-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OyGDpBdqGgYg2scXgalvk85XKJ+R3QZ2DB4B29vOh552slaSSRxwmdJjPZ3xJWwJ Uy90N0AX0YS45wdMxwxYnQ== 0000950156-96-000297.txt : 19960311 0000950156-96-000297.hdr.sgml : 19960311 ACCESSION NUMBER: 0000950156-96-000297 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960308 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOOMIS SAYLES FUNDS CENTRAL INDEX KEY: 0000872649 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06241 FILM NUMBER: 96532602 BUSINESS ADDRESS: STREET 1: 399 BOYLSTON STREET CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 8002831155 MAIL ADDRESS: STREET 1: 399 BOYLSTON STREET CITY: BOSTON STATE: MA ZIP: 02116 N-30D 1 LOOMIS SAYLES ANNUAL REPORT LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------ TO OUR SHAREHOLDERS: Nearly all markets around the world showed exceptional returns in 1995. This was partially a rebound from a disappointing 1994. Mostly, however, it reflected the fact that major economies in the world were not growing fast enough, if growing at all, to use up available liquidity. The excess liquidity found its way into the financial markets and stocks and bonds, pretty much around the world, did well. Concerned with the weak economies, the central banks in the major countries did their best to be sure that the liquidity was replenished. No matter how you slice it, it was a good year. Nineteen ninety six is starting with the same setting that made 1995 such a winner. Liquidity still exceeds the demand of the various economies. There are some signs this will change later in the year but that is quite a ways away. While bond valuations seem a bit rich contrasted with recent year experience, they are still quite reasonable on a longer term basis. The same is not really true of stock valuations in the United States but it is the case elsewhere. Also, as always, the aggregate numbers hide a number of exceptional situations. The one worry we have in 1996 is any sort of upset of a global political nature. TOTAL RETURN* LOOMIS SAYLES FUNDS VS MICROPAL CATEGORY
TOTAL RETURN* TOTAL RETURN** LOOMIS SAYLES RANK 12 MONTHS ENDED FROM MODIFIED INCEPTION IN MICROPAL CATEGORY 12/31/95 TO 12/31/95 FROM MODIFIED INCEPTION ------------------------- ----------------------- ----------------------- LOOMIS MICROPAL LOOMIS MICROPAL SAYLES MEDIAN SAYLES MEDIAN RANK PERCENTILE ------ ------ ------ ------ ---- ---------- Growth ....................................... 30.91 31.33 11.86 12.66 183 of 286 64th Growth & Income .............................. 35.23 32.14 12.81 12.52 86 of 202 43th Small Cap .................................... 32.09 29.92 18.54 15.63 23 of 98 23th International Equity ......................... 8.73 9.72 8.64 8.92 26 of 46 57th Bond ......................................... 31.96 18.76 15.45 9.94 1 of 21 1st Global Bond .................................. 23.91 17.74 9.75 8.80 10 of 26 38th U.S. Government Securities ................... 23.03 16.76 11.81 8.29 7 of 94 7th Municipal Bond ............................... 16.50 16.84 8.44 8.22 35 of 103 34th Short-Term Bond .............................. 10.62 10.82 5.90 5.25 10 of 61 16th - ---------- Note: Past performance is not predictive of future performance. * Total return is derived from changes in principal value plus reinvested dividends and capital gains distributions. ** Periods over one year are annualized. Modified inception reflects the nearest Micropal reporting period following actual inception. Micropal reports performance as of month end. Actual and modified inception dates occurred in May 1991 except for the Short-Term Bond Fund which commenced operations in August 1992. Source: Micropal, Inc.
The underlying theme for the markets in recent years has been that, for the first time in nearly sixty years, the world is not experiencing a major hot or cold war. Thus, the enormous expenditure of maintaining standing armies is being somewhat diminished. There are also other pressures to hold down government spending at the national level. The combination of these two factors means that the national governments are not soaking up liquidity that would otherwise go to the economies and the various markets around the world. As long as this continues, there is a relatively favorable background for the financial markets. This more peaceful political environment has allowed for further expansion of world trade and further progress by the developing countries. It is just possible that we are coming into one of these wonderful times in history when progress can continue uninterrupted for a very long spell. That seems to be what the equity and fixed income markets have picked up on. Right now, it does not appear that, barring a geo-political upset, there is much in store to seriously interrupt the reasonable market environment. We've all been around long enough to realize that the best thing to do with a forecast is to forget it. Hopefully, that will not be the case with this one. While we can't predict the future we do feel comfortable that we will at least be able to react to the present as it changes. Enclosed, as part of this report, are individual comments from each of the portfolio managers which make for good reading. We thank you all for joining us as shareholders in our Funds. Best personal regards, /s/ Daniel J. Fuss Daniel J. Fuss STOCK FUNDS LOOMIS SAYLES GROWTH FUND Average Annual Returns(%) - Period Ended December 31, 1995 Since 1 year 3 years Inception ------ ------- --------- Loomis Sayles Growth Fund 30.91 11.30 13.26 Micropal Average Growth Fund(b) 31.02 12.77 12.79 S&P 500 Index(c) 37.44 15.26 13.62 Loomis S&P Micropal ------ ----- -------- 10.70 10.00 10.00 9.90 9.50 9.50 11.50 10.10 10.20 12.50 10.90 11.10 11.50 10.60 11.00 10.90 10.80 10.70 11.30 11.20 11.00 12.90 11.70 12.00 13.30 12.20 12.30 13.60 12.30 12.40 14.40 12.60 13.00 14.10 12.90 13.10 13.60 12.40 12.70 13.10 12.50 12.30 13.60 13.10 13.00 13.60 13.10 12.80 14.50 14.30 13.80 16.20 15.70 15.00 17.80 17.00 16.00 17.80 18.00 16.70 Note: Past performance is not predictive of future performance. (a): Inception date of the Loomis Sayles Growth Fund is May 16, 1991. Since Micropal and S&P 500 performance data is not available coincident with this date, comparative cumulative performance is charted from May 31, 1991. (b): Source: Micropal, Inc. (c): S&P 500 is a capital-weighted, total return index comprised of 500 widely held common stocks, representing industrial, utility, transportation, and financial companies listed on the New York Stock Exchange, American Stock Exchange and Over-the-Counter market. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. The Fund portfolio manager is Jerome A. Castellini. For equity investors, 1995 was one of the most rewarding years in history. Despite the budget impasse, a decelerating economy and higher price volatility, the large company indices, as exemplified above by the S&P 500, returned over 37%. We believe this reflects the underlying strength in our financial markets and the prospects for a continuation of low interest rates and higher savings, which should allow the rally to broaden into the faster growth sectors. This would benefit the Growth Fund. In 1995, companies such as Medtronic and Merck, with hot selling products, added to our performance. Exploration prospects for Enron and Anadarko are excellent while the technology sector is still positioned for accelerated growth after last fall's dip. While providing the bulk of the portfolio's performance through late last fall, these stocks fell victim to profit taking at year-end. We believe, however, that the prospects for growth in wireless communications (Glenayre and Airtouch) as well as the Internet (Microsoft, Cisco and Oracle) are even more compelling today than they have been in the past. LOOMIS SAYLES GROWTH & INCOME FUND Average Annual Returns(%) - Period Ended December 31, 1995 Since 1 year 3 years Inception ------ ------- --------- Loomis Sayles Growth & Income Fund 35.23 14.46 13.96 Micropal Average Growth & Income Fund(b) 31.29 12.93 12.19 S&P 500 Index(c) 37.44 15.26 13.62 Loomis S&P Micropal ------ ----- -------- 10.60 10.00 10.00 10.00 9.50 9.60 10.30 10.10 10.10 10.70 10.90 10.80 11.00 10.60 10.80 11.10 10.80 10.80 11.30 11.20 11.10 12.20 11.70 11.80 12.90 12.20 12.30 12.80 12.30 12.40 13.10 12.60 12.80 13.70 12.90 12.90 13.50 12.40 12.40 13.50 12.50 12.40 14.10 13.10 12.90 13.60 13.10 12.70 15.00 14.30 13.70 16.30 15.70 14.90 17.60 17.00 15.90 18.30 18.00 16.70 Note: Past performance is not predictive of future performance. (a): Inception date of the Loomis Sayles Growth & Income Fund is May 13, 1991. Since Micropal and S&P 500 performance data is not available coincident with this date, comparative performance is presented is charted from May 31, 1991. (b): Source: Micropal, Inc. (c): S&P 500 is a capital-weighted, total return index comprised of 500 widely held common stocks, representing industrial, utility, transportation, and financial companies listed on the New York Stock Exchange, American Stock Exchange and Over-the-Counter market. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. The Fund portfolio manager is Jeffrey W. Wardlow. As indicated above, the Growth and Income Fund had a return of 35.2% for 1995. By comparison, the S&P 500 Index had a return of 37.5% for the year, and the average growth and income fund had a return of 31.3%. In the stock market, two major factors helped transform a good year into a great one. First, lower interest rates reversed the damage done by higher rates in 1994 and drove financial stocks up 50%. Second, the return of favorable earnings comparisons and dissipating concern over health care reform propelled the health care sector dramatically higher. Technology stocks, despite all the attention in 1995, ended up with returns about even with the broader market. The worst performing sectors were consumer cyclicals and basic industry. The market also exhibited a definite large-cap bias, with the small and mid-cap indices lagging the S&P 500 index by a wide margin. The Fund benefitted from an overweight in financials and some strong selections in capital goods and consumer staples stocks. Although still slightly underweighted, we increased our position in technology stocks at the end of the year after the sector sold off sharply. We have also added to the food and utility groups as we expect those stocks to do better in a slowing economy. While still overweighted in financials, we have started to cut back on the group due to the strong performance of the group last year. As we look forward, 1996 seems unlikely to provide the huge returns of last year. Interest rates may decline slightly, but not to the extent of the decline last year. Likewise, corporate earnings are likely to advance this year but at a slower pace than last year. LOOMIS SAYLES SMALL CAP FUND Average Annual Returns(%) - Period Ended December 31, 1995 Since 1 year 3 years Inception ------ ------- --------- Loomis Sayles Small Cap Fund 32.09 14.73 18.86 Micropal Average Small Company Growth Fund(b) 31.30 14.67 15.80 Russell 2000 Index(c) 28.55 14.50 15.21 Loomis Russell Micropal ------ ------- -------- 10.20 10.00 10.00 9.90 9.40 9.50 11.50 10.20 10.50 13.00 10.80 11.60 14.40 11.60 11.90 12.50 10.80 10.90 12.50 11.10 11.30 14.80 12.80 13.00 15.70 13.30 13.20 16.00 13.60 13.60 18.10 14.80 14.70 18.40 15.20 15.00 17.40 14.80 14.50 16.60 14.20 13.70 17.40 15.20 14.80 16.90 14.90 14.80 18.00 15.60 15.60 18.90 17.00 17.10 21.50 18.70 19.10 22.30 19.10 19.40 Note: Past performance is not predictive of future performance. (a): Inception date of the Loomis Sayles Small Cap Fund is May 13, 1991. Since Micropal and Russell 2000 Index performance data is not available coincident with this date, comparative performance is presented is charted from May 31, 1991. (b): Source: Micropal, Inc. (c): Russell 2000 Index is comprised of the 2,000 smallest securities in the Russell 3000 Index (a broad market index), representing approximately 7% of the Russell 3000 total market capitalization. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. The Fund portfolio managers are Jeffrey C. Petherick and Mary C. Champagne. On the surface, 1995 looked to be a very easy year in the market. However, many fund managers did not manage to beat their benchmarks. We are pleased to say that we beat the Russell 2000 in an environment that did not favor our investment style. As indicated above, the Small Cap Fund was up 32.09% versus 28.55% for the Russell 2000. 1995 was the year for the "growth" investor, with all of the "growth" indices substantially outperforming "value" indices. Despite this, our small cap value discipline served us well in 1995. Our focus on undervalued stocks possessing strong earnings visibility led us to good solid companies with near-term catalysts that helped unlock their inherent value. Our discipline also kept us away from the many value traps in the market, i.e., those companies seemingly representing value yet with no near- term catalyst to draw investor interest. Many of our best ideas were found in the Financial Services, Health Care and Technology areas. Our overweighting in the first two sectors helped us to participate in their spectacular flight while our underweighting in Technology allowed us to avoid disaster when those highfliers eventually came tumbling back toward earth. Our underweighting in Consumer Cyclical stocks, particularly retail stocks, also helped dramatically as many managers held large positions in these stocks hoping for a recovery. We prefer to wait for evidence of a recovery before making our investments and this strategy has proven correct. As we have done consistently, we placed as much emphasis on the sell decisions as we did on the buy decisions. Kicking out the non-performers had much to do with our strong performance this year. Those stocks that did not meet our objectives as they related to our investment thesis were replaced with better ideas. The majority of the stocks liquidated due to nonperformance continued to disappoint as the year progressed. We know that one of the greatest threats to a portfolio's performance in the long run is not the difficulty of finding good investments, but in the frequent reluctance to let go of the poor ones. Over the years this has been one of the main tenets of our investment discipline and is one of the main reasons for our superior investment results. We look forward to the challenge 1996 is sure to bring. While we think it may be a difficult first half of the year we believe that our discipline will continue to serve us well and lead us to many good opportunities in the market. Small stocks have now underperformed large stocks for two years, but we believe the stage is set for small cap stocks to begin to outperform. A moderate economy will make growth difficult for many of the large companies, while many of the small companies that operate in niche markets will continue to experience strong earnings growth. This should draw investors back to the small cap arena. The Small Cap Fund is well positioned should this occur. LOOMIS SAYLES INTERNATIONAL EQUITY FUND Average Annual Returns(%) - Period Ended December 31, 1995 Since 1 year 3 years Inception ------ ------- --------- Loomis Sayles International Equity Fund 8.73 13.96 8.43 Micropal Average International Equity Fund(b) 9.48 14.48 9.18 MSCI-EAFE Index(c) 11.21 16.70 8.07 Loomis MSCI Micropal ------ ---- -------- 10.00 10.00 10.00 9.50 9.30 9.50 10.40 10.10 10.20 10.40 10.20 10.30 10.80 9.00 10.00 11.20 9.20 10.50 10.50 9.40 10.00 9.80 9.00 9.80 10.80 10.05 10.70 11.00 11.10 11.20 12.10 11.80 12.30 13.60 11.90 13.60 13.60 12.40 13.40 13.40 12.90 13.50 13.60 12.90 14.00 13.40 12.80 13.40 13.70 13.00 13.00 14.80 13.20 13.60 14.80 13.70 14.30 14.50 14.30 14.60 Note: Past performance is not predictive of future performance. (a): Inception date of the Loomis Sayles International Equity Fund is May 10, 1991. Since Micropal and MSCI-EAFE Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. (b): Source: Micropal, Inc. (c): MSCI-EAFE Index is a capital-weighted average of the perfromance of over 1,000 securities listed on the stock exchanges of 20 countries in Europe, Australia and the Far East. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. The Fund portfolio manager is Frank E. Jedlicka. Despite a decline of 1.54% during the final quarter of 1995, the Loomis Sayles International Equity Fund net asset value per share gained 8.73% in the year. The Fund's annualized return since its modified inception on May 31, 1991 is 8.64%. As shown above, the MSCI EAFE index's annualized return over the same period was 8.07%. During the year, we maintained approximately equal weightings in twelve countries having relatively cheap price-to-earnings and price-to-book ratios, strong earnings momentum and low rates of inflation. We believe that this diversification lowers the risk of international investing and increases the probability of superior returns over reasonably long periods of time. At year end, the companies in which we were invested had an average price- to-earnings ratio of 11.1x (vs. 26.0x for EAFE), a return-on-equity of 19.5% (vs. 8.1%) and a dividend yield of 2.4% (vs. 2.1%). On average, their earnings per share were expected to rise by 16.1% (IBES consensus estimates) in local currency terms during the current year. While the economic recovery in Europe was slowed somewhat by weakness in Germany and problems both political and economic in France, 1996 has begun on a firmer note and we believe that it is likely to be more rewarding than the year just past. BOND FUNDS LOOMIS SAYLES BOND FUND Average Annual Returns(%) - Period Ended December 31, 1995 Since 1 year 3 years Inception ------ ------- --------- Loomis Sayles Bond Fund 31.96 15.66 15.19 Micropal Average Medium Grade Taxable Bond Fund(b) 18.90 8.30 10.14 Merrill Lynch Govt/Corp Index(c) 19.20 8.53 9.74 Loomis Micropal Merrill ------ -------- -------- 10.00 10.00 10.00 9.80 10.00 10.00 10.50 10.60 10.60 10.90 11.20 11.10 11.20 11.00 11.00 11.80 11.50 11.40 12.30 12.00 12.00 12.40 12.00 12.00 13.40 12.60 12.50 14.10 13.00 12.90 14.70 13.50 13.30 15.20 13.30 13.30 15.00 12.80 12.90 14.50 12.60 12.80 14.80 12.70 12.80 14.60 12.70 12.80 15.70 13.30 13.50 17.30 14.10 14.40 18.10 14.40 14.60 19.20 15.10 15.30 Note: Past performance is not predictive of future performance. (a): Inception date of the Loomis Sayles Bond Fund is May 16, 1991. Since Micropal and Merrill Lynch Govt/Corp Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. (b): Source: Micropal, Inc. (c): Merrill Lynch Index Govt/Corp is a composite of approximately 4,900 U.S. government and corporate issues with at least $25 million outstanding, greater than 1 year maturity and credit ratings of BBB or greater. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. The Fund portfolio manager is Daniel J. Fuss. The U.S. fixed income markets posted strong returns during 1995. The year finished with the bond markets registering their best annual returns since 1985. Performance, as reported by Micropal Inc., was quite noteworthy. For the fourth quarter of 1995, the Loomis Sayles Bond Fund rose 6.43% which compares very favorably to the Merrill Lynch Government/Corporate Index's return of 4.63%. For the year, the Fund returned 31.96% compared to 19.20% for the Index. Much of the Fund's performance can be attributed to being long, well call protected and having a continued emphasis in the corporate sector. While the Fund benefited from an overall narrowing of corporate spreads, style "effects" were not the only driver of performance. Strong individual issue selection was evident as the Bond Fund outperformed corporate-specific indices. The Fund's position in yield-oriented convertible bonds helped as this sector as a whole drew support from the strong stock market. At year end, approximately 19% of the portfolio was invested in convertible issues. The Fund's positions in Canadian and emerging market debt, primarily in the form of Latin American Brady issues, also helped as these sectors registered strong returns. The Loomis Sayles Bond Fund remains well diversified. The Fund carries a yield advantage relative to the market. Further, the Fund is extremely well call protected, has a good degree of potential credit improvement built into it and carries non-market related specific advantages. We are very confident with the current structure of the portfolio. As always, we continue to pursue various corners of inefficiency in the market; looking for neglected issues with strengthening credit fundamentals. LOOMIS SAYLES GLOBAL BOND FUND Average Annual Returns(%) - Period Ended December 31, 1995 Since 1 year 3 years Inception ------ ------- --------- Loomis Sayles Global Bond Fund 23.91 9.04 9.54 Micropal Average General Global Bond Fund(b) 16.91 8.38 8.77 Salomon Brothers World Government Bond Index(c) 19.04 11.36 12.04 Loomis Salomon Micropal ------ ------- -------- 10.00 10.00 10.00 9.60 9.90 9.80 10.50 10.70 10.60 11.70 11.60 11.30 11.10 11.20 11.00 12.00 11.90 11.60 11.80 12.70 11.90 11.80 12.20 11.60 12.40 12.80 12.20 12.40 13.20 12.20 13.20 13.80 13.10 13.50 13.80 13.40 13.00 13.80 12.80 12.20 13.90 12.60 12.20 14.10 12.70 12.30 14.10 12.70 12.00 15.70 13.50 13.10 16.50 14.10 14.20 16.30 14.30 15.30 16.80 14.80 Note: Past performance is not predictive of future performance. (a): Inception date of the Loomis Sayles Global Bond Fund is May 10, 1991. Since Micropal and Salomon Brothers World Government Bond Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. (b): Source: Micropal, Inc. (c): Salomon Brothers World Government Bond Index is a capital-weighted index whick tracks the performance of 14 government bond markets. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. The Fund portfolio manager is E. John deBeer. The Loomis Sayles Global Bond Fund ended the year as the #1 performing fund in its class for the quarter and for the year.