR THE FIRST
YEAR OF EACH PERIOD.
</TABLE>
<PAGE>
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS AND RISK CONSIDERATIONS
This section provides more information on the Fund's investments and risk
considerations. Except any investment policies that are identified as
"fundamental," all of the investment policies and strategies of the Fund may be
changed without a vote of the Fund's shareholders.
The Fund may use any of the investment strategies described in this section.
Some of these investment strategies are principal investment strategies for the
Fund, while others are secondary investment strategies for the Fund.
TEMPORARY DEFENSIVE STRATEGIES
For temporary defensive purposes, the Fund may invest any portion of its assets
in cash or in any securities Loomis Sayles deems appropriate. Although Loomis
Sayles has the option to use these defensive strategies, Loomis Sayles may
choose not to use them for a variety of reasons, even in very volatile market
conditions. The Fund may miss certain investment opportunities if it uses
defensive strategies and thus may not achieve its investment objective.
PORTFOLIO TURNOVER
Portfolio turnover considerations will not limit Loomis Sayles' investment
discretion in managing the assets of the Fund. The Fund anticipates that its
portfolio turnover rate will vary significantly from time to time depending upon
the volatility of economic and market conditions. High portfolio turnover may
generate higher costs and higher levels of taxable gains, both of which may hurt
the performance of your investment.
COMMON STOCKS AND OTHER EQUITY SECURITIES
Common stocks and their equivalents, together called "equity securities," are
generally volatile and more risky than some other forms of investment. Equity
securities of companies with relatively small market capitalizations may be more
volatile than the securities of larger, more established companies and than the
broad equity market indices.
GROWTH STOCKS
Stocks of companies that Loomis Sayles believes have earnings that will grow
faster than the economy as a whole are known as growth stocks. The Fund
generally invests a significant portion of its assets in growth stocks.
Growth stocks typically trade at higher multiples of current earnings than
other stocks. As a result, the values of growth stocks may be more sensitive
to changes in current or expected earnings than the values of other stocks.
If Loomis Sayles' assessment of the prospects for a company's earnings
growth is
LOOMIS SAYLES FUNDS 7
<PAGE>
wrong, or if its judgment of how other investors will value the company's
earnings growth is wrong, then the price of that company's stock may fall or
may not approach the value that Loomis Sayles has placed on it.
VALUE STOCKS
Stocks of companies that are not expected to experience significant earnings
growth, but whose stocks Loomis Sayles believes are undervalued compared to
their true worth, are known as value stocks. The Fund also may invest in
value stocks. These companies may have experienced adverse business
developments or may be subject to special risks that have caused their
stocks to be out of favor. If Loomis Sayles' assessment of a company's
prospects is wrong, or if other investors do not eventually recognize the
value of the company, then the price of the company's stock may fall or may
not approach the value that Loomis Sayles has placed on it.
FOREIGN SECURITIES
Securities of issuers organized or headquartered outside the United States are
foreign securities. The Fund may invest any portion of its assets in securities
of Canadian issuers and up to 20% of its assets in other foreign securities.
Foreign securities may present risks not associated with investments in
comparable securities of U.S. issuers. There may be less information publicly
available about a foreign corporate or governmental issuer than about a U.S.
issuer, and foreign corporate issuers are generally not subject to accounting,
auditing, and financial reporting standards and practices comparable to those in
the United States. The securities of some foreign issuers are less liquid and at
times more volatile than securities of comparable U.S. issuers. Foreign
brokerage commissions and securities custody costs are often higher than in the
United States. With respect to certain foreign countries, there is a possibility
of governmental expropriation of assets, confiscatory taxation, political or
financial instability, and diplomatic developments that could affect the value
of investments in those countries. The Fund's receipt of interest on foreign
government securities may depend on the availability of tax or other revenues to
satisfy the issuer's obligations.
The Fund's investments in foreign securities may include investments in
countries whose economies or securities markets are not yet highly developed.
Special considerations associated with these investments (in addition to the
considerations regarding foreign investments generally) may include, among
others, greater political uncertainties, an economy's dependence on revenues
from particular commodities or on international aid or development assistance,
currency transfer restrictions, highly limited numbers of potential buyers for
such securities, and delays and disruptions in securities settlement procedures.
Since most foreign securities are denominated in foreign currencies or traded
primarily in securities markets in which settlements are made in foreign
currencies, the value of these investments and the net investment income
available for
<PAGE>
distribution to shareholders of the Fund may be affected by changes in currency
exchange rates, exchange control regulations, or foreign withholding taxes.
Changes in the value relative to the U.S. dollar of a foreign currency in which
the Fund's holdings are denominated will result in a change in the U.S. dollar
value of the Fund's assets and the Fund's income available for distribution.
In addition, although part of the Fund's income may be received or realized in
foreign currencies, the Fund will be required to compute and distribute its
income in U.S. dollars. Therefore, if the value of a currency relative to the
U.S. dollar declines after the Fund's income has been earned in that currency,
translated into U.S. dollars, and declared as a dividend, but before payment of
the dividend, the Fund could be required to liquidate portfolio securities to
pay the dividend. Similarly, if the value of a currency relative to the U.S.
dollar declines between the time the Fund accrues expenses in U.S. dollars and
the time such expenses are paid, the amount of foreign currency required to be
converted into U.S. dollars will be greater than the equivalent amount in
foreign currency of the expenses at the time they were incurred.
In determining whether to invest assets of the Fund in securities of a
particular foreign issuer, Loomis Sayles will consider the likely effects of
foreign taxes on the net yield available to the Fund and its shareholders.
Compliance with foreign tax law may reduce the Fund's net income available for
distribution to shareholders.
FOREIGN CURRENCY HEDGING TRANSACTIONS
Foreign currency hedging transactions are an effort to protect the value of
specific portfolio positions or to anticipate changes in relative values of
currencies in which current or future Fund portfolio holdings are denominated or
quoted. For example, to protect against a change in the foreign currency
exchange rate between the date on which the Fund contracts to purchase or sell a
security and the settlement date for the purchase or sale, or to "lock in" the
equivalent of a dividend or interest payment in another currency, the Fund might
purchase or sell a foreign currency on a spot (that is, cash) basis at the
prevailing spot rate. If conditions warrant, the Fund may also enter into
private contracts to purchase or sell foreign currencies at a future date
("forward contracts"). The Fund might also purchase exchange-listed and
over-the-counter call and put options on foreign currencies. Over-the-counter
currency options are generally less liquid than exchange-listed options and will
be treated as illiquid assets. The Fund may not be able to dispose of
over-the-counter options readily.
Foreign currency transactions involve costs and may result in losses.
OPTIONS AND FUTURES TRANSACTIONS
Options and futures transactions involve the Fund buying, selling, or writing
options (or buying or selling futures contracts) on securities, securities
indices, or currencies. The Fund may engage in these transactions either to
enhance investment return or to hedge against changes in the value of other
assets that the
LOOMIS SAYLES FUNDS 9
<PAGE>
Fund owns or intends to acquire. Options and futures fall into the broad
category of financial instruments known as "derivatives" and involve special
risks. Use of options or futures for other than hedging purposes may be
considered a speculative activity, involving greater risks than are involved in
hedging.
Options can generally be classified as either "call" or "put" options. There are
two parties to a typical options transaction: the "writer" and the "buyer." A
call option gives the buyer the right to buy a security or other asset (such as
an amount of currency or a futures contract) from, and a put option gives the
buyer the right to sell a security or other asset to, the option writer at a
specified price, on or before a specified date. The buyer of an option pays a
premium when purchasing the option, which reduces the return on the underlying
security or other asset if the option is exercised, and results in a loss if the
option expires unexercised. The writer of an option receives a premium from
writing an option, which may increase its return if the option expires or is
closed out at a profit. If the Fund as the writer of an option is unable to
close out an unexpired option, it must continue to hold the underlying security
or other asset until the option expires, to "cover" its obligation under the
option.
A futures contract creates an obligation by the seller to deliver and the buyer
to take delivery of the type of instrument or cash at the time and in the amount
specified in the contract. Although many futures contracts call for the delivery
(or acceptance) of the specified instrument, futures are usually closed out
before the settlement date through the purchase (or sale) of a comparable
contract. If the price of the sale of the futures contract by the Fund is less
than the price of the offsetting purchase, the Fund will realize a loss.
The value of options purchased by the Fund and futures contracts held by the
Fund may fluctuate based on a variety of market and economic factors. In some
cases, the fluctuations may offset (or be offset by) changes in the value of
securities held in the Fund's portfolio. All transactions in options and futures
involve the possible risk of loss to the Fund of all or a significant part of
the value of its investment. In some cases, the risk of loss may exceed the
amount of the Fund's investment. When the Fund writes a call option or sells a
futures contract without holding the underlying securities, currencies, or
futures contracts, its potential loss is unlimited. The Fund will be required,
however, to set aside with its custodian bank liquid assets in amounts
sufficient at all times to satisfy its obligations under options and futures
contracts.
The successful use of options and futures will usually depend on Loomis Sayles'
ability to forecast stock market, currency, or other financial market movements
correctly. The Fund's ability to hedge against adverse changes in the value of
securities held in its portfolio through options and futures also depends on the
degree of correlation between changes in the value of futures or options
positions and changes in the values of the portfolio securities. The successful
use of futures and exchange-traded options also depends on the availability of a
liquid secondary market to enable the Fund to close its positions on a timely
basis. There can be no assurance that such a market will exist at any particular
time. In the case of options
<PAGE>
that are not traded on an exchange ("over-the-counter" options), the Fund is at
risk that the other party to the transaction will default on its obligations, or
will not permit the Fund to terminate the transaction before its scheduled
maturity.
The options and futures markets of foreign countries are small compared to those
of the U.S. and consequently are characterized in most cases by less liquidity
than U.S. markets. In addition, foreign markets may be subject to less detailed
reporting requirements and regulatory controls than U.S. markets. Furthermore,
investments in options in foreign markets are subject to many of the same risks
as other foreign investments. See "Foreign Securities" above.
SECURITIES LENDING
Securities lending involves the Fund lending its portfolio securities to broker-
dealers or other parties under contracts calling for the deposit by the borrower
with the Fund's custodian of cash collateral equal to at least the market value
of the securities loaned, marked to market on a daily basis. The Fund will
continue to benefit from interest or dividends on the securities loaned and will
also receive interest through investment of the cash collateral in short-term
liquid investments. No loans will be made if, as a result, the aggregate amount
of such loans outstanding at any time would exceed 33 1/3% of the Fund's assets
(taken at current value). Any voting rights, or rights to consent, relating to
securities loaned pass to the borrower. However, if a material event affecting
the investment occurs, such loans will be called so that the securities may be
voted by the Fund. The Fund pays various fees in connection with such loans,
including shipping fees and reasonable custodial or placement fees.
Securities loans must be fully collateralized at all times, but involve some
credit risk to the Fund if the borrower defaults on its obligation and the Fund
is delayed or prevented from recovering the collateral.
RULE 144A SECURITIES
Rule 144A securities are privately offered securities that can be resold only to
certain qualified institutional buyers. Rule 144A securities are treated as
illiquid, unless Loomis Sayles has determined, under guidelines established by
Loomis Sayles Funds' trustees, that a particular issue of Rule 144A securities
is liquid.
LOOMIS SAYLES FUNDS 11
<PAGE>
MANAGEMENT
INVESTMENT ADVISER
The Board of Trustees of Loomis Sayles Funds oversees the Fund and supervises
the Fund's investment adviser, Loomis, Sayles & Company, L.P. ("Loomis Sayles"),
which is located at One Financial Center, Boston, Massachusetts.
Loomis Sayles was founded in 1926 and is one of the country's oldest and largest
investment firms. Loomis Sayles is responsible for making investment decisions
for the Fund and for managing the Fund's other affairs and business, including
providing executive and other personnel for the management of the Fund.
As previously described in the "Expenses of the Fund" section, the Fund pays
Loomis Sayles a monthly investment advisory fee, also known as a management fee,
at the annual rate of 0.75% of its average net assets for these services.
Certain expenses incurred by the Fund would be higher if not for Loomis Sayles'
contractual obligation to limit the Fund's expenses through February 1, 2001.
PORTFOLIO MANAGERS
Lauriann Kloppenburg leads a team of Loomis Sayles research analysts in managing
the Fund. Ms. Kloppenburg, who is Vice President and Director of Equity
Research, has been employed by Loomis Sayles since 1982.
INVESTMENT ADVISER'S PAST PERFORMANCE
Prior performance of the Loomis Sayles Research Account (the "Account")
represents the total returns of a segment of the Loomis Sayles Pension Plan
managed by the Loomis Sayles. Aside from the Loomis Sayles Research Fund
limiting its holdings to between 40 and 60 issuers, the investment objective,
policies and strategies are substantially similar to those of the Account.
However, because the Fund is designed to be more focused, performance is more
likely to vary relative to the S&P 500 Index than that of the Account. The
performance information shown below for the Account is adjusted to give effect
to the projected expenses for the Fund's Retail Class for the 2000 fiscal year.
This information is provided merely to illustrate the past performance of the
Account measured against a specified market index, and does not represent the
performance of the Fund, which does not yet have a performance record of its
own. Investors should not consider this performance data as an indication of
future performance of the Fund or Loomis Sayles. The Account is not subject to
frequent inflows and outflows of assets as are most mutual funds, including the
Fund. Such inflows and outflows of assets make it more difficult to manage the
Fund and thus may adversely affect its performance relative to the Account. In
addition, the Account is not subject to the diversification requirements,
specific tax restrictions and investment limitations imposed on the Fund by the
Investment Company Act of 1940, as amended and Subchapter M of the Internal
Revenue Code of 1986, as amended. Consequently, the performance results for the
Account could have been lower than what is shown had it been regulated as
registered investment company under the federal securities laws.
<PAGE>
BAR CHART
- ------------------------------------------------------------------------
CHART TO COME
PERFORMANCE TABLE The following table compares the performance of the Account to
the Standard & Poor's 500 Index, a commonly used benchmark of U.S. equity
securities. The index is unmanaged, has no operating costs, and is included in
the table to facilitate your comparison of the Account's performance to a
broad-based market index.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1999
- ------------------------------------------------------------------------------
1 Year 5 Years 10 Years
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------
LOOMIS SAYLES ACCOUNT
S&P 500 INDEX
</TABLE>
DISTRIBUTION PLAN AND OTHER FEES
For the Retail Class of the Fund, the Fund has adopted a distribution plan under
Rule 12b-1 of the Investment Company Act of 1940 that allows the Fund to pay
fees for the sale and distribution of Retail Class shares and for services
provided to shareholders. This 12b-1 fee currently is .25% of the Fund's average
daily net assets attributable to its Retail Class shares. Because these 12b-1
fees are paid out of the Fund's assets on an ongoing basis, over time these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges.
Loomis Sayles may pay certain broker-dealers and financial intermediaries whose
customers are existing shareholders of the Fund a continuing fee at an annual
rate of up to .25% of the value of either Class of Fund shares held for those
customers' accounts, although this continuing fee is paid by Loomis Sayles out
of its own assets and is not assessed against the Fund.
LOOMIS SAYLES FUNDS 13
<PAGE>
GENERAL INFORMATION
PRICING
The price of the Fund's shares is based on its net asset value ("NAV"). The NAV
per share of the Fund equals the total value of its assets, less its
liabilities, divided by the number of outstanding shares. Shares are valued as
of the close of regular trading on the New York Stock Exchange on each day the
Exchange is open for trading.
The Fund values its investments for which market quotations are readily
available at market value. The Fund values short-term investments that will
mature within 60 days at amortized cost, which approximates market value. The
Fund values all other investments and assets at fair value.
The Fund translates prices for its investments quoted in foreign currencies into
U.S. dollars at current exchange rates. As a result, changes in the value of
those currencies in relation to the U.S. dollar may affect the Fund's NAV.
Because foreign markets may be open at different times than the New York Stock
Exchange, the value of the Fund's shares may change on days when shareholders
are not able to buy or sell shares. If events materially affecting the values of
the Fund's foreign investments occur between the close of foreign markets and
the close of regular trading on the New York Stock Exchange, these foreign
investments may be valued at their fair value.
HOW TO PURCHASE SHARES
You can buy shares of the Fund in the following way:
- - BY MAIL You can mail a completed application form, which is available by
calling Boston Financial Data Services at 800-626-9390, along with a check
payable to State Street Bank and Trust Company for the amount of your purchase
to:
Boston Financial Data Services
P.O. Box 8314
Boston, MA 02266-8314
Attn: Loomis Sayles Funds
THROUGH A FINANCIAL ADVISER Your financial adviser will be responsible for
furnishing all necessary documents to Loomis Sayles or Boston Financial Data
Services. Your financial adviser may charge you for his or her services.
THROUGH SYSTEMATIC INVESTING You can make regular investments of $50 or more per
month through automatic deductions from your bank checking or savings account.
Applications are available through your financial adviser or by calling Loomis
Sayles at 800-626-9390.
THROUGH A BROKER-DEALER You may purchase shares of the Fund through a
broker-dealer that has been approved by Loomis Sayles Distributors, L.P., which
can be contacted at One Financial Center, Boston, MA 02111 (800-633-3330).
<PAGE>
The Fund sells its shares at the NAV next calculated after Boston Financial Data
Services receives a properly completed investment order. Boston Financial Data
Services generally must receive your properly completed order before the close
of regular trading on the New York Stock Exchange for your shares to be bought
or sold at the Fund's NAV on that day.
Shares of the Fund may be purchased by (1) cash, (2) exchanging shares of the
same Class of any other Loomis Sayles Fund, provided the value of the shares
exchanged meets the investment minimum of the Fund, (3) exchanging securities
acceptable to Loomis Sayles, or (4) a combination of such methods. The exchange
of securities for shares of the Fund is subject to various restrictions, as
described in the Statement of Additional Information.
All purchases made by check should be in U.S. dollars and made payable to State
Street Bank and Trust Company. The Fund will not accept checks made payable to
anyone other than State Street Bank and Trust Company (including checks made
payable to you) or starter checks. When you make an investment by check or by
periodic account investment, to ensure that your investment has cleared, you
will not be permitted to redeem that investment until it your check has cleared
or has been in your account for 15 days.
After your account has been established, you may send subsequent investments
directly to Boston Financial Data Services at the above address. Please include
either the account identification slip detached from your account statement or a
note containing the Fund's name, your account number and your name, address,
telephone number, and social security number.
You also may wire subsequent investments to the Fund by using the following wire
instructions:
State Street Bank and Trust Company
Boston, MA 02101
ABA No. 011000028
DDA 9904-622-9
(Your account number)
Attn: Custody and Shareholder Services
Loomis Sayles Research Fund
Your bank may charge a fee for transmitting funds by wire.
The Fund may periodically close to new purchases of shares or refuse any order
to buy shares if the Fund determines that doing so would be in the best
interests of the Fund and its shareholders.
The Fund's shares may be purchased by all types of tax-deferred retirement
plans. If you wish to open an individual retirement account (IRA) with the Fund,
Loomis Sayles has retirement plan forms available.
The minimum initial investment for the Fund generally is $250,000 for
Institutional Class shares and $5,000 for Retail Class shares. Loomis Sayles
Funds may waive these minimums in its sole discretion.
LOOMIS SAYLES FUNDS 15
<PAGE>
Each subsequent investment must be at least $50.
HOW TO REDEEM SHARES
You can redeem shares of the Fund any day the New York Stock Exchange is open.
If you are redeeming shares that you purchased within the past 15 days by check
or by periodic account investment, your redemption will be delayed until your
payment for the shares clears.
Your redemptions generally will be sent to you via first class mail on the
business day after your request is received. Under unusual circumstances, the
Fund may suspend redemptions or postpone payment for more than seven days.
Although most redemptions are made in cash, as described in the Statement of
Additional Information, the Fund reserves the right to redeem shares in kind.
REDEMPTIONS THROUGH YOUR FINANCIAL ADVISER Your adviser must receive your
request in proper form before the close of regular trading on the New York Stock
Exchange for you to receive that day's NAV. Your adviser will be responsible for
furnishing all necessary documents to Loomis Sayles on a timely basis and may
charge you for his or her services.
REDEMPTIONS FROM THE FUND Boston Financial Data Services must receive your
redemption request in proper form before the close of regular trading on the New
York Stock Exchange in order for you to receive that day's NAV.
You may make redemptions directly from the Fund either by mail or by telephone.
- - BY MAIL Send a signed letter of instruction that includes the name of the
Fund, the exact name(s) in which the shares are registered, any special
capacity in which you are signing (such as trustee or custodian or on behalf
of a partnership, corporation, or other entity), your address, telephone
number, account number, social security number, and the number of shares or
dollar amount to be redeemed to the following address:
Boston Financial Data Services
PO Box 8314
Boston, MA 02266-8314
Attn: Loomis Sayles Funds
If you have certificates for the shares you want to sell, you must include
them along with completed stock power forms.
- - BY TELEPHONE You may redeem shares by calling Boston Financial Data Services
at 800-626-9390. Proceeds from telephone redemption requests can be wired to
your bank account or sent by check in the name of the registered owner(s) to
the record address.
Before Boston Financial Data Services can wire redemption proceeds to your
bank account, you must provide specific wire instructions to Boston Financial
Data Services at the time you open your account or make any subsequent
investments. A wire fee (currently $5) will be deducted from the proceeds of
each wire.
<PAGE>
A telephone redemption request must be received by Boston Financial Data
Services prior to the close of regular trading on the New York Stock Exchange.
If you telephone a redemption request after the Exchange closes or on a day
when the Exchange is not open for business, Boston Financial Data Services
cannot accept the request, and you must make a new redemption request during
regular trading on the Exchange.
The maximum value of shares that you may redeem by telephone is $50,000. For
your protection, telephone redemption requests will not be permitted if Boston
Financial Data Services or the Fund has been notified of an address change for
your account within the preceding 30 days. Unless you indicate otherwise on
your account application, Boston Financial Data Services will be authorized to
accept redemption and transfer instructions by telephone. If you prefer, you
can decline telephone redemption and transfer privileges.
The telephone redemption privilege may be modified or terminated by the Fund
without notice. Certain of the telephone redemption procedures may be waived
for holders of Institutional Class shares.
SYSTEMATIC WITHDRAWAL PLAN If the value of your account is $25,000 or more, you
can have periodic redemptions automatically paid to you or to someone you
designate. Please call 800-626-9390 for information or to set up a systematic
withdrawal plan.
SIGNATURE GUARANTEE You must have your signature guaranteed by a bank, broker-
dealer, or other financial institution that can issue a signature guarantee for
the following types of redemptions:
- - If you are redeeming shares worth more than $50,000.
- - If you are requesting that the proceeds check be made out to someone other
than the registered owner(s) or sent to an address other than the record
address.
- - If the account registration has changed within the past 30 days.
- - If you are instructing us to wire the proceeds to a bank account not
designated on the application.
Please note that a notary public cannot provide a signature guarantee. This
guaranteed signature requirement may be waived by Loomis Sayles in certain
cases.
REDEMPTION BY THE FUND If you own fewer shares than the minimum set by the
Trustees, the Fund may redeem your shares and send you the proceeds.
HOW TO EXCHANGE SHARES
You may exchange shares of the Fund for shares of the same Class of any other
Loomis Sayles Fund that offers that Class of shares or for shares of certain
money market funds advised by Nvest Funds Management, L.P., an affiliate of
Loomis Sayles.
LOOMIS SAYLES FUNDS 17
<PAGE>
The value of Fund shares that you wish to exchange must meet the investment
minimum of the new fund. Exchanges into the Loomis Sayles High Yield Fund must
be specially approved by Loomis Sayles. Please call 800-633-3330 (option 6)
prior to requesting this transaction.
You may make an exchange by sending a signed letter of instruction or by
telephone unless you have elected on your account application to decline
telephone exchange privileges.
Since excessive exchange activity may interfere with portfolio management and
may have an adverse effect on other shareholders of the Fund, the exchange
privilege should not be viewed as a means for taking advantage of short-term
swings in the market. The Fund reserves the right to terminate or limit your
exchange privilege if you make more than four exchanges in a calendar year. The
Fund may terminate the exchange privilege upon 60 days' notice to shareholders.
Please remember that an exchange may be a taxable event for federal and/or state
income tax purposes, so that you may realize a gain or loss that is subject to
income tax.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays its net investment income to shareholders as
dividends annually. The Fund also distributes all of its net capital gains
realized from the sale of portfolio securities. The Fund typically will make
capital gain distributions annually, but the Fund may make more frequent capital
gain distributions.
You may choose to:
- - Reinvest all distributions in additional shares.
- - Receive all distributions in cash.
If you do not select an option when you open your account, all distributions
will be reinvested.
<PAGE>
TAX CONSEQUENCES
For federal income tax purposes, distributions of investment income from the
Fund are taxable as ordinary income. Taxes on distributions of capital gains are
determined by how long the Fund owned the investments that generated the capital
gains, rather than by how long you have owned your shares of the Fund.
Distributions of short-term capital gains, which result from the sale of
securities that the Fund had held for one year or less, are taxable as ordinary
income. Properly designated distributions of long-term capital gains, which
result from the sale of securities that the Fund had held for more than one
year, are taxable as long-term capital gains (generally at a 20% federal income
tax rate for noncorporate shareholders).
Distributions of income and capital gains are taxable whether you receive them
in cash or reinvest them in additional shares. If a dividend or distribution is
made shortly after you purchase shares of the Fund, while in effect a return of
capital to you, the dividend or distribution is taxable, as described above.
This is called "buying a dividend" and should be avoided, if possible.
The Fund's investments in foreign securities may be subject to foreign
withholding taxes, which would decrease the Fund's yield on these securities.
Shareholders may be entitled to claim a credit or deduction with respect to
foreign taxes. In addition, the Fund's investments in foreign securities may
increase or accelerate the Fund's recognition of income and may affect the
timing or amount of the Fund's distributions.
In addition to income tax on the Fund's distributions, any gain that results if
you sell or exchange your shares generally is subject to income tax. You should
consult your tax adviser for more information on how an investment in the Fund
affects your own tax situation.
LOOMIS SAYLES FUNDS 19
<PAGE>
FOR MORE INFORMATION ABOUT THE FUND:
The Fund's statement of additional information (SAI) provides additional
information about the Fund. The SAI is incorporated by reference into this
Prospectus, which means that it is part of this Prospectus for legal purposes.
You may get free copies of the SAI, request other information about the Fund and
other Loomis Sayles Funds, or make shareholder inquiries by contacting your
financial adviser, by visiting the Loomis Sayles web site at
http://www.loomissayles.com, or by calling Loomis Sayles toll-free at
800-633-3330.
You may review and copy information about the Fund, including the SAI, at the
Securities and Exchange Commission's Public Reference Room in Washington, DC.
You may call the Commission at 202-942-8090 for information about the operation
of the Public Reference Room. You also may access reports and other information
about the Fund on the EDGAR Database on the Commission's web site at
http://www.sec.gov. You may obtain these reports and other information about the
Fund, with payment of a duplicating fee, by writing the Public Reference Section
of the Commission, Washington, DC 20549-0102, or via e-mail
([email protected]). You may need to refer to the Fund's file number, which is
listed at the bottom of this page.
Loomis Sayles Funds
One Financial Center
Boston, MA 02111
800-633-3330
www.loomissayles.com
File No. 811-6241
<PAGE>
[LOGO]
STATEMENT OF ADDITIONAL
INFORMATION
FEBRUARY 1, 2000, AS REVISED AUGUST 1, 2000
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THIS STATEMENT
OF ADDITIONAL INFORMATION RELATES TO THE PROSPECTUS OR PROSPECTUSES OF EACH
SERIES ("FUND") OF LOOMIS SAYLES FUNDS DATED FEBRUARY 1, 2000, AS REVISED FROM
TIME TO TIME. EACH REFERENCE TO THE PROSPECTUS IN THIS STATEMENT OF ADDITIONAL
INFORMATION SHALL INCLUDE ALL OF THE FUNDS' CURRENT PROSPECTUSES, UNLESS
OTHERWISE NOTED. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH THE APPLICABLE PROSPECTUS. A COPY OF EACH PROSPECTUS MAY BE
OBTAINED FROM LOOMIS SAYLES FUNDS, ONE FINANCIAL CENTER, BOSTON, MASSACHUSETTS
02111.