* The Fund's 23.91% return is remarkable even in a year when the average global income fund posted a respectable 16.91% return. The Fund's larger holdings, including Canada and the emerging markets, performed well during the quarter. Going forward, the U.S. should continue to be stable to positive. On the other hand, foreign markets have lagged the U.S. and look to offer better value. In particular, emerging markets offer high yields and improving credit fundamentals. Our strategy continues to emphasize searching for yield advantages while attempting to reduce volatility. The Fund's yield is more than 2% above the market. Bargains in emerging markets and convertible bonds will likely be found in the upcoming stanza. Portfolio duration is driven by our determination of where we can find opportunities for value in individual securities. - ---------- *The Loomis Sayles Global Bond Fund ranked 1 out of 87 mutual funds reporting performance for one year on 12/31/95 in Micropal's General Global Bond Category. LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND Average Annual Returns(%) - Period Ended December 31, 1995 Since 1 year 3 years Inception ------ ------- --------- Loomis Sayles U.S. Government Securities Fund 23.03 10.10 11.80 Micropal Average General U.S. Government Bond Fund(b) 18.27 7.49 8.80 Lehman Brothers Government Bond Index(c) 18.34 8.17 9.40 Loomis MSCI Micropal ------ ---- -------- 10.00 10.00 10.00 10.00 10.10 10.10 10.70 10.60 10.60 11.50 11.10 11.10 11.10 10.90 10.90 11.60 11.20 11.40 12.40 11.80 12.00 12.50 11.80 11.90 13.30 12.30 12.50 13.90 12.60 12.80 14.60 13.00 13.20 14.50 13.00 13.20 13.70 12.60 12.80 13.40 12.30 12.70 13.40 12.30 12.70 13.60 12.40 12.80 14.40 12.90 13.40 15.40 13.70 14.20 15.90 14.00 14.40 16.70 14.60 15.10 Note: Past performance is not predictive of future performance. (a): Inception date of the Loomis Sayles U.S. Government Securities Fund is May 31, 1991. Since Micropal and Lehman Brothers Government Bond Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. (b): Source: Micropal, Inc. (c): Lehman Borthers Government Bond Index is composed of all publicly issued, nonconvertible, domestic debt of the U.S. government or any of its agencies, quasi-federal corporations, or corporate debt guaranteed by the U.S. government. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. The Fund portfolio manager is Kent P. Newmark. Long bond yields fell to their lowest levels in almost two years towards the end of 1995, completing the third best bond year in history. Only 1982 and 1985 produced higher total returns. Practically everything went well for bonds last quarter. Inflation remained in check, the economy showed increasing signs of weakness and a balanced budget in seven years was seriously discussed by Congress and the White House. Many market observers are now expecting long Treasuries to hit 5 1/2% this year, but my forecast is less sanguine. I believe the market has discounted most, if not all, of the good news and therefore have held the portfolio's duration at a conservative 6.0 years. The Tennessee Valley Authority issue, trading to its 1999 call date, performed quite well during the fourth quarter as investors found appeal in the 150 basis point excess yield to call over Treasuries. That spread should narrow this year as the yield curve steepens. Although the chances of double digit returns for the Fund in 1996 are not great, we will work to outperform our competition. LOOMIS SAYLES MUNICIPAL BOND FUND Average Annual Returns(%) - Period Ended December 31, 1995 Since 1 year 3 years Inception ------ ------- --------- Loomis Sayles Muni Bond Fund 16.50 7.14 8.49 Micropal Average General Municipal Fund(b) 16.86 7.15 8.20 Lehman Brothers Muni Bond Index(c) 17.48 7.75 8.61 Loomis Micropal Lehman ------ -------- ------ 10.00 10.00 10.00 10.00 10.00 10.00 10.40 10.40 10.40 10.80 10.70 10.70 10.80 10.70 10.80 11.60 11.20 11.20 11.60 11.40 11.50 11.80 11.60 11.70 12.20 12.00 12.10 12.70 12.50 12.50 13.10 12.90 12.90 13.20 13.00 13.10 12.50 12.20 12.40 12.60 12.30 12.50 12.70 12.30 12.60 12.70 12.10 12.40 13.30 13.00 13.30 13.50 13.20 13.60 13.90 13.50 14.00 14.50 14.20 14.60 Note: Past performance is not predictive of future performance. (a): Inception date of the Loomis Sayles Municipal Bond Fund is May 29, 1991. Since Micropal and Lehman Brothers Municipal Bond Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. (b): Source: Micropal, Inc. (c): Lehman Borthers Municipal Bond Index is computed from prices on approximately 21,000 bonds consisting of roughly 30% revenue bonds, 30% government obligations bonds, 27% insured and 13% prerefunded bonds. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. The Fund portfolio manager is Martha F. Hodgman. The municipal bond market had one of its best returns in years. The Lehman Bros. Municipal Bond Index showed a 17.5% return for the year -- quite a difference from last year's loss of 5.2%. After outperforming Treasuries in the first quarter, renewed discussion of flat tax proposals caused the municipal market to falter as investors feared that the tax advantage to owning municipal bonds might be repealed. The trading relationship of municipals to Treasuries changed dramatically in response to tax reform ideas so that long municipals that had traded as rich as 79% of long Treasuries in late April soon were trading at between 90%-93%, significantly above their 83% average. Through the balance of the year municipals continued to trade cheaply, fluctuating between 88% and 92% of comparable long Treasuries, as tax and budget reform solutions were proposed. The Loomis Sayles Municipal Bond Fund's 16.5% total return for the year nearly equaled the average municipal fund's return of 16.9% as shown in the above chart. As we stated in our semi-annual report, we lagged in the first half of the year since we were somewhat more defensive (with a shorter average maturity and duration than the market average), and were pleasantly surprised by the market's strength. Still, we were able to take advantage of some undervalued securities, notably the Foothills Transportation Authority bonds that we purchased in early June. We bought these BBB rated, zero coupon bonds with a yield of 7.28%, 50 basis points cheaper than the long Treasury bond. At year end, these bonds were yielding 6.40%, still 40 basis points cheaper than the long bond, but with a price appreciation of over 30%. During the fourth quarter we continued our process of lowering our exposure to issues with very short calls and investing in bonds with better call protection. The ongoing budget debate and political discussions will continue to affect the municipal market for much of the coming year. As questions about the repeal of the corporate de minimus tax code provision, the flat tax and the impact on state and local governments of Federal cuts are resolved there will undoubtedly be many opportunities over the coming months to both exploit cheaper situations and profit on richer relationships. LOOMIS SAYLES SHORT-TERM BOND FUND Average Annual Returns(%) - Period Ended December 31, 1995 Since 1 year 3 years Inception ------ ------- --------- Loomis Sayles Short-Term Bond Fund 10.62 6.39 5.90 Micropal Average Short-Term Corporate Bond Fund(b) 10.60 5.53 5.24 Lehman 1-3 Year Govt Index(c) 10.84 5.50 5.29 Loomis Micropal Merrill ------ -------- -------- 10.00 10.00 10.00 10.10 10.00 10.00 10.00 10.10 10.10 10.40 10.30 10.30 10.50 10.40 10.40 10.70 10.60 10.50 10.80 10.60 10.60 10.70 10.50 10.60 10.70 10.50 10.60 10.90 10.60 10.70 10.90 10.60 10.70 11.30 10.90 11.00 11.70 11.20 11.40 11.80 11.40 11.50 12.10 11.70 11.80 Note: Past performance is not predictive of future performance. (a): Inception date of the Loomis Sayles Short-Term Bond Fund is August 3, 1992. Since Micropal and Lehman 1-3 year Govt Index performance data is not available coincident with this date, comparative performance is presented from August 31, 1992. (b): Source: Micropal, Inc. (c): The Lehman Brothers 1-3 Year Govt Index includes fixed rate debt issues rated investment grade or higher. All issues have at least one year to three years to maturity and an outstanding par value of at least $100 million for U.S. Govt issues. The Government Bond Index includes issues of the U.S. Govt or any agency thereof. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. The Fund portfolio manager is John Hyll. For 1995 the Lehman Brothers 1-3 Year Government Index generated a total return of 10.84%. By comparison, the Fund's total return as exhibited in the above chart was 10.62%. In some respects 1995 was a difficult year as the market continued to accelerate relentlessly before there was a chance to react. The market's psychology turned decidedly bullish throughout the year as it became apparent that the magnitude of interest rate increases experienced in 1994 would result in a slowing economy during 1995. A slowing economy with benign inflationary pressures and the lowering of interest rates by the Federal Reserve contributed to the explosive 1995 bond market rally. Throughout the year, we increased credit quality due to both the narrowing of corporate spreads and to increase the Fund's market relatedness. As of December 31, 1995 the Fund had one of its highest concentrations of government and agency securities ever, at 59.2%. This high percentage reflects concerns of a slowing economy going forward and the likelihood of additional Federal Reserve easing. LOOMIS SAYLES GROWTH FUND - -------------------------------------------------------------------------------- INVESTMENTS -- as of December 31, 1995 COMMON STOCKS -- 98.3% OF TOTAL NET ASSETS Shares Value (a) ---------- ----------- BEVERAGE -- 2.6% Coca Cola Co. .................................... 15,700 $ 1,165,725 ----------- BUSINESS SERVICES -- 3.3% Cintas Corp. ..................................... 10.800 480,600 First Data Corp. ................................. 14,700 983,063 ----------- 1,463,663 ----------- CHEMICAL -- MAJOR -- 1.0% Air Products & Chemicals ......................... 8,600 453,650 ----------- CHEMICALS -- SPECIALTY -- 1.8% Morton International ............................. 22,600 810,775 ----------- COMPUTER SOFTWARE & SERVICES -- 13.8% Adobe Systems, Inc. .............................. 17,400 1,078,800 FTP Software, Inc. (c) ........................... 31,000 899,000 Informix Corp. (c) ............................... 50,100 1,503,000 Microsoft Corp. (c) .............................. 15,300 1,342,575 Oracle Systems Corp. (c) ......................... 31,200 1,322,100 ----------- 6,145,475 ----------- ELECTRONIC COMPONENTS -- 5.7% Intel Corp. ...................................... 24,100 1,367,675 LSI Logic Corp. (c)............................... 13,000 425,750 Molex Inc. ....................................... 11,750 359,844 Motorola ......................................... 7,500 427,500 ----------- 2,580,769 ----------- FINANCIAL SERVICES -- 1.0% MBNA Corp. ....................................... 12,500 460,938 ----------- FOOD -- PACKAGED & MISCELLANEOUS -- 2.8% Starbucks Corp. (c) .............................. 60,000 1,260,000 ----------- HEALTH CARE -- DRUGS -- 13.6% Amgen (c) ........................................ 23,100 1,371,563 Genzyme Corp. (c) ................................ 3,900 243,263 Johnson & Johnson ................................ 11,900 1,018,938 Merck & Co., Inc. ................................ 24,800 1,630,600 Oncor (c) ........................................ 185,000 832,500 Somatogen (c) .................................... 56,000 1,057,000 ----------- 6,153,864 ----------- HEALTH CARE -- SERVICES -- 1.7% HealthSouth Rehabilitation (c) ................... 26,800 780,550 ----------- HEALTH CARE -- MEDICAL TECHNOLOGY -- 4.3% Medtronic ........................................ 23,800 1,329,825 Ventritex (c) .................................... 35,900 623,763 ----------- 1,953,588 ----------- HOME PRODUCTS -- 4.9% Duracell International ........................... 12,100 626,175 Gillette Co. ..................................... 21,400 1,115,475 Procter & Gamble ................................. 5,800 481,400 ----------- 2,223,050 ----------- HOTELS & RESTAURANTS -- 1.2% McDonalds Corp. .................................. 12,200 550,525 ----------- INSURANCE -- 5.2% American International Group ..................... 