LOOMIS SAYLES FUNDS
- Loomis Sayles Aggressive Growth Fund
- Loomis Sayles Bond Fund
- Loomis Sayles Core Value Fund
- Loomis Sayles Emerging Markets Fund
- Loomis Sayles Global Bond Fund
- Loomis Sayles Global Technology Fund
- Loomis Sayles Growth Fund
- Loomis Sayles High Yield Fund
- Loomis Sayles Intermediate Maturity Bond Fund
- Loomis Sayles International Equity Fund
- Loomis Sayles Investment Grade Bond Fund
- Loomis Sayles Mid-Cap Value Fund
- Loomis Sayles Municipal Bond Fund
- Loomis Sayles Research Fund
- Loomis Sayles Short-Term Bond Fund
- Loomis Sayles Small Cap Growth Fund
- Loomis Sayles Small Cap Value Fund
- Loomis Sayles U.S. Government Securities Fund
- Loomis Sayles Worldwide Fund
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
THE TRUST................................................... 3
INVESTMENT STRATEGIES AND RISKS............................. 3
Investment Restrictions................................. 3
Investment Strategies................................... 6
U.S. Government Securities.............................. 6
When-Issued Securities.................................. 7
Zero Coupon Bonds....................................... 7
Repurchase Agreements................................... 8
Real Estate Investment Trusts........................... 8
Rule 144A Securities.................................... 8
Tax-Exempt Fixed Income Securities...................... 8
Foreign Currency Transactions........................... 10
Options................................................. 10
Small Companies......................................... 12
Private Placements...................................... 12
Closed-end Investment Companies and Unit Investment
Trusts................................................. 12
MANAGEMENT OF THE TRUST..................................... 13
PRINCIPAL HOLDERS........................................... 17
INVESTMENT ADVISORY AND OTHER SERVICES...................... 24
PORTFOLIO TRANSACTIONS AND BROKERAGE........................ 29
DESCRIPTION OF THE TRUST.................................... 31
Voting Rights........................................... 32
Shareholder and Trustee Liability....................... 33
How to Buy Shares....................................... 33
Net Asset Value......................................... 33
SHAREHOLDER SERVICES........................................ 34
Open Accounts........................................... 34
Systematic Withdrawal Plan.............................. 34
Exchange Privilege...................................... 35
IRAs.................................................... 35
Redemptions............................................. 35
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX
STATUS.................................................... 36
FINANCIAL STATEMENTS........................................ 39
CALCULATION OF YIELD AND TOTAL RETURN....................... 39
PERFORMANCE COMPARISONS..................................... 40
PERFORMANCE DATA............................................ 43
APPENDIX A--PUBLICATIONS AND OUTLETS THAT MAY CONTAIN FUND
INFORMATION............................................... 48
APPENDIX B--ADVERTISING AND PROMOTIONAL LITERATURE.......... 50
</TABLE>
2
<PAGE>
THE TRUST
Loomis Sayles Funds (the "Trust") is a diversified, registered, open-end
management investment company. The Trust includes 20 series (collectively, the
"Funds," with each series being known as a "Fund"). The Trust was organized as a
Massachusetts business trust on February 20, 1991.
Shares of the Funds are freely transferable and entitle shareholders to
receive dividends as determined by the Trust's Board of Trustees and to cast a
vote for each share held at shareholder meetings. The Trust generally does not
hold shareholder meetings and expects to do so only when required by law.
Shareholders may call meetings to consider removal of the Trust's trustees.
INVESTMENT STRATEGIES AND RISKS
The investment objective and principal investment strategies of each Fund
are described in the Prospectus. The investment policies of each Fund set forth
in the Prospectus and in this Statement of Additional Information may be changed
by the Trust's Board of Trustees without shareholder approval, except that the
investment objective of each Fund as set forth in the Prospectus and any policy
explicitly identified as "fundamental" may not be changed without the approval
of the holders of a majority of the outstanding shares of the relevant Fund
(which in the Prospectus and this Statement of Additional Information means the
lesser of (i) 67% of the shares of that Fund present at a meeting at which more
than 50% of the outstanding shares are present or represented by proxy or (ii)
more than 50% of the outstanding shares). Except in the case of the 15%
limitation on illiquid securities, the percentage limitations set forth below
and in the Prospectus will apply at the time a security is purchased and will
not be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such purchase.
INVESTMENT RESTRICTIONS
In addition to its investment objective and policies set forth in the
Prospectus, the following investment restrictions are policies of each Fund (and
those marked with an asterisk are fundamental policies of each Fund):
Each Fund will not:
(1) Invest in companies for the purpose of exercising control or
management.
*(2) Act as underwriter, except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
*(3) Invest in oil, gas or other mineral leases, rights or royalty
contracts or in real estate, commodities or commodity contracts. (This
restriction does not prevent any Fund from engaging in transactions in
futures contracts relating to securities indices, interest rates or
financial instruments or options, or from investing in issuers that invest
or deal in the foregoing types of assets or from purchasing securities that
are secured by real estate.)
*(4) Make loans, except that each Fund may lend its portfolio securities
to the extent permitted under the Investment Company Act of 1940, as amended
(the "1940 Act"). (For purposes of this investment restriction, neither (i)
entering into repurchase agreements nor (ii) purchasing debt obligations in
which a Fund may invest consistent with its investment policies is
considered the making of a loan.)
(5) With respect to 75% of its assets, purchase any security (other than
U.S. Government securities) if, as a result, more than 5% of the Fund's
assets (taken at current value) would then be invested in securities of a
single issuer. (For purposes of this restriction, the Loomis Sayles
Municipal Bond Fund treats each state and each separate political
subdivision, agency, authority or instrumentality of such state, each
multistate agency or authority, and each guarantor, if any, of obligations
of any
3
<PAGE>
such issuer as a separate issuer, provided that the assets and revenues of
the issuer are separate from those of the government(s) that created the
subdivision, agency, authority or instrumentality.)
(6) With respect to 75% of its assets, acquire more than 10% of the
outstanding voting securities of an issuer.
(7) Pledge, mortgage, hypothecate or otherwise encumber any of its
assets, except that each Fund may pledge assets having a value not exceeding
10% of its assets to secure borrowings permitted by restriction (9) below.
(For purposes of this restriction, collateral arrangements with respect to
options, futures contracts, and options on futures contracts and with
respect to initial and variation margin are not deemed to be a pledge or
other encumbrance of assets.)
*(8) Purchase any security (other than U.S. Government securities) if, as
a result, more than 25% of the Fund's assets (taken at current value) would
be invested in any one industry (in the utilities category, gas, electric,
water and telephone companies will be considered as being in separate
industries). Tax-exempt securities issued by governments or political
subdivisions of governments and purchased by the Loomis Sayles Municipal
Bond Fund are not subject to this restriction, since such issuers are not
members of any industry.
(9) Borrow money in excess of 20% of its net assets, nor borrow any
money except as a temporary measure for extraordinary or emergency purposes,
except that each of the Loomis Sayles Emerging Markets Fund, Loomis Sayles
Global Technology Fund, and Loomis Sayles International Equity Fund also may
borrow up to 10% of its net assets to facilitate settlement of purchase
transactions in markets that have shorter settlement periods than the
markets in which the Fund has sold securities and is awaiting the receipt of
settlement proceeds. However as a fundamental policy, the Investment Grade
Bond Fund may not borrow money in excess of 10% of its assets (taken at
cost) or 5% of its assets (taken at current value), whichever is lower, nor
borrow any money except as a temporary measure for extraordinary purposes.
(10) Purchase securities on margin (except such short term credits as are
necessary for clearance of transactions) or make short sales (except where,
by virtue of ownership of other securities, it has the right to obtain,
without payment of additional consideration, securities equivalent in kind
and amount to those sold).
(11) Participate on a joint or joint and several basis in any trading
account in securities. (The "bunching" of orders for the purchase or sale of
portfolio securities with Loomis, Sayles & Company, L.P. ("Loomis Sayles")
or accounts under its management to reduce brokerage commissions, to average
prices among them or to facilitate such transactions is not considered a
trading account in securities for purposes of this restriction.)
(12) Purchase any illiquid security, including any security that is not
readily marketable, if, as a result, more than 15% of the Fund's net assets
(based on current value) would then be invested in such securities.
(13) Write or purchase puts, calls, or combinations of both, except that
each Fund may
(1) acquire warrants or rights to subscribe to securities of companies
issuing such warrants or rights, or of parents or subsidiaries of such
companies, (2) purchase and sell put and call options on securities, and (3)
write, purchase and sell put and call options on currencies and enter into
currency forward contracts.
*(14) Issue senior securities. (For purposes of this restriction, none of
the following is deemed to be a senior security: any pledge or other
encumbrance of assets permitted by restriction (7) above; any borrowing
permitted by restriction (9) above; any collateral arrangements with respect
to options, futures contracts, and options on futures contracts and with
respect to initial and variation margin; and the purchase or sale of
options, forward contracts, futures contracts, or options on futures
contracts.)
4
<PAGE>
(15) Certain Funds have other non-fundamental investment parameters, as
listed below.
LOOMIS SAYLES AGGRESSIVE GROWTH FUND
The Fund normally will invest at least 65% of its assets in equity
securities of companies with market capitalizations that fall within the
capitalization range of companies included in the Russell Mid-Cap Growth Index.
LOOMIS SAYLES BOND FUND
The Fund normally will invest at least 65% of its assets in fixed income
securities.
LOOMIS SAYLES EMERGING MARKETS FUND
The Fund normally will invest at least 65% of its assets in stocks or other
equity securities of issuers located in countries with emerging securities
markets.
LOOMIS SAYLES GLOBAL BOND FUND
The Fund normally will invest at least 65% of its assets in fixed income
securities of issuers from at least three countries, which may include the
United States, and no more than 40% of its assets in issuers headquartered in
any one country.
LOOMIS SAYLES GLOBAL TECHNOLOGY FUND
The Fund normally will invest at least 65% of its assets in equity
securities of technology companies located in the United States or abroad.
LOOMIS SAYLES HIGH YIELD FUND
The Fund normally will invest at least 65% of its assets in lower rated
fixed income securities ("junk bonds").
LOOMIS SAYLES INTERNATIONAL EQUITY FUND
The Fund normally will invest at least 65% of its assets in equity
securities of issuers from at least three countries outside the United States.
LOOMIS SAYLES INVESTMENT GRADE BOND FUND
The Fund normally will invest at least 65% of its assets in investment grade
fixed income securities.
LOOMIS SAYLES MID-CAP VALUE FUND
The Fund normally will invest at least 65% of its assets in equity
securities of companies with a market capitalization that falls within the
capitalization range of companies included in the Standard & Poor's Mid-Cap 400
Index.
LOOMIS SAYLES MUNICIPAL BOND FUND
The Fund normally will invest at least 65% of its assets in fixed income
securities.
LOOMIS SAYLES SHORT-TERM BOND FUND
The Fund normally will invest at least 65% of its assets in fixed income
securities with a remaining maturity of five years or less.
5
<PAGE>
LOOMIS SAYLES SMALL CAP GROWTH FUND
The Fund normally will invest at least 65% of its assets in equity
securities of companies with market capitalizations that fall within the
capitalization range of the Russell 2000 Index.
LOOMIS SAYLES SMALL CAP VALUE FUND
The Fund normally will invest at least 65% of its assets in equity
securities of companies with market capitalizations that fall within the
capitalization range of the Russell 2000 Index.
LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND
The Fund normally will invest at least 65% of its assets in U.S. Government
securities.
Each Fund intends, based on the views of the staff of the Securities and
Exchange Commission (the "SEC"), to restrict its investments in repurchase
agreements maturing in more than seven days, together with other investments in
illiquid securities, to the percentage permitted by restriction (12) above.
INVESTMENT STRATEGIES
Except to the extent prohibited by a Fund's investment policies as set forth
in the Prospectus or in this Statement of Additional Information, the investment
strategies used by Loomis Sayles in managing each of the Funds may include
investments in the types of securities described below.
U.S. GOVERNMENT SECURITIES
U.S. Government securities include direct obligations of the U.S. Treasury,
as well as securities issued or guaranteed by U.S. Government agencies,
authorities, and instrumentalities, including, among others, the Government
National Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association, the Federal Housing Administration, the
Resolution Funding Corporation, the Federal Farm Credit Banks, the Federal Home
Loan Bank, the Tennessee Valley Authority, the Student Loan Marketing
Association, and the Small Business Administration. More detailed information
about some of these categories of U.S. Government securities follows.
U.S. Treasury Bills--U.S. Treasury Bills are direct obligations of the U.S.
Treasury that are issued in maturities of one year or less. No interest is paid
on Treasury bills; instead, they are issued at a discount and repaid at full
face value when they mature. They are backed by the full faith and credit of the
U.S. Government.
U.S. Treasury Notes and Bonds--U.S. Treasury Notes and Bonds are direct
obligations of the U.S. Treasury that are issued in maturities that vary between
one and forty years, with interest normally payable every six months. They are
backed by the full faith and credit of the U.S. Government.
"Ginnie Maes"--Ginnie Maes are debt securities issued by a mortgage banker
or other mortgagee that represent an interest in a pool of mortgages insured by
the Federal Housing Administration or the Farmer's Home Administration or
guaranteed by the Veterans Administration. The Government National Mortgage
Association ("GNMA") guarantees the timely payment of principal and interest
when such payments are due, whether or not these amounts are collected by the
issuer of these certificates on the underlying mortgages. An assistant attorney
general of the United States has rendered an opinion that the guarantee by GNMA
is a general obligation of the United States backed by its full faith and
credit. Mortgages included in single family or multi-family residential mortgage
pools backing an issue of Ginnie Maes have a maximum maturity of up to 30 years.
Scheduled payments of principal and interest are made to the registered holders
of Ginnie Maes (such as the Funds) each month. Unscheduled prepayments may be
made by homeowners or as a result of a default. Prepayments are passed through
to the registered holder of Ginnie Maes along with regular monthly payments of
principal and interest.
6
<PAGE>
"Fannie Maes"--The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private stockholders that
purchases residential mortgages from a list of approved seller/servicers. Fannie
Maes are pass-through securities issued by FNMA that are guaranteed as to timely
payment of principal and interest by FNMA but are not backed by the full faith
and credit of the U.S. Government.
"Freddie Macs"--The Federal Home Loan Mortgage Corporation ("FHLMC") is a
corporate instrumentality of the U.S. Government. Freddie Macs are participation
certificates issued by FHLMC that represent an interest in residential mortgages
from FHLMC's national portfolio. FHLMC guarantees the timely payment of interest
and ultimate collection of principal, but Freddie Macs are not backed by the
full faith and credit of the U.S. Government.
As described in the Prospectus, the yields available from U.S. Government
securities are generally lower than the yields available from corporate
fixed-income securities. Like other fixed-income securities, however, the values
of U.S. Government securities change as interest rates fluctuate. Fluctuations
in the value of portfolio securities will not affect interest income on existing
portfolio securities but will be reflected in the Fund's net asset value.
WHEN-ISSUED SECURITIES
When-issued securities are agreements with banks or broker-dealers for the
purchase or sale of securities at an agreed-upon price on a specified future
date. Such agreements might be entered into, for example, when a Fund that
invests in fixed income securities anticipates a decline in interest rates and
is able to obtain a more advantageous yield by committing currently to purchase
securities to be issued later. When a Fund purchases securities on a when-issued
or delayed-delivery basis, it is required to create a segregated account with
the Trust's custodian and to maintain in that account liquid assets in an amount
equal to or greater than, on a daily basis, the amount of the Fund's when-issued
or delayed-delivery commitments. Each Fund will make commitments to purchase on
a when-issued or delayed-delivery basis only securities meeting that Fund's
investment criteria. The Fund may take delivery of these securities or, if it is
deemed advisable as a matter of investment strategy, the Fund may sell these
securities before the settlement date. When the time comes to pay for
when-issued or delayed- delivery securities, the Fund will meet its obligations
from then available cash flow or the sale of securities, or from the sale of the
when-issued or delayed-delivery securities themselves (which may have a value
greater or less than the Fund's payment obligation).
ZERO COUPON BONDS
Zero coupon bonds are debt obligations that do not entitle the holder to any
periodic payments of interest either for the entire life of the obligation or
for an initial period after the issuance of the obligation. Such bonds are
issued and traded at a discount from their face amounts. The amount of the
discount varies depending on such factors as the time remaining until maturity
of the bonds, prevailing interest rates, the liquidity of the security, and the
perceived credit quality of the issuer. The market prices of zero coupon bonds
generally are more volatile than the market prices of securities that pay
interest periodically and are likely to respond to changes in interest rates to
a greater degree than non-zero coupon bonds having similar maturities and credit
quality. In order to satisfy a requirement for qualification as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"), each Fund must distribute each year at least 90% of its net investment
income, including the original issue discount accrued on zero coupon bonds.
Because a Fund investing in zero coupon bonds will not on a current basis
receive cash payments from the issuer in respect of accrued original issue
discount, the Fund may have to distribute cash obtained from other sources in
order to satisfy the 90% distribution requirement under the Code. Such cash
might be obtained from selling other portfolio holdings of the Fund. In some
circumstances, such sales might be necessary in order to satisfy cash
distribution requirements even though investment considerations might otherwise
make it undesirable for the Fund to sell such securities at such time.
7
<PAGE>
REPURCHASE AGREEMENTS
Under a repurchase agreement, a Fund purchases a security and obtains a
simultaneous commitment from the seller (a bank or, to the extent permitted by
the 1940 Act, a recognized securities dealer) to repurchase the security at an
agreed upon price and date (usually seven days or less from the date of original
purchase). The resale price is in excess of the purchase price and reflects an
agreed upon market rate unrelated to the coupon rate on the purchased security.
Such transactions afford the Fund the opportunity to earn a return on
temporarily available cash at minimal market risk. While the underlying security
may be a bill, certificate of indebtedness, note, or bond issued by an agency,
authority, or instrumentality of the U.S. Government, the obligation of the
seller is not guaranteed by the U.S. Government, and there is a risk that the
seller may fail to repurchase the underlying security. In such event, the Fund
would attempt to exercise rights with respect to the underlying security,
including possible disposition in the market. However, the Fund may be subject
to various delays and risks of loss, including (a) possible declines in the
value of the underlying security during the period while the Fund seeks to
enforce its rights thereto, (b) possible reduced levels of income and lack of
income during this period, and (c) inability to enforce rights and the expenses
involved in attempted enforcement.
REAL ESTATE INVESTMENT TRUSTS
REITs involve certain unique risks in addition to those risks associated
with investing in the real estate industry in general (such as possible declines
in the value of real estate, lack of availability of mortgage funds, or extended
vacancies of property). Equity REITs may be affected by changes in the value of
the underlying property owned by the REITs, while mortgage REITs may be affected
by the quality of any credit extended. REITs are dependent upon management
skills, are not diversified, and are subject to heavy cash flow dependency,
risks of default by borrowers, and self-liquidation. REITs are also subject to
the possibilities of failing to qualify for tax-free pass-through of income
under the Code and failing to maintain their exemptions from registration under
the 1940 Act.
Investment in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume, and may be subject
to more abrupt or erratic price movements than larger securities.
RULE 144A SECURITIES
Rule 144A securities are privately offered securities that can be resold
only to certain qualified institutional buyers. Rule 144A securities are treated
as illiquid, unless Loomis Sayles has determined, under guidelines established
by the Trust's trustees, that the particular issue of Rule 144A securities is
liquid. Under the guidelines, Loomis Sayles considers such factors as: (1) the
frequency of trades and quotes for a security; (2) the number of dealers willing
to purchase or sell the security and the number of other potential purchasers;
(3) dealer undertakings to make a market in the security; and (4) the nature of
the security and the nature of the marketplace trades in the security.
TAX-EXEMPT FIXED INCOME SECURITIES
Tax-exempt fixed income securities include debt obligations issued to obtain
funds for various public purposes, including the construction of a wide range of
public facilities such as bridges, highways, hospitals, housing, mass
transportation, schools, streets, and water and sewer works. Other public
purposes for which tax-exempt fixed income securities may be issued include
refunding outstanding obligations, obtaining funds for general operating
expenses, and obtaining funds to lend to other public institutions and
facilities. In addition, prior to the Tax Reform Act of 1986, certain debt
obligations known as industrial development bonds could be issued by or on
behalf of public authorities to obtain funds to provide privately operated
housing facilities, sports facilities, convention or trade show facilities,
airport, mass transit, port or parking facilities, air or water pollution
control facilities, and certain local facilities for water supply, gas,
electricity, or sewage or solid waste disposal. Such obligations are included
within the term tax-exempt fixed income securities if the interest paid thereon
is, in the opinion of bond counsel, exempt from federal income tax.
8
<PAGE>
Interest on certain industrial development bonds used to fund the construction,
equipment, repair, or improvement of privately operated industrial or commercial
facilities may also be exempt from federal income tax. The Tax Reform Act of
1986 eliminated some types of tax-exempt industrial revenue bonds but retained
others under the general category of "private activity bonds." The interest on
so-called "private activity bonds" is exempt from ordinary federal income
taxation but is treated as a tax preference item in computing a shareholder's
alternative minimum tax liability. The Loomis Sayles Municipal Bond Fund may
invest up to 20% of its net assets in private activity bonds.
The Loomis Sayles Municipal Bond Fund may not be a desirable investment for
"substantial users" of facilities financed by industrial development bonds or
for "related persons" of substantial users. See "Income Dividends, Capital Gain
Distributions and Tax Status."
The two principal classifications of tax-exempt fixed income securities are
general obligation bonds and limited obligation (or revenue) bonds. General
obligation bonds are obligations involving the credit of an issuer possessing
taxing power and are payable from the issuer's general unrestricted revenues and
not from any particular fund or source. The characteristics and method of
enforcement of general obligation bonds vary according to the law applicable to
the particular issuer, and payment may be dependent upon an appropriation by the
issuer's legislative body. Limited obligation bonds are payable only from the
revenues derived from a particular facility or class of facilities, or in some
cases from the proceeds of a special excise or other specific revenue source
such as the user of the facility. Tax-exempt industrial development bonds and
private activity bonds are in most cases revenue bonds and generally are not
payable from the unrestricted revenues of the issuer. The credit and quality of
such fixed income securities are usually directly related to the credit standing
of the corporate user of the facilities. Principal and interest on such fixed
income securities is the responsibility of the corporate user (and any
guarantor).
Prices and yields on tax-exempt fixed income securities are dependent on a
variety of factors, including general money market conditions, the financial
condition of the issuer, general conditions of the tax-exempt bond market, the
size of a particular offering, the maturity of the obligation, and the rating of
the issue. A number of these factors, including the ratings of particular
issues, are subject to change from time to time. Information about the financial
condition of an issuer of tax-exempt fixed income securities may not be as
extensive as that made available by corporations whose securities are publicly
traded.
Obligations of issuers of tax-exempt fixed income securities are subject to
the provisions of bankruptcy, insolvency, and other laws, such as the Federal
Bankruptcy Reform Act of 1978, affecting the rights and remedies of creditors.
Congress or state legislatures may seek to extend the time for payment of
principal or interest, or both, or to impose other constraints upon enforcement
of such obligations. There is also the possibility that, as a result of
litigation or other conditions, the power or ability of issuers to meet their
obligations for the payment of interest and principal on their tax-exempt fixed
income securities may be materially affected, or their obligations may be found
to be invalid or unenforceable. Such litigation or conditions may from time to
time have the effect of introducing uncertainties in the market for tax-exempt
fixed income securities or certain segments thereof, or materially affecting the
credit risk with respect to particular fixed income securities. Adverse
economic, business, legal, or political developments might affect all or a
substantial portion of a Fund's tax-exempt fixed income securities in the same
manner.
From time to time the Loomis Sayles Municipal Bond Fund may have less than
80% of its net assets invested in tax-exempt fixed income securities (1) for
defensive purposes when deemed prudent in the judgment of Loomis Sayles to
protect shareholders' capital or (2) on a temporary basis for liquidity purposes
or pending the investment of proceeds from sales of Fund shares. The ability of
the Fund to invest in securities other than tax-exempt fixed income securities
is limited by a requirement of the Code that at least 50% of the Fund's assets
be invested in tax-exempt securities at the end of each calendar quarter in
order to pass through to shareholders the tax-exempt interest earned by the
Fund. See "Income Dividends, Capital Gain Distributions and Tax Status."
The Loomis Sayles Municipal Bond Fund may purchase and sell portfolio
investments to take advantage of changes or anticipated changes in yield
relationships, markets, or economic conditions. The
9
<PAGE>
Fund may also sell tax-exempt fixed income securities due to changes in the
adviser's evaluation of the issuer or cash needs resulting from redemption
requests for Fund shares. The secondary market for tax-exempt fixed income
securities typically has been less liquid than that for taxable debt securities,
and this may affect the Fund's ability to sell particular tax-exempt fixed
income securities, especially in periods when other investors are attempting to
sell the same securities.
FOREIGN CURRENCY TRANSACTIONS
Since investment in securities of foreign issuers will usually involve
currencies of foreign countries, and since a Fund may temporarily hold funds in
bank deposits in foreign currencies during the course of investment programs,
the value of the assets of a Fund as measured in U.S. dollars may be affected by
changes in currency exchange rates and exchange control regulations, and a Fund
may incur costs in connection with conversion between various currencies.
A Fund may enter into forward contracts under two circumstances. First, when
a Fund enters into a contract for the purchase or sale of a security denominated
or traded in a market in which settlement is made in a foreign currency, it may
desire to "lock in" the U.S. dollar price of the security. By entering into a
forward contract for the purchase or sale, for a fixed amount of dollars, of the
amount of foreign currency involved in the underlying transactions, the Fund
will be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date on which the investment is purchased
or sold and the date on which payment is made or received.
Second, when Loomis Sayles believes that the currency of a particular
country may suffer a substantial decline against another currency, it may enter
into a forward contract to sell, for a fixed amount of another currency, the
amount of the first currency approximating the value of some or all of the
Fund's portfolio investments denominated in the first currency. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of such
securities in a currency will change as a consequence of market movements in the
value of those investments between the date the forward contract is entered into
and the date it matures.
The Funds generally will not enter into forward contracts with a term of
greater than one year.
Options on foreign currencies are similar to forward contracts, except that
one party to the option (the holder) is not contractually bound to buy or sell
the specified currency. Instead, the holder has discretion whether to "exercise"
the option and thereby require the other party to buy or sell the currency on
the terms specified in the option. Options transactions involve transaction
costs and, like forward contract transactions, involve the risk that the other
party may default on its obligations (if the options are not traded on an
established exchange) and the risk that expected movements in the relative value
of currencies may not occur, resulting in an imperfect hedge or a loss to the
Fund.
Each Fund, in conjunction with its transactions in forward contracts,
options, and futures, will maintain in a segregated account with its custodian
liquid assets with a value, marked to market on a daily basis, sufficient to
satisfy the Fund's outstanding obligations under such contracts, options, and
futures.
OPTIONS
An option entitles the holder to receive (in the case of a call option) or
to sell (in the case of a put option) a particular security at a specified
exercise price. An "American style" option allows exercise of the option at any
time during the term of the option. A "European style" option allows an option
to be exercised only at the end of its term. Options may be traded on or off an
established securities exchange.
If the holder of an option wishes to terminate its position, it may seek to
effect a closing sale transaction by selling an option identical to the option
previously purchased. The effect of the purchase is that the previous option
position will be canceled. A Fund will realize a profit from closing out an
option if the price received for selling the offsetting position is more than
the premium paid to purchase the option;
10
<PAGE>
the Fund will realize a loss from closing out an option transaction if the price
received for selling the offsetting option is less than the premium paid to
purchase the option.
The use of options involves risks. One risk arises because of the imperfect
correlation between movements in the price of options and movements in the price
of the securities that are the subject of the hedge. A Fund's hedging strategies
will not be fully effective if such imperfect correlation occurs.
Price movement correlation may be distorted by illiquidity in the options
markets and the participation of speculators in such markets. If an insufficient
number of contracts are traded, commercial users may not deal in options because
they do not want to assume the risk that they may not be able to close out their
positions within a reasonable amount of time. In such instances, options market
prices may be driven by different forces than those driving the market in the
underlying securities, and price spreads between these markets may widen. The
participation of speculators in the market enhances its liquidity. Nonetheless,
the trading activities of speculators in the options markets may create
temporary price distortions unrelated to the market in the underlying
securities.
An exchange-traded option may be closed out only on an exchange that
generally provides a liquid secondary market for an option of the same series.
If a liquid secondary market for an exchange-traded option does not exist, it
might not be possible to effect a closing transaction with respect to a
particular option, with the result that the Fund would have to exercise the
option in order to accomplish the desired hedge. Reasons for the absence of a
liquid secondary market on an exchange include the following: (i) there may be
insufficient trading interest in certain options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing transactions or both;
(iii) trading halts, suspensions, or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities;
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (v) the facilities of an exchange or the Options Clearing Corporation
or other clearing organization may not at all times be adequate to handle
current trading volume; or (vi) one or more exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that exchange (or in that class or series of options)
would cease to exist, although outstanding options on that exchange that had
been issued by the Options Clearing Corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms.
The successful use of options depends in part on the ability of Loomis
Sayles to forecast correctly the direction and extent of interest rate, stock
price, or currency value movements within a given time frame. To the extent
interest rates, stock prices, or currency values move in a direction opposite to
that anticipated, a Fund may realize a loss on the hedging transaction that is
not fully or partially offset by an increase in the value of portfolio
securities. In addition, whether or not interest rates or the relevant stock
price or relevant currency values move during the period that the Fund holds
options positions, the Fund will pay the cost of taking those positions (i.e.,
brokerage costs). As a result of these factors, the Fund's total return for such
period may be less than if it had not engaged in the hedging transaction.
An over-the-counter option (an option not traded on an established exchange)
may be closed out only with the other party to the original option transaction.
While the Fund will seek to enter into over-the-counter options only with
dealers who agree to or are expected to be capable of entering into closing
transactions with the Fund, there can be no assurance that the Fund will be able
to liquidate an over-the-counter option at a favorable price at any time prior
to its expiration. Accordingly, the Fund might have to exercise an
over-the-counter option it holds in order to achieve the intended hedge.
Over-the-counter options are not subject to the protections afforded purchasers
of listed options by the Options Clearing Corporation or other clearing
organization.
The staff of the SEC has taken the position that over-the-counter options
should be treated as illiquid securities for purposes of each Fund's investment
restriction prohibiting it from investing more than 15% of its net assets in
illiquid securities. The Funds intend to comply with this position.
11
<PAGE>
Income earned by a Fund from its hedging activities will be treated as
capital gain and, if not offset by net recognized capital losses incurred by the
Fund, will be distributed to shareholders in taxable distributions. Although
gain from options transactions may hedge against a decline in the value of a
Fund's portfolio securities, that gain, to the extent not offset by losses, will
be distributed in light of certain tax considerations and will constitute a
distribution of that portion of the value preserved against decline.
SMALL COMPANIES
Investments in companies with relatively small market capitalizations may
involve greater risk than is usually associated with more established companies.
These companies often have limited product lines, markets, or financial
resources, and they may be dependent upon a relatively small management group.
Their securities may have limited marketability and may be subject to more
abrupt or erratic movements in price than securities of companies with larger
capitalizations or market averages in general. The net asset values of funds
that invest in companies with smaller capitalizations therefore may fluctuate
more widely than market averages.
PRIVATE PLACEMENTS
The Funds may invest in securities that are purchased in private placements
and, accordingly, are subject to restrictions on resale as a matter of contract
or under federal securities laws. Because there may be relatively few potential
purchasers for these securities, especially under adverse market or economic
conditions or in the event of adverse changes in the financial condition of the
issuer, a Fund could find it more difficult to sell the securities when Loomis
Sayles believes that it is advisable to do so or may be able to sell the
securities only at prices lower than if the securities were more widely held. At
times, it also may be more difficult to determine the fair value of the
securities for purposes of computing a Fund's net asset value.
While private placements may offer opportunities for investment that are not
otherwise available on the open market, the securities so purchased are often
"restricted securities," which are securities that cannot be sold to the public
without registration under the Securities Act of 1933, as amended (the
"Securities Act") or the availability of an exemption from registration (such as
Rule 144 or Rule 144A under the Securities Act), or that are not readily
marketable because they are subject to other legal or contractual delays or
restrictions on resale.
The absence of a trading market can make it difficult to ascertain a market
value for illiquid investments such as private placements. Disposing of illiquid
investments may involve time-consuming negotiation and legal expenses, and it
may be difficult or impossible for a Fund to sell them promptly at an acceptable
price. A Fund may have to bear the extra expense of registering the securities
for resale and the risk of substantial delay in effecting the registration. In
addition, market quotations typically are less readily available for these
securities. The judgment of Loomis Sayles may at times play a greater role in
valuing these securities than in the case of unrestricted securities.
Generally speaking, restricted securities may be sold only to qualified
institutional buyers, in a privately negotiated transaction to a limited number
of purchasers, in limited quantities after they have been held for a specified
period of time and other conditions are met pursuant to an exemption from
registration, or in a public offering for which a registration statement is in
effect under the Securities Act. A Fund may be deemed to be an underwriter for
purposes of the Securities Act when selling restricted securities to the public
so that the Fund may be liable to purchasers of the securities if the
registration statement prepared by the issuer, or the prospectus forming a part
of the registration statement, is materially inaccurate or misleading.
CLOSED-END INVESTMENT COMPANIES AND UNIT INVESTMENT TRUSTS
A closed-end investment company is an investment company that does not
redeem its shares on a daily basis. As a result, an investment in a closed-end
investment company may be illiquid (hard to sell). A
12
<PAGE>
unit investment trust ("UIT") is an investment company that does not have a
board of directors and that issues redeemable securities. Since the value of a
closed-end investment company or UIT is based on the value of the individual
securities it holds, that value will fall if the value of its underlying
securities declines. As a shareholder in a closed-end investment company or UIT,
a Fund will bear its ratable share of the investment company's expenses,
including management fees, and the Fund's shareholders will bear such expenses
indirectly, in addition to similar expenses of the Fund.
MANAGEMENT OF THE TRUST
The trustees of the Trust supervise the affairs of the Trust and have the
other responsibilities assigned to them by the laws of The Commonwealth of
Massachusetts. The trustees and officers of the Trust, their ages, and their
principal occupations during the past five years are as follows:
JOSEPH ALAIMO (69)--Trustee. 727 N. Bank Lane, Lake Forest, Illinois.
President, Wintrust Asset Management Company.
PAUL G. CHENAULT (66)--Trustee. 6546 Neville Court, Mason, Ohio 45040.
Retired; Trustee of Variable Investors Series Trust. From August 1997 to
September 1997, Vice President of Loomis Sayles and prior to October 1995,
Senior Vice President and Chief Investment Officer, XL Capital Ltd., Hamilton,
Bermuda.
RICHARD S. HOLWAY (73)--Trustee. 1314 Seaspray Lane, Sanibel, Florida.
Retired. Formerly Senior Vice President, Loomis Sayles. Director, Sandwich
Cooperative Bank.
MICHAEL T. MURRAY (69)--Trustee. 404 N. Western Ave., Lake Forest, Illinois.
Retired. Formerly Vice President, Loomis Sayles.
DANIEL J. FUSS(1) (66)--President and Trustee. Vice Chairman and Director,
Loomis Sayles.
ROBERT J. BLANDING (52)--Executive Vice President. 555 California Street,
San Francisco, California. President, Chairman, Director, and Chief Executive
Officer, Loomis Sayles.
MARK W. HOLLAND (50)--Treasurer. Vice President and Director, Loomis Sayles.
SHEILA M. BARRY (54)--Secretary and Compliance Officer. Assistant General
Counsel and Vice President, Loomis Sayles. Formerly, Senior Counsel and Vice
President, New England Funds, L.P.
DAWN M. ALSTON-PAIGE (35)--Vice President. 1533 N. Woodward, Bloomfield
Hills, Michigan. Vice President, Loomis Sayles.
MARK BARIBEAU (40)--Vice President. Vice President, Loomis Sayles.
JAMES C. CARROLL (49)--Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles. Formerly Managing Director and Senior
Energy Analyst at Paine Webber, Inc.
PAMELA N. CZEKANSKI (41)--Vice President. Vice President, Loomis Sayles.
E. JOHN DEBEER (61)--Vice President. Vice President, Loomis Sayles.
WILLIAM H. EIGEN, JR. (62)--Vice President. Vice President, Loomis Sayles.
Formerly Vice President, INVESCO Funds Group and Vice President, The Travelers
Corp.
CHRISTOPHER R. ELY (44)--Vice President. Vice President and Director, Loomis
Sayles. Formerly Senior Vice President and Portfolio Manager, Keystone
Investment Management Company, Inc.
QUENTIN P. FAULKNER (60)--Vice President. Vice President, Loomis Sayles.
- --------------
(1) Trustee deemed an "interested person" of the Trust, as defined by the 1940
Act.
13
<PAGE>
PHILIP C. FINE (50)--Vice President. Vice President, Loomis Sayles. Formerly
Vice President and Portfolio Manager, Keystone Investment Management Company,
Inc.
KATHLEEN C. GAFFNEY (38)--Vice President. Vice President, Loomis Sayles.
JOSEPH R. GATZ (38)--Vice President. Vice President, Loomis Sayles.
Formerly, Portfolio Manager, Bank One Investment Advisers Corporation.
ISAAC GREEN (38)--Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Executive Vice President and Director, Loomis Sayles.
DEAN GULIS (44)--Vice President. Vice President, Loomis Sayles. Formerly,
Principal and Director of Research at Roney & Company.
MARTHA F. HODGMAN (48)--Vice President. Vice President, Loomis Sayles.
JOHN HYLL (45)--Vice President. 555 California Street, San Francisco,
California.
JEFFREY L. MEADE (49)--Vice President. Executive Vice President, Chief
Operating Officer and Director, Loomis Sayles.
ESWAR MENON (35)--Vice President. 555 California Street, San Francisco,
California. Vice President, Loomis Sayles. Formerly Portfolio Manager at
Nicholas Applegate Capital Management, Equity Analyst at Koaneman Capital
Management, and Senior Engineer at Integrated Device Technology.
ALEX MUROMCEW (36)--Vice President. 555 California Street, San Francisco,
California. Vice President, Loomis Sayles. Formerly Portfolio Manager at
Nicholas Applegate Capital Management and Investment Analyst at Teton Partners,
L.P.
KENT P. NEWMARK (61)--Vice President. 555 California Street, San Francisco,
California. Vice President, Managing Partner and Director, Loomis Sayles.
BRUCE G. PICARD, JR. (30)--Vice President. Vice President, Loomis Sayles.
LAUREN B. PITALIS (39)--Vice President. Vice President, Loomis Sayles.
Formerly Vice President and Assistant Secretary, Harris Associates Investment
Trust.
RICHARD D. SKAGGS (44)--Vice President. Vice President, Loomis Sayles.
DAVID L. SMITH (46)--Vice President. Vice President, Loomis Sayles. Formerly
Vice President and Portfolio Manager, Keystone Investment Management Company,
Inc.
SANDRA P. TICHENOR (50)--Vice President. 555 California Street, San
Francisco, California. General Counsel, Executive Vice President, Secretary,
Clerk and Director, Loomis Sayles. Formerly Partner, Heller, Ehrman, White &
McAuliffe.
JOHN TRIBOLET (29)--Vice President. 555 California Street, San Francisco,
California. Vice President, Loomis Sayles. Formerly Portfolio Manager at
Nicholas-Applegate Capital Management, MBA student at the University of Chicago,
and investment banker, most recently at PaineWebber, Inc.
JEFFREY W. WARDLOW (39)--Vice President. 1533 N. Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles.
ANTHONY J. WILKINS (57)--Vice President. Executive Vice President and
Director, Loomis Sayles.
Previous positions during the past five years with Loomis Sayles are omitted
if not materially different.
Except as indicated above, the address of each trustee and officer of the
Trust affiliated with Loomis Sayles is One Financial Center, Boston,
Massachusetts. The Trust pays no compensation to its officers or to
14
<PAGE>
the trustees listed above who are directors, officers, or employees of Loomis
Sayles. Each trustee who is not a director, officer, or employee of Loomis
Sayles is compensated at the rate of $1,250 per Fund per annum.
COMPENSATION TABLE
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
(5)
TOTAL
(3) (4) COMPENSATION
(2) PENSION OR ESTIMATED FROM TRUST AND
(1) AGGREGATE RETIREMENT BENEFITS ANNUAL FUND COMPLEX*
NAME OF PERSON, COMPENSATION ACCRUED AS PART OF BENEFITS UPON PAID TO
POSITION FROM TRUST FUND EXPENSES RETIREMENT TRUSTEE
--------------- ------------ ------------------- ------------- --------------
<S> <C> <C> <C> <C>
Joseph Alaimo, Trustee....................... $ 5,312.50 N/A N/A $ 5,312.50
Richard S. Holway, Trustee................... $21,562.50 N/A N/A $21,562.50
Michael T. Murray, Trustee................... $21,562.50 N/A N/A $21,562.50
Daniel J. Fuss, Trustee...................... $ 0 N/A N/A $ 0
</TABLE>
- --------------
* No Trustee receives compensation from any mutual funds affiliated with
Loomis Sayles, other than the Trust.
As of June 30 2000, the officers and trustees of the trust collectively
owned beneficially the following percentages of each fund: % of the Loomis
Sayles Aggressive Growth Fund, less than 1% of the Loomis Sayles Bond Fund, %
of the Loomis Sayles Core Value Fund, % of the Loomis Sayles Global Bond Fund,
% of the Loomis Sayles Growth Fund, % of the Loomis Sayles High Yield Fund,
% of the Loomis Sayles Intermediate Maturity Bond Fund, 1.44% of the Loomis
Sayles International Equity Fund, % of the Loomis Sayles Investment Grade Bond
Fund, % of the Loomis Sayles Mid-Cap Value Fund, 8.30% of the Loomis Sayles
Municipal Bond Fund, % of the Loomis Sayles Short-Term Bond Fund, % of the
Loomis Sayles Small Cap Growth Fund, less than 1% of the Loomis Sayles Small Cap
Value Fund, % of the Loomis Sayles U.S. Government Securities Fund, and % of
the Loomis Sayles Worldwide Fund. These amounts include shares held by the
Loomis Sayles Employees' Profit Sharing Plan (the "Profit Sharing Plan") for the
accounts of officers and trustees of the Trust, but exclude all other holdings
of the Profit Sharing Plan and the Loomis Sayles Funded Pension Plan (the
"Pension Plan").
As of June 30, 2000, the Pension Plan owned the following percentages of the
outstanding Institutional Class shares of the indicated Funds: % of the Loomis
Sayles Aggressive Growth Fund, less than 1% of the Loomis Sayles Bond Fund, %
of the Loomis Sayles Core Value Fund, % of the Loomis Sayles Global Bond Fund,
7.39% of the Loomis Sayles Growth Fund, % of the Loomis Sayles High Yield
Fund, % of the Loomis Sayles Intermediate Maturity Bond Fund, % of the
Loomis Sayles International Equity Fund, % of the Loomis Sayles Mid-Cap Value
Fund, less than 1% of the Loomis Sayles Short-term Bond Fund, % of the Loomis
Sayles Small Cap Growth Fund, % of the Loomis Sayles Small Cap Value Fund, %
of the Loomis Sayles U.S. Government Securities Fund, and 82.71% of the Loomis
Sayles Worldwide Fund.
As of June 30, 2000, the Profit Sharing Plan owned the following percentages
of the outstanding Institutional Class shares of the indicated Funds: % of the
Aggressive Growth Fund, less than 1% of the Loomis Sayles Bond Fund, % of the
Loomis Sayles Core Value Fund, % of the Loomis Sayles Global Bond Fund, % of
the Loomis Sayles Growth Fund, % of the Loomis Sayles High Yield Fund, % of
the Loomis Sayles Intermediate Maturity Bond Fund, % of the Loomis Sayles
International Equity Fund, 30.02% of the Loomis Sayles Mid-Cap Value Fund,
12.54% of the Loomis Sayles Short-Term Bond Fund, 7.98% of the Loomis Sayles
Small Cap Growth Fund, 4.04% of the Loomis Sayles Small Cap Value
15
<PAGE>
Fund, 14.12% of the Loomis Sayles U.S. Government Securities Fund, and 13.33% of
the Loomis Sayles Worldwide Fund.
The trustee of the Pension Plan is Fleet Investment Management. The Pension
Plan's Advisory Committee, which is composed of the same individuals listed
below as trustees of the Profit Sharing Plan, has the sole voting and investment
power with respect to the Pension Plan's shares. The trustees of the Profit
Sharing Plan are E. John deBeer, Quentin P. Faulkner, Sandra P. Tichenor,
Larry K. Shaw, Kathleen C. Gaffney, Mark W. Holland, and Patrick P. Hurley, all
of whom are officers and employees of Loomis Sayles and (except for Messrs.
Hurley and Shaw) trustees or officers of the Trust. Plan participants are
entitled to exercise investment and voting power over shares owned of record by
the Profit Sharing Plan. Shares not voted by participants are voted in the same
proportion as the shares voted by the voting participants. The address for the
Profit Sharing Plan and the Pension Plan is One Financial Center, Boston,
Massachusetts.
For current and retired Trustees of the Trust, investment advisory clients
of Loomis Sayles (and their directors, officers, and employees), and current and
retired employees of Loomis Sayles and the parents, spouses, and children of the
foregoing, the Trust has reduced the minimum initial investment for
Institutional Class shares of each Fund to $2,500.
16
<PAGE>
PRINCIPAL HOLDERS
The following table provides information on the principal holders of each
Fund. A principal holder is a person who owns of record or beneficially 5% or
more of any class of a Fund's outstanding securities. Information provided in
this table is as of June 30, 2000.
INSTITUTIONAL CLASS SHARES
<TABLE>
<CAPTION>
PERCENTAGE OF
SHAREHOLDER ADDRESS SHARES HELD
- ----------- ------- -------------
<S> <C> <C>
</TABLE>
17
<PAGE>
RETAIL CLASS SHARES
<TABLE>
<CAPTION>
PERCENTAGE OF
SHAREHOLDER ADDRESS SHARES HELD
- ----------- ------- -------------
<S> <C> <C>
</TABLE>
18
<PAGE>
ADMIN CLASS SHARES
<TABLE>
<CAPTION>
PERCENTAGE OF
SHAREHOLDER ADDRESS SHARES HELD
- ----------- ------- -------------
<S> <C> <C>
</TABLE>
To the extent that any shareholder listed above beneficially owns more than
25% of a Fund, it may be deemed to "control" such Fund within the meaning of the
1940 Act. The Loomis, Sayles & Company, L.P. is a limited partnership organized
under the laws of Delaware whose corporate parent is Loomis, Sayles & Company,
Inc., a Massachusetts corporation. Loomis, Sayles & Company, Inc. is an indirect
wholly-owned subsidiary of Nvest Companies, L.P. Nvest Companies, L.P.'s
managing general partner, Nvest Corporation, is a direct wholly-owned subsidiary
of Metropolitan Life Insurance Company, which in turn is a wholly-owned
subsidiary of Metlife, Inc., a publicly traded company. Nvest Companies, L.P.'s
advising general partner, Nvest L.P., is a publicly traded company listed on the
New York Stock Exchange. Nvest Corporation is the sole general partner of Nvest
L.P.
19
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
ADVISORY AGREEMENTS. Under each advisory agreement, Loomis Sayles manages
the investment and reinvestment of the assets of the relevant Fund and generally
administers its affairs, subject to supervision by the Board of Trustees of the
Trust. Loomis Sayles furnishes, at its own expense, all necessary office space,
facilities and equipment, services of executive and other personnel of the
Funds, and certain administrative services. For these services, the advisory
agreements provide that each Fund shall pay Loomis Sayles a monthly investment
advisory fee at the following annual percentage rates of the particular Fund's
average daily net assets:
<TABLE>
<CAPTION>
FUND RATE
- ---- --------
<S> <C>
Loomis Sayles Aggessive Growth Fund......................... .75%
Loomis Sayles Bond Fund..................................... .60
Loomis Sayles Core Value Fund............................... .50
Loomis Sayles Emerging Markets Fund......................... 1.25
Loomis Sayles Global Bond Fund.............................. .60
Loomis Sayles Global Technology Fund........................ 1.00
Loomis Sayles Growth Fund................................... .50
Loomis Sayles High Yield Fund............................... .60
Loomis Sayles Intermediate Maturity Bond Fund............... .40
Loomis Sayles International Equity Fund..................... .75
Loomis Sayles Investment Grade Bond Fund.................... .40
Loomis Sayles Mid-Cap Value Fund............................ .75
Loomis Sayles Municipal Bond Fund........................... .40*
Loomis Sayles Research Fund................................. .75
Loomis Sayles Short-Term Bond Fund.......................... .25
Loomis Sayles Small Cap Growth Fund......................... .75
Loomis Sayles Small Cap Value Fund.......................... .75
Loomis Sayles U.S. Government Securities Fund............... .30
Loomis Sayles Worldwide Fund................................ .75
</TABLE>
- ------------------------
* Loomis Sayles has contractually agreed to reduce the management fee for the
Loomis Sayles Municipal Bond Fund to .30% through February 1, 2001.
20
<PAGE>
During the periods shown below, pursuant to the advisory agreements
described above, Loomis Sayles received the following amount of investment
advisory fees from each Fund (before voluntary fee reductions and expense
assumptions) and bore the following amounts of fee reductions and expense
assumptions for each Fund:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL PERIOD ENDED FISCAL YEAR ENDED
12/31/97 9/30/98* 9/30/99
------------------------ ------------------------ ------------------------
FEE WAIVERS FEE WAIVERS FEE WAIVERS
ADVISORY AND EXPENSE ADVISORY AND EXPENSE ADVISORY AND EXPENSE
FUND FEES ASSUMPTIONS FEES ASSUMPTIONS FEES ASSUMPTIONS
---- ---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Loomis Sayles Aggressive Growth
Fund.......................... $ 11,993 $151,104 $ 11,818 $109,517 $ 51,041 $151,062
Loomis Sayles Bond Fund......... 5,460,675 197,170 6,920,645 112,593 9,494,667 39,426
Loomis Sayles Core Value Fund... 269,200 29,404 264,693 12,673 380,288 18,860
Loomis Sayles Global Bond Fund.. 178,622 123,445 155,995 85,930 240,399 95,735
Loomis Sayles Growth Fund....... 174,976 74,929 114,917 52,384 139,736 110,695
Loomis Sayles High Yield Fund... 34,062 185,981 50,667 141,220 108,323 168,537
Loomis Sayles Intermediate
Maturity Bond Fund............ 17,125 147,955 25,473 122,162 40,062 154,766
Loomis Sayles International
Equity Fund................... 705,111 178,102 451,871 124,877 543,750 179,012
Loomis Sayles Investment Grade
Bond Fund..................... 8,585 162,568 12,300 119,899 40,491 167,270
Loomis Sayles Mid-Cap Value
Fund.......................... 18,691 158,363 23,688 117,826 34,645 157,358
Loomis Sayles Municipal Bond
Fund.......................... 34,082 102,318 28,142 77,070 34,119 111,048
Loomis Sayles Research Fund..... N/A N/A N/A N/A N/A N/A
Loomis Sayles Short-Term Bond
Fund.......................... 41,211 143,266 45,845 74,443 69,499 187,089
Loomis Sayles Small Cap Growth
Fund.......................... 24,894 170,503 67,049 117,517 379,428 75,249
Loomis Sayles Small Cap Value
Fund.......................... 1,581,667 12,741 1,981,662 5,254 2,941,342 6,827
Loomis Sayles U.S. Government
Securities Fund............... 55,096 87,088 65,031 60,872 64,112 99,919
Loomis Sayles Worldwide Fund.... 55,489 148,392 32,580 112,466 44,837 165,386
</TABLE>
- --------------
* The fiscal year-end for each of the Funds changed to September 30 in 1998.
The Trust pays the compensation of its trustees who are not directors,
officers, or employees of Loomis Sayles or its affiliates (other than registered
investment companies); registration, filing and other fees in connection with
requirements of regulatory authorities; all charges and expenses of its
custodian and transfer agent; the charges and expenses of its independent
accountants; all brokerage commissions and transfer taxes in connection with
portfolio transactions; all taxes and fees payable to governmental agencies; the
cost of any certificates representing shares of the Funds; the expenses of
meetings of the shareholders and trustees of the Trust; the charges and expenses
of the Trust's legal counsel; interest on any borrowings by the Funds; the cost
of services, including services of counsel, required in connection with the
preparation of, and the cost of printing, the Trust's registration statements
and Prospectuses, including amendments and revisions thereto, annual, semiannual
and other periodic reports of the Trust, and notices and proxy solicitation
material furnished to shareholders or regulatory authorities, to the extent that
any such materials relate to the Trust or its shareholders; and the Trust's
expenses of bookkeeping, accounting, auditing, and financial reporting,
including related clerical expenses.
21
<PAGE>
Under each advisory agreement, if the total ordinary business expenses of a
Fund or the Trust as a whole for any fiscal year exceed the lowest applicable
limitation (based on percentage of average net assets or income) prescribed by
any state in which the shares of the Fund or the Trust are qualified for sale,
Loomis Sayles shall pay such excess. Loomis Sayles will not be required to
reduce its fee or pay such expenses to an extent or under circumstances that
would result in any Fund's inability to qualify as a regulated investment
company under the Code. The term "expenses" is defined in the advisory
agreements or in relevant state regulations and excludes brokerage commissions,
taxes, interest, distribution-related expenses, and extraordinary expenses.
As described in the Prospectuses, Loomis Sayles has agreed to certain
additional, voluntary arrangements to limit Fund expenses. These arrangements
may be modified or terminated by Loomis Sayles at any time.
Each advisory agreement provides that it will continue in effect for two
years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
relevant Fund and (ii) by vote of a majority of the Trustees who are not
"interested persons" of the Trust, as that term is defined in the 1940 Act, cast
in person at a meeting called for the purpose of voting on such approval. Any
amendment to an advisory agreement must be approved by vote of a majority of the
outstanding voting securities of the relevant Fund and by vote of a majority of
the Trustees who are not such interested persons, cast in person at a meeting
called for the purpose of voting on such approval. Each agreement may be
terminated without penalty by vote of the Board of Trustees or by vote of a
majority of the outstanding voting securities of the relevant Fund, upon sixty
days' written notice, or by Loomis Sayles upon ninety days' written notice, and
each terminates automatically in the event of its assignment. In addition, each
agreement will automatically terminate if the Trust or the Fund shall at any
time be required by Loomis Sayles to eliminate all reference to the words
"Loomis" and "Sayles" in the name of the Trust or the Fund, unless the
continuance of the agreement after such change of name is approved by a majority
of the outstanding voting securities of the relevant Fund and by a majority of
the Trustees who are not interested persons of the Trust or Loomis Sayles.
Each advisory agreement provides that Loomis Sayles shall not be subject to
any liability in connection with the performance of its services thereunder in
the absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard of its obligations and duties.
Loomis Sayles acts as investment adviser or subadviser to New England Star
Value Fund, New England Strategic Income Fund, New England Star Advisers Fund,
New England Star Small Cap Fund, and New England Balanced Fund, which are series
of New England Funds Trust I, a registered open-end management investment
company; New England High Income Fund, a series of New England Funds Trust II, a
registered, open-end management investment company; and the Loomis Sayles Small
Cap Series of New England Zenith Fund, a registered open-end management
investment company; and Loomis Sayles Investment Trust, a registered open-end
management investment company. Loomis Sayles also provides investment advice to
certain other open-end management investment companies and numerous other
corporate and fiduciary clients.
The general partner of Loomis Sayles is a special purpose corporation that
is an indirect wholly-owned subsidiary of Nvest Companies, L.P. Nvest Companies,
L.P.'s managing general partner, Nvest Corporation, is a direct wholly-owned
subsidiary of Metropolitan Life Insurance Company, a mutual life insurance
company. Nvest Companies, L.P.'s advising general partner, Nvest L.P., is a
publicly traded company listed on the New York Stock Exchange. Nvest Corporation
is the sole general partner of Nvest L.P.
Certain officers and trustees of the Trust also serve as officers,
directors, and trustees of other investment companies and clients advised by
Loomis Sayles. The other investment companies and clients sometimes invest in
securities in which the Funds also invest. If a Fund and such other investment
companies or clients desire to buy or sell the same portfolio securities at the
same time, purchases and
22
<PAGE>
sales may be allocated, to the extent practicable, on a pro rata basis in
proportion to the amounts desired to be purchased or sold for each. It is
recognized that in some cases the practices described in this paragraph could
have a detrimental effect on the price or amount of the securities a Fund
purchases or sells. In other cases, however, it is believed that these practices
may benefit the Funds. It is the opinion of the trustees that the desirability
of retaining Loomis Sayles as adviser for the Funds outweighs the disadvantages,
if any, that might result from these practices.
DISTRIBUTION AGREEMENT AND RULE 12B-1 PLANS. Under an agreement with the
Trust (the "Distribution Agreement"), Loomis Sayles Distributors, L.P., One
Financial Center, Boston, Massachusetts 02111 (the "Distributor") serves as the
general distributor of each class of shares of the Funds. Under this agreement,
the Distributor is not obligated to sell a specific number of shares. The
Distributor bears the cost of making information about the Funds available
through advertising and other means and the cost of printing and mailing the
Prospectuses to persons other than shareholders. The Funds pay the cost of
registering and qualifying their shares under state and federal securities laws
and the distribution of the Prospectuses to existing shareholders.