15,650 1,447,625 Exel ............................................. 14,300 872,300 ----------- 2,319,925 ----------- MEDIA & ENTERTAINMENT -- 1.3% Viacom Inc. Class B (c) ......................... 12,499 592,140 ----------- METALS -- 1.1% Nucor Corp. ...................................... 9,000 514,125 ----------- NATURAL GAS PIPELINES -- 2.0% Enron Corp. ...................................... 23,300 888,313 ----------- OFFICE EQUIPMENT & SUPPLIES -- 9.2% Cisco Systems (c) ............................... 19,200 1,432,800 Compression Labs (c) ............................. 51,400 321,250 Hewlett Packard Co. .............................. 12,700 1,063,625 Parametric Technology (c) ........................ 10,000 665,000 Silicon Graphics (c) ............................. 24,200 665,500 ----------- 4,148,175 ----------- OIL -- INDEPENDENT PRODUCERS -- 9.4% Anadarko Petroleum Corp. ......................... 32,700 1,769,888 Cross Timbers Oil Co. ............................ 24,600 433,575 Enron Oil & Gas Co. .............................. 30,000 720,000 Unit Corp. (c) ................................... 270,800 1,286,300 ----------- 4,209,763 ----------- OIL -- SERVICE -- 1.7% Rowan (c) ........................................ 79,700 787,038 ----------- RETAIL -- SPECIALTY -- 5.7% CUC International (c) ............................ 24,150 824,119 Office Depot (c) ................................ 38,400 758,400 Petsmart (c) .................................... 31,200 967,200 ----------- 2,549,719 ----------- TELECOMMUNICATIONS -- 5.0% Airtouch Communications (c) ..................... 24,500 692,120 Glenayre Technologies, Inc. (c) .................. 8,000 498,000 Qualcomm (c) .................................... 22,500 967,500 Tellabs, Inc. (c) ................................ 2,400 88,800 ----------- 2,246,420 ----------- TOTAL COMMON STOCKS (Identified Cost $34,695,385) .............................. 44,258,190 ----------- LOOMIS SAYLES GROWTH FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) SHORT-TERM INVESTMENT -- 3.1% Face Amount Value (a) ---------- ----------- Repurchase Agreement with State Street Bank and Trust Company dated 12/29/95 at 5.00% to be repurchased at $1,385,769 on 1/2/96 collateralized by $1,315,000 U.S. Treasury Note 7.125% due 9/30/99, with a value of $1,416,734 ............ $1,385,000 $ 1,385,000 ----------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $1,385,000) ............................... 1,385,000 ----------- TOTAL INVESTMENTS -- 101.4% (Identified Cost $36,080,385) ................................ 45,643,190 Cash, Receivables and Other Assets ............................. 124,492 Liabilities .................................................... (756,910) ----------- TOTAL NET ASSETS -- 100% ....................................... $45,010,772 =========== (a) See Note 1A. (b) Federal Tax Information: At December 31, 1995 the net unrealized appreciation on investments based on cost of $36,086,880 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost ......... $11,174,670 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value ......... (1,618,360) ----------- Net unrealized appreciation ................................ $ 9,556,310 =========== (c) Non-income producing security. See accompanying notes to financial statements. LOOMIS SAYLES GROWTH AND INCOME FUND - -------------------------------------------------------------------------------- INVESTMENTS -- as of December 31, 1995 COMMON STOCKS -- 97.0% OF TOTAL NET ASSETS Shares Value (a) ---------- ----------- AEROSPACE -- 4.5% Northrop Grumman Corp. ........................... 13,000 $ 832,000 Raytheon Corp. ................................... 17,000 803,250 ----------- 1,635,250 ----------- BANKS/SAVINGS & LOANS -- 6.2% Chase Manhattan Corp. ........................... 16,000 970,000 Standard Federal Bank of Troy, Michigan ....................................... 32,700 1,287,562 ----------- 2,257,562 ----------- BEVERAGE -- 1.2% PepsiCo .......................................... 8,000 447,000 ----------- CHEMICAL -- MAJOR -- 5.7% Dupont ........................................... 10,000 698,750 Geon Co. ......................................... 19,000 463,125 Praxair .......................................... 18,000 605,250 W.R. Grace ....................................... 5,800 342,925 ----------- 2,110,050 ----------- ELECTRICAL EQUIPMENT -- 2.0% General Electric Co. ............................. 10,000 720,000 ----------- ELECTRONIC COMPONENTS -- 1.8% Texas Instruments ................................ 12,500 646,875 ----------- ENVIRONMENTAL SERVICES -- 2.7% WMX Technologies ................................. 30,200 902,225 Wheelabrator Technologies ........................ 4,800 80,400 ----------- 982,625 ----------- FINANCIAL SERVICES -- 7.6% Beneficial Corp. ................................. 14,200 662,075 Countrywide Credit Industries .................... 28,000 609,000 Finova Group ..................................... 23,000 1,109,750 PaineWebber Group, Inc. .......................... 18,800 376,000 ----------- 2,756,825 ----------- FOOD -- PKGD. & MISC. -- 2.2% Hershey Foods Corp. .............................. 3,300 214,500 Sara Lee ......................................... 18,000 573,750 ----------- 788,250 ----------- HEALTH CARE -- DRUGS -- 4.4% Bristol Myers Squibb ............................. 6,400 549,600 Eli Lilly ........................................ 7,200 405,000 Schering-Plough .................................. 12,200 667,950 ----------- 1,622,550 ----------- HEALTH CARE -- MEDICAL TECHNOLOGY -- 1.8% C.R. Bard ........................................ 20,000 645,000 ----------- LOOMIS SAYLES GROWTH AND INCOME FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) COMMON STOCKS -- (Continued) Shares Value (a) ---------- ----------- HEALTH CARE -- SERVICES -- 3.4% Tenet Healthcare REITS (c) ....................... 60,240 $ 1,249,980 ----------- HOME PRODUCTS -- 2.4% Premark International ............................ 17,500 885,938 ----------- HOUSING & BUILDING MATERIALS -- 2.4% Armstrong World Industries Inc. .................. 14,000 868,000 ----------- INSURANCE -- 4.4% ACE Limited ...................................... 16,000 636,000 Allstate Corp. ................................... 13,759 565,839 First Colony Corp. ............................... 16,000 406,000 ----------- 1,607,839 ----------- MULTI-INDUSTRY -- 7.2% Dial Corp. ....................................... 20,000 592,500 Eaton Corp. ...................................... 13,500 723,937 Philips Electronics ADR (d) ...................... 21,500 771,313 Textron Inc. ..................................... 8,000 540,000 ----------- 2,627,750 ----------- NATURAL GAS -- PIPELINES -- 2.8% El Paso Natural Gas Co. .......................... 16,000 454,000 Mapco ............................................ 10,500 573,563 ----------- 1,027,563 ----------- OFFICE EQUIPMENT -- 4.7% AST Research (c) ................................. 19,918 169,302 Hewlett Packard .................................. 1,000 83,750 Harris Corp. ..................................... 13,100 715,588 Xerox Corp. ...................................... 5,500 753,500 ----------- 1,722,140 ----------- OIL -- INDEPENDENT PRODUCERS -- 2.6% Union Texas Petroleum Holdings ................... 27,000 523,125 Vastar Resources ................................. 13,000 412,750 ----------- 935,875 ----------- OIL -- MAJOR INTEGRATED -- 4.5% Atlantic Richfield Co. ........................... 8,000 886,000 Repsol ADR (d) ................................... 23,000 756,125 ----------- 1,642,125 ----------- REAL ESTATE -- 4.3% Health Care Property Investments ................. 27,000 948,374 Meditrust SBI REITS .............................. 17,000 592,875 ----------- 1,541,249 ----------- RETAIL -- GENERAL MERCHANDISE -- 4.3% Federated Dept. Stores (c) ....................... 28,000 770,000 Sears, Roebuck & Co. ............................. 20,000 780,000 ----------- 1,550,000 ----------- RETAIL -- FOOD & DRUG -- 1.1% Mckesson Corp. New ............................... 7,600 384,750 ----------- TEXTILES & APPAREL -- 0.4% Warnaco Group (c) ................................ 5,800 $ 145,000 ----------- TOBACCO -- 2.1% Loews Corp. ...................................... 10,000 783,750 ----------- UTILITIES -- ELECTRIC -- 5.2% Eastern Utilities Associates ..................... 25,000 590,625 Pacific Gas & Electric Co. ....................... 24,000 681,000 Texas Utilities .................................. 15,300 629,213 ----------- 1,900,838 ----------- UTILITIES -- TELECOMMUNICATIONS -- 5.1% Ameritech Corp. .................................. 14,300 843,700 Bellsouth Corp. .................................. 24,000 1,044,000 ----------- 1,887,700 ----------- TOTAL COMMON STOCKS (Identified Cost $29,383,611) .............................. 35,372,484 ----------- SHORT-TERM INVESTMENT -- 4.4% Face Amount ---------- Associates Corp. of North America 5.95%, 1/2/96 .................................. $1,609,170 1,609,170 ----------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $1,609,170 ................................ 1,609,170 ----------- TOTAL INVESTMENTS -- 101.4% (Identified Cost $30,992,781) ................................ 36,981,654 Receivables and Other Assets ................................... 332,635 Liabilities .................................................... (848,993) ----------- TOTAL NET ASSETS -- 100% ....................................... $36,465,296 =========== (a) See Note 1A. (b) Federal tax information. At December 31, 1995, the net unrealized appreciation on investments based on cost of $30,992,781 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost ......... $ 6,516,434 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value ......... (527,561) ----------- Net unrealized appreciation ................................ $ 5,988,873 =========== (c) Non-income producing security. (d) An American Depository Receipt (ADR) is a certificate issued by a U.S. bank representing the right to receive securities of the foreign issuer described. The values of ADRs are significantly influenced by trading on exchanges not located in the United States or Canada. See accompanying notes to financial statements. LOOMIS SAYLES SMALL CAP FUND - -------------------------------------------------------------------------------- INVESTMENTS -- as of December 31, 1995 COMMON STOCKS -- 88.2% OF TOTAL NET ASSETS Shares Value (a) ----------- ----------- AEROSPACE -- 1.3% Whittaker Corp. (c) ............................. 54,400 $ 1,183,200 ----------- AUTO & RELATED -- 2.1% Masland Corp..................................... 66,400 929,600 Strattec Security Corp. (c) ..................... 26,300 466,825 Tower Automotive Inc. (c) ....................... 1,900 33,250 Walbro Corp. .................................... 24,400 439,200 ----------- 1,868,875 ----------- BUSINESS SERVICES -- 2.8% Brady, W.H. ..................................... 24,000 648,000 Career Horizons Inc. (c) ........................ 27,700 934,875 CDI Corp. (c) ................................... 35,600 640,800 Cort Business Services (c) ...................... 20,100 331,650 ----------- 2,555,325 ----------- CHEMICALS -- SPECIALTY -- 3.4% Cambrex Corp. ................................... 20,100 831,638 Cytec Industries (c) ............................ 