As described in the Prospectuses, the Funds have adopted Rule 12b-1 plans
("Plans") for their Retail Class, Admin Class, and Class A shares. The Plans,
among other things, permit the relevant classes of the Funds to pay the
Distributor monthly fees, at annual rates not exceeding 0.25% of the assets of
the Retail Class, Admin Class, and Class A, respectively, as compensation for
its services as principal underwriter of the shares of these classes. Pursuant
to Rule 12b-1 under the 1940 Act, each Plan (together with the Distribution
Agreement) was approved by the Board of Trustees, including a majority of the
trustees who are not interested persons of the Trust (as defined in the 1940
Act) and who have no direct or indirect financial interest in the operations of
the Plan or the Distribution Agreement (the "Independent Trustees"). The
principal types of activities for which payments under these Plans may be made
include payments to intermediaries for shareholder servicing, for no transaction
fee or wrap programs, and for retirement plan record keeping. Payments under
these Plans also may be made for activities such as advertising, printing, and
mailing the Prospectuses to persons who are not current shareholders,
compensation to underwriters, compensation to broker-dealers, compensation to
sales personnel, and interest, carrying, or other financing charges.
The following table provides information on the amount of fees paid by the
Funds under these Plans during the past fiscal year.
<TABLE>
<CAPTION>
12B-1 FEES
PAID BY THE
FUND/CLASS FUND
- ---------- -------------
<S> <C>
Loomis Sayles Aggressive Growth Fund
Retail Class.............................................. $ 536
Loomis Sayles Bond Fund
Retail Class.............................................. $137,433
Admin Class............................................... $ 3,323
Loomis Sayles Core Value Fund
Retail Class.............................................. $ 2,184
Loomis Sayles Global Bond Fund
Retail Class.............................................. $ 15,884
Loomis Sayles Growth Fund
Retail Class.............................................. $ 1,521
Loomis Sayles Intermediate Maturity Bond Fund
Retail Class.............................................. $ 2,391
Loomis Sayles International Equity Fund
Retail Class.............................................. $ 416
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
12B-1 FEES
PAID BY THE
FUND/CLASS FUND
- ---------- -------------
<S> <C>
Loomis Sayles Investment Grade Bond Fund
Retail Class.............................................. $ 5,871
Loomis Sayles Mid-Cap Value Fund
Retail Class.............................................. $ 465
Loomis Sayles Research Fund................................. N/A
Loomis Sayles Short-Term Bond Fund
Retail Class.............................................. $ 1,542
Loomis Sayles Small Cap Growth Fund
Retail Class.............................................. $ 9,021
Loomis Sayles Small Cap Value Fund
Retail Class.............................................. $167,609
Admin Class............................................... $ 7,110
Loomis Sayles Worldwide Fund
Retail Class.............................................. $ 269
</TABLE>
Each Plan may be terminated by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting securities of the
relevant class of shares of the Fund to which the Plan relates. Each Plan may be
amended by vote of the trustees, including a majority of the Independent
Trustees, cast in person at a meeting called for the purpose. Any change in any
Plan that would materially increase the fees payable thereunder by the Retail
Class, Admin Class, or Class A shares of a Fund requires approval of the Retail
Class, Admin Class, or Class A shareholders of that Fund. The Trust's trustees
review quarterly written reports of such costs and the purposes for which such
costs have been incurred. Each Plan provides that, for so long as that Plan is
in effect, selection and nomination of those trustees who are not interested
persons of the Trust shall be committed to the discretion of such disinterested
persons.
The Distribution Agreement may be terminated at any time with respect to a
Fund on 60 days' written notice without payment of any penalty by the Trust or
by vote of a majority of the outstanding voting securities of that Fund or by
vote of a majority of the Independent Trustees.
The Distribution Agreement and the Plans will continue in effect for
successive one-year periods, provided that each such continuance is specifically
approved (i) by the vote of a majority of the entire Board of Trustees and (ii)
by the vote of a majority of the Independent Trustees, in each case cast in
person at a meeting called for that purpose.
CUSTODIAL ARRANGEMENTS. State Street Bank and Trust Company ("State Street
Bank"), Boston, Massachusetts 02102, is the Trust's custodian. As such, State
Street Bank holds in safekeeping certificated securities and cash belonging to
the Funds and, in such capacity, is the registered owner of securities held in
book entry form belonging to the Funds. Upon instruction, State Street Bank
receives and delivers cash and securities of the Funds in connection with Fund
transactions and collects all dividends and other distributions made with
respect to Fund portfolio securities. State Street Bank also maintains certain
accounts and records of the Funds and calculates the total net asset value,
total net income, and net asset value per share of each Fund on a daily basis.
INDEPENDENT ACCOUNTANTS. The Trust's independent accountants are
PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP conducts an annual audit
of the Trust's financial statements, assists in the preparation of the Funds'
federal and state income tax returns, and consults with the Funds as to matters
of accounting and federal and state income taxation. The information under the
caption "Financial Highlights" included in the Prospectuses has been so
included, and the financial statements incorporated by reference herein from the
Funds' 1999 Annual Report have been so incorporated, in reliance on the
24
<PAGE>
reports of PricewaterhouseCoopers LLP, given on the authority of said firm as
experts in auditing and accounting.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In placing orders for the purchase and sale of portfolio securities for each
Fund, Loomis Sayles always seeks the best price and execution. Transactions in
unlisted securities are carried out through broker-dealers who make the primary
market for such securities unless, in the judgment of Loomis Sayles, a more
favorable price can be obtained by carrying out such transactions through other
brokers or dealers.
Loomis Sayles selects only brokers or dealers that it believes are
financially responsible, will provide efficient and effective services in
executing, clearing, and settling an order, and will charge commission rates
that, when combined with the quality of the foregoing services, will produce
best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid. However, the
commissions are believed to be competitive with generally prevailing rates.
Loomis Sayles will use its best efforts to obtain information as to the general
level of commission rates being charged by the brokerage community from time to
time and will evaluate the overall reasonableness of brokerage commissions paid
on transactions by reference to such data. In making such evaluation, all
factors affecting liquidity and execution of the order, as well as the amount of
the capital commitment by the broker in connection with the order, are taken
into account. The Funds, other than the Loomis Sayles Emerging Markets Fund, the
Loomis Sayles High Yield Fund, the Loomis Sayles Global Technology Fund, the
Loomis Sayles International Equity Fund, and the Loomis Sayles Worldwide Fund,
will not pay a broker a commission at a higher rate than otherwise available for
the same transaction in recognition of the value of research services provided
by the broker or in recognition of the value of any other services provided by
the broker that do not contribute to the best price and execution of the
transaction.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker that Loomis Sayles believes will provide best price and
execution for a transaction. These research services include not only a wide
variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and projections,
asset allocation, and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although it
is not possible to assign an exact dollar value to these services, they may, to
the extent used, tend to reduce Loomis Sayles' expenses. Such services may be
used by Loomis Sayles in servicing other client accounts and in some cases may
not be used with respect to the Funds. Receipt of services or products other
than research from brokers is not a factor in the selection of brokers.
LOOMIS SAYLES EMERGING MARKETS FUND, LOOMIS SAYLES GLOBAL TECHNOLOGY FUND,
LOOMIS SAYLES HIGH YIELD FUND, LOOMIS SAYLES INTERNATIONAL EQUITY FUND, AND
LOOMIS SAYLES WORLDWIDE FUND. In placing orders for the purchase and sale of
securities for the Loomis Sayles Emerging Markets Fund, the Loomis Sayles Global
Technology Fund, the Loomis Sayles High Yield Fund, the Loomis Sayles
International Equity Fund, and the Loomis Sayles Worldwide Fund, Loomis Sayles
follows the same policies as for the other Funds, except that Loomis Sayles may
cause these Funds to pay a broker-dealer that provides brokerage and research
services to Loomis Sayles an amount of commission for effecting a securities
transaction for these Funds in excess of the amount another broker-dealer would
have charged for effecting that transaction. Loomis Sayles must determine in
good faith that such greater commission is reasonable in relation to the value
of the brokerage and research services provided by the executing broker-dealer
viewed in terms of that particular transaction or Loomis Sayles' overall
responsibilities to the Trust and its other clients. Loomis Sayles' authority to
cause these Funds to pay such greater commissions is also subject to such
policies as the trustees of the Trust may adopt from time to time.
25
<PAGE>
The following tables set forth, for the 1997 and 1999 fiscal years and the
1998 fiscal period (January 1, 1998 through September 30, 1998), respectively,
(1) the aggregate dollar amount of brokerage commissions paid on portfolio
transactions during such period, (2) the dollar amount of transactions on which
brokerage commissions were paid during such period that were directed to brokers
providing research services ("directed transactions") and (3) the dollar amount
of commissions paid on directed transactions during such period. Funds not
listed in a table did not pay brokerage commissions during the relevant period.
FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(1) (3)
AGGREGATE (2) COMMISSIONS
BROKERAGE DIRECTED ON DIRECTED
FUND COMMISSIONS TRANSACTIONS TRANSACTIONS
- ---- ----------- ------------ ------------
<S> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund................... $ 6,261 $ 45,426 $ 84
Loomis Sayles Core Value Fund.......................... $ 81,471 $ 22,718,537 $21,202
Loomis Sayles Growth Fund.............................. $ 81,395 $ 3,200,161 $ 4,782
Loomis Sayles International Equity Fund................ $759,784 $220,336,814 $28,794
Loomis Sayles Mid-Cap Value Fund....................... $ 7,298 $ 83,840 $ 319
Loomis Sayles Small Cap Growth Fund.................... $ 9,774 $ 181,489 $ 672
Loomis Sayles Small Cap Value Fund..................... $579,295 $ 29,877,865 $71,938
Loomis Sayles Worldwide Fund........................... $ 9,953 $ 4,261,122 $ 489
</TABLE>
FISCAL PERIOD ENDED SEPTEMBER 30, 1998
(JANUARY 1, 1998 - SEPTEMBER 30, 1998)
<TABLE>
<CAPTION>
(1) (3)
AGGREGATE (2) COMMISSIONS
BROKERAGE DIRECTED ON DIRECTED
FUND COMMISSIONS TRANSACTIONS TRANSACTIONS
- ---- ----------- ------------ ------------
<S> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund.................... $ 5,336 $ 4,300 $ 256
Loomis Sayles Core Value Fund........................... $ 76,841 $23,336,695 $27,893
Loomis Sayles Growth Fund............................... $ 84,990 $ 114,400 $ 6,864
Loomis Sayles International Equity Fund................. $466,218 $ 6,619,778 $15,145
Loomis Sayles Mid-Cap Value Fund........................ $ 14,031 $ 246,357 $ 569
Loomis Sayles Small Cap Growth Fund..................... $ 22,443 $ 154,320 $ 348
Loomis Sayles Small Cap Value Fund...................... $872,492 $42,599,200 $78,151
Loomis Sayles Worldwide Fund............................ $ 20,610 $ 3,333,161 $ 520
</TABLE>
FISCAL YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
(1) (3)
AGGREGATE (2) COMMISSIONS
BROKERAGE DIRECTED ON DIRECTED
FUND COMMISSIONS TRANSACTIONS TRANSACTIONS
- ---- ----------- ------------ ------------
<S> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund................... $ 14,322 $ 145,236 $ 336
Loomis Sayles Core Value Fund.......................... $ 115,040 $15,827,491 $21,747
Loomis Sayles Growth Fund.............................. $ 137,480 $ 7,272,139 $ 8,616
Loomis Sayles International Equity Fund................ $ 731,793 $ 3,476,533 $ 7,758
Loomis Sayles Mid-Cap Value Fund....................... $ 2,380,584 $ 492,747 $ 750
Loomis Sayles Small Cap Growth Fund.................... $ 80,746 $ 2,061,538 $ 5,511
Loomis Sayles Small Cap Value Fund..................... $ 2,380,584 $ 8,248,982 $21,687
Loomis Sayles Worldwide Fund........................... $ 31,971 $ 103,464 $ 126
</TABLE>
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The table below presents information regarding the securities of the Funds'
regular broker-dealers that were held by the Funds as of September 30, 1999.
<TABLE>
<CAPTION>
% OF FUND'S
FUND MARKET VALUE ASSETS
- ---- ------------ -----------
<S> <C> <C>
Loomis Sayles Aggressive Growth Fund
Charles Schwab.......................................... $ 50,531 0.34%
Loomis Sayles Growth Fund
Merrill Lynch........................................... $ 530,781 1.83%
Loomis Sayles Core Value Fund
Bear Stearns............................................ $ 576,575 0.84%
Morgan Stanley.......................................... $ 856,200 1.25%
Loomis Sayles Intermediate Maturity Bond Fund
Credit Suisse (First Boston)............................ $ 49,809 0.46%
Lehman Brothers Inc..................................... $ 159,288 1.47%
Morgan Stanley.......................................... $ 191,092 1.77%
Loomis Sayles Investment Grade Bond Fund
Lehman Brothers Inc..................................... $ 232,372 1.09%
Loomis Sayles Mid-Cap Value Fund
Knight Trimark Group.................................... $ 109,750 1.90%
Lehman Brothers Inc..................................... $ 69,975 1.21%
Loomis Sayles Small Cap Value Fund
Federated Investors Inc................................. $3,417,225 0.86%
</TABLE>
DESCRIPTION OF THE TRUST
The Trust, registered with the SEC as a diversified open-end management
investment company, is organized as a Massachusetts business trust under the
laws of Massachusetts by an Agreement and Declaration of Trust (the "Declaration
of Trust") dated February 20, 1991.
The Declaration of Trust currently permits the trustees to issue an
unlimited number of full and fractional shares of each series. Each share of
each Fund represents an equal proportionate interest in such Fund with each
other share of that Fund and is entitled to a proportionate interest in the
dividends and distributions from that Fund. The shares of each Fund do not have
any preemptive rights. Upon termination of any Fund, whether pursuant to
liquidation of the Trust or otherwise, shareholders of that Fund are entitled to
share pro rata in the net assets of that Fund available for distribution to
shareholders. The Declaration of Trust also permits the trustees to charge
shareholders directly for custodial, transfer agency, and servicing expenses.
The assets received by each Fund for the issue or sale of its shares and all
income, earnings, profits, losses, and proceeds therefrom, subject only to the
rights of creditors, are allocated to, and constitute the underlying assets of,
that Fund. The underlying assets are segregated and are charged with the
expenses with respect to that Fund and with a share of the general expenses of
the Trust. Any general expenses of the Trust that are not readily identifiable
as belonging to a particular Fund are allocated by or under the direction of the
trustees in such manner as the trustees determine to be fair and equitable.
While the expenses of the Trust are allocated to the separate books of account
of each Fund, certain expenses may be legally chargeable against the assets of
all Funds.
The Declaration of Trust also permits the trustees, without shareholder
approval, to subdivide any series of shares or Fund into various classes of
shares with such dividend preferences and other rights as the trustees may
designate. Shares of each Fund (other than the Loomis Sayles High Yield Fund,
the Loomis Sayles Municipal Bond Fund, and the Loomis Sayles U.S. Government
Securities Fund) are
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currently divided into two classes, designated Retail Class and Institutional
Class shares. The Loomis Sayles Bond Fund and the Loomis Sayles Small Cap Value
Fund offer a third class of shares designated Admin Class shares. The Loomis
Sayles Aggressive Growth Fund and the Loomis Sayles Global Technology Fund offer
an additional class of shares designated Class A shares, which have a front-end
sales charge of up to 5.75%. The trustees may also, without shareholder
approval, establish one or more additional separate portfolios for investments
in the Trust or merge two or more existing portfolios. Shareholders' investments
in such an additional or merged portfolio would be evidenced by a separate
series of shares (i.e., a new "Fund").
The Declaration of Trust provides for the perpetual existence of the Trust.
The Declaration of Trust, however, provides that the trustees may terminate the
Trust or any Fund upon written notice to the shareholders.
VOTING RIGHTS
As summarized in the Prospectus, shareholders are entitled to one vote for
each full share held (with fractional votes for each fractional share held) and
may vote (to the extent provided in the Declaration of Trust) on the election of
trustees and the termination of the Trust and on other matters submitted to the
vote of shareholders.
The Declaration of Trust provides that on any matter submitted to a vote of
all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a particular
series or sub-series would be adversely affected by the vote, in which case a
separate vote of that series or sub-series shall also be required to decide the
question. Also, a separate vote shall be held whenever required by the 1940 Act
or any rule thereunder. Rule 18f-2 under the 1940 Act provides in effect that a
class shall be deemed to be affected by a matter unless it is clear that the
interests of each class in the matter are substantially identical or that the
matter does not affect any interest of such class. On matters affecting an
individual series, only shareholders of that series are entitled to vote.
Consistent with the current position of the SEC, shareholders of all series vote
together, irrespective of series, on the election of trustees and the selection
of the Trust's independent accountants, but shareholders of each series vote
separately on other matters requiring shareholder approval, such as certain
changes in investment policies of that series or the approval of the investment
advisory agreement relating to that series.
There will normally be no meetings of shareholders for the purpose of
electing trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of trustees at such time as
less than a majority of the trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the Board of Trustees,
less than two-thirds of the trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders. In
addition, trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for that purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a trustee, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the trustees shall continue to hold office and
may appoint successor trustees. Voting rights are not cumulative.
No amendment may be made to the Declaration of Trust without the affirmative
vote of a majority of the outstanding shares of the Trust, except (i) to change
the Trust's name or to cure technical problems in
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<PAGE>
the Declaration of Trust and (ii) to establish, change, or eliminate the par
value of any shares (currently all shares have no par value).
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law shareholders could, under certain circumstances, be
held personally liable for the obligations of the Fund of which they are
shareholders. However, the Declaration of Trust disclaims shareholder liability
for acts or obligations of each Fund and requires that notice of such disclaimer
be given in each agreement, obligation, or instrument entered into or executed
by the Trust or the trustees. The Declaration of Trust provides for
indemnification out of Fund property for all loss and expense of any shareholder
held personally liable for the obligations of the Fund. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
considered remote since it is limited to circumstances in which the disclaimer
is inoperative and the Fund itself would be unable to meet its obligations.
The Declaration of Trust further provides that the trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a trustee against any liability to which the
trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The By-Laws of the Trust provide for indemnification by the Trust of
the trustees and officers of the Trust except with respect to any matter as to
which any such person did not act in good faith in the reasonable belief that
such action was in or not opposed to the best interests of the Trust. No officer
or trustee may be indemnified against any liability to the Trust or the Trust's
shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
HOW TO BUY SHARES
The procedures for purchasing shares of each Fund are summarized in the
Prospectuses under "General Information-How to Purchase Shares."
NET ASSET VALUE
The net asset value of the shares of each Fund is determined by dividing
that Fund's total net assets (the excess of its assets over its liabilities) by
the total number of shares of the Fund outstanding and rounding to the nearest
cent. Such determination is made as of the close of regular trading on the New
York Stock Exchange (generally 4:00 p.m. Eastern time) on each day on which that
Exchange is open for unrestricted trading, and no less frequently than once
daily on each day during which there is sufficient trading in a Fund's portfolio
securities that the value of that Fund's shares might be materially affected.
During the 12 months following the date of this Statement of Additional
Information, the New York Stock Exchange is expected to be closed on the
following weekdays: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
and Christmas Day. Equity securities listed on an established securities
exchange or on the Nasdaq National Market System are normally valued at their
last sale price on the exchange where primarily traded or, if there is no
reported sale during the day, and in the case of over-the-counter securities not
so listed, at the closing bid price. Short-term securities with a remaining
maturity of 60 days or less are valued at amortized cost, which approximates
market value. Long-term debt securities are valued by a pricing service, which
determines valuations of normal institutional-size trading units of long-term
debt securities. Such valuations are determined using methods based on market
transactions for comparable securities and on various relationships between
securities that are generally recognized by institutional traders. Other
securities for which current market quotations are not readily available and all
other assets are valued at fair value as determined in good faith by the Board
of Trustees on the basis of dealer-supplied quotations or otherwise, although
the actual calculations may be made by persons acting pursuant to the direction
of the board.
Generally, trading in foreign securities markets is substantially completed
each day at various times prior to the close of regular trading on the New York
Stock Exchange. Occasionally, events affecting the
29
<PAGE>
value of foreign fixed income securities and of equity securities of non-U.S.
issuers not traded on a U.S. exchange may occur between the completion of
substantial trading of such securities for the day and the close of regular
trading on the New York Stock Exchange, which events will not be reflected in
the computation of the Fund's net asset value. If events materially affecting
the value of any Fund's portfolio securities occur during such period, then
these securities may be valued at their fair value as determined in good faith
by or in accordance with procedures approved by the trustees.
SHAREHOLDER SERVICES
OPEN ACCOUNTS
A shareholder's investment in each Fund is automatically credited to an open
account maintained for the shareholder by Boston Financial Data Services, Inc.
("BFDS"), the shareholder servicing agent for State Street Bank. Certificates
representing shares are issued only upon written request to the shareholder
servicing agent but are not issued for fractional shares. Following each
transaction in the account, a shareholder will receive an account statement
disclosing the current balance of shares owned and the details of recent
transactions in the account. After the close of each fiscal year, the
shareholder servicing agent will send each shareholder a statement providing
federal tax information on dividends and distributions paid to the shareholder
during the year. This should be retained as a permanent record. Shareholders
will be charged a fee for duplicate information.
The open account system permits the purchase of full and fractional shares
and, by making the issuance and delivery of certificates representing shares
unnecessary, eliminates the problems of handling and safekeeping certificates,
and the cost and inconvenience of replacing lost, stolen, mutilated, or
destroyed certificates.
The costs of maintaining the open account system are borne by the Trust, and
no direct charges are made to shareholders. Although the Trust has no present
intention of making such direct charges to shareholders, it reserves the right
to do so. Shareholders will receive notice before any such charges are made.
SYSTEMATIC WITHDRAWAL PLAN
A Systematic Withdrawal Plan, referred to in the Prospectus under "General
Information--How to Redeem Shares," provides for monthly, quarterly, semiannual,
or annual withdrawal payments of $50 or more from the account of an eligible
shareholder, as provided therein, provided that the account has a value of at
least $25,000 at the time the plan is established.
Payments will be made either to the shareholder or to any other person
designated by the shareholder. If payments are issued to an individual other
than the registered owner(s), a signature guarantee will be required on the Plan
application. All shares in an account that is subject to a Systematic Withdrawal
Plan must be held in an open account rather than in certificated form. Income
dividends and capital gain distributions will be reinvested at the net asset
value determined as of the close of regular trading on the New York Stock
Exchange on the record date for the dividend or distribution.
Since withdrawal payments represent proceeds from liquidation of shares, the
shareholder should recognize that withdrawals may reduce and possibly exhaust
the value of the account, particularly in the event of a decline in net asset
value. Accordingly, the shareholder should consider whether a Systematic
Withdrawal Plan and the specified amounts to be withdrawn are appropriate under
the circumstances. The Fund makes no recommendations or representations in this
regard. It may be appropriate for the shareholder to consult a tax adviser
before establishing such a plan. See "Redemptions" and "Income Dividends,
Capital Gain Distributions and Tax Status" below for certain information
regarding federal income taxes.
30
<PAGE>
EXCHANGE PRIVILEGE
Shareholders may redeem their shares of any Fund and have the proceeds
applied on the same day to purchase shares of the same class of any other Fund
or of certain money market funds advised by Nvest Funds Management, L.P., an
affiliate of Loomis Sayles, as long as the investment minimum of the Fund into
which the exchange is made is met. An exchange of shares of the Loomis Sayles
Emerging Markets Fund and the Loomis Sayles High Yield Fund purchased within one
year of such exchange will be subject to a redemption fee of 2.00% of the amount
exchanged. For purposes of determining whether a redemption fee is payable with
respect to shares of the Loomis Sayles Emerging Markets Fund and the Loomis
Sayles High Yield Fund purchased by exchange of shares of another Fund, the
one-year period shall be deemed to begin on the date of such purchase by
exchange. Class A shares of the Loomis Sayles Aggressive Growth Fund and the
Loomis Sayles Global Technology Fund can be exchanged into Class A shares of any
series of Loomis Sayles Funds or New England Funds that offers Class A shares.
This exchange privilege is summarized in the Prospectuses under "General
Information--How to Exchange Shares."
Exchanges may be effected by (1) making a telephone request by calling
800-626-9390, provided that a special authorization form is on file with BFDS or
(2) sending a written exchange request to BFDS accompanied by an account
application for the appropriate Fund. The Trust reserves the right to modify
this exchange privilege without prior notice. An exchange constitutes a sale of
shares for federal income tax purposes on which the investor may realize a
capital gain or loss.
IRAS
IRAs may be established under a prototype plan made available by Loomis
Sayles. These plans may be funded with shares of any Fund, although it is
expected that shares of the Loomis Sayles Municipal Bond Fund would ordinarily
not be an appropriate investment for these plans.
All income dividends and capital gain distributions of plan participants
must be reinvested. Plan documents and further information can be obtained from
Loomis Sayles.
Check with your financial or tax adviser as to the suitability of Fund
shares for your retirement plan.
REDEMPTIONS
The procedures for redemption of Fund shares are summarized in the
Prospectuses under "General Information--How to Redeem Shares."
Except as noted below, signatures on redemption requests must be guaranteed
by commercial banks, trust companies, savings associations, credit unions, or
brokerage firms that are members of domestic securities exchanges. Signature
guarantees by notaries public are not acceptable. However, as noted in the
Prospectuses, a signature guarantee will not be required if the proceeds of the
redemption do not exceed $50,000 and the proceeds check is made payable to the
registered owner(s) and mailed to the record address for an account whose
account registration has not changed in the past 30 days.
If a shareholder selects the telephone redemption service in the manner
described in the next paragraph, Fund shares may be redeemed by making a
telephone call directly to BFDS at 800-626-9390. When a telephone redemption
request is received, the proceeds are wired to the bank account previously
chosen by the shareholder and a nominal wire fee (currently $5.00) is deducted.
Telephone redemption requests must be received by BFDS prior to the close of
regular trading on the New York Stock Exchange on a day when the Exchange is
open for business. Requests made after that time or on a day when the New York
Stock Exchange is not open for business cannot be accepted by BFDS, and a new
request will be necessary.
In order to redeem shares by telephone, a shareholder either must select
this service when completing the Fund application or must do so subsequently in
writing. When selecting the service, a shareholder must designate a bank account
to which the redemption proceeds should be wired. Any change in the bank
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<PAGE>
account so designated must be made by furnishing to BFDS a written request with
a signature guarantee. Telephone redemptions may be made only if an investor's
bank is a member of the Federal Reserve System or has a correspondent bank that
is a member of the System. If the account is with a savings bank, it must have
only one correspondent bank that is a member of the System. The Trust, BFDS,
Loomis Sayles Distributors, L.P., and State Street Bank are not responsible for
the authenticity of withdrawal instructions received by telephone.
The redemption price will be the net asset value per share next determined
after the redemption request and any necessary special documentation are
received by BFDS in proper form, less, in the case of the Loomis Sayles High
Yield Fund and the Loomis Sayles Emerging Markets Fund, a redemption fee of
2.00% of the amount redeemed with respect to shares of that Fund redeemed within
one (1) year of purchase, if applicable. Proceeds resulting from a written
redemption request will normally be mailed to the shareholder within seven days
after receipt of a request in good order. Telephonic redemption proceeds will
normally be wired on the first business day following receipt of a proper
redemption request. In those cases where a shareholder has recently purchased
shares by check and the check was received less than fifteen days prior to the
redemption request, the Fund may withhold redemption proceeds until the check
has cleared.
Each Fund will normally redeem shares for cash; however, each Fund reserves
the right to pay the redemption price wholly or partly in kind. If portfolio
securities are distributed in lieu of cash, the shareholder will normally incur
brokerage commissions upon subsequent disposition of any such securities.
However, the Trust has elected to be governed by Rule 18f-1 under the 1940 Act,
pursuant to which the Trust is obligated to redeem shares solely in cash for any
shareholder during any 90-day period up to the lesser of $250,000 or 1% of the
total net asset value of the Trust at the beginning of such period.
A redemption constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a long-term or short-term capital
gain or loss. See "Income Dividends, Capital Gain Distributions and Tax Status."
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
As described in the Prospectuses under "Dividends and Distributions," it is
the policy of each Fund to pay its shareholders, as dividends, substantially all
net investment income and to distribute annually all net realized capital gains,
if any, after offsetting any capital loss carryovers.
Income dividends and capital gain distributions are payable in full and
fractional shares of the particular Fund based upon the net asset value
determined as of the close of regular trading on the New York Stock Exchange on
the record date for each dividend or distribution. Shareholders, however, may
elect to receive their income dividends or capital gain distributions, or both,
in cash. The election may be made at any time by submitting a written request
directly to the shareholder servicing agent (BFDS). In order for a change to be
in effect for any dividend or distribution, it must be received by the
shareholder servicing agent on or before the record date for such dividend or
distribution.
As required by federal law, detailed federal tax information will be
furnished to each shareholder for each calendar year on or before January 31 of
the succeeding year.
The Internal Revenue Service ("IRS") requires any Fund to withhold 31% of
any redemption proceeds (including the value of shares exchanged) and of any
income dividends and capital gain distributions in the following situations:
- If you do not provide a correct, certified taxpayer identification number
to the Fund.
- If the IRS notifies the Fund that you have under reported your income in
the past and thus are subject to backup withholding.
- If you fail to certify to the Fund that you are not subject to such backup
withholding.
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<PAGE>
Each Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order to qualify as such and to qualify for
the favorable tax treatment accorded regulated investment companies and their
shareholders, each Fund must, among other things, (i) derive at least 90% of its
gross income from dividends, interest, payments with respect to certain
securities loans, gains from the sale of securities or foreign currencies, or
other income (including, but not limited to, gains from options, futures, or
forward contracts) derived with respect to its business of investing in such
stock, securities, or currencies; (ii) distribute with respect to each taxable
year at least 90% of the sum of its taxable net investment income, its
tax-exempt income, and the excess, if any, of net short-term capital gains over
net long-term capital losses for such year; and (iii) diversify its holdings so
that at the end of each fiscal quarter (a) at least 50% of the value of its
assets is invested in cash, U.S. Government securities, securities of other
regulated investment companies, and other securities of issuers that represent,
with respect to each issuer, no more than 5% of the value of the Fund's assets
and 10% of the outstanding voting securities of such issuer and (b) not more
than 25% of its assets is invested in the securities (other than those of the
U.S. government or other regulated investment companies) of any one issuer or of
two or more issuers that the Fund controls and that are engaged in the same,
similar, or related trades and businesses. To the extent it qualifies for
treatment as a regulated investment company, a Fund will not be subject to
federal income tax on income paid to its shareholders in the form of dividends
or capital gain distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
each Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund so elects) plus undistributed amounts from prior years. Each Fund
intends to make distributions sufficient to avoid imposition of the excise tax.
Distributions declared by a Fund during October, November, or December to
shareholders of record on a date in any such month and paid by the Fund during
the following January will be treated for federal tax purposes as paid by the
Fund and received by shareholders on December 31 of the year in which they were
declared.
Shareholders of each Fund will be subject to federal income taxes on
distributions made by the Fund (other than "exempt-interest dividends" paid by
the Loomis Sayles Municipal Bond Fund, as described in its Prospectus) whether
received in cash or additional shares of the Fund. Distributions by each Fund of
net income and short-term capital gains, if any, will be taxable to shareholders
as ordinary income. Distributions designated by a Fund as deriving from net
gains on securities held for more than one year will be taxable to shareholders
as long-term capital gains (generally taxed at a rate of 20% for noncorporate
shareholders), without regard to how long the shareholder has held shares of the
Fund.
Dividends and distributions on a Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur for shares purchased at a time when a
Fund's net asset value reflects gains that are either unrealized or realized but
not distributed. Such realized gains may be required to be distributed even when
a Fund's net asset value also reflects unrealized losses.
The Loomis Sayles Emerging Markets Fund, the Loomis Sayles Global Bond Fund,
the Loomis Sayles Global Technology Fund, the Loomis Sayles International Equity
Fund, and the Loomis Sayles Worldwide Fund each may be eligible to make an
election under Section 853 of the Code so that its shareholders will be able to
claim a credit or deduction on their income tax returns for, and will be
required to treat as part of the amounts distributed to them, their pro rata
portion of qualified taxes paid by the relevant Fund to foreign countries. The
ability of shareholders of the Fund to claim a foreign tax credit is subject to
certain limitations imposed by Section 904 of the Code, which in general limits
for the amount of foreign tax that may be used to reduce a shareholder's U.S.
tax liability to that amount of U.S. tax that would be imposed on the amount and
type of income for which the foreign tax was paid. In addition, a shareholder
must hold shares of the Fund (without protection from risk of loss) on the
ex-dividend date and for at least 16 days
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<PAGE>
during the 30-day period beginning on the date that is 15 days before the
ex-dividend date in order to be eligible to claim a foreign credit for his or
her share of these foreign taxes. A shareholder who for U.S. income tax purposes
claims a foreign tax credit in respect of Fund distributions may not claim a
deduction for foreign taxes paid by the Fund, regardless of whether the
shareholder itemizes deductions. Also, under Section 63 of the Code, no
deduction for foreign taxes may be claimed by shareholders who do not itemize
deductions on their federal income tax returns. It should also be noted that a
tax-exempt shareholder, like other shareholders, will be required to treat as
part of the amounts distributed to it a pro rata portion of the income taxes
paid by the Fund to foreign countries. However, that income will generally be
exempt from United States taxation by virtue of such shareholder's tax-exempt
status, and such a shareholder will not be entitled to either a tax credit or a
deduction with respect to such income. The Loomis Sayles Emerging Markets Fund,
the Loomis Sayles Global Bond Fund, the Loomis Sayles Global Technology Fund,
the Loomis Sayles International Equity Fund, and the Loomis Sayles Worldwide
Fund will notify shareholders each year of the amount of dividends and
distributions and the shareholder's pro rata share of qualified taxes paid by
each such Fund to foreign countries.
Each Fund's transactions, if any, in foreign currencies are likely to result
in a difference between the Fund's book income and taxable income. This
difference may cause a portion of the Fund's income distributions to constitute
a return of capital for tax purposes or require the Fund to make distributions
exceeding book income to avoid excise tax liability and to qualify as a
regulated investment company.
Investment by a Fund in "passive foreign investment companies" could subject
the Fund to U.S. federal income tax or other charge on the proceeds from the
sale of its investment in such a company; however, this tax can be avoided by
making an election to mark such investments to market annually or to treat the
passive foreign investment company as a "qualified electing fund."
If a Fund engages in hedging transactions, including hedging transactions in
options, futures contracts, and straddles, or other similar transactions, it
will be subject to special tax rules (including constructive sale,
mark-to-market, straddle, wash sale, and short sale rules), the effect of which
may be to accelerate income to the Fund, defer losses to the Fund, cause
adjustments in the holding periods of the Fund's securities, or convert
short-term capital losses into long-term capital losses. These rules could
therefore affect the amount, timing and character of distributions to
shareholders. Each Fund will endeavor to make any available elections pertaining
to such transactions in a manner believed to be in the best interests of the
Fund.
A Fund's investment in securities issued at a discount and certain other
obligations will (and investments in securities purchased at a discount may)
require the Fund to accrue and distribute income not yet received. In such
cases, a Fund may be required to sell assets (including when it is not
advantageous to do so) to generate the cash necessary to distribute as dividends
to its shareholders all of its income and gains and therefore to eliminate any
tax liability at the Fund level.
Generally a Fund may designate dividends eligible for the dividends-received
deduction only to the extent that such dividends are derived from dividends paid
to the Fund with respect to which the Fund could have taken the
dividends-received deduction if it had been a regular corporation. The
dividends-received deduction is not available to non-corporate shareholders,
Subchapter S corporations, or corporations that do not hold their shares for at
least 46 days during the 90-day period beginning on the date that is 45 days
before the ex-dividend date. The dividends-received deduction also is not
available with respect to dividends derived from a Fund's investment in foreign
securities or REITs.
Redemptions and exchanges of each Fund's shares are taxable events, and,
accordingly, shareholders may realize gains and losses on these transactions. In
general, any gain realized upon a taxable disposition of shares will be treated
as long-term capital gain if the shares have been held for more than one year.
Otherwise the gain on the sale, exchange, or redemption of Fund shares will be
treated as short-term capital gain. However, if a shareholder sells Fund shares
at a loss within six months after purchasing the shares, the loss will be
treated as a long-term capital loss to the extent of any long-term capital gain
distributions received by the shareholder. Furthermore, no loss will be allowed
on the sale of Fund shares
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<PAGE>
to the extent the shareholder acquired other shares of the same Fund within 30
days prior to the sale of the loss shares or 30 days after such sale.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and regulations currently in effect. For the complete
provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative action.
Dividends and distributions also may be subject to foreign, state, and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state, foreign, or local taxes.
The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty). The IRS recently revised its
regulations affecting the application to foreign investors of the back-up
withholding tax rules. The new regulations will generally be effective for
payments made on or after January 1, 2001 (although transition rules will
apply). In some circumstances, the new rules will increase the certification and
filing requirements imposed on foreign investors in order to qualify for
exemption from the 31% back-up withholding tax and for reduced withholding tax
rates under income tax treaties. Foreign investors in each Fund should consult
their advisers with respect to the potential application of these new
regulations.
FINANCIAL STATEMENTS
The financial statements of each Fund included in the Trust's 1999 Annual
Report, filed with the SEC on November 29, 1999, are incorporated by reference
to such Report.
CALCULATION OF YIELD AND TOTAL RETURN
YIELD. Yield with respect to a Fund will be computed by dividing the Fund's
net investment income for a recent 30-day period by the maximum offering price
(reduced by any undeclared earned income expected to be paid shortly as a
dividend) on the last trading day of that period. Net investment income will
reflect amortization of any market value premium or discount of fixed income
securities (except for obligations backed by mortgages or other assets) and may
include recognition of a pro rata portion of the stated dividend rate of
dividend-paying portfolio securities. The Funds' yields will vary from time to
time depending upon market conditions, the composition of the Funds' portfolios
and operating expenses of the Trust allocated to each Fund. These factors, and
possible differences in the methods used in calculating yield, should be
considered when comparing a Fund's yield to yields published for other
investment companies and other investment vehicles. Yield should also be
considered relative to changes in the value of the Fund's shares and to the
relative risks associated with the investment objectives and policies of the
Fund.
At any time in the future, yields may be higher or lower than past yields,
and there can be no assurance that any historical results will continue.
Investors in the Funds are specifically advised that the net asset value per
share of each Fund may vary, just as yields for each Fund may vary. An
investor's focus on yield to the exclusion of the consideration of the value of
shares of a Fund may result in the investor's misunderstanding the total return
he or she may derive from that Fund.
TOTAL RETURN. Total Return with respect to a Fund is a measure of the
change in value of an investment in such Fund over the period covered and
assumes that any dividends or capital gain distributions are reinvested
immediately, rather than paid to the investor in cash. The formula for total
return used herein includes four steps: (1) adding to the total number of shares
purchased through a hypothetical $1,000 investment in the Fund all additional
shares that would have been purchased if all dividends and distributions paid or
distributed during the period had been immediately reinvested;
35
<PAGE>
(2) calculating the value of the hypothetical initial investment of $1,000 as of
the end of the period by multiplying the total number of shares owned at the end
of the period by the net asset value per share on the last trading day of the
period; (3) assuming redemption at the end of the period; and (4) dividing the
resulting account value by the initial $1,000 investment.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Fund may from time to time include its total
return information in advertisements or in information furnished to present or
prospective shareholders. Each of the Loomis Sayles Bond, Loomis Sayles Global
Bond, Loomis Sayles High Yield, Loomis Sayles Intermediate Maturity Bond, Loomis
Sayles Investment Grade Bond, Loomis Sayles Municipal Bond, Loomis Sayles
Short-Term Bond, Loomis Sayles U.S. Government Securities, and Loomis Sayles
Worldwide Funds may from time to time include the yield and/or total return of
its shares in advertisements or information furnished to present or prospective
shareholders. Each Fund may from time to time include in advertisements or
information furnished to present or prospective shareholders (i) the ranking of
performance figures relative to such figures for groups of mutual funds
categorized by Lipper Analytical Services, Inc. or Standard & Poor's Micropal,
Inc. as having similar investment objectives, (ii) the rating assigned to the
Fund by Morningstar, Inc. based on the Fund's risk-adjusted or straight
performance relative to other mutual funds in its broad investment class, and/or
(iii) the ranking of performance figures relative to such figures for mutual
funds in its general investment category as determined by CDA/Weisenberger's
Management Results.
VOLATILITY. Each Fund may quote various measures of its volatility and
benchmark correlation. In addition, a Fund may compare these measures to those
of other funds and indices. Measures of volatility seek to compare a Fund's
historical share price fluctuations or total returns to those of a benchmark.
Measures of benchmark correlation indicate the extent to which a Fund's returns
change in ways similar to those of the benchmark. All measures of volatility and
correlation are calculated using averages of historical data. Each Fund may
utilize charts and graphs to present its volatility and average annual total
return. Each Fund may also discuss or illustrate examples of interest rate
sensitivity.
LIPPER ANALYTICAL SERVICES, INC. distributes mutual fund rankings monthly.
The rankings are based on total return performance calculated by Lipper,
generally reflecting changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect deduction of any sales
charges. Lipper rankings cover a variety of performance periods, including, but
not limited to, year-to-date, 1-year, 5-year, and 10-year performance. Lipper
classifies mutual funds by investment objective and asset category.
STANDARD & POOR'S MICROPAL, INC. distributes mutual fund rankings weekly
and monthly. The rankings are based upon performance calculated by Standard &
Poor's Micropal, generally reflecting changes in net asset value that can be
adjusted for the reinvestment of capital gains and dividends. If deemed
appropriate by the user, performance can also reflect deductions for sales
charges. Standard & Poor's Micropal rankings cover a variety of performance
periods, including, but not limited to, year-to-date, 1-year, 5-year, and
10-year performance. Standard & Poor's Micropal classifies mutual funds by
investment objective and asset category.
MORNINGSTAR, INC. distributes mutual fund ratings monthly. The ratings are
divided into five groups: highest, above average, neutral, below average, and
lowest. They represent a fund's historical risk/reward ratio relative to other
funds in its broad investment class as determined by Morningstar, Inc.
Morningstar ratings cover a variety of performance periods, including 3-year,
5-year, 10-year, and overall performance. The performance factor for the overall
rating is a weighted-average return performance (if available) reflecting
deduction of expenses and sales charges. Performance is adjusted using
quantitative techniques to reflect the risk profile of the fund. The ratings are
derived from a purely quantitative system that does not utilize the subjective
criteria customarily employed by rating agencies such as Standard & Poor's and
Moody's Investors Service, Inc.
36
<PAGE>
STANDARD & POOR'S SELECT FUNDS are funds selected by Standard & Poor's that
have demonstrated above-average absolute and volatility-adjusted returns
relative to funds with the same investment style, along with having investment
management attributes that are consistent with the fund's investment style.
Select Fund designation is based on a six-month moving average of three years of
absolute and volatility-adjusted performance. A Select Fund designation does not
address the market risk, credit risk, or counterparty risk of a fund, nor does
it address a fund's suitability as a counterparty or obligor.
VALUE LINE INVESTMENT SURVEY is an investment advisory service that ranks
approximately 1,700 stocks for "timeliness" and safety. Using a computerized
model based on earnings momentum, Value Line projects which stocks will have the
best or worst relative price performance over the next 6 to 12 months. In
addition, each stock is assigned a risk rating, which identifies the volatility
of a stock's price behavior relative to the market average. The service also
ranks all major industry groups for timeliness.
CDA/WEISENBERGER'S MANAGEMENT RESULTS publishes mutual fund rankings and is
distributed monthly. The rankings are based entirely on total return calculated
by Weisenberger for periods such as year-to-date, 1-year, 3-year, 5-year, and
10-year. Mutual funds are ranked in general categories (e.g., international
bond, international equity, municipal bond, and maximum capital gain).
Weisenberger rankings do not reflect deduction of sales charges or fees.
Performance information may also be used to compare the performance of the
Fund to certain widely acknowledged standards or indices for stock and bond
market performance, such as those listed below.
CONSUMER PRICE INDEX. The Consumer Price Index, published by the U.S.
Bureau of Labor Statistics, is a statistical measure of changes, over time, in
the prices of goods and services in major expenditure groups.
DOW JONES INDUSTRIAL AVERAGE. The Dow Jones Industrial Average is a market
value-weighted and unmanaged index of 30 large industrial stocks.
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX. The Lehman Brothers
Government/Corporate Bond Index is an index of publicly issued U.S. Treasury
obligations, debt obligations of U.S. government agencies (excluding
mortgage-backed securities), fixed-rate, non-convertible, investment-grade
corporate debt securities, and U.S. dollar-denominated, SEC-registered
non-convertible debt issued by foreign governmental entities or international
agencies used as a general measure of the performance of fixed-income
securities.
LEHMAN BROTHERS GOVERNMENT/CORPORATE INTERMEDIATE BOND INDEX. The Lehman
Brothers Government/Corporate Intermediate Bond Index consists of those bonds
held within the Lehman Brothers Government/Corporate Bond Index that have an
average maturity of 1-10 years.
LEHMAN BROTHERS 1-3 YEAR GOVERNMENT INDEX. The Index consists of fixed rate
debt issues of the U.S. government or its agencies rated investment grade or
higher with at least one year maturity and an outstanding par value of at least
$100 million for U.S. government issues.
LEHMAN BROTHERS 1-3 YEAR GOVERNMENT/CORPORATE BOND INDEX. The Index is a
market value weighted performance benchmark for government and corporate
fixed-rate debt issues with maturities of between one and three years.
LEHMAN BROTHERS GOVERNMENT BOND INDEX. The Lehman Brothers Government Bond
Index is composed of all publicly issued, non-convertible, domestic debt of the
U.S. government or any of its agencies or quasi-federal corporations, or
corporate debt guaranteed by the U.S. government.
LEHMAN BROTHERS MUNICIPAL BOND INDEX. The Lehman Brothers Municipal Bond
Index is computed from the prices of approximately 21,000 bonds consisting of
roughly 30% revenue bonds, 30% government obligation bonds, 27% insured bonds,
and 13% pre-refunded bonds.
37
<PAGE>
MSCI-EAFE INDEX. The MSCI-EAFE Index contains over 1,000 stocks from 20
different countries with Japan (approximately 50%), the United Kingdom, France,
and Germany being the most heavily weighted.
MSCI-EAFE EX-JAPAN INDEX. The MSCI-EAFE ex-Japan Index consists of all
stocks contained in the MSCI-EAFE Index, other than stocks from Japan.
MERRILL LYNCH HIGH YIELD MASTER INDEX. The Merrill Lynch High Yield Master
Index consists of fixed-rate, coupon-bearing bonds with an outstanding par that
is greater than or equal to $50 million, a maturity range greater than or equal
to one year, and a rating of less than BBB/Baa3 but not in default.
RUSSELL 2000 INDEX. The Russell 2000 Index is comprised of the 2,000
smallest companies included in the Russell 3000 Index, which represents
approximately 98% of the investable U.S. equity market.
RUSSELL MID-CAP GROWTH INDEX. The Russell Mid-Cap Growth Index is a market
capitalization weighted index of medium capitalization stocks determined by
Russell to be growth stocks as measured by their price-to-book ratios and
forecasted growth values.
SALOMON BROTHERS WORLD GOVERNMENT BOND INDEX. The Salomon Brothers World
Government Bond Index includes a broad range of institutionally traded
fixed-rate government securities issued by the national governments of 17
countries, including the United States. The index generally excludes floating-or
variable-rate bonds, securities aimed principally at non-institutional investors
(such as U.S. Savings Bonds), and private-placement type securities.
STANDARD & POOR'S/BARRA GROWTH INDEX. The Standard & Poor's/Barra Growth
Index is constructed by ranking the securities in the S&P 500 by price-to-book
ratio and including the securities with the highest price-to-book ratios that
represent approximately half of the market capitalization of the S&P 500.
STANDARD & POOR'S/BARRA VALUE INDEX. The Standard & Poor's/Barra Value
Index is constructed by ranking the securities in the S&P 500 by price-to-book
ratio and including the securities with the lowest price-to-book ratios that
represent approximately half of the market capitalization of the S&P 500.
STANDARD & POOR'S ("S&P") MID-CAP 400 INDEX. The S&P Mid-Cap 400 Index
consists of 400 domestic stocks chosen for market size, liquidity, and industry
group representation. It is market-weighted (stock price times shares
outstanding) with each stock affecting the index in proportion to its value. The
index is comprised of industrial, utility, financial, and transportation stocks,
in size order.
STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX (THE "S&P 500"). The S&P
500 is a market value-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. The
S&P 500 is composed almost entirely of common stocks of companies listed on the
New York Stock Exchange, although the common stocks of a few companies listed on
the American Stock Exchange or traded over-the-counter are included. The 500
companies represented include 400 industrial, 60 transportation, and 40
financial services concerns. The S&P 500 represents about 80% of the market
value of all issues traded on the New York Stock Exchange. The S&P 500 is the
most common index for the overall U.S. stock market.
From time to time, articles about the Funds regarding performance, rankings,
and other characteristics of the Funds may appear in publications including, but
not limited to, the publications included in Appendix A. In particular, some or
all of these publications may publish their own rankings or performance reviews
of mutual funds, including the Funds. References to or reprints of such articles
may be used in the Funds' promotional literature. References to articles
regarding personnel of Loomis Sayles who have portfolio management
responsibility may also be used in the Funds' promotional literature. For
additional information about the Funds' advertising and promotional literature,
see Appendix B.
38
<PAGE>
INSTITUTIONAL CLASS
PERFORMANCE DATA*
The manner in which total return and yield of the Funds will be calculated
for public use is described above. The table summarizes the calculation of total
return and yield for Institutional Class shares of the Funds, where applicable,
(i) for the one-year period ended September 30, 1999, (ii) for the three-year
period ended September 30, 1999, (iii) for the five-year period ended
September 30, 1999, (iv) from modified inception through September 30, 1999, and
(v) from actual inception through September 30, 1999.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------------------------------------
FOR THE
FOR THE THREE- FOR THE FROM FROM
CURRENT ONE-YEAR YEAR FIVE-YEAR MODIFIED ACTUAL
SEC PERIOD PERIOD PERIOD INCEPTION** INCEPTION***
YIELD AT ENDED ENDED ENDED THROUGH THROUGH
FUND 9/30/99 9/30/99 9/30/99 9/30/99 9/30/99 9/30/99
- ---- -------- -------- -------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Loomis Sayles Aggressive Growth
Fund............................ N/A 97.94% N/A N/A 33.66% 33.66%
Loomis Sayles Bond Fund........... 8.45% 7.61% 8.22% 11.48% 11.95% 11.83%
Loomis Sayles Core Value Fund..... N/A 10.51% 14.20% 16.59% 13.50% 14.13%
Loomis Sayles Emerging Markets
Fund............................ N/A N/A N/A N/A N/A N/A
Loomis Sayles Global Bond Fund.... 6.58% 14.19% 7.23% 11.24% 9.13% 9.05%
Loomis Sayles Global Technology
Fund............................ N/A N/A N/A N/A N/A N/A
Loomis Sayles Growth Fund......... N/A 30.91% 16.62% 18.74% 14.16% 14.94%
Loomis Sayles High Yield Fund..... 12.01% 21.03% 5.01% N/A 5.01% 5.37%
Loomis Sayles Intermediate
Maturity Bond Fund.............. 7.41% 2.98% N/A N/A 4.69% 4.69%
Loomis Sayles International Equity
Fund............................ N/A 31.96% 10.32% 9.41% 9.56% 9.48%
Loomis Sayles Investment Grade
Bond Fund....................... 7.52% 6.53% N/A N/A 7.51% 7.51%
Loomis Sayles Mid-Cap Value Fund.. N/A 12.86% N/A N/A 8.38% 8.38%
Loomis Sayles Municipal Bond
Fund............................ 4.75% (2.83)% 5.07% 6.06% 6.53% 6.55%
Loomis Sayles Research Fund....... N/A N/A N/A N/A N/A N/A
Loomis Sayles Short-Term Bond
Fund............................ 6.98% 1.77% 5.94% 6.27% 5.65% 5.64%
Loomis Sayles Small Cap Growth
Fund............................ N/A 70.30% N/A N/A 22.98% 22.98%
Loomis Sayles Small Cap Value
Fund............................ N/A 12.80% 9.35% 14.70% 15.77% 15.97%
Loomis Sayles U.S. Government
Securities Fund................. 6.21% (3.50)% 7.57% 8.63% 8.78% 8.77%
Loomis Sayles Worldwide Fund...... N/A 27.82% 7.61% N/A 7.62% 7.70%
</TABLE>
- --------------
* Performance (for other than (i) the one-year and five-year periods for the
Loomis Sayles Bond Fund and (ii) the one-year, three-year, and five-year
periods for the Loomis Sayles Core Value and Loomis Sayles Small Cap Value
Funds) would have been lower if a portion of the management fee had not been
waived by Loomis Sayles. In the absence of this limitation, actual yield and
total return would have been as follows:
39
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
-----------------------------------------------------------------------
FOR THE
FOR THE THREE- FOR THE FROM FROM
CURRENT ONE-YEAR YEAR FIVE-YEAR MODIFIED ACTUAL
SEC PERIOD PERIOD PERIOD INCEPTION** INCEPTION***
YIELD AT ENDED ENDED ENDED THROUGH THROUGH
FUND 9/30/99 9/30/99 9/30/99 9/30/99 9/30/99 9/30/99
- ---- -------- -------- -------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Loomis Sayles Aggressive Growth
Fund.............................. N/A 94.07% N/A N/A 25.23% 25.23%
Loomis Sayles Bond Fund............. 8.45% 7.61% 8.21% 11.48% 11.76% 11.65%
Loomis Sayles Core Value Fund....... N/A 10.51% 14.20% 16.59% 13.24% 13.88%
Loomis Sayles Emerging Markets
Fund.............................. N/A N/A N/A N/A N/A N/A
Loomis Sayles Global Bond Fund...... 6.39% 13.97% 6.85% 10.96% 8.48% 8.42%
Loomis Sayles Global Technology
Fund.............................. N/A N/A N/A N/A N/A N/A
Loomis Sayles Growth Fund........... N/A 30.48% 16.38% 18.59% 14.04% 14.84%
Loomis Sayles High Yield Fund....... 11.26% 19.75% (1.35)% N/A (1.35)% (0.91)%
Loomis Sayles Intermediate Maturity
Bond Fund......................... 6.09% 1.57% N/A N/A 2.29% 2.29%
Loomis Sayles International Equity
Fund.............................. N/A 31.67% 10.12% 9.29% 8.99% 8.92%
Loomis Sayles Investment Grade Bond
Fund.............................. 6.12% 4.06% N/A N/A 2.20% 2.20%
Loomis Sayles Mid-Cap Value Fund.... N/A 9.47% N/A N/A 3.46% 3.46%
Loomis Sayles Municipal Bond Fund... 3.64% (3.89)% 3.40% 4.51% 0.90% 0.91%
Loomis Sayles Research Fund......... N/A N/A N/A N/A N/A N/A
Loomis Sayles Short-Term Bond
Fund.............................. 6.61% 1.16% 5.30% 5.81% 4.81% 4.82%
Loomis Sayles Small Cap Growth
Fund.............................. N/A 70.11% N/A N/A 20.22% 20.22%
Loomis Sayles Small Cap Value
Fund.............................. N/A 12.80% 9.35% 14.70% 15.63% 15.83%
Loomis Sayles U.S. Government
Securities Fund................... 5.39% (3.99)% 6.96% 8.16% 8.13% 8.13%
Loomis Sayles Worldwide Fund........ N/A 24.68% 4.25% N/A 4.58% 4.74%
</TABLE>
- --------------
** Periods less than one year are not annualized. For the Loomis Sayles
Aggressive Growth Fund, Loomis Sayles Mid-Cap Value Fund, Loomis Sayles
Small Cap Growth Fund, Loomis Sayles Intermediate Maturity Bond Fund, and
Loomis Sayles Investment Grade Bond Fund, the modified inception date is
December 31, 1996. For the Loomis Sayles Short-Term Bond Fund, the modified
inception date is August 31, 1992, for the Loomis Sayles Worldwide Fund--May
31, 1996, for the Loomis Sayles High Yield Fund--September 30, 1996, and for
all other Funds--May 31, 1991.