14,100 879,488 Intertape Polymer Group ......................... 26,400 828,300 LeaRonal ........................................ 22,300 512,900 ----------- 3,052,326 ----------- COMPUTER SOFTWARE & SERVICES -- 2.6% Analysts International Corp. .................... 17,500 525,000 Control Data Systems (c) ........................ 27,500 539,688 MDL Information Systems Inc. (c) ................ 24,700 568,100 SPSS Inc. (c) ................................... 13,600 265,200 Sterling Software (c) ........................... 7,600 474,050 ----------- 2,372,038 ----------- ELECTRONIC COMPONENTS -- 3.5% Amphenol Corp. (c) .............................. 20,500 497,125 Burr Brown Corp. (c) ............................ 12,400 316,200 Dallas Semiconductor Corp. (c) .................. 2,100 43,575 Dynatech Corp. (c) .............................. 64,000 1,088,000 Unitrode Corp. (c) .............................. 24,600 694,950 Zilog (c) ....................................... 17,300 633,612 ----------- 3,273,462 ----------- ELECTRICAL EQUIPMENT -- 1.6% Gasonics International Corp. (c) ................ 30,500 411,750 Numerex Corp. (c) ............................... 87,300 567,459 Woodhead Industries ............................. 34,800 495,900 ----------- 1,475,109 ----------- ENVIRONMENTAL SERVICES -- 2.1% United Waste Systems (c) ........................ 22,400 834,400 World Fuel Services Corp. ....................... 67,050 1,064,419 ----------- 1,898,819 ----------- FINANCIAL SERVICES -- 3.9% Cityscape Financial Corp. ....................... 19,500 404,625 DVI Inc. (c) .................................... 55,000 770,000 Eaton Vance Corp. ............................... 21,400 604,550 Imperial Credit Industries (c) .................. 33,350 725,363 Investors Financial Services Co. (c) ............ 1,527 31,685 WFS Financial Inc. (c) .......................... 50,800 990,600 ----------- 3,526,823 ----------- FOOD -- PACKAGED & MISCELLANEOUS -- 0.8% Universal Foods Corp. ........................... 17,400 698,175 ----------- FREIGHT TRANSPORTATION -- 3.1% ABC Rail Products Corp. (c)...................... 31,700 701,363 Harper Group .................................... 63,100 1,120,025 TNT Freightways Corp. ........................... 49,000 986,125 ----------- 2,807,513 ----------- HEALTH CARE -- MEDICAL TECHNOLOGY -- 4.1% Conmed Corp. (c)................................. 36,750 918,750 Gelman Sciences (c) ............................. 45,950 1,160,238 Lunar Corp. (c) ................................. 7,150 196,625 Sofamor Danek Group (c) ......................... 49,800 1,413,075 ----------- 3,688,688 ----------- HEALTH CARE -- SERVICES -- 6.4% Community Health Care Systems (c) ............... 36,100 1,286,063 Grancare Inc. (c) ............................... 62,212 902,074 Healthplan Services Corp. (c) ................... 19,400 485,000 Health Images ................................... 65,000 471,250 Medisense (c) ................................... 30,300 958,238 Regency Health Services (c) ..................... 84,770 858,295 Sierra Health Services (c) ...................... 26,800 850,900 ----------- 5,811,820 ----------- HOME PRODUCTS -- 3.5% Aptargroup ...................................... 16,900 631,637 Bush Boake Allen (c) ............................ 21,200 580,350 Inbrand Corp. (c) ............................... 64,850 1,070,025 U.S. Can Corp. (c) .............................. 66,300 895,050 ----------- 3,177,062 ----------- HOTELS & RESTAURANTS -- 0.5% Supertel Hospitality (c) ........................ 43,800 438,000 ----------- HOUSING & BUILDING MATERIALS -- 4.1% Congoleum Corp. ................................. 76,000 817,000 Crossman Communities (c) ........................ 38,800 727,500 Giant Cement HLD (c) ............................ 76,200 876,300 Toro Co. ........................................ 39,100 1,285,413 ----------- 3,706,213 ----------- INSURANCE -- 7.0% Allied Group .................................... 34,500 1,242,000 Amerin Corp. (c) ................................ 16,600 444,050 Capital Re Corp. ................................ 37,700 1,159,275 Meadowbrook Insurance Group (c) ................. 13,400 448,900 LOOMIS SAYLES SMALL CAP FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) COMMON STOCKS -- (Continued) Shares Value (a) ----------- ----------- INSURANCE -- (CONTINUED) Protective Life Corp. ........................... 34,400 $ 1,075,000 Reinsurance Group of America .................... 37,500 1,373,437 Triad Guaranty (c) .............................. 22,800 604,200 ----------- 6,346,862 ----------- LEISURE -- 1.0% Harman International ............................ 23,235 932,304 ----------- MACHINERY -- 3.7% Greenfield Industries ........................... 27,000 843,750 Hardinge Inc. ................................... 28,300 735,800 Keystone International Inc. ..................... 50,200 1,004,000 Wolverine Tube (c) .............................. 20,900 783,750 ----------- 3,367,300 ----------- MEDIA & ENTERTAINMENT -- 2.3% Banta Corp. ..................................... 24,725 1,087,900 Houghton Mifflin ................................ 21,500 967,500 ----------- 2,055,400 ----------- METALS -- 3.7% Citation Corp. (c)............................... 59,050 708,600 Cleveland - Cliffs .............................. 20,500 840,500 Quanex Corp. .................................... 27,800 538,625 Republic Engineered Steels (c) .................. 72,300 334,388 UNR Industries .................................. 111,400 960,825 ----------- 3,382,938 ----------- MULTI-INDUSTRY -- 1.6% Griffon Corp. (c)................................ 110,450 994,050 Insilco Corp. (c) ............................... 14,200 452,624 ----------- 1,446,674 ----------- OIL -- INDEPENDENT PRODUCERS -- 4.1% Belden & Blake Corp. (c) ........................ 59,525 1,041,688 Cross Timbers Oil Co. ........................... 46,000 810,750 Lomak Petroleum (c) ............................. 61,300 597,675 Vintage Petroleum (c) ........................... 57,200 1,287,000 ----------- 3,737,113 ----------- OIL -- SERVICE -- 2.8% Global Industries (c) ........................... 10,100 303,000 Pride Petroleum Services Inc. (c) ............... 71,400 758,625 Seitel Inc. (c) ................................. 39,400 1,393,775 ----------- 2,455,400 ----------- PAPER -- 1.1% Carausatar Industries ........................... 47,800 956,000 ----------- REAL ESTATE -- 6.2% Capstone Capital Corp. REITS (c) ................ 59,300 1,134,111 Chateau Properties REITS ........................ 57,500 1,293,750 HGI Realty Inc. REITS ........................... 39,500 903,563 Liberty Property REITS .......................... 54,600 1,132,950 Patriot American Hospitality REITS (c) .......... 42,900 1,104,666 ----------- 5,569,040 ----------- RETAIL -- GENERAL MERCHANDISE -- 0.1% Claires Stores .................................. 5,600 98,700 ----------- RETAIL -- SPECIALTY -- 3.7% Borders Group (c) ............................... 25,100 $ 464,350 Cato Corp. Class A (c) .......................... 86,575 670,955 Cole National Corp. (c) ......................... 71,000 985,125 Haverty Furniture Companies ..................... 45,100 625,763 Officemax (c) ................................... 25,000 559,375 ----------- 3,305,568 ----------- SAVINGS & LOAN/BANKS -- 3.4% Charter One Financial Inc. ...................... 33,700 1,032,063 Commercial Federal Corp. (c) .................... 21,100 796,525 First Financial Corp. ........................... 34,850 801,550 First Savings Bank of Washington (c) ............ 34,000 446,250 ----------- 3,076,388 ----------- TEXTILE & APPAREL -- 1.2% Jones Apparel Group (c).......................... 27,500 1,082,812 ----------- TELECOMMUNICATIONS -- 0.5% Davel Communications Group (c) .................. 30,600 413,100 ----------- TOTAL COMMON STOCKS (Identified Cost $69,749,658) .............................. 79,759,047 ----------- SHORT-TERM INVESTMENT -- 11.0% Face Amount ----------- Repurchase Agreement with State Street Bank and Trust Company dated 12/29/95 at 5.00% to be repurchased at $9,925,000 on 1/2/96 collateralized by $9,400,000 U.S. Treasury Note 7.125% due 9/30/99, with a value of $10,127,222 ................................ $9,925,000 9,925,000 ----------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $9,925,000) ............................... 9,925,000 ----------- TOTAL INVESTMENTS -- 99.2% (Identified Cost $79,674,658) (b) ............................ 89,684,047 Cash Receivables and Other Assets .............................. 2,656,705 Liabilities .................................................... (1,885,817) ----------- TOTAL NET ASSETS -- 100% ....................................... $90,454,935 =========== (a) See Note 1A. (b) Federal Tax Information: At December 31, 1995 the net unrealized appreciation on investments based on cost of $79,876,857 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost ......... $12,310,156 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value ......... (2,502,966) ----------- Net unrealized appreciation ................................ $ 9,807,190 =========== (c) Non-income producing security. See accompanying notes to financial statements. LOOMIS SAYLES INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- INVESTMENTS -- as of December 31, 1995 COMMON STOCKS -- 98.1% OF TOTAL NET ASSETS Shares (a) Value (b) ----------- ----------- BELGIUM -- 9.0% Barco ........................................... 6,000 $ 709,181 Bekaert ......................................... 800 657,026 CBR ............................................. 1,700 686,575 CFE ............................................. 2,500 602,838 Colruyt ......................................... 2,900 794,561 Fortis AG ....................................... 6,700 811,207 GIB ............................................. 18,000 787,618 General de Banque ............................... 2,100 725,438 Tessenderlo Chemie .............................. 1,900 675,653 UCB ............................................. 550 728,316 ----------- 7,178,413 ----------- BRAZIL -- 8.0% Belgo Mineira ................................... 6,130,000 343,709 Bradesco ........................................ 65,000,000 568,416 Bradesco Rights ................................. 1,519,831 2,439 Brahma .......................................... 500,000 617,299 Cimento Itau .................................... 1,980,000 472,593 Coteminas ....................................... 1,700,000 568,416 Itaubanco ....................................... 2,000,000 557,613 Klabin .......................................... 500,000 452,675 Manah ........................................... 23,300,000 407,510 Metal Leve ...................................... 16,800,000 190,123 Pirelli Tire .................................... 447,000 630,031 Sadia Concordia ................................. 850,000 629,630 Usiminas ........................................ 600,000,000 487,654 Weg ............................................. 1,131,000 465,432 ----------- 6,393,540 ----------- CANADA -- 7.8% CAE ............................................. 75,000 556,400 Cominco ......................................... 36,000 725,381 Donohue ......................................... 45,000 523,428 Extendicare ..................................... 55,000 584,335 Loblaw Cos. ..................................... 