*** Actual Inception Dates:
<TABLE>
<S> <C>
Loomis Sayles Aggressive Growth Fund.................... December 31, 1996
Loomis Sayles Bond Fund................................. May 16, 1991
Loomis Sayles Core Value Fund........................... May 13, 1991
Loomis Sayles Emerging Markets Fund..................... November 9, 1999
Loomis Sayles Global Bond Fund.......................... May 10, 1991
Loomis Sayles Global Technology Fund.................... February 1, 2000
Loomis Sayles Growth Fund............................... May 16, 1991
Loomis Sayles High Yield Fund........................... September 11, 1996
Loomis Sayles Intermediate Maturity Bond Fund........... December 31, 1996
Loomis Sayles International Equity Fund................. May 10, 1991
Loomis Sayles Investment Grade Bond Fund................ December 31, 1996
Loomis Sayles Mid-Cap Value Fund........................ December 31, 1996
Loomis Sayles Municipal Bond Fund....................... May 29, 1991
Loomis Sayles Research Fund............................. August 1, 2000
Loomis Sayles Short-Term Bond Fund...................... August 3, 1992
Loomis Sayles Small Cap Value Fund...................... May 13, 1991
Loomis Sayles Small Cap Growth Fund..................... December 31, 1996
Loomis Sayles U.S. Government Securities Fund........... May 21, 1991
Loomis Sayles Worldwide Fund............................ May 1, 1996
</TABLE>
40
<PAGE>
RETAIL CLASS
PERFORMANCE DATA*
The manner in which total return and yield of the Funds will be calculated
for public use is described above. This table summarizes the calculation of
total return and yield for Retail Class shares of the Funds, where applicable,
(i) for the one-year period ended September 30, 1999 and (ii) since actual
inception through September 30, 1999.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
--------------------------
CURRENT FOR THE FROM ACTUAL
SEC ONE-YEAR INCEPTION**
YIELD AT PERIOD ENDED THROUGH
FUND 9/30/99 9/30/99 9/30/99
- ---- -------- ------------ -----------
<S> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund........................ N/A 97.45% 33.33%
Loomis Sayles Bond Fund..................................... 8.43% 7.30% 6.63%
Loomis Sayles Core Value Fund............................... N/A 10.18% 11.62%
Loomis Sayles Emerging Markets Fund......................... N/A N/A N/A
Loomis Sayles Global Bond Fund.............................. 6.34% 13.84% 5.86%
Loomis Sayles Global Technology Fund........................ N/A N/A N/A
Loomis Sayles Growth Fund................................... N/A 30.56% 15.68%
Loomis Sayles Intermediate Maturity Bond Fund............... 7.15% 2.62% 4.44%
Loomis Sayles International Equity Fund..................... N/A 31.56% 7.89%
Loomis Sayles Investment Grade Bond Fund.................... 7.28% 6.23% 7.24%
Loomis Sayles Mid-Cap Value Fund............................ N/A 12.51% 8.08%
Loomis Sayles Research Fund................................. N/A N/A N/A
Loomis Sayles Short-Term Bond Fund.......................... 6.74% 1.41% 5.39%
Loomis Sayles Small Cap Growth Fund......................... N/A 69.90% 22.72%
Loomis Sayles Small Cap Value Fund.......................... N/A 12.39% 6.23%
Loomis Sayles Worldwide Fund................................ N/A 27.59% 5.92%
</TABLE>
- --------------
* Performance (for other than the one-year period for the Loomis Sayles Small
Cap Value Fund) would have been lower if a portion of the management fee had
not been waived by Loomis Sayles. In the absence of this limitation, actual
yield and total return would have been as follows:
41
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
--------------------------
CURRENT FOR THE FROM ACTUAL
SEC ONE-YEAR INCEPTION**
YIELD AT PERIOD ENDED THROUGH
FUND 9/30/99 9/30/99 9/30/99
- ---- -------- ------------ -----------
<S> <C> <C> <C>
Loomis Sayles Aggressive Growth Fund........................ N/A 82.05% (13.80%)
Loomis Sayles Bond Fund..................................... 8.40% 7.26% 6.52%
Loomis Sayles Core Value Fund............................... N/A 7.70% 8.13%
Loomis Sayles Emerging Markets Fund......................... N/A N/A N/A
Loomis Sayles Global Bond Fund.............................. 5.92% 13.32% 4.95%
Loomis Sayles Global Technology Fund........................ N/A N/A N/A
Loomis Sayles Growth Fund................................... N/A 26.21% 7.25%
Loomis Sayles Intermediate Maturity Bond Fund............... 4.90% (0.53%) (4.43%)
Loomis Sayles International Equity Fund..................... N/A 16.98% (7.81%)
Loomis Sayles Investment Grade Bond Fund.................... 5.90% 3.68% 0.21%
Loomis Sayles Mid-cap Value Fund............................ N/A (1.41%) (16.74%)
Loomis Sayles Research Fund................................. N/A N/A N/A
Loomis Sayles Short-term Bond Fund.......................... 3.93% (2.33%) (5.54%)
Loomis Sayles Small Cap Growth Fund......................... N/A 68.96% 18.32%
Loomis Sayles Small Cap Value Fund.......................... N/A 12.39% 6.19%
Loomis Sayles Worldwide Fund................................ N/A 3.32% (62.95%)
</TABLE>
- --------------
** The actual inception date for the Retail Class of each of the Funds, except
the Loomis Sayles Emerging Markets Fund and the Loomis Sayles Global
Technology Fund, is December 31, 1996. The actual inception dates for the
Retail Class of the Loomis Sayles Emerging Markets Fund and the Loomis
Sayles Global Technology Fund are May 9, 2000 and February 1, 2000,
respectively.
42
<PAGE>
ADMIN CLASS
PERFORMANCE DATA*
The manner in which total return and yield of the Funds will be calculated
for public use is described above. This table summarizes the calculation of
total return and yield for Admin Class shares of the Funds, where applicable,
(i) for the one-year period ended September 30, 1999, (ii) from modified
inception through September 30, 1999, and (iii) from actual inception through
September 30, 1999.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------
FOR THE FROM FROM
CURRENT ONE-YEAR MODIFIED ACTUAL
SEC PERIOD INCEPTION** INCEPTION**
YIELD AT ENDED THROUGH THROUGH
FUND 9/30/99 9/30/99 9/30/99 9/30/99
- ---- -------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Loomis Sayles Bond Fund............................... 8.16% 7.11% 2.66% 3.23%
Loomis Sayles Small Cap Value Fund.................... N/A 12.03% (2.64%) (3.79%)
</TABLE>
- --------------
* Performance would have been lower if a portion of the management fee had not
been waived by Loomis Sayles. In the absence of this limitation, actual
yield and total return would have been as follows:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
------------------------------------
FOR THE FROM FROM
CURRENT ONE-YEAR MODIFIED ACTUAL
SEC PERIOD INCEPTION** INCEPTION**
YIELD AT ENDED THROUGH THROUGH
FUND 9/30/99 9/30/99 9/30/99 9/30/99
- ---- -------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Loomis Sayles Bond Fund............................... 7.64% 5.90% (1.21%) (0.50%)
Loomis Sayles Small Cap Value Fund.................... N/A 11.80% (4.22%) (5.28%)
</TABLE>
- --------------
** The modified and actual inception dates for the Admin Class of the Loomis
Sayles Bond Fund and the Loomis Sayles Small Cap Value Fund are January 31,
1998 and January 2, 1998, respectively.
43
<PAGE>
APPENDIX A
PUBLICATIONS AND OUTLETS THAT MAY CONTAIN FUND INFORMATION
ABC and affiliates
Adam Smith's Money World
America Online
Anchorage Daily News
Atlanta Constitution
Atlanta Journal
Arizona Republic
Austin American Statesman
Baltimore Sun
Bank Investment Marketing
Barron's
Bergen County Record (NJ)
Bloomberg Business News
Bond Buyer
Boston Business Journal
Boston Globe
Boston Herald
Broker World
Business Radio Network
Business Week
CBS and affiliates
CDA Investment Technologies
CFO
Changing Times
Chicago Sun Times
Chicago Tribune
Christian Science Monitor
Christian Science Monitor News Service
Cincinnati Enquirer
Cincinnati Post
CNBC
CNN
Columbus Dispatch
CompuServe
Dallas Morning News
Dallas Times-Herald
Denver Post
Des Moines Register
Detroit Free Press
Donoghues Money Fund Report
Dorfman, Dan (syndicated column)
Dow Jones News Service
Economist
FACS of the Week
Fee Adviser
Financial News Network
Financial Planning
Financial Planning on Wall Street
Financial Research Corp.
Financial Services Week
Financial World
Fitch Insights
Forbes
Fort Worth Star-Telegram
Fortune
Fox Network and affiliates
Fund Action
Fund Decoder
Global Finance
(the) Guarantor
Hartford Courant
Houston Chronicle
INC
Indianapolis Star
Individual Investor
Institutional Investor
International Herald Tribune
Internet
Investment Advisor
Investment Company Institute
Investment Dealers Digest
Investment Profiles
Investment Vision
Investor's Daily
IRA Reporter
Journal of Commerce
Kansas City Star
KCMO (Kansas City)
KOA-AM (Denver)
LA Times
Leckey, Andrew (syndicated column)
Life Association News
Lifetime Channel
Miami Herald
Milwaukee Sentinel
Money Magazine
Money Maker
Money Management Letter
Morningstar
Mutual Fund Market News
Mutual Funds Magazine
National Public Radio
National Underwriter
NBC and affiliates
New England Business
New England Cable News
New Orleans Times-Picayune
New York Daily News
44
<PAGE>
New York Times
Newark Star Ledger
Newsday
Newsweek
Nightly Business Report
Orange County Register
Orlando Sentinel
Palm Beach Post
Pension World
Pensions and Investments
Personal Investor
Philadelphia Inquirer
Porter, Sylvia (syndicated column)
Portland Oregonian
Prodigy
Public Broadcasting Service
Quinn, Jane Bryant (syndicated column)
Registered Representative
Research Magazine
Resource
Reuters
Rocky Mountain News
Rukeyser's Business (syndicated column)
Sacramento Bee
San Diego Tribune
San Francisco Chronicle
San Francisco Examiner
San Jose Mercury
Seattle Post-Intelligencer
Seattle Times
Securities Industry Management
Smart Money
St. Louis Post Dispatch
St. Petersburg Times
Standard & Poor's Outlook
Standard & Poor's Stock Guide
Stanger's Investment Advisor
Stockbroker's Register
Strategic Insight
Tampa Tribune
Time
Tobias, Andrew (syndicated column)
Toledo Blade
US News and World Report
USA Today
USA TV Network
Value Line
Wall Street Journal
Wall Street Letter
Wall Street Week
Washington Post
WBZ
WBZ-TV
WCVB-TV
WEEI
WHDH
Worcester Telegram
World Wide Web
Worth Magazine
WRKO
45
<PAGE>
APPENDIX B
ADVERTISING AND PROMOTIONAL LITERATURE
Loomis Sayles Funds' advertising, sales literature, communications to
shareholders and other promotional material may include, but is not limited to:
A total return figure or modified inception date that more accurately
compares a Fund's performance with other measures of investment return such
as data published by Lipper Analytical Services, Inc. or with the
performance of any other index.
Hypothetical calculations of a Fund's aggregate total return for a
period of time assuming the investment of a particular investment in shares
of a Fund and assuming the reinvestment of all dividends and distributions.
Specific and general investment philosophies, objectives, strategies,
processes and techniques.
Discussions and/or illustrations of the potential investment goals of a
prospective investor, investment management strategies, techniques, policies
or investment suitability of a Fund (such as value investing, market timing,
dollar cost averaging, asset allocation, constant ratio transfer, automatic
account rebalancing, and the advantages and disadvantages of investing in
tax-deferred and taxable investments).
Discussions of economic conditions, the relationship between sectors of
the economy and the economy as a whole, various securities markets, the
effects of inflation, sources of information, economic models, forecasts,
data services utilized, consulted or considered in the course of providing
advisory or other services, as well as historical performance of various
asset classes, including but not limited to, stocks, bonds and Treasury
securities.
A summary of the substance of information contained in shareholder
reports (including the investment composition of a Fund by investment,
industry sector and country weighting), as well as the views of Loomis
Sayles as to current market, economic, trade and interest rate trends,
legislative, regulatory and monetary developments, investment strategies and
related matters believed to be of relevance to a Fund. This information may
be updated as of a current date (such as the date of the performance data,
if any).
Charts, graphs or drawings which compare the investment objective,
return potential, relative stability and/or growth possibilities of the
Funds and/or other mutual funds, or illustrate the potential risks and
rewards of investment in various investment vehicles, including but not
limited to, stocks, bonds, Treasury securities and shares of a Fund and/or
other mutual funds.
A discussion of certain attributes or benefits to be derived by an
investment in a Fund and/or other mutual funds, shareholder profiles and
hypothetical investor scenarios, timely information on financial management,
tax and retirement planning and investment alternatives to certificates of
deposit and other financial instruments.
Inclusion of symbols, headlines or other material which highlight or
summarize the information discussed in more detail therein.
Specific and general references to industry statistics regarding 401(k)
and retirement plans including historical information and industry trends
and forecasts regarding the growth of assets, numbers of plans, funding
vehicles, participants, sponsors, and other demographic data relating to
plans, participants and sponsors, third party and other administrators,
benefits consultants, and firms with whom Loomis Sayles may or may not have
a relationship.
Specific and general reference to comparative ratings, rankings, and
other forms of evaluation as well as statistics regarding the Funds as
401(k) or retirement plan funding vehicles produced by industry authorities,
research organizations, and publications.
46
<PAGE>
In addition, Loomis Sayles Funds' advertising, sales literature,
communications to shareholders and other promotional material may include, but
is not limited to, discussions of the following information:
Loomis Sayles Funds' participation in wrap fee and no transaction fee
programs
Loomis Sayles Funds' and Loomis Sayles' website
Loomis Sayles publications, including fact sheets for each Fund,
Characteristics of Loomis Sayles, including the number and locations of
its offices, its investment practices and clients, and assets under
management
Industry conferences at which Loomis Sayles participates
Current capitalization, levels of profitability, and other financial
information
Identification of portfolio managers, researchers, economists,
principals, and other staff members and employees and descriptions of Loomis
Sayles' resources devoted to such staff
The specific credentials of the above individuals, including but not
limited to previous employment, current, and past positions, titles and
duties performed, industry experience, educational background and degrees,
awards, and honors
The types of clients Loomis Sayles advises, and specific identification
of, and general reference to, current individual, corporate, and
institutional clients, including pension and profit sharing plans
Loomis Sayles' method of operation, personnel, internal work
environment, procedure and philosophy
Current and historical statistics relating to:
--total dollar amount of assets managed
--Loomis Sayles assets managed in total and by Fund
--the growth of assets
--asset types managed
Loomis Sayles Funds' tag line--"Listening Harder, Delivering More"--and
statements that and examples of how Loomis Sayles Funds listens to its clients
and works hard to deliver results that exceed their expectations.
47
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Agreement and Declaration of Trust. (5)
(b) By-Laws. (5)
(c) Not applicable.
(d)(1) Form of Advisory Agreement between the Registrant, on behalf of its
Loomis Sayles Bond Fund, and Loomis, Sayles & Company, L.P. (7)
(d)(2) Form of Amendment No. 1 to Advisory Agreement between the Registrant,
on behalf of its Loomis Sayles Core Value Fund, and Loomis, Sayles &
Company, L.P. (3)
(d)(3) Form of Advisory Agreement between the Registrant, on behalf of its
Loomis Sayles Emerging Markets Fund, and Loomis, Sayles & Company,
L.P. (9)
(d)(4) Form of Amendment No. 1 to Advisory Agreement between the Registrant,
on behalf of its Loomis Sayles Global Bond Fund, and Loomis, Sayles &
Company, L.P. (3)
(d)(5) Form of Advisory Agreement between the Registrant, on behalf of its
Loomis Sayles Global Technology Fund, and Loomis, Sayles & Company,
L.P. is filed herein.
(d)(6) Form of Amendment No. 1 to Advisory Agreement between the Registrant,
on behalf of its Loomis Sayles Growth Fund, and Loomis, Sayles &
Company, L.P. (3)
(d)(7) Form of Advisory Agreement between the Registrant, on behalf of its
Loomis Sayles High Yield Fund, and Loomis, Sayles & Company, L.P. (2)
(d)(8) Form of Advisory Agreement between the Registrant, on behalf of its
Loomis Sayles Intermediate Maturity Bond Fund, and Loomis, Sayles &
Company, L.P. (3)
(d)(9) Form of Amendment No. 1 to Advisory Agreement between the Registrant,
on behalf of its Loomis Sayles International Equity Fund, and Loomis,
Sayles & Company, L.P. (3)
(d)(10) Form of Advisory Agreement between the Registrant, on behalf of its
Loomis Sayles Investment Grade Bond Fund, and Loomis, Sayles &
Company, L.P. (3)
(d)(11) Form of Advisory Agreement between the Registrant, on behalf of its
Loomis Sayles Managed Bond Fund, and Loomis, Sayles & Company, L.P.
(6)
-1-
<PAGE>
(d)(12) Form of Advisory Agreement between the Registrant, on
behalf of its Loomis Sayles Aggressive Growth Fund, formerly known as
the Loomis Sayles Mid-Cap Growth Fund, and Loomis, Sayles & Company,
L.P. (3)
(d)(13) Form of Advisory Agreement between the Registrant, on behalf of its
Loomis Sayles Mid-Cap Value Fund, and Loomis, Sayles & Company, L.P.
(3)
(d)(14) Form of Amendment No. 1 to Advisory Agreement between the Registrant,
on behalf of its Loomis Sayles Municipal Bond Fund, and Loomis, Sayles
& Company, L.P. (3)
(d)(15) Form of Amendment No. 1 to Advisory Agreement between the Registrant,
on behalf of its Loomis Sayles Short-Term Bond Fund, and Loomis,
Sayles & Company, L.P. (3)
(d)(16) Form of Advisory Agreement between the Registrant, on behalf of its
Loomis Sayles Small Cap Growth Fund, and Loomis, Sayles & Company,
L.P. (3)
(d)(17) Form of Amendment No. 1 to Advisory Agreement between the Registrant,
on behalf of its Loomis Sayles Small Cap Value Fund, and Loomis,
Sayles & Company, L.P. (3)
(d)(18) Form of Amended and Restated Investment Advisory Agreement between the
Registrant, on behalf of its Loomis Sayles U.S. Government Securities
Fund, and Loomis, Sayles & Company, L.P. (7)
(d)(19) Form of Amendment No. 1 to Advisory Agreement between the Registrant,
on behalf of its Loomis Sayles Worldwide Fund, and Loomis, Sayles &
Company, L.P. (3)
(d)(20) Advisory Agreement between Registrant, on behalf of its Loomis
Sayles Research Fund and Loomis, Sayles & Company, L.P. to be filed
by subsequent Amendment.
(e) Form of Amended and Restated Distribution Agreement is filed herein.
(f) Not Applicable.
(g)(1) Form of Custodian Agreement. (5)
(g)(2) Letter Agreement between the Registrant and State Street Bank and
Trust Company relating to the applicability of the Custodian Agreement
to Loomis Sayles Short-Term Bond Fund. (4)
(g)(3) Letter Agreement between the Registrant and State Street Bank and
Trust Company relating to the applicability of the Custodian Agreement
to Loomis Sayles High Yield Fund. (4)
(g)(4) Letter Agreement between the Registrant and State Street Bank and
Trust Company relating to the applicability of the Custodian Agreement
to Loomis Sayles Intermediate Maturity Bond Fund, Loomis Sayles
Investment Grade Bond Fund, Loomis Sayles
-2-
<PAGE>
Aggressive Growth Fund (formerly known as Loomis Sayles Mid-Cap Growth
Fund), Loomis Sayles Mid-Cap Value Fund, and Loomis Sayles Small Cap
Growth Fund. (4)
(g)(5) Form of Letter Agreement between the Registrant and State Street Bank
and Trust Company relating to the applicability of the Custodian
Agreement to Loomis Sayles Worldwide Fund. (4)
(g)(6) Form of Letter Agreement between the Registrant and State Street Bank
and Trust Company relating to the applicability of the Custodian
Agreement to Loomis Sayles Managed Bond Fund. (7)
(g)(7) Form of Letter Agreement between the Registrant and State Street Bank
and Trust Company relating to the applicability of the Custodian
Agreement and the Transfer Agency and Service Agreement to Loomis
Sayles Global Technology Fund. (10)
(g)(8) Form of Letter Agreement between the Registrant and State Street Bank
and Trust Company relating to the applicability of the Custodian
Agreement to Loomis Sayles Emerging Markets Fund. (10)
(g)(9) Letter Agreement between Registrant and State Street Bank and Trust
Company relating to the applicability of the Custodian Agreement
and Transfer Agency and Service Agreement to Loomis Sayles Research
Fund, to be filed by subsequent amendment.
(h)(1) Form of Transfer Agency and Service Agreement between the Registrant
and State Street Bank and Trust Company. (5)
(h)(2) Letter Agreement between the Registrant and State Street Bank and
Trust Company relating to the applicability of the Transfer Agency and
Service Agreement to Loomis Sayles Short-Term Bond Fund. (4)
(h)(3) Letter Agreement between the Registrant and State Street Bank and
Trust Company relating to the applicability of the Transfer Agency and
Service Agreement to Loomis Sayles High Yield Fund and Loomis Sayles
Worldwide Fund. (4)
(h)(4) Letter Agreement between the Registrant and State Street Bank and
Trust Company relating to the applicability of the Transfer Agency and
Service Agreement to Loomis Sayles Intermediate Maturity Bond Fund,
Loomis Sayles Investment Grade Bond Fund, Loomis Sayles Aggressive
Growth Fund (formerly known as Loomis Sayles Mid-Cap Growth Fund),
Loomis Sayles Mid-Cap Value Fund, and Loomis Sayles Small Cap Growth
Fund. (4)
(h)(5) See Exhibit (g)(7) for Form of Letter Agreement between the Registrant
and State Street Bank and Trust Company relating to the applicability
of the Transfer Agency and Service Agreement to Loomis Sayles Global
Technology Fund.
(h)(6) Form of Transfer Agency and Service Agreement between the Registrant,
on behalf of its Loomis Sayles Emerging Markets Fund, Class J shares
of Loomis Sayles
-3-
<PAGE>
Investment Grade Bond Fund, and the Loomis Sayles Managed Bond Fund,
and State Street Bank and Trust Company. (10)
(i) Opinion and Consent of Counsel to be filed by subsequent amendment.
(j) Consent of PricewaterhouseCoopers LLP to be filed by subsequent
amendment.
(k) Not Applicable.
(l)(1) Investment Representation Regarding Initial Shares. (5)
(l)(2) Form of Organizational Expense Reimbursement Agreement. (5)
(m)(1) Form of Distribution Plan for Retail Class shares. (3)
(m)(2) Form of Distribution Plan for Admin Class shares. (5)
(m)(3) Form of Service and Distribution Plan relating to Loomis Sayles
Managed Bond Fund. (6)
(m)(4) Form of Service and Distribution Plan relating to Class J shares of
Loomis Sayles Investment Grade Bond Fund. (8)
(m)(5) Form of Distribution Plan for Class A shares of Loomis Sayles
Aggressive Growth Fund. (10)
(m)(6) Form of Distribution Plan for Class A shares of Loomis Sayles Global
Technology Fund is filed herein.
(n) Amended and Restated Rule 18f-3(d) Plan is filed herewith.
(o)(1) Powers of Attorney for Daniel J. Fuss, Richard S. Holway, and Michael
T. Murray. (1)
(o)(2) Power of Attorney for Joseph Alaimo. (9)
(p) Code of Ethics
- -------------------------------------------------------------------------------
-4-
<PAGE>
(1) Incorporated by reference to the Exhibit to Post-Effective Amendment
No. 7 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on February 16, 1996.
(2) Incorporated by reference to the Exhibit to Post-Effective Amendment
No. 10 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on August 30, 1996.
(3) Incorporated by reference to the Exhibit to Post-Effective Amendment
No. 11 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on October 9, 1996.
(4) Incorporated by reference to the Exhibit to Post-Effective Amendment
No. 12 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on March 10, 1997.
(5) Incorporated by reference to the Exhibit to Post-Effective Amendment
No. 13 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on October 31, 1997.
(6) Incorporated by reference to the Exhibit to Post-Effective Amendment
No. 15 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on August 5, 1998.
(7) Incorporated by reference to the Exhibit to Post-Effective Amendment
No. 17 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on November 30, 1998.
(8) Incorporated by reference to the Exhibit to Post-Effective Amendment
No. 18 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on April 12, 1999.
(9) Incorporated by reference to the Exhibit to Post-Effective Amendment
No. 21 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on November 19, 1999.
(10) Incorporated by reference to the Exhibits to Post-Effective Amendment
No. 24 to the Registrant's Registration Statement under the Securities
Act of 1933 filed with the SEC on January 26, 2000.
-5-
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not Applicable.
ITEM 25. INDEMNIFICATION
Article VIII of the Registrant's Agreement and Declaration of Trust (Exhibit (a)
hereto) and Article 4 of the Registrant's By-Laws (Exhibit (b) hereto) provide
for indemnification of its trustees and officers. The effect of these provisions
is to provide indemnification for each of the Registrant's trustees and officers
against liabilities and counsel fees reasonably incurred in connection with the
defense of any legal proceeding in which such trustee or officer may be involved
by reason of being or having been a trustee or officer, except with respect to
any matter as to which such trustee or officer shall have been adjudicated not
to have acted in good faith and in the reasonable belief that such trustee's or
officer's action was in the best interest of the Registrant, and except that no
trustee or officer shall be indemnified against any liability to the Registrant
or its shareholders to which such trustee or officer otherwise would be subject
by reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of such trustee's or officer's
office.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Loomis, Sayles & Company, L.P. ("Loomis Sayles"), the investment adviser of the
Registrant, provides investment advice to the nine series of Loomis Sayles
Investment Trust, five series of New England Funds Trust I, one series of New
England Funds Trust II, and one series of New England Zenith Funds, all of which
are registered investment companies, and to other registered investment
companies, organizations, and individuals.
The sole general partner of Loomis Sayles is Loomis, Sayles & Company, Inc., One
Financial Center, Boston, Massachusetts 02111.
ITEM 27. PRINCIPAL UNDERWRITERS
The Registrant's principal underwriter is Loomis Sayles Distributors, L.P., the
sole general partner of which is Loomis Sayles Distributors, Inc. Loomis Sayles
is a limited partner of Loomis Sayles Distributors, L.P. Each of these entities
is located at One Financial Center, Boston, Massachusetts 02111.
-6-
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The following companies maintain possession of the documents required by the
specified rules:
(a) Registrant
Rule 31a-1(b)(4), (9), (10), (11)
Rule 31a-2(a)
(b) State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Rule 31a-1(a)
Rule 31a-1(b)(1), (2), (3), (5), (6), (7), (8)
Rule 31a-2(a)
(c) Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
Rule 31a-1(f)
Rule 31a-2(e)
(d) Loomis Sayles Distributors, L.P.
One Financial Center
Boston, MA 02111
Rule 31a-1(d)
Rule 31a-2(c)
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
-7-
<PAGE>
********************
NOTICE
A copy of the Agreement and Declaration of Trust of the Registrant is on file
with the Secretary of The Commonwealth of Massachusetts and the Clerk of the
City of Boston and notice is hereby given that this Registration Statement has
been executed on behalf of the Registrant by officers of the Registrant as
officers and not individually and by its Trustees as trustees and not
individually and that the obligations of or arising out of this Registration
Statement are not binding upon any of the Trustees, officers, or shareholders
individually but are binding only upon the assets and property of the
Registrant.
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets the
requirements for effectiveness of this amendment pursuant to Rule 485(a) under
the Securities Act of 1933 and has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, The Commonwealth of Massachusetts, on
the 18th day of May, 2000.
LOOMIS SAYLES FUNDS
By: DANIEL J. FUSS*
------------------------------
Daniel J. Fuss, President
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, this amendment to the Registration Statement of
the Registrant has been signed below by the following persons in the capacities
and on the dates indicated.
SIGNATURE TITLE DATE
DANIEL J. FUSS* President and Trustee May 18, 2000
- ------------------------
Daniel J. Fuss
MARK W. HOLLAND Treasurer May 18, 2000
- ------------------------
Mark W. Holland
JOSEPH ALAIMO* Trustee May 18, 2000
- ------------------------
Joseph Alaimo
RICHARD S. HOLWAY* Trustee May 18, 2000
- ------------------------
Richard S. Holway
MICHAEL T. MURRAY* Trustee May 18, 2000
- ------------------------
Michael T. Murray
Trustee May 18, 2000
- -------------------------
Paul G. Chenault
*By: MARK W. HOLLAND
------------------------
Mark W. Holland, Attorney-in-fact
May 18, 2000
<PAGE>
INDEX TO EXHIBITS
99.(n) Amended and Restated 18f-3(d) Plan
99.(p) Code of Ethics of Loomis, Sayles & Company, L.P.
-10-
<PAGE>
Exhibit 99.(n)
<PAGE>
LOOMIS SAYLES FUNDS
AMENDED AND RESTATED PLAN
PURSUANT TO RULE 18F-3(D) UNDER THE INVESTMENT COMPANY ACT OF 1940
Effective May 8, 2000
Each of the series of Loomis Sayles Funds (the "Trust") managed by
Loomis, Sayles & Company, L.P. ("Loomis Sayles") (each a "Fund" and, together,
the "Funds") may from time to time issue one or more of the following classes of
shares: Retail Class shares, Institutional Class shares, Admin Class shares,
Class J shares and Class A shares. Each class is subject to such investment
minimums and other conditions of eligibility as are set forth in the Funds'
registration statements as from time to time in effect. The differences in
expenses among these classes of shares, and the conversion and exchange features
of each class of shares, are set forth below in this Plan. Expenses are
allocated among the classes of shares of each Fund based upon the net assets of
each Fund attributable to shares of each class, except (1) as noted below and
(2) each class may bear Omnibus Account Expenses relating to holders of shares
of such class. Omnibus Account Expenses include payments made for
sub-accounting, recordkeeping, investor communications, investor servicing,
proxy or voting instruction solicitation or tabulation and similar functions and
services performed or provided to or with respect to investors who hold shares
of such class through any kind of omnibus, "street name," nominee or similar
account (that is, an account of record that represents ownership by a beneficial
owner or owners other than the owner of record).
This Plan is subject to change, to the extent permitted by law and by
the Agreement and Declaration of Trust and By-laws of each Fund, by action of
the Trustees of each Fund.
RETAIL CLASS SHARES
DISTRIBUTION FEES
Retail Class shares pay distribution fees pursuant to plans adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Plans").
Retail Class shares also bear any costs associated with obtaining shareholder
approval of any amendments to a Plan. Pursuant to the Plans, Retail Class shares
may pay up to 0.25% of the relevant Fund's average net assets attributable to
the Retail Class shares (which percentage may be less for certain Funds, as
described in the Funds' registration statements as from time to time in effect).
Amounts payable under the Plans are subject to such further limitations as the
Trustees may from time to time determine and as set forth in the registration
statement of each Fund as from time to time in effect.
EXCHANGE AND CONVERSION FEATURES
To the extent provided in the registration statement of the relevant
Fund as from time to time in effect, Retail Class shares of any Fund may be
exchanged, at the holder's option and
<PAGE>
subject to minimum investment requirements, for Retail Class shares of any
other Fund that offers Retail Class shares, provided that Retail Class shares
of such other Fund are available to residents of the relevant state. Retail
Class shares may also be exchanged for shares of certain money market funds
advised by Nvest Funds Management, L.P., an affiliate of Loomis Sayles. The
Funds reserve the right to terminate or limit the exchange privilege of any
shareholder who makes more than four exchanges in a calendar year. The Funds
may terminate or change the exchange privilege at any time upon 60 days'
notice to shareholders.
Retail Class shares do not convert to any other class of shares.
INSTITUTIONAL CLASS SHARES
DISTRIBUTION FEES
Institutional Class shares pay no distribution fees.
EXCHANGE AND CONVERSION FEATURES
To the extent provided in the registration statement of the relevant
Fund as from time to time in effect, Institutional Class shares of any Fund may
be exchanged, at the holder's option, for Institutional Class shares of any
other Fund that offers Institutional Class shares, provided that Institutional
Class shares of such other Fund are available to residents of the relevant
state. Institutional Class shares may also be exchanged for shares of certain
money market funds advised by Nvest Funds Management, L.P., an affiliate of
Loomis Sayles. The Funds reserve the right to terminate or limit the exchange
privilege of any shareholder who makes more than four exchanges in a calendar
year. The Funds may terminate or change the exchange privilege at any time upon
60 days' notice to shareholders.
Institutional Class shares do not convert to any other class of shares.
ADMIN CLASS SHARES
ADMINISTRATIVE FEES
Admin Class shares pay administrative fees to certain financial
intermediaries for providing personal service and account maintenance for their
customers who hold Admin Class shares. These fees are paid on the average daily
net assets attributable to Admin Class shares at the annual rate stated in the
Funds' registration statements as from time to time in effect.
DISTRIBUTION AND SERVICE FEES
Admin Class shares pay distribution and service fees pursuant to Plans.
Admin Class shares also bear any costs associated with obtaining shareholder
approval of any amendments to a Plan. Pursuant to the Plans, Admin Class shares
may pay up to 0.25% of the relevant Fund's
2
<PAGE>
average net assets attributable to the Admin Class shares (which percentage
may be less for certain Funds, as described in the Funds' registration
statements as from time to time in effect). Amounts payable under the Plans
are subject to such further limitations as the Trustees may from time to time
determine and as set forth in the registration statement of each Fund as from
time to time in effect.
EXCHANGE AND CONVERSION FEATURES
To the extent provided in the registration statement of the relevant
Fund as from time to time in effect, Admin Class shares of any Fund may be
exchanged, at the holder's option and subject to minimum investment
requirements, for Admin Class shares of any other Fund that offers Admin Class
shares, provided that Admin Class shares of such other Fund are available to
residents of the relevant state. Admin Class shares may also be exchanged for
shares of certain money market funds advised by Nvest Funds Management, L.P., an
affiliate of Loomis Sayles. The Funds reserve the right to terminate or limit
the exchange privilege of any shareholder who makes more than four exchanges in
a calendar year. The Funds may terminate or change the exchange privilege at any
time upon 60 days' notice to shareholders.
Admin Class shares do not convert to any other class of shares.
CLASS J SHARES
SALES CHARGE
Class J shares of the Funds are offered at a public offering price that
is equal to their net asset value ("NAV") plus a front end sales charge of up to
3.50% of the public offering price (which maximum may be less for certain Funds,
as described in the Prospectus). Certain purchases of Class J shares may qualify
for a waived or reduced front end sales charge.
DISTRIBUTION AND SERVICE FEES
Class J shares pay distribution and service fees pursuant to Plans.
Class J shares also bear any costs associated with obtaining shareholder
approval of any amendments to a Plan. Pursuant to the Plans, Class J shares may
pay up to 0.75% of the relevant Fund's average net assets attributable to the
Class J shares (which percentage may be less for certain Funds, as described in
the Funds' registration statements as from time to time in effect). Amounts
payable under the Plans are subject to such further limitations as the Trustees
may from time to time determine and as set forth in the registration statement
of each Fund as from time to time in effect.
EXCHANGE AND CONVERSION FEATURES
To the extent provided in the registration statement of the relevant
Fund as from time to time in effect, Class J shares of any Fund may be
exchanged, at the holder's option and subject to minimum investment
requirements, for Class J shares of any other Fund that offers Class J
3
<PAGE>
shares, provided that Class J shares of such other Fund are available to
residents of the relevant state. The Funds reserve the right to terminate or
limit the exchange privilege of any shareholder who makes more than four
exchanges in a calendar year. The Funds may terminate or change the exchange
privilege at any time upon 60 days' notice to shareholders.
Class J shares do not convert to any other class of shares.
CLASS A SHARES
SALES CHARGE
Class A shares of the Funds are offered at a public offering price that
is equal to their net asset value ("NAV") plus a front end sales charge of up to
5.75% of the public offering price (which maximum may be less for certain Funds,
as described in the Prospectus). Certain purchases of Class A shares may qualify
for a waived or reduced front end sales charge.
DISTRIBUTION AND SERVICE FEES
Class A shares pay distribution and service fees pursuant to Plans.
Class A shares also bear any costs associated with obtaining shareholder
approval of any amendments to a Plan. Pursuant to the Plans, Class A shares may
pay up to 0.25% of the relevant Fund's average net assets attributable to the
Class A shares (which percentage may be less for certain Funds, as described in
the Funds' registration statements as from time to time in effect). Amounts
payable under the Plans are subject to such further limitations as the Trustees
may from time to time determine and as set forth in the registration statement
of each Fund as from time to time in effect.
EXCHANGE AND CONVERSION FEATURES
To the extent provided in the registration statement of the relevant
Fund as from time to time in effect, Class A shares of any Fund may be
exchanged, at the holder's option, for Class A shares of any other Fund that
offers Class A shares, provided that Class A shares of such other Fund are
available to residents of the relevant state. Class A shares may also be
exchanged for shares of certain money market funds advised by Nvest Funds
Management, L.P., an affiliate of Loomis Sayles. The Funds reserve the right to
terminate or limit the exchange privilege of any shareholder who makes more than
four exchanges in a calendar year. The Funds may terminate or change the
exchange privilege at any time upon 60 days' notice to shareholders.
Class A shares do not convert to any other class of shares.
4
<PAGE>
EMERGING MARKETS FUND AND HIGH YIELD FUND
In addition to the expenses described above, shares of the Loomis
Sayles Emerging Markets Fund and the Loomis Sayles High Yield Fund are subject
to a contingent deferred sales charge ("CDSC"), which currently is 2.00% of the
dollar amount of shares of these Funds that are redeemed or exchanged within one
year of purchase. This CDSC may be waived by Loomis Sayles in its sole
discretion if Loomis Sayles determines that minimal brokerage and transaction
costs are incurred in connection with the redemption or exchange.
<PAGE>
Exhibit 99.(p)
<PAGE>
LOOMIS, SAYLES & CO., L.P.
CODE OF ETHICS
----------------------------------------------------
POLICY ON PERSONAL TRADING AND RELATED ACTIVITIES
BY LOOMIS, SAYLES PERSONNEL
----------------------------------------------------
JANUARY 14, 2000
<PAGE>
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TABLE OF CONTENTS
<TABLE>
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PAGE #
<S> <C> <C>
1. INTRODUCTION..............................................................................................1
2. STATEMENT OF GENERAL PRINCIPLES...........................................................................1
3. OVERVIEW..................................................................................................2
3.1 Provisions of the Code Applicable to You........................................................2
3.2 A Few Key Terms.................................................................................3
4. SUBSTANTIVE RESTRICTIONS ON PERSONAL TRADING AND RELATED
ACTIVITIES --PROHIBITED OR RESTRICTED ACTIVITIES..........................................................6
4.1 Competing with Client Trades....................................................................6
4.2 Personal Use of Client Trading Knowledge........................................................6
4.3 Disclosure of Client Trading Knowledge..........................................................6
4.4 Transacting in Securities Under Consideration or Pending Execution..............................6
4.5 Initial Public Offerings and Private Placements.................................................7
4.6 Participation in Investment Clubs and Private Pooled Vehicles...................................7
4.7 Good Until Canceled and Limit Orders............................................................7
4.8 Investment Personnel Seven-Day Blackout.........................................................8
4.9 Research Analyst Three-Day Blackout Before Recommendation.......................................8
4.10 Access Person Seven-Day Blackout After Recommendation...........................................9
4.11 Short Term Trading Profits......................................................................9
4.12 Short Sales.....................................................................................9
4.13 Futures and Related Options.....................................................................9
4.14 Acceptance of Gifts............................................................................10
4.15 Public Company Board Service and Other Affiliations............................................10
5. PRECLEARANCE, DOCUMENT DELIVERY AND
REPORTING PROCEDURES.....................................................................................10
5.1 Preclearance...................................................................................10
5.2 Transaction Reporting Requirements.............................................................11
5.3 Initial and Annual Personal Holdings Reporting Requirements....................................13
5.4 Brokerage Confirmations and Statements.........................................................13
5.5 Review of Reports by Review Officer............................................................13
6. EXEMPT SECURITIES AND EXEMPT TRANSACTIONS................................................................13
6.1 Exempt Securities..............................................................................13
6.2 Exempt Transactions............................................................................14
6.3 Exemption for Investment Personnel from Seven-Day Blackout
for Certain Transactions in Large Capitalization Stocks........................................15
6.4 Other Exemptions Granted by the Review Officer.................................................15
<PAGE>
7. SANCTIONS................................................................................................15
8. RECORDKEEPING REQUIREMENTS...............................................................................16
9. MISCELLANEOUS............................................................................................17
9.1 Confidentiality................................................................................17
9.2 Notice to Access Persons, Investment Personnel and Research
Analysts as to Status; Notice to Review Officer of Engagement of Independent Contractors.......17
9.3 Initial and Annual Certification of Compliance.................................................17
9.4 Questions and Educational Materials............................................................17
GLOSSARY OF TERMS...............................................................................................G-1
</TABLE>
<PAGE>
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LOOMIS, SAYLES & CO., L.P.
CODE OF ETHICS
---------------------------------------------------
POLICY ON PERSONAL TRADING AND RELATED ACTIVITIES
---------------------------------------------------
1. INTRODUCTION
This Code of Ethics ("Code") of Loomis, Sayles & Co., L.P. ("Loomis,
Sayles") governs personal trading in securities and related activities by you
and, in some circumstances, your family members and others in a similar
relationship to you.
The policies in this Code reflect Loomis, Sayles' desire to detect and
prevent not only situations involving actual or potential conflicts of interest
or unethical conduct, but those situations involving even the appearance of
these.
2. STATEMENT OF GENERAL PRINCIPLES
It is the policy of Loomis, Sayles that no Loomis, Sayles personnel
shall engage in any act, practice or course of conduct that would violate this
Code, the fiduciary duty owed by Loomis, Sayles and its personnel to our
clients, Section 206 of the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the provisions of Section 17(j) of the Investment Company Act of
1940, as amended (the "1940 Act"), and Rule 17j-1 thereunder. The fundamental
position of Loomis, Sayles is, and has been, that we must at all times place the
interests of our clients first. Accordingly, your personal financial
transactions (and in some cases, those of your family members and others in a
similar relationship to you) and related activities must be conducted
consistently with this Code and in such a manner as to avoid any actual or
potential conflict of interest or abuse of your position of trust and
responsibility. Further, you must not take inappropriate advantage of your
position with or on behalf of any of our clients.
Without limiting in any manner the fiduciary duty owed by Loomis,
Sayles personnel to clients, it should be noted that Loomis, Sayles considers it
proper that purchases and sales be made by its personnel in the marketplace of
securities owned by our clients, PROVIDED that such securities transactions
comply with the spirit of, and the specific restrictions and limitations set
forth in, this Code. Loomis, Sayles believes this policy not only encourages
investment freedom and results in investment experience, but also fosters a
continuing personal interest in such investments by those responsible for the
continuous supervision of our clients' portfolios. It is also evidence of our
confidence in the investments made for our clients.
<PAGE>
In making personal investment decisions, however, you must exercise
extreme care to ensure that the prohibitions of this Code are not violated.
Further, you should conduct your personal investing in such a manner as to
eliminate the possibility that your time and attention are devoted to your
personal investments at the expense of time and attention that should be devoted
to management of a client's portfolio.
It is not intended that these policies will specifically address every
situation involving personal trading. These policies will be interpreted and
applied, and exceptions and amendments will be made, by Loomis, Sayles in a
manner considered fair and equitable, but in all cases with the view of placing
our clients' interests paramount. It also bears emphasis that technical
compliance with the procedures, prohibitions and limitations of this Code will
not automatically insulate you from scrutiny of, and sanctions for, securities
transactions which indicate an abuse of your fiduciary duty to any client of
Loomis, Sayles.
You are encouraged to bring any questions you may have about these
policies to the personnel in the Legal and Compliance Department, who will
assist you. BOLDFACED terms appearing in these policies have special meaning.
Please see the Glossary for definitions of these terms. Also, see the
"Explanatory Notes" appearing throughout (and made a part of) this Code for
clarification of certain provisions.
3. OVERVIEW
This Code governs personal trading and related activities by Loomis,
Sayles personnel, and in some circumstances by their family members and others
in a similar relationship to Loomis, Sayles personnel.
3.1 PROVISIONS OF THE CODE APPLICABLE TO YOU
The Code contains substantive rules you must observe. You must also
follow certain procedural requirements designed to enforce and verify compliance
with the Code. The Code also provides for sanctions for violations of either
substantive or procedural requirements. The Code consists of three types of
requirements applicable to you. These three types of Code provisions can be
summarized as follows:
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<PAGE>
3.1.1 Substantive Restrictions on Personal Trading and
Related Activities. (Section 4)
As a Loomis, Sayles employee, your personal securities
trading, outside affiliations and receipt of gifts are subject to restrictions,
and in some cases, prohibitions. Certain of these activities, such as competing
with client trades and making personal use and benefit from client trades, are
obviously unethical, and the basis for prohibitions on these activities is self
evident. Others, such as purchases of initial public offerings and private
placements, trading during specified black out periods, short-term trading and
public company board service, are restricted because they present actual or
perceived conflicts of interest. These restrictions or prohibitions are based on
SEC rules or positions, industry "best practices" recommendations, and Loomis,
Sayles, policies.
3.1.2 Preclearance, Document Delivery and Reporting.
(Section 5)
With certain limited exceptions (described in Section 6) you
must pre-clear every personal securities transaction you propose to enter. You
must also arrange for the delivery by your broker to the Legal and Compliance
Department of duplicate copies of your brokerage confirmation statements and
account statements, either in paper form or, through arrangements with certain
brokers approved by the Legal and Compliance Department, electronically.
Likewise, you must report your personal securities transactions to the Legal and
Compliance Department on a monthly basis either directly, or through
arrangements, approved by the Legal and Compliance Department, by which your
broker provides the Legal and Compliance Department with electronic duplicate
copies of your brokerage confirmation statements and account statements.
Finally, you must disclose your personal securities holdings on an annual basis
(and, for new employees, upon commencing employment). Certain restrictions apply
differently to different types of personnel. You will be notified from time to
time of the category (or categories) into which you fall, and where appropriate,
of the accounts or specific securities with respect to which you are considered
to be in such category.
3.1.3 Sanctions. (Section 7)
The sanctions for violating the Code may be severe. They range
from warnings and fines to suspension or termination of employment, and, in some
cases, to referral to regulatory agencies for civil or criminal proceedings
against the individual involved.
3.2 A FEW KEY TERMS
As noted above, BOLDFACED terms have special meaning in this Code. The
application of a particular Code requirement to you may hinge on the elements of
the definition of these terms. See the Glossary at the end of this Code for
definitions of these terms. In order to have a basic understanding of the Code,
however, you must have an understanding of the terms "SECURITY" and "BENEFICIAL
OWNERSHIP" as used in the Code.
3.2.1 Security.
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<PAGE>
This Code generally relates to transactions in and ownership
of investment that is a SECURITY. For purposes of the Code, SECURITY is
interpreted as defined in Rule 17j-1 under the 1940 Act and Rule 204-2(a)(12)
under the Advisers Act or any applicable successor provision. Currently, this
means any type of equity or debt security (such as common and preferred stocks,
and corporate and government bonds or notes) and any instrument representing, or
any rights relating to, a security (such as certificates of participation,
depository receipts, put and call options, warrants, convertible securities and
securities indices).
EXCEPT that SECURITY for this purpose does NOT include:
- shares of registered open-end investment companies
(mutual funds) whether or not affiliated with
Loomis, Sayles
- direct obligations of the United States Government
(i.e., Treasury securities, as distinct from U.S.
Government agencies or instrumentalities)
- bankers' acceptances
- bank certificates of deposit
- commercial paper
- repurchase agreements
- other money market instruments
EXPLANATORY NOTE:
SHARES OF CLOSED-END FUNDS, MUNICIPAL OBLIGATIONS AND
SECURITIES ISSUED BY AGENCIES AND INSTRUMENTALITIES
OF THE U.S. GOVERNMENT (E.G., GNMA OBLIGATIONS) ARE
SECURITIES.
3.2.2 Beneficial Ownership.
The Code governs any SECURITY in which you have a direct or
indirect "BENEFICIAL OWNERSHIP." This term encompasses not only "ownership" by
you in the usual sense, but any interest which gives you an ability to profit or
enjoy economic benefits from a SECURITY.
BENEFICIAL OWNERSHIP for purposes of the Code is interpreted
as that term is defined from time to time in Rule 17j-1 under the 1940 Act and
Rule 204-2(a)(12) under the Advisers Act or any applicable successor provision.
Currently, this means a direct or indirect "pecuniary interest" that is held or
shared by you directly or indirectly (through any contract, arrangement,
understanding, relationship or otherwise) in a SECURITY. The term "pecuniary
interest" in turn generally means your opportunity directly or indirectly to
receive or share in any PROFIT derived from a transaction in a
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<PAGE>
SECURITY whether or not the SECURITY or the relevant account is in your name
or is held in an ordinary brokerage or retirement plan account. Although this
concept is subject to a variety of SEC rules and interpretations, you should
know that you are PRESUMED under the Code to have an indirect pecuniary
interest as a result of:
- ownership of a SECURITY by your spouse or minor
children;
- ownership of a SECURITY by your other family members
sharing your household (including an adult child, a
stepchild, a grandchild, a parent, stepparent,
grandparent, sibling, mother- or father-in-law,
sister- or brother-in-law, and son- or
daughter-in-law);
- your share ownership, partnership interest or similar
interest in the portfolio securities held by a
corporation, general or limited partnership or
similar entity you control;
- your right to receive dividends or interest from a
SECURITY even if that right is separate or separable
from the underlying securities;
- your interest in a SECURITY held for the benefit of
you alone or for you and others in a trust or similar
arrangement (including any present or future right to
income or principal); and
- your right to acquire a SECURITY through the exercise
or conversion of a "derivative security."
EXPLANATORY NOTE:
NOTE THAT YOU ARE PRESUMED TO HAVE A BENEFICIAL
OWNERSHIP IN ANY SECURITY HELD BY FAMILY MEMBERS WHO
SHARE YOUR HOUSEHOLD. IN CERTAIN UNUSUAL CASES THIS
PRESUMPTION WILL NOT APPLY IF THE REVIEW OFFICER
DETERMINES, BASED ON ALL OF THE RELEVANT FACTS, THAT
THE ATTRIBUTION OF THESE FAMILY MEMBER'S SECURITY
TRANSACTIONS TO YOU IS INAPPROPRIATE.
IN THE CASE OF UNMARRIED PERSONS WHO SHARE A
HOUSEHOLD AND COMBINE THEIR FINANCIAL RESOURCES IN A
MANNER SIMILAR TO THAT OF MARRIED PERSONS, EACH
PERSON WILL BE PRESUMED TO HAVE A BENEFICIAL
OWNERSHIP IN THE SECURITIES AND TRANSACTIONS OF THE
OTHER.
THE LOOMIS, SAYLES FUNDED PENSION PLAN, AND ANY
ACCOUNT OF AN ACCESS PERSON, EVEN IF ALSO A CLIENT
ACCOUNT, WILL BE SUBJECT TO THIS CODE AS AN ACCOUNT
IN WHICH AN ACCESS PERSON HAS A BENEFICIAL OWNERSHIP.
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<PAGE>
4. SUBSTANTIVE RESTRICTIONS ON PERSONAL TRADING AND RELATED ACTIVITIES --
PROHIBITED OR RESTRICTED
ACTIVITIES
The following are substantive prohibitions and restrictions on your
personal trading and related activities. Please note that different types of
prohibitions and restrictions apply to different types of personnel. In general,
the prohibitions set forth below relating to trading activities apply to
accounts holding SECURITIES in which an ACCESS PERSON has a BENEFICIAL
OWNERSHIP. However, as noted above in the Statement of General Principles,
technical compliance with these provisions will not insulate you from scrutiny
of, and sanctions for, SECURITIES transactions which indicate an abuse of your
fiduciary duty.
4.1 COMPETING WITH CLIENT TRADES.
No ACCESS PERSON may, directly or indirectly, purchase or sell a
SECURITY in such a way that the ACCESS PERSON knew, or reasonably should have
known, that such a SECURITY transaction competes in the market with any actual
or considered SECURITY transaction for any client of Loomis, Sayles, or
otherwise personally acts to injure any Loomis, Sayles client's SECURITY
transactions.
4.2 PERSONAL USE OF CLIENT TRADING KNOWLEDGE.
No ACCESS PERSON may use the knowledge of SECURITIES purchased or sold
by any client of Loomis, Sayles or SECURITIES being considered for purchase or
sale by any client of Loomis, Sayles to profit personally, directly or
indirectly, by the market effect of such transactions.
4.3 DISCLOSURE OF CLIENT TRADING KNOWLEDGE.
No ACCESS PERSON may, directly or indirectly, communicate to any person
who is not an ACCESS PERSON or other approved agent of Loomis, Sayles (e.g.,
legal counsel) any non-public information relating to any client of Loomis,
Sayles or any issuer of any SECURITY owned by any client of Loomis, Sayles,
including, without limitation, the purchase or sale or considered purchase or
sale of a SECURITY on behalf of any client of Loomis, Sayles, except to the
extent necessary to comply with applicable law or to effectuate SECURITIES
transactions on behalf of the client of Loomis, Sayles.
4.4 TRANSACTING IN SECURITIES UNDER CONSIDERATION OR PENDING
EXECUTION.
No ACCESS PERSON may, directly or indirectly, execute a personal
SECURITIES transaction on a day during on which: (a) the same SECURITY or an
EQUIVALENT SECURITY is being considered for purchase or sale by a client; or (b)
the same SECURITY or an EQUIVALENT SECURITY is the subject of a pending "buy" or
"sell" order, until that SECURITY ceases being considered for purchase or sale
or the buy or sell order is executed or withdrawn.
EXPLANATORY NOTE:
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<PAGE>
YOU MAY ASSUME THAT A SECURITY IS NOT BEING
CONSIDERED FOR PURCHASE OR SALE OR THE SUBJECT OF A
PENDING BUY OR SELL ORDER IF YOU RECEIVE A
PRECLEARANCE TO TRADE THE SECURITY, AS DESCRIBED IN
SECTION 5, UNLESS YOU HAVE ACTUAL KNOWLEDGE TO THE
CONTRARY.
4.5 INITIAL PUBLIC OFFERINGS AND PRIVATE PLACEMENTS.
Without obtaining prior written approval from the REVIEW OFFICER, no
ACCESS PERSON may, directly or indirectly, purchase any SECURITY sold in an
INITIAL PUBLIC OFFERING or pursuant to a PRIVATE PLACEMENT TRANSACTION.
EXPLANATORY NOTE:
AN ACCESS PERSON SEEKING APPROVAL TO ACQUIRE A
SECURITY IN AN INITIAL PUBLIC OFFERING OR PRIVATE
PLACEMENT TRANSACTION MUST SUBMIT A REQUEST IN THE
FORM PRESCRIBED BY THE REVIEW OFFICER FROM TIME TO
TIME DESCRIBING THE ISSUER AND THE INVESTMENT.
IN CONSIDERING SUCH A REQUEST, THE REVIEW OFFICER
WILL TAKE INTO ACCOUNT, AMONG OTHER CONSIDERATIONS,
WHETHER THE INVESTMENT OPPORTUNITY SHOULD BE RESERVED
FOR LOOMIS, SAYLES CLIENTS, WHETHER THE OPPORTUNITY
IS BEING OFFERED TO YOU BY VIRTUE OF YOUR POSITION AT
LOOMIS, SAYLES AND WHETHER THE OPPORTUNITY IS LIKELY
TO PRESENT ACTUAL OR PERCEIVED CONFLICTS OF INTEREST
WITH LOOMIS, SAYLES' DUTIES TO ITS CLIENTS.
IT SHOULD BE UNDERSTOOD THAT APPROVAL OF THESE
TRANSACTIONS WILL BE GIVEN ONLY IN SPECIAL
CIRCUMSTANCES, AND NORMALLY WILL BE DENIED.
IF YOU HAVE BEEN AUTHORIZED TO ACQUIRE A SECURITY IN
A PRIVATE PLACEMENT TRANSACTION, YOU MUST DISCLOSE
SUCH INVESTMENT WHEN YOU ARE INVOLVED IN A CLIENT'S
SUBSEQUENT CONSIDERATION OF AN INVESTMENT IN THE
ISSUER, EVEN IF THAT INVESTMENT INVOLVES A DIFFERENT
TYPE OR CLASS OF SECURITY. IN SUCH CIRCUMSTANCES, THE
CLIENT'S DECISION TO PURCHASE SECURITIES OF THE
ISSUER MUST BE INDEPENDENTLY REVIEWED BY AN
INVESTMENT PERSON WITH NO PERSONAL INTEREST IN THE
ISSUER.
4.6 PARTICIPATION IN INVESTMENT CLUBS AND PRIVATE POOLED VEHICLES.
No ACCESS PERSON shall participate in an investment club or invest in a
hedge fund, or similar private organized investment pool (but not on SEC
registered open-end mutual fund) without express permission of the REVIEW
OFFICER.
4.7 GOOD UNTIL CANCELED AND LIMIT ORDERS.
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<PAGE>
No ACCESS PERSON shall place any "good until canceled" or "limit" order
with any broker except that an ACCESS PERSON may utilize a "day order with a
limit" so long as the transaction is consistent with provisions of this Code,
including the preclearance procedures.
EXPLANATORY NOTE:
ALL ORDERS MUST EXPIRE AT THE END OF THE TRADING DAY
THEY ARE PRECLEARED AND MADE. "GOOD UNTIL CANCELED"
AND "LIMIT" ORDERS THAT DO NOT EXPIRE AT THE END OF
THAT TRADING DAY ARE INCONSISTENT WITH THE
PRECLEARANCE TIMING ASPECTS OF THIS CODE OF ETHICS.