25,000 570,138 Magna International ............................. 12,500 538,083 Noranda ......................................... 35,000 718,054 Pancanadian Petroleum ........................... 18,700 719,336 Royal Bank ...................................... 25,000 570,138 Suncor .......................................... 23,000 720,435 ----------- 6,225,728 ----------- FINLAND -- 8.0% Cultor .......................................... 18,000 743,529 Kemira .......................................... 80,000 670,094 Kesko ........................................... 45,000 558,679 Metra ........................................... 14,000 578,300 Metsa-Seria ..................................... 15,000 461,263 Orion ........................................... 28,000 783,918 Rauma ........................................... 32,000 627,869 Rautaruukki ..................................... 90,000 547,320 Stockmann ....................................... 15,000 781,393 Valmet .......................................... 24,000 594,823 ----------- 6,347,188 ----------- FRANCE -- 8.6% Air liquide ..................................... 3,700 611,576 Cep Communication ............................... 5,280 436,906 Cep Communication Warrants ...................... 5,280 17,164 Cetelem ......................................... 3,700 693,019 Docks De France ................................. 4,000 606,542 Ecco TT ......................................... 8,500 492,867 Ecia ............................................ 6,200 654,560 Guyenne & Gascogne .............................. 2,100 571,385 Michelin ........................................ 13,000 517,456 Primagaz ........................................ 10,725 850,306 Synthelabo ...................................... 10,500 656,558 Zodiac .......................................... 4,600 716,274 ----------- 6,824,613 ----------- GERMANY -- 7.9% BMW ............................................. 1,400 716,324 Commerzbank ..................................... 2,700 637,174 Degussa ......................................... 1,900 632,231 Duerr ........................................... 1,800 538,810 Gehe ............................................ 1,300 660,633 Kiekert ......................................... 10,000 593,108 Mannesmann ...................................... 1,900 604,058 Preussag ........................................ 2,000 558,301 Siemens ......................................... 1,200 655,761 Veba ............................................ 16,000 678,315 ----------- 6,274,715 ----------- NETHERLANDS -- 8.4% Aegon ........................................... 17,750 783,738 Ahrend .......................................... 18,000 591,045 Hunter Douglas .................................. 13,000 601,493 IHC Caland ...................................... 24,000 805,970 Internatio-Muller ............................... 9,500 655,193 KBB ............................................. 10,037 661,643 NBM Amstelland .................................. 45,000 682,836 Philips ......................................... 16,000 577,114 Royal Dutch Petroleum ........................... 4,000 557,711 Stork ........................................... 30,000 742,537 ----------- 6,659,280 ----------- NEW ZEALAND -- 8.0% Air New Zealand ................................. 200,000 679,428 Carter Holt Harvey .............................. 370,000 797,674 Fisher and Paykel ............................... 190,000 577,187 Fletcher Challenge .............................. 240,000 553,472 Hallenstein Glasson ............................. 360,000 714,967 Nuplex .......................................... 200,000 638,923 Ports of Auckland ............................... 180,000 582,087 Sanford ......................................... 310,000 613,641 Sanford Rights .................................. 31,000 0 LOOMIS SAYLES INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) COMMON STOCKS -- (Continued) Shares (a) Value (b) ----------- ----------- NEW ZEALAND -- CONTINUED Telecom Corp. of New Zealand .................... 152,000 $ 655,386 Wrightston ...................................... 650,000 492,591 ----------- 6,305,356 ----------- NORWAY -- 7.9% Braathens ....................................... 12,500 646,627 Elkem ........................................... 45,000 507,444 Elkjop .......................................... 27,000 668,549 Hafslund Nycomed ................................ 20,000 506,261 Helikopter ...................................... 45,000 546,478 Kvaerner ........................................ 12,500 441,599 Norsk Hydro ..................................... 13,500 566,350 Rieber & Son .................................... 30,000 615,084 Schibsted ....................................... 45,000 610,352 Storli .......................................... 32,000 474,403 Uni Storebrand .................................. 130,000 717,598 ----------- 6,300,745 ----------- SINGAPORE -- 8.0% City Developments ............................... 70,000 509,793 Courts .......................................... 390,000 595,630 DBS Land ........................................ 220,000 743,548 Fraser & Neave .................................. 45,000 572,721 Keppel Corp. .................................... 60,000 534,540 Overseas-Chinese Banking ........................ 60,000 750,902 Pacific Carriers ................................ 750,000 646,963 Robinson ........................................ 135,000 563,176 United Overseas Bank ............................ 66,000 634,660 Wing Tai Holdings ............................... 380,000 776,497 ----------- 6,328,430 ----------- SPAIN -- 8.2% Acerinox ........................................ 5,000 504,088 Azkoyen ......................................... 8,500 477,014 BCO Popular ..................................... 4,000 735,220 Cubiertas ....................................... 9,500 524,547 FCC ............................................. 6,000 458,486 Gas Natural ..................................... 3,600 559,057 Prosegur ........................................ 30,000 741,958 Repsol .......................................... 20,000 653,219 Sevillana ....................................... 85,000 657,902 Vidrala ......................................... 12,500 491,455 Zardoya Otis .................................... 6,500 707,654 ----------- 6,510,600 ----------- SWEDEN -- 8.3% Aga ............................................. 50,000 689,131 Assidomain ...................................... 30,000 650,720 Atlas Copco ..................................... 42,000 645,297 Avesta Sheffield ................................ 60,000 528,710 Bergman & Beving ................................ 22,000 619,690 Kalmar .......................................... 44,000 729,047 Sandvik ......................................... 35,000 612,159 SKF ............................................. 32,000 $ 614,192 Svedala ......................................... 23,000 592,426 Svenska Handelsbanken ........................... 43,000 893,836 ----------- 6,575,208 ----------- TOTAL COMMON STOCKS (Identified Cost $76,265,032) .............................. 77,923,816 ----------- SHORT-TERM INVESTMENTS -- 0.9% Face Amount ----------- Repurchase Agreement with State Street Bank and Trust Company dated 12/29/95 at 5.00% to be repurchased at $734,408 on 1/02/96 collateralized by $515,515 U.S. Treasury Bond 9.875%, due 11/15/15 with a value of $749,191 $734,000 734,000 ----------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $734,000) ................................. 734,000 ----------- TOTAL INVESTMENTS -- 99.0% (Identified Cost $76,999,032) (b) ............................ 78,657,816 Cash, Receivables and Other Assets (c) ......................... 2,778,283 Liabilities .................................................... (1,947,889) ----------- TOTAL NET ASSETS -- 100% ....................................... $79,488,210 =========== (a) Ordinary shares unless noted otherwise. (b) See Notes 1A and 1B. (c) Including foreign currencies with a value of $492,875 and a cost of $493,599. (d) Federal Tax Information: At December 31, 1995 the net unrealized appreciation on investments based on cost for federal income tax purposes of $77,033,971 was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost ......... $ 7,886,146 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value ......... (6,262,301) ----------- Net unrealized appreciation ................................ $ 1,623,845 =========== Ten Largest industry holdings at December 31, 1995 (unaudited). Machinery ......................................................... 8.2% Banking ........................................................... 7.8 Transport-Equipment ............................................... 6.3 Construction ...................................................... 5.2 Retail ............................................................ 5.0 Transportation .................................................... 4.8 Pharmaceuticals ................................................... 4.3 Oil/Gas ........................................................... 4.1 Food .............................................................. 3.8 Steel ............................................................. 3.7 See accompanying notes to financial statements. LOOMIS SAYLES BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- as of December 31, 1995 BONDS AND NOTES -- 89.6% OF TOTAL NET ASSETS Face Amount Value (a) ----------- ------------ NON-CONVERTIBLE BONDS -- 71.6% AEROSPACE -- 0.8% Rohr Industries, 9.250%, 3/01/17 $ 2,300,000 $ 2,116,000 ------------ AIR TRANSPORT -- 3.6% AMR Corp. Delaware, 9.000%, 8/01/12 .............................. 2,250,000 2,537,483 AMR Corp. Delaware, 8.625%, 3/01/17 .............................. 450,000 485,739 NWA Trust, 9.360%, 9/10/07 ..................... 851,600 900,567 United Airlines, 9.125%, 01/15/12 ............................. 2,500,000 2,793,750 United Airlines, 9.560%, 10/19/18 ............................. 2,100,000 2,445,030 ------------ 9,162,569 ------------ HOME BUILDERS -- 1.4% Hovnanian Enterprises, 9.750%, 6/01/05-99 ........................... 1,350,000 1,161,000 Hovnanian Enterprises, 11.250%, 4/15/02-99 .......................... 1,000,000 910,000 Pulte Corp. 7.300%, 10/24/05 ................... 1,000,000 1,027,700 Webb, 9.000%, 2/15/06-99 ....................... 500,000 475,000 ------------ 3,573,700 ------------ BROADCASTING -- 0.3% CBS Inc., 7.125%, 11/01/23 .................... 1,000,000 863,630 ------------ CANADIAN -- 16.7% Canadian Government, 8.000%, 6/01/23 .............................. 12,650,000 9,718,014 Hydro Quebec, Zero Coupon, 8/15/20 ...................................... 25,000,000 2,260,404 Province of British Columbia, Zero Coupon, 8/23/13 ......................... 10,000,000 1,810,522 Province of British Columbia, Zero Coupon, 6/09/14 ......................... 10,000,000 1,700,611 Province of British Columbia, Zero Coupon, 8/23/24 ......................... 10,000,000 772,274 Ontario Hydro, 8.900%, 8/18/22 ................. 9,340,000 7,544,952 Province of Ontario, Zero Coupon, 7/13/22 ......................... 13,000,000 1,143,025 Province of Quebec, 9.375%, 1/16/23 .............................. 11,655,000 9,463,069 Rogers Cablesystems, 9.650%, 1/15/14 .............................. 3,400,000 2,173,579 Province of Manitoba, 7.750%, 12/22/25 ............................. 