4.8 INVESTMENT PERSONNEL SEVEN-DAY BLACKOUT.
Except as set forth in Section 6.3 below, no INVESTMENT PERSON shall,
directly or indirectly, purchase or sell any SECURITY within a period of seven
(7) calendar days BEFORE and AFTER the date that a client with respect to which
he or she is designated by the REVIEW OFFICER as an INVESTMENT PERSON has
purchased or sold such SECURITY.
EXPLANATORY NOTE:
THE "SEVEN DAYS BEFORE" ELEMENT OF THIS RESTRICTION
IS BASED ON THE PREMISE THAT AN INVESTMENT PERSON CAN
NORMALLY BE EXPECTED TO KNOW, WHEN HE OR SHE IS
EFFECTING A PERSONAL TRADE, WHETHER ANY CLIENT AS TO
WHICH HE IS DESIGNATED AN INVESTMENT PERSON WILL BE
TRADING IN THE SAME SECURITY SEVEN DAYS LATER. AN
INVESTMENT PERSON HAS AN AFFIRMATIVE OBLIGATION TO
RECOMMEND AND/OR EFFECT SUITABLE AND ATTRACTIVE
TRADES FOR CLIENTS REGARDLESS OF WHETHER SUCH TRADE
WILL CAUSE A PRIOR PERSONAL TRADE TO BE CONSIDERED IN
APPARENT VIOLATION OF THIS RESTRICTION. IT WOULD
CONSTITUTE A BREACH OF FIDUCIARY DUTY AND A VIOLATION
OF THIS CODE TO DELAY OR FAIL TO MAKE ANY SUCH
RECOMMENDATION OR TRANSACTION IN ORDER TO AVOID A
CONFLICT WITH THIS RESTRICTION.
OF COURSE, IN PARTICULAR CASES A CHANGE OF
CIRCUMSTANCE, A FIRM OR CLIENT INITIATED LIQUIDATION,
REBALANCING OR OTHER DECISION OR SIMILAR EVENT MAY
OCCUR AFTER AN INVESTMENT PERSON'S PERSONAL TRADE
WHICH GIVES RISE TO AN OPPORTUNITY OR NECESSITY FOR
HIS OR HER CLIENT TO TRADE IN THAT SECURITY WHICH DID
NOT EXIST OR WAS NOT ANTICIPATED BY THAT PERSON AT
THE TIME OF THAT PERSON'S PERSONAL TRADE. THE REVIEW
OFFICER WILL REVIEW ANY EXTENUATING CIRCUMSTANCES
WHICH MAY WARRANT WAIVING OF ANY REMEDIAL ACTIONS IN
A PARTICULAR SITUATION INVOLVING AN APPARENTLY
INADVERTENT VIOLATION OF THIS RESTRICTION.
4.9 RESEARCH ANALYST THREE-DAY BLACKOUT BEFORE RECOMMENDATION.
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<PAGE>
During the three (3) business day period BEFORE the issuance of a
RECOMMENDATION by a RESEARCH ANALYST with respect to a SECURITY, that RESEARCH
ANALYST may not purchase or sell that SECURITY.
EXPLANATORY NOTE:
OF COURSE, IN PARTICULAR CASES A NEWS RELEASE, CHANGE
OF CIRCUMSTANCE OR SIMILAR EVENT MAY OCCUR AFTER A
RESEARCH ANALYST'S PERSONAL TRADE WHICH GIVES RISE TO
A NEED, OR MAKES IT APPROPRIATE, FOR A RESEARCH
ANALYST TO ISSUE A RECOMMENDATION WHICH NEWS,
CIRCUMSTANCE OR EVENT DID NOT EXIST OR WAS NOT
ANTICIPATED BY A RESEARCH ANALYST AT THE TIME OF THE
RESEARCH ANALYST'S PERSONAL TRADE. THE REVIEW OFFICER
WILL REVIEW ANY EXTENUATING CIRCUMSTANCES WHICH MAY
WARRANT WAIVING OF ANY REMEDIAL SANCTIONS IN A
PARTICULAR SITUATION INVOLVING AN APPARENTLY
INADVERTENT VIOLATION OF THIS RESTRICTION. A RESEARCH
ANALYST HAS AN AFFIRMATIVE DUTY TO MAKE UNBIASED
RECOMMENDATIONS AND ISSUE REPORTS, BOTH WITH RESPECT
TO THEIR TIMING AND SUBSTANCE, WITHOUT REGARD TO HIS
OR HER PERSONAL INTEREST. IT WOULD CONSTITUTE A
BREACH OF A RESEARCH ANALYST'S FIDUCIARY DUTY AND A
VIOLATION OF THIS CODE TO DELAY OR FAIL TO ISSUE A
RECOMMENDATION IN ORDER TO AVOID A CONFLICT WITH THIS
PROVISION.
4.10 ACCESS PERSON SEVEN-DAY BLACKOUT AFTER RECOMMENDATION.
During the seven (7) day period after a RECOMMENDATION is issued with
respect to a SECURITY, no ACCESS PERSON may purchase or sell that SECURITY.
4.11 SHORT TERM TRADING PROFITS.
No ACCESS PERSON may profit from the purchase and sale, or conversely
the sale and purchase, of the same or equivalent SECURITY within 60 calendar
days. Any profits generated on such transactions (calculated in a manner
determined appropriate under the circumstances by the REVIEW OFFICER) will be
disgorged. Exceptions may be requested (in advance) from the REVIEW OFFICER.
Such exceptions will be granted only in cases in which there are extenuating
circumstances and no actual or apparent conflict exists between such
transactions and a client's transactions.
4.12 SHORT SALES.
No ACCESS PERSON may purchase a put option or sell a call option, sell
a SECURITY short or otherwise take a short position in a SECURITY then being
managed by Loomis, Sayles on a discretionary basis in a client account, unless
there is a corresponding long position in the underlying SECURITY. Short selling
against the box is permitted, as is purchasing a put or selling a call option on
a broad based index.
4.13 FUTURES AND RELATED OPTIONS.
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No ACCESS PERSON shall use futures or related options on a SECURITY to
evade the restrictions of this Code. In other words, no ACCESS PERSON may use
futures or related options transactions with respect to a SECURITY if this Code
would prohibit taking the same position directly in the SECURITY.
4.14 ACCEPTANCE OF GIFTS.
Without obtaining prior written approval of the REVIEW OFFICER, no
ACCESS PERSON may accept any gift or other thing of more than DE MINIMIS value
from any person or entity that does business with Loomis, Sayles. The REVIEW
OFFICER will, from time to time, issue guidelines as to the type and value of
items that would be considered subject to this restriction.
4.15 PUBLIC COMPANY BOARD SERVICE AND OTHER AFFILIATIONS.
No ACCESS PERSON may serve on the board of directors of any publicly
traded company, absent prior written approval by the REVIEW OFFICER. In
determining whether to approve such board service, the REVIEW OFFICER will
consider whether such service will involve an actual or perceived conflict of
interest with client trading, place impediments on Loomis Sayles' ability to
trade on behalf of clients or otherwise materially interfere with the effective
discharge of Loomis Sayles' or the ACCESS PERSON'S duties to clients. Likewise,
absent prior written approval by the REVIEW OFFICER, no ACCESS PERSON shall
accept any other service, employment, engagement, connection, association or
affiliation in or with any enterprise, business or otherwise which may present
such actual or perceived conflicts, place impediments on trading or otherwise
materially interfere with the effective discharge of Loomis Sayles' or the
ACCESS PERSON'S responsibilities to clients.
5. PRECLEARANCE, DOCUMENT DELIVERY AND REPORTING PROCEDURES
5.1 PRECLEARANCE
With certain limited exceptions, set forth in Section 6 below, every
ACCESS PERSON must pre-clear (by written, telephonic or electronic means
specified by the REVIEW OFFICER from time to time) all personal SECURITY
transactions in which he or she has or would acquire BENEFICIAL OWNERSHIP. Any
transaction approved pursuant to the preclearance request procedure must be
executed by the end of the trading day on which it is approved unless the REVIEW
OFFICER extends the preclearance for an additional trading day. If the ACCESS
PERSON'S trade has not been executed by the end of the same trading day (or the
next trading day in the case of an extension), the "preclearance" will lapse and
the ACCESS PERSON may not trade without again seeking and obtaining preclearance
of the intended trade.
Pre-clearance requests will be accepted and responded to only during
hours specified by the REVIEW OFFICER from time to time.
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If after preclearance is given and before it has lapsed, an ACCESS
PERSON becomes aware that a SECURITY as to which he or she obtained
pre-clearance has become the subject of a buy or sell order or has become a
SECURITY being considered for purchase or sale, the ACCESS PERSON who obtained
the preclearance must consider the preclearance revoked. If the transaction has
already been executed before the ACCESS PERSON becomes aware of such facts no
violation will be considered to occur as a result of the ACCESS PERSON'S
transactions.
Generally preclearance will be DENIED:
- if Loomis, Sayles has an unfilled order for that
SECURITY placed with a broker-dealer, the SECURITY is
on the Loomis, Sayles "Restricted List" or
"Concentration List" (or such other trading
restriction list as Loomis, Sayles, may from time to
time establish) or the SECURITY is otherwise being
considered for purchase or sale,
- if the trade is otherwise prohibited under the
substantive rules set forth in Section 4 above (e.g.,
the requesting person is an INVESTMENT PERSON and his
or her client accounts have traded in the same
SECURITY within seven calendar days).
If an ACCESS PERSON has actual knowledge that a requested transaction
is nevertheless in violation of this Code, approval of the request will not
protect the ACCESS PERSON from being considered in violation of the Code.
5.2 TRANSACTION REPORTING REQUIREMENTS
5.2.1 Accounts Subject to Reporting.
Unless utilizing an alternative reporting procedure described
in Section 5.2.3 below, each ACCESS PERSON must file (by paper or electronic
means specified by the REVIEW OFFICER from time to time) a report on all
SECURITY transactions made during each monthly period in which such ACCESS
PERSON has, or by reason of such transactions acquires or disposes of, any
BENEFICIAL OWNERSHIP of a SECURITY, or as to which the ACCESS PERSON has any
direct or indirect influence or control (even if such ACCESS PERSON has no
BENEFICIAL OWNERSHIP in such SECURITY). (Official Loomis, Sayles client accounts
in which no Loomis, Sayles employee has a BENEFICIAL OWNERSHIP are not control
accounts for this purpose.) Control accounts subject to reporting include
accounts managed by an ACCESS PERSON, accounts of trusts for which an ACCESS
PERSON serve as trustee or co-trustee and similar accounts. Such report is
required whether or not such transactions were precleared or subject to
preclearance.
5.2.2 Transaction Reporting Procedure.
Every transaction report must be made not later than ten (10)
calendar days after the end of each calendar month in which the transaction(s)
to which the report relates was effected. All reports must contain the
information required from time to time by Rule 17j-1 under the 1940 Act and Rule
204-2(a)(12) under the Advisers Act or any
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applicable successor provision. A list of the specific items of information
then required will be set forth in a reporting form or other materials
provided by the REVIEW OFFICER from time to time.
If no transactions in any securities required to be reported
were effected during a monthly period by an ACCESS PERSON, such ACCESS PERSON
shall nevertheless submit a report within the time-frame specified above stating
that no reportable securities transactions were effected.
In addition, with respect to each account maintained by the
ACCESS PERSON during the period subject to reporting under Section 5.2.1,
whether or not a transaction occurred in such an account, the transaction report
must contain the brokerage account identification information required from time
to time by Rule 17j-1 under the 1940 Act and Rule 204-2(a)(12) under the
Advisers Act or any applicable successor provision. A list of the specific items
of information then required will be set forth in a reporting form or other
materials provided by the REVIEW OFFICER from time to time.
Every report concerning a securities transaction prohibited
under Section 4, with respect to which the ACCESS PERSON relies upon one of the
exemptions from substantive restrictions or preclearance requirements provided
in Section 6 shall contain a brief statement of the exemption relied upon and
the circumstances of the transactions.
5.2.3 Alternative Transaction Reporting Procedures
The REVIEW OFFICER may from time to time specify one or more
personal trading arrangements that permit or require the use of approved
alternative reporting procedures. These arrangements may include effecting all
transactions through a Loomis, Sayles trading desk or through approved brokerage
firms, or similar arrangements, in each case that would permit the REVIEW
OFFICER to receive directly electronic or other information reports on the
ACCESS PERSON'S trading without the intervention of the ACCESS PERSON.
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5.3 INITIAL AND ANNUAL PERSONAL HOLDINGS REPORTING REQUIREMENTS
Within 10 days after becoming an ACCESS PERSON, each ACCESS PERSON must
file with the REVIEW OFFICER a report (by paper or electronic means specified by
the REVIEW OFFICER from time to time) of such SECURITIES in which such ACCESS
PERSON has a BENEFICIAL OWNERSHIP or as to which such ACCESS PERSON has direct
or indirect influence or control. In addition, at least annually thereafter, by
a date specified by the REVIEW OFFICER, each ACCESS PERSON must file with the
REVIEW OFFICER a dated report on a form and in a manner specified by the REVIEW
OFFICER of SECURITIES in which such ACCESS PERSON has a BENEFICIAL OWNERSHIP or
over which such ACCESS PERSON has direct or indirect influence or control. In
the case of the initial holdings report, the information must be as of the date
the person became an ACCESS PERSON. In the case of the annual holdings report,
the information in the report shall be as of a date within 30 days of filing the
report. In each case, this report must contain the information required from
time to time by Rule 17j-1 under the 1940 Act and Rule 204-2(a)(12) under the
Advisers Act or any applicable successor provision. A list of the specific items
of information then required will be set forth in a reporting form or other
materials provided by the REVIEW OFFICER from time to time.
5.4 BROKERAGE CONFIRMATIONS AND STATEMENTS
Each ACCESS PERSON must arrange for his or her broker to supply to the
REVIEW OFFICER, on a timely basis, duplicate copies of all confirmations of all
SECURITY transactions and copies of periodic statements for all accounts holding
SECURITIES in which the ACCESS PERSON has BENEFICIAL OWNERSHIP or as to which
such ACCESS PERSON has direct or indirect influence or control. ACCESS PERSONS
who maintain accounts with institutions that agree to provide such information
in an approved ELECTRONIC format may be eligible for an exemption from some of
the transaction reports required by the Code with respect to those accounts. See
Section 5.2.3.
5.5 REVIEW OF REPORTS BY REVIEW OFFICER
The REVIEW OFFICER shall establish procedures as the REVIEW OFFICER may
from time to time determine appropriate, for the review of the information
required to be compiled under this Code regarding transactions by ACCESS
PERSONS.
6. EXEMPT SECURITIES AND EXEMPT TRANSACTIONS
6.1 EXEMPT SECURITIES
Transactions in the following types of SECURITIES are exempt from the
substantive TRADING RESTRICTIONS and the PRECLEARANCE REQUIREMENTS, but NOT
REPORTING, requirements of this Code:
- shares of unit investment trusts as to which entity's
investment portfolio the ACCESS PERSON has no direct
or indirect influence or control (other than
open-ended registered investment companies, shares of
which are not considered "securities" at all for
these purposes);
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- bonds issued or guaranteed by any sovereign
government or its agencies, instrumentalities or
authorities or supra-national issuers (other than
direct U.S. government obligations which are not
considered "SECURITIES" at all for these purposes) in
each case, as designated by the REVIEW OFFICER from
time to time;
- SECURITIES of small, private businesses owned or
operated by the family of the ACCESS PERSON; and
- "index baskets" and options, futures or other
derivatives in each case tied to recognized broad
market indices.
6.2 EXEMPT TRANSACTIONS.
The following types of transactions are exempt from the TRADING
RESTRICTIONS, and the PRECLEARANCE REQUIREMENTS, but NOT REPORTING, requirements
of this Code:
- purchases or sales of SECURITIES for an account over
which you have no direct or indirect influence or
control;
- purchases or sales of SECURITIES which occur as a
result of operation of law, or any margin call
(provided such margin call does not result from your
withdrawal of collateral within 10 days before the
call and you have no involvement in the selection of
the specific SECURITIES to be sold);
- purchases of SECURITIES which are part of an
automatic dividend reinvestment plan, automatic
payroll deduction program, automatic cash purchase or
withdrawal program or other similar automatic
transaction program, but only to the extent you have
made no voluntary adjustment (up or down) in the rate
at which you purchase or sell;
- purchases of SECURITIES made by exercising rights
distributed by an issuer PRO RATA to all other
holders of a class of its SECURITIES or other
interests, to the extent such rights were acquired by
you from the issuer, and sales of such rights so
acquired;
- tenders of SECURITIES pursuant to tender offers which
are expressly conditioned on the tender offeror's
acquisition of all of the SECURITIES of the same
class; and
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- transactions in SECURITIES by your spouse (or person
in a similar relationship such that the presumption
of BENEFICIAL OWNERSHIP arises) employed at another
investment firm or similar entity, provided that: (a)
you have no direct or indirect influence or control
over the transaction; (b) the transactions are
effected solely through an account separate from your
account and (c) the REVIEW OFFICER has specifically
exempted the spousal or similar account from certain
trading restrictions and preclearance requirements.
EXPLANATORY NOTE:
TRANSACTIONS IN SUCH SPOUSAL OR SIMILAR RELATIONSHIP
ACCOUNTS THAT ARE EXEMPTED FROM TRADING RESTRICTIONS
AND PRECLEARANCE REQUIREMENTS WILL BE SUBJECT TO
SPECIAL SCRUTINY AND MAY BE SUBJECT TO ADDITIONAL
POLICIES OR RESTRICTIONS IN THE DISCRETION OF THE
REVIEW OFFICER TO ENSURE THAT THESE ACCOUNTS ARE NOT
BEING USED TO CIRCUMVENT THE POLICIES AND PURPOSES OF
THIS CODE.
6.3 EXEMPTION FOR INVESTMENT PERSONNEL FROM SEVEN-DAY BLACKOUT FOR
CERTAIN TRANSACTIONS IN LARGE CAPITALIZATION STOCKS.
An INVESTMENT PERSON may, without regard to the Investment Personnel
Seven-Day Blackout restriction set forth in Section 4.8 above, purchase or sell
a publicly traded equity security of an issuer having a market capitalization of
at least U.S. $5 billion in one or more transactions having an aggregate value
not exceeding U.S. $10,000 in any one day. Such transactions shall otherwise be
subject to all other substantive and procedural provisions of this Code,
including the preclearance provisions.
6.4 OTHER EXEMPTIONS GRANTED BY THE REVIEW OFFICER.
Subject to applicable law, the REVIEW OFFICER may from time to time
grant exemptions from the trading restrictions, preclearance requirements or
other provisions of this Code with respect to particular individuals, types of
transactions or SECURITIES, where in the opinion of the REVIEW OFFICER such an
exemption is appropriate in light of all the surrounding circumstances.
7. SANCTIONS
Any violation of the substantive or procedural requirements of this
Code will result in the imposition of such sanctions as the REVIEW OFFICER may
deem appropriate under the circumstances of the particular violation, as well as
the violator's past history of violations. These sanctions may include, but are
not limited to:
- a letter of caution or warning;
- payment of monies, such as a fine, disgorgement of
profits generated or payment of losses avoided, or
restitution to an affected client;
- suspension of personal trading privileges;
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- actions affecting employment status, such as
suspension of employment without pay, demotion or
termination of employment; and
- referral to the SEC, other civil authorities or
criminal authorities;
In applying sanctions, the REVIEW OFFICER will be guided by sanctions
guidelines established by senior management, from time to time, setting forth
suggested sanctions for specific types of violations, including a schedule of
escalating penalties for repeat violations in some areas. Serious violations,
including those involving deception, dishonesty or knowing breaches of law or
fiduciary duty, will result in one or more of the most severe violations
regardless of the violator's history of prior compliance.
Fines, penalties and disgorged profits will be donated to a charity
selected by the relevant employee or as determined by the REVIEW OFFICER.
8. RECORDKEEPING REQUIREMENTS
Loomis, Sayles shall maintain and preserve records relating to this
Code of the type and in the manner and form and for the time period prescribed
from time to time by applicable law. Currently, Loomis, Sayles is required by
law to maintain and preserve:
- in an easily accessible place, a copy of this Code
(and any prior code of ethics that was in effect at
any time during the past five years) for a period of
five years;
- in an easily accessible place a record of any
violation of this Code and of any action taken as a
result of such violation for a period of five years
following the end of the fiscal year in which the
violation occurs;
- a copy of each report (or information provided in
lieu of a report) submitted under this Code for a
period of five years, provided that for the first two
years such copy must be preserved in an easily
accessible place;
- in an easily accessible place, a list of all persons
who are, or within the past five years were, required
to make, or were responsible for reviewing, reports
pursuant to this Code;
- a copy of each report provided to any INVESTMENT
COMPANY as required by paragraph (c)(2)(ii) of Rule
17j-1 under the 1940 Act or any successor provision
for a period of five years following the end of the
fiscal year in which such report is made, provided
that for the first two years such record shall be
preserved in an easily accessible place; and
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- a written record of any decision, and the reasons
supporting any decision, to approve the purchase by
an ACCESS PERSON of any SECURITY in an INITIAL PUBLIC
OFFERING or PRIVATE PLACEMENT TRANSACTION for a
period of five years following the end of the fiscal
year in which the approval is granted.
9. MISCELLANEOUS
9.1 CONFIDENTIALITY
Information obtained from any ACCESS PERSON hereunder will normally be
kept in strict confidence by Loomis, Sayles, but may under certain circumstances
be provided to third parties. For example, reports of SECURITIES transactions
and violations hereunder will be made available to the SEC or any other
regulatory or self-regulatory organization to the extent required by law or
regulation, and in certain circumstances, may in Loomis, Sayles' discretion be
made available to other civil and criminal authorities. In addition, information
regarding violations of this Code may be provided to clients or former clients
of Loomis, Sayles.
9.2 NOTICE TO ACCESS PERSONS, INVESTMENT PERSONNEL AND RESEARCH
ANALYSTS AS TO STATUS; NOTICE TO REVIEW OFFICER OF ENGAGEMENT
OF INDEPENDENT CONTRACTORS
Loomis, Sayles shall periodically identify all persons who are
considered to be "ACCESS PERSONS," " INVESTMENT PERSONNEL" and "RESEARCH
ANALYSTS" and any accounts or types of accounts or SECURITIES covered as to
which a designation of INVESTMENT PERSONNEL or RESEARCH ANALYSTS may apply,
inform such persons of their respective reporting and duties under the Code and
provide such persons with copies of this Code.
Any person engaging an independent contractor shall notify the REVIEW
OFFICER of this engagement and provide to the REVIEW OFFICER information
concerning the independent contractor sufficient to permit the REVIEW OFFICER to
make a determination as to whether such independent contractor shall be
designated as an ACCESS PERSON.
9.3 INITIAL AND ANNUAL CERTIFICATION OF COMPLIANCE
Each ACCESS PERSON must, upon becoming an ACCESS PERSON and annually
thereafter, (by paper or electronic means specified by the REVIEW OFFICER from
time to time) acknowledge that he or she has received, read and understands this
Code and recognizes that he or she is subject hereto, and certify that he or she
will (in the case of a new ACCESS PERSON) and has during the past year (in the
case of an annual certification) complied with the requirements of this Code of
Ethics, except as otherwise disclosed in writing to the REVIEW OFFICER.
9.4 QUESTIONS AND EDUCATIONAL MATERIALS
You are encouraged to bring to the Legal and Compliance Department any
questions you may have about interpreting or complying with this Code, about
SECURITY accounts or personal trading activities of you or of your family or
household members, about your legal or ethical responsibilities or about similar
matters that may involve this Code.
The Legal and Compliance Department may from time to time circulate
educational materials or bulletins designed to assist you in understanding and
carrying out your duties under this Code.
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GLOSSARY OF TERMS
The BOLDFACE terms used throughout this policy have the following
meanings:
1. "ACCESS PERSON" means an "access person" as defined from time
to time in Rule 17j-1 under the 1940 Act or any applicable
successor provision. Currently, this means any director,
general partner or officer of Loomis, Sayles, or any ADVISORY
PERSON (as defined below) of Loomis, Sayles.
2. "ADVISORY PERSON" means an "advisory person" and
"advisory representative" as defined from time to time in
Rule 17j-1 under the 1940 Act and Rule 204-2(a)(12) under
the Advisers Act, respectively, or any applicable
successor provision. Currently, this means (i) every
employee of Loomis, Sayles (or of any company in a
CONTROL relationship to Loomis, Sayles), who, in
connection with his or her regular functions or duties,
makes, participates in, or obtains information regarding
the purchase or sale of a SECURITY by Loomis, Sayles on
behalf of clients, or whose functions relate to the
making of any recommendations with respect to such
purchases or sales; and (ii) every natural person in a
CONTROL relationship to Loomis, Sayles who obtains
information concerning recommendations made to a client
with regard to the purchase or sale of a SECURITY.
ADVISORY PERSON also includes: (a) any other employee
designated by the REVIEW OFFICER as an ADVISORY PERSON
under this Code; and (b) any independent contractor (or
similar person) engaged by Loomis, Sayles designated as
such by the REVIEW OFFICER as a result of such
independent contractor's access to information about the
purchase or sale of SECURITIES by Loomis, Sayles on
behalf of clients (by being present in Loomis, Sayles
offices, having access to computer data or otherwise).
3. "BENEFICIAL OWNERSHIP" is defined in Section 3.2.2 of the Code.
4. "CONTROL" means "control" as defined from time to time in Rule
17j-1 under the 1940 Act and Rule 204-2(a)(12) under the
Advisers Act or any applicable successor provision. Currently,
this means the power to exercise a controlling influence over
the management or policies of Loomis, Sayles, unless such
power is solely the result of an official position with
Loomis, Sayles.
5. "INITIAL PUBLIC OFFERING" means an "initial public offering"
as defined from time to time in Rule 17j-l under the 1940 Act
or any applicable successor provision. Currently, this means
any offering of securities registered under the Securities Act
of 1933 the issuer of which immediately before the offering,
was not subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934.
6. "INVESTMENT COMPANY" means any INVESTMENT COMPANY registered
as such under the 1940 Act and for which Loomis, Sayles serves
as investment adviser or subadviser.
7. "INVESTMENT PERSON" means all PORTFOLIO MANAGERS of Loomis,
Sayles and other ADVISORY PERSONS who assist the PORTFOLIO
MANAGERS in making and implementing investment decisions for
an INVESTMENT COMPANY or other client of Loomis, Sayles,
including, but not limited to, designated RESEARCH ANALYSTS
and traders of Loomis,
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Sayles. A person is considered an INVESTMENT PERSON only
as to those client accounts or types of client accounts
as to which he or she is designated by the REVIEW OFFICER
as such. As to other accounts, he or she is simply an
ACCESS PERSON.
8. "PORTFOLIO MANAGER" means any individual employed by Loomis,
Sayles who has been designated as a PORTFOLIO MANAGER by
Loomis, Sayles. A person is considered a PORTFOLIO MANAGER
only as to those client accounts as to which he or she is
designated by the REVIEW OFFICER as such. As to other client
accounts, he or she is simply an ACCESS PERSON.
9. "PRIVATE PLACEMENT TRANSACTION" means a "limited offering" as
defined from time to time in Rule 17j-l under the 1940 Act or
any applicable successor provision. Currently, this means an
offering exempt from registration under the Securities Act of
1933 pursuant to Section 4(2) or 4(6) or Rule 504, 505 or 506
under that Act.
10. "RECOMMENDATION" means any initial rating or change therein,
in the case of an equity SECURITY, or any initial rating or
status, or change therein in the case of a fixed income
SECURITY in either case issued by a RESEARCH ANALYST.
11. "RESEARCH ANALYST" means any individual employed by Loomis,
Sayles who has been designated as a RESEARCH ANALYST by
Loomis, Sayles. A person is considered a RESEARCH ANALYST only
as to those SECURITIES which he or she is assigned to cover
and about which he or she issues research reports to other
INVESTMENT PERSONNEL. As to other accounts, he or she is
simply an ACCESS PERSON.
12. "REVIEW OFFICER" means the General Counsel or such other
officer or employee of Loomis, Sayles designated from time to
time by Loomis, Sayles to receive and review reports of
purchases and sales by ACCESS PERSONS, and to address issues
of personal trading. "ALTERNATE REVIEW OFFICER(S)" means the
employee or employees of Loomis, Sayles designated from time
to time by Loomis, Sayles to receive and review reports of
purchases and sales, and to address issues of personal
trading, by the REVIEW OFFICER, and to act for the REVIEW
OFFICER in the absence of the REVIEW OFFICER.
13. "SECURITY" is defined in Section 3.2.1 of the Code.
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