3,000,000 2,155,481 Province of Saskatchewan, 8.750%, 5/30/25 .............................. 4,835,000 3,843,414 ------------ 42,585,345 ------------ COMPUTER HARDWARE -- 1.1% Data General Corp., 8.375%, 9/15/02 .............................. $ 350,000 $ 343,725 Unisys Corp., 9.750%, 9/15/16 .................. 2,000,000 1,680,000 Unisys Corp., 8.875%, 7/15/97 .................. 1,000,000 885,000 ------------ 2,908,725 ------------ ELECTRICAL EQUIPMENT -- 2.1% Westinghouse Electric Corp., 8.625%, 8/01/12 .............................. 950,000 969,019 Westinghouse Electric Corp., 7.875%, 9/01/23 .............................. 4,850,000 4,529,270 ------------ 5,498,289 ------------ ENTERTAINMENT -- 2.0% Time Warner Entertainment Co., 8.750%, 4/01/17 .............................. 1,500,000 1,614,090 Time Warner Entertainment Co., 8.375%, 3/15/23 .............................. 3,200,000 3,444,832 ------------ 5,058,922 ------------ ENVIRONMENTAL SERVICES -- 0.6% Envirotest System Corp., 9.625%, 4/01/03 .............................. 2,500,000 1,650,000 ------------ FOOD & BEVERAGE -- 5.2% Borden, 7.875%, 02/15/23 ....................... 1,000,000 934,240 Chiquita Brands, 9.125%, 3/01/04 ............... 350,000 346,500 RJR Nabisco, 7.625%, 9/15/03 ................... 7,500,000 7,350,075 RJR Nabisco, 9.250%, 8/15/13 ................... 4,445,000 4,582,173 ------------ 13,212,988 ------------ FOREIGN CURRENCY -- 7.7% New Zealand Government, 8.000%, 4/15/04 .............................. 2,475,000 1,694,200 New Zealand Government, 8.000%, 11/15/06 ............................. 14,395,000 9,955,891 Mexican Cetes, Zero Coupon, 7/18/96 ...................................... 5,300,000 550,911 Mexican Cetes, Zero Coupon, 10/03/96 ..................................... 10,898,960 1,049,695 Republic of Ireland, 6.250%, 10/18/04 ............................. 75,000 110,834 Republic of Ireland, 8.250%, 8/18/15 .............................. 3,700,000 6,283,967 ------------ 19,645,498 ------------ FOREIGN ISSUER -- 11.1% BCO Central Costa, 6.250%, 5/21/10 .............................. 1,000,000 610,000 Empresas ICA Sociedad, 5.000%, 3/15/04 .............................. 250,000 130,000 Republic of Argentina, 1.000%, 3/31/23 .............................. 15,800,000 9,025,750 500,000 282,500 2,653,020 1,512,221 LOOMIS SAYLES BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) BONDS AND NOTES -- (Continued) Face Amount Value (a) ----------- ------------ FOREIGN ISSUER -- CONTINUED Republic of Brazil, 4/15/24 .................... $19,150,000 $ 10,125,563 Republic of Ecuador, 1.000%, 2/28/25 .............................. 6,000,000 2,167,500 Republic of Ecuador, 6.812%, 2/28/15 .............................. 2,042,972 681,842 Mexico (United Mexican State), CL B, 6.250%, 12/31/19 ....................... 2,000,000 1,310,000 Mexico (United Mexican State), CL A, 6.250%, 12/31/19 ....................... 1,000,000 655,000 Poland PDI Brady, 3.750%, 10/24/14 ............................. 1,500,000 973,125 Poland PDI Brady, 3.750%, 10/24/14 ............................. 500,000 324,375 Transportation Maritima Mexico, 9.250%, 5/15/03 .............................. 550,000 492,250 ------------ 28,290,126 ------------ GOVERNMENT -- 5.0% United States Treasury Bond, 6.250%, 8/15/23 .............................. 7,400,000 7,613,934 United States Treasury Strips, Zero Coupon Bonds, 8/15/23 ................... 19,000,000 3,604,300 United States Treasury Bond, 6.875%, 8/15/25 .............................. 1,500,000 1,691,715 ------------ 12,909,949 ------------ METAL -- 0.4% Midland Ross Corp., 6.000%, 2/15/07 .............................. 1,400,000 896,000 ------------ OIL -- 2.5% Forest Oil, 11.250%, 9/01/03 ................... 500,000 475,000 Maxus Energy, 8.500%, 4/01/08 .................. 1,000,000 910,000 Mobile Energy Services Co., 8.665%, 1/01/17 .............................. 1,250,000 1,358,125 Sage Energy, 8.500%, 10/15/05 .................. 98,000 84,035 USX Marathon Group, 8.500%, 3/01/23 .............................. 450,000 482,693 USX Marathon Group, 8.125%, 7/15/23 .............................. 2,825,000 2,985,573 ------------ 6,295,426 ------------ RETAIL -- 4.6% Bradlees Inc, 11.000%, 8/01/02 (d) ............. 250,000 62,500 Bradlees Inc, 9.250%, 3/01/03 (d) ............. 250,000 58,750 K Mart, 9.350%, 1/02/20 ........................ 2,500,000 1,737,500 K Mart, 9.780%, 1/05/20 ........................ 1,000,000 710,000 K Mart, 7.950%, 2/01/03 ........................ 4,500,000 3,150,855 Penn Traffic Co., 9.625%, 4/15/05 .............. 4,500,000 3,510,000 Service Merchandise, 9.000%, 12/15/04 ............................. $ 500,000 $ 406,250 Woolworth, 8.500%, 1/15/22 ..................... 2,000,000 2,053,600 ------------ 11,689,455 ------------ RESTAURANTS -- 0.8% Foodmaker inc., 9.750%, 6/01/02 ................ 500,000 462,500 Flagstar Corp., 11.250%, 11/01/04 .............. 2,200,000 1,567,500 ------------ 2,030,000 ------------ STEEL -- 1.1% Geneva Steel Co., 9.500%, 1/15/04 .............. 2,750,000 2,145,000 Geneva Steel Co., 11.125%, 3/15/01 ............. 750,000 622,500 ------------ 2,767,500 ------------ TAX EXEMPT MUNICIPAL -- 0.3% Foothill/Eastern Transportation, Zero Coupon, 1/01/29 ......................... 5,525,000 684,161 ------------ TAXABLE MUNICIPAL -- 0.8% Los Angeles County, California 7.070%, 6/30/09 1,500,000 1,552,860 New York City, 9.500%, 6/01/09-01 .............. 400,000 450,184 ------------ 2,003,044 ------------ TELECOMMUNICATIONS -- 1.1% Nextel Communications, 1.000%, 8/15/04 .............................. 2,500,000 1,356,250 Tele-Communications, 7.875%, 8/01/13 .............................. 1,500,000 1,542,765 ------------ 2,899,015 ------------ TEXTILES -- 0.6% Fruit of the Loom Inc., 7.375%, 11/15/23 ............................. 1,500,000 1,436,295 ------------ UTILITIES -- 1.8% Beaver Valley Funding Corp., 9.000%, 6/01/17 .............................. 3,000,000 2,530,440 Commonwealth Edison, 4.750%, 12/01/11-96 .......................... 1,000,000 808,850 Long Island Lighting Co., 8.200%, 3/15/23-03 ........................... 450,000 439,215 Niagara Mohawk, 7.875%, 4/10/24 ................ 1,000,000 927,240 ------------ 4,705,745 ------------ TOTAL NON-CONVERTIBLE BONDS (Identified Cost $167,720,075) ............................ 182,882,382 ------------ CONVERTIBLE BONDS -- 18.0% AEROSPACE -- 0.7% Hexcel Corp., 7.000%, 8/01/11 .................. 675,000 573,750 Rohr Industries, 7.000%, 10/01/12 .............. 1,600,000 1,360,000 ------------ 1,933,750 ------------ LOOMIS SAYLES BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) BONDS AND NOTES -- (Continued) Face Amount Value (a) ----------- ------------ AUTO PARTS -- 0.8% Mascotech, 4.500%, 12/15/03 .................... $ 2,500,000 $ 1,943,750 ------------ BROADCASTING -- 0.7% Comcast Corp., 1.125%, 4/15/07 ................. 250,000 126,875 Fuqua Industries, 6.500%, 8/04/02 .............. 1,860,000 1,543,800 ------------ 1,670,675 ------------ COMPUTER HARDWARE & PERIPHERALS -- 1.6% AST Research Inc., Zero Coupon Bond, 12/14/13 .. 5,000,000 1,700,000 Maxtor Corp., 5.750%, 3/01/12 .................. 2,100,000 1,627,500 Micropolis Corp., 6.000%, 3/15/12 .............. 1,228,000 589,440 Unisys Corp., 8.250%, 8/01/00 .................. 500,000 445,000 ------------ 4,361,940 ------------ EDUCATION -- 0.1% National Education Corp., 6.500%, 5/15/11 .............................. 75,000 52,500 ------------ ELECTRONICS -- 0.8% EDO Corp., 7.000%, 12/15/11 .................... 434,000 303,800 Genrad Inc., 7.250%, 5/01/11 ................... 467,000 429,640 National Semiconductor, 6.500%, 10/01/02 ............................. 500,000 469,790 Richardson Electronics, 7.250%, 12/15/06 ............................. 450,000 360,000 Thermedics, 6.500%, 7/15/98 .................... 175,000 465,500 ------------ 2,028,730 ------------ ENTERTAINMENT -- 2.1% Discovery Zone Inc., Zero Coupon Bond, 10/14/13 2,500,000 650,000 Time Warner, Zero Coupon Bond, 12/17/12 ........ 13,400,000 4,706,750 ------------ 5,356,750 ------------ ENVIRONMENTAL SERVICES -- 1.2% Air & Water Technologies, 8.000%, 5/15/15 .............................. 1,000,000 855,000 Ogden Corp., 6.000%, 6/01/02 ................... 500,000 473,125 Ogden Corp., 5.750%, 10/20/02 .................. 1,750,000 1,638,438 ------------ 2,966,563 ------------ FOOD -- 0.2% Chiquita Brands International, 7.000%, 3/28/01 (c) .......................... 450,000 416,250 ------------- FOREIGN CURRENCY -- 0.4% LASMO, 7.750%, 10/04/05 ........................ 650,000 908,385 SKF, Zero Coupon, 7/26/02 ...................... 210,000 159,660 ------------ 1,068,045 ------------ FOREIGN ISSUER -- 0.2% Teleckom Malaysia 4.000%, 10/03/04 ............................. $ 500,000 $ 482,500 ------------ HEALTH CARE & RELATED -- 3.1% Alza Corp., Zero Coupon, 7/14/14 6,900,000 2,785,875 Centocor, 7.250%, 2/1/01 ....................... 750,000 877,500 Centocor, 6.750%, 10/16/01 (c) ................. 875,000 787,500 Centocor, 6.750%, 10/16/01 (c) ................. 780,000 702,000 Chiron Corp., 1.900%, 11/17/00 ................. 2,000,000 2,025,000 Glycomed, Inc., 7.500%, 1/01/03 900,000 702,000 ------------ 7,879,875 ------------ MANUFACTURING -- 0.5% FMC Corp., 6.750%, 1/16/05 ..................... 1,175,000 1,122,125 Trinova, 6.000%, 10/15/02 ...................... 250,000 240,938 ------------ 1,363,063 ------------ OIL & GAS -- 1.3% Cross Timbers Oil Co., 5.250%, 11/02/23 ............................. 250,000 235,000 Lone Star, 8.000%, 8/27/02 ..................... 100,000 82,000 Oryx Energy, 7.500%, 5/15/14 ................... 345,000 307,050 Pennzoil, 4.750%, 10/01/03 ..................... 3,000,000 3,037,500 ------------ 3,661,550 ------------ REAL ESTATE -- 3.1% Federal Realty Investors Trust, 5.250%, 10/28/03 ............................. 2,000,000 1,795,000 Meditrust, 7.500%, 3/01/01 ..................... 250,000 252,500 Rockefeller Properties, Zero Coupon Bonds, 12/31/00 ..................................... 7,000,000 3,955,000 Rouse Co., 5.750%, 7/23/02 ..................... 1,850,000 1,799,125 ------------ 7,801,625 ------------ RESTAURANT -- 0.2% Flagstar Corp., 10.000%, 11/01/14 .............. 500,000 280,000 Shoney's, Zero Coupon, 4/11/04 ................. 750,000 294,376 ------------ 574,376 ------------ SPECIALTY RETAIL -- 0.2% CML Group Inc., 5.500%, 1/15/03 ................ 250,000 178,750 Eagle Hardware & Garden Inc., 6.250%, 3/15/01 .............................. 275,000 198,688 Jacobson Stores Inc., 6.750%, 12/15/11 ............................. 290,000 205,900 ------------ 583,338 ------------ TEXTILE -- 0.2% Dixie Yarns, 7.000%, 5/15/12 ................... 300,000 226,500 Fieldcrest Cannon Inc., 6.000%, 3/15/12 .............................. 500,000 342,500 ------------ 569,000 ------------ AIR TRANSPORTATION -- 0.1% Air Wisconsin, 7.750%, 6/15/10 ................. 200,000 182,000 ------------ LOOMIS SAYLES BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) BONDS AND NOTES -- (Continued) Face Amount Value (a) ----------- ------------ TRUCK & LEASING -- 0.5% Preston Corp., 7.000%, 5/01/11 ................. $ 750,000 $ 525,000 Worldway, 6.250%, 4/15/11 ...................... 1,000,000 730,000 ------------ 1,255,000 ------------ TOTAL CONVERTIBLE BONDS (Identified Cost $44,575,044) ............................. 46,151,280 ------------ PREFERRED STOCKS -- 7.4% Shares ----------- BANKS -- 2.4% Bankamerica Corp. Series A...................... 450 21,938 Bankamerica Corp. Series B ..................... 19,300 1,746,650 Bank of Boston Corp. ........................... 11,700 959,400 Citicorp ....................................... 25,000 2,250,000 First Chicago Corp. ............................ 7,500 671,250 HSBC Americas Inc. ............................. 11,500 523,250 ------------ 6,172,488 ------------ COMPUTERS -- 0.2% Unisys Corp. ................................... 21,800 585,875 ------------ METALS -- 1.1% Aluminum Company of America .................... 10,000 725,000 Bethlehem Steel Corp. (c) ...................... 44,550 1,971,338 ------------ 2,696,338 ------------ OIL & GAS -- 2.4% Enserch Corp. .................................. 700 65,800 Kaneb Services ................................. 500 4,313 McDermott Inc. ................................. 14,000 397,250 Occidental Petroleum Corp. (c) ................. 65,500 3,618,875 Unocal Corp. ................................... 39,000 2,145,000 ------------ 6,231,238 ------------ REAL ESTATE -- 0.1% Rouse Co. ...................................... 5,000 258,125 ------------ UTILITIES -- 1.2% Baltimore Gas & Electric Co. ................... 440 23,760 Central Los Angeles Electric ................... 1,500 123,000 Cleveland Electric ............................. 200 176,500 Connecticut Light & Power ...................... 1,800 46,012 Illinois Power ................................. 200 8,600 Indianapolis Power & Light Co. ................. 476 25,288 Jersey Central Power & Light ................... 170 9,180 Long Island Lighting Co. ....................... 10,000 202,500 Louisiana Power & Light Co. .................... 2,600 142,675 MDU Resources .................................. 5,000 455,000 Metropolitan Edison Co. ........................ 2,570 133,640 Minnesota Power & Light ........................ 200 13,400 Nevada Power Co. ............................... 19,000 332,500 Niagara Mohawk Power ........................... 5,000 240,000 Niagara Mohawk Power ........................... 35,000 656,250 Northern States Power Co. ...................... 600 30,750 Public Service Co. ............................. 360 19,980 Texas Utilities ................................ 5,000 482,500 ------------ 3,121,535 ------------ TOTAL PREFERRED STOCKS (Identified Cost $18,474,552) ............................. 19,065,599 ------------ SHORT-TERM INVESTMENT -- 1.8% Face Amount ----------- Repurchase Agreement with State Street Bank and Trust Company dated 12/29/95 at 5.000% to be repurchased at $4,526,513 on 1/2/96 collateralized $3,175,000 U.S. Treasury Bond, 9.875% due 11/15/15 with a value of $4,618,799 ................................... $ 4,524,000 4,524,000 ------------ TOTAL SHORT-TERM INVESTMENT (Identified Cost $4,524,000) .............................. 4,524,000 ------------ TOTAL INVESTMENTS -- 98.8% (Identified cost $235,293,671) (b) .......................... 252,623,261 Cash, Receivables and Other Assets (e) ........................ 11,435,575 Liabilities ................................................... (8,348,679) ------------ TOTAL NET ASSETS -- 100% ...................................... $255,710,157 ============ (a) See Note 1A. (b) At December 31, 1995 the net unrealized appreciation on investments based on cost of $235,392,842 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost ........ $ 20,000,293 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value ........ (2,769,874) ------------ Net unrealized appreciation ............................... $ 17,230,419 ============ (c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualfied institutional buyers. (d) Company filed for Chapter 11 Bankruptcy. Non-income producing security. (e) Including foreign currencies with a value of $1,071,029 and a cost of $1,071,346. See accompanying notes to financial statements. LOOMIS SAYLES GLOBAL BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- as of December 31, 1995 BONDS AND NOTES -- 95.6% OF TOTAL NET ASSETS Face Currency Amount Value (a) -------- ------------- ----------- ARGENTINA -- 5.5% Republic of Argentina, 1.00%, 3/31/23 ............... USD 1,000,000 $ 571,250 ----------- AUSTRIA -- 2.3% Republic of Austria, 9.00%, 7/22/04 ................ PS 141,000 236,186 ----------- BRAZIL -- 5.1% Republic of Brazil, YL3 4.25%, 4/15/24 ................ USD 1,000,000 528,750 ----------- CANADA -- 11.9% Ontario Hydro, 8.900%, 8/18/22 ............... CAD 475,000 383,710 Province of Ontario, 8.100%, 9/08/23 ............... CAD 525,000 390,326 Province of Saskatchewan, 9.600%, 2/4/22 ................ CAD 525,000 452,912 ----------- 1,226,948 ----------- FINLAND -- 3.1% Repola, 6.500%, 3/25/04 ......... FIN 1,500,000 323,573 ----------- FRANCE -- 5.6% Government of France, 7.000%, 10/12/00 .............. FFR 1,350,000 288,022 Government of France, 8.500%, 11/25/02 .............. FFR 1,260,000 287,182 ----------- 575,204 ----------- GERMANY -- 4.5% Treuhandanstalt, 7.500%, 9/09/04 ............... GER 600,000 458,823 ----------- GREAT BRITAIN -- 6.5% Glaxo Wellcome, 8.750%, 12/01/05 .............. PS 250,000 405,862 Northern Foods, 6.750%, 8/08/08 ............... PS 200,000 263,975 ----------- 669,837 ----------- IRELAND -- 3.3% Republic of Ireland, 8.250%, 8/18/15 ............... IP 200,000 339,674 ----------- ITALY -- 8.9% U.S. General Electric Capital Corp., 9.550%, 8/25/03......... ITL 550,000,000 327,297 IMI Bank International, 1.00%, 6/13/06................. ITL 3,000,000,000 583,281 ----------- 910,578 ----------- JAPAN -- 8.8% Mitsubishi Trust & Banking, 3.250%, 9/30/03 ............... USD 550,000 $ 497,063 Sumitomo Trust & Banking, 1.750%, 3/31/02 ............... USD 500,000 403,750 ----------- 900,813 ----------- MEXICO -- 4.4% Mexico (United Mexico States), 6.250%, 12/31/19 with 700,000 Rights ........... USD 700,000 458,500 ----------- NETHERLANDS -- 3.2% Dutch Government, 7.000%, 6/15/05 ............... NLG 500,000 332,556 ----------- NEW ZEALAND -- 5.0% New Zealand, 8.000%, 11/15/06 .............. NZD 750,000 518,716 ----------- SPAIN -- 5.5% Government of Spain, 10.000%, 2/28/05 .............. ESP 67,000,000 568,293 ----------- SWEDEN -- 5.2% Kingdom of Sweden, 10.2500%, 5/05/00 ............. SK 3,300,000 534,080 ----------- UNITED STATES -- 6.8% United States Treasury USD 700,000 701,532 ----------- TOTAL BONDS AND NOTES (Identified Cost $9,372,852) ............................... 9,855,313 ----------- SHORT-TERM INVESTMENTS -- 10.1% Repurchase Agreement with State Street Bank and Trust Company dated 12/29/95 to be repurchased at $1,038,577 on 1/02/96 collateralized by $985,000 U.S. Treasury Notes 7.125% due 9/30/99 with a value of $1,061,204 ......................... 1,038,000 1,038,000 ----------- TOTAL SHORT-TERM INVESTMENTS (identified cost $1,038,000) ................................. 1,038,000 ----------- TOTAL INVESTMENTS -- 105.7% (Identified Cost $10,410,852) (b) ............................ 10,893,313 Cash, Receivables and Other Assets (c) ......................... 287,624 Liabilities .................................................... (876,632) ----------- TOTAL NET ASSETS -- 100% ....................................... $10,304,305 =========== LOOMIS SAYLES GLOBAL BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) FORWARD FOREIGN CURRENCY CONTRACTS AT DECEMBER 31, 1995 LOCAL AGGREGATE UNREALIZED DELIVERY CURRENCY FACE TOTAL APPRECIATION/ DATE AMOUNT AMOUNT VALUE DEPRECIATION -------- -------- ------ ----- ------------ Deutsche Marks (sell) ....... 3/20/96 125,000 $ 87,498 $ 87,370 $ 128 Deutsche Marks (sell) ....... 3/20/96 4,271,000 2,962,475 2,985,279 (22,804) French Francs (buy) ........ 3/20/96 84,000 17,071 17,143 (72) French Francs (buy) ........ 3/20/96 2,727,000 546,197 556,532 (10,335) -------- FORWARD FOREIGN CURRENCY CONTRACTS -- NET ..................... $(33,083) ======== (a) See Notes 1A and 1B. (b) Federal Tax Information: At December 31, 1995 the net unrealized appreciation on investments based on cost for federal income tax purposes of $10,410,852 was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost ................................... $ 621,372 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value ................................. (138,911) -------------- Net unrealized appreciation ..................... $ 482,461 ============== As of December 31, 1995 the Fund had net tax basis loss carryforwards of $994,500 and $155,568 which expire on December 31, 2002 and December 31, 2003, respectively. (c) Including foreign currencies with a value of $475 and a cost of $470. AUD = Australian Dollar. GER = German Deutsche Mark. CAD = Canadian Dollar. IP = Irish Punt. DKK = Danish Krone. ITL = Italian Lira. ECU = European Currency Unit. NLG = Netherlands Guilder. ESP = Spanish Peseta. NZD = New Zealand Dollar. FFR = French Franc. PS = Pound Sterling. FIN = Finnish Markka. SK = Swedish Krone. See accompanying notes to financial statements. LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND - -------------------------------------------------------------------------------- INVESTMENTS -- as of December 31, 1995 BONDS AND NOTES -- 98.5% OF TOTAL NET ASSETS Face Amount Value (a) ---------- ----------- GOVERNMENT AGENCIES -- 52.7% Government National Mortgage Association, 9.000% with various maturities to 2005 ............... $2,650,447 $ 2,807,805 Tennessee Valley Authority, 8.625%, 11/15/29 ..... 6,666,000 7,474,386 ----------- 10,282,191 ----------- U.S. GOVERNMENT -- 45.8% U.S. Treasury Strips, Zero Coupon Bonds, 11/15/07 ................................ 1,100,000 554,235 U.S. Treasury Bonds, 8.750%, 11/15/08 ............ 4,700,000 5,606,207 U.S. Treasury Bonds, 7.500%, 11/15/24 ............ 2,310,000 2,776,689 ----------- 8,937,131 ----------- TOTAL BONDS AND NOTES (Identified Cost $18,583,301) .............................. 19,219,322 ----------- TOTAL INVESTMENTS -- 98.5% (Identified Cost $18,583,301) (b) ............................ $19,219,322 Cash, Receivables and Other Assets ............................. 354,748 Liabilities .................................................... (74,920) ----------- TOTAL NET ASSETS -- 100% ....................................... $19,499,150 =========== (a) See Note 1A. (b) Federal Tax Information: At December 31, 1995 the net unrealized appreciation on investments based on cost of $18,892,037 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost ....... $ 428,583 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value ....... (101,298) ----------- Net unrealized appreciation ................................ $ 327,285 =========== As of December 31, 1995 the Fund had a net tax basis loss carryforward of $291,541 which expires on December 31, 2002. See accompanying notes to financial statements. LOOMIS SAYLES MUNICIPAL BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- as of December 31, 1995 BONDS -- 96.5% OF TOTAL NET ASSETS Face Amount Value (a) -------- ---------- ALASKA -- 1.3% Alaska State Housing Finance Corp., 6.600%, 12/1/15 ................................... $ 95,000 $ 99,589 ---------- ARIZONA -- 2.0% Phoenix Street and Highway User, 6.25%, 7/01/11 .................................... 150,000 160,920 ---------- CALIFORNIA -- 16.2% California State, 6.20%, 9/01/06 .................... 100,000 110,451 California State, 6.40%, 9/01/07 .................... 225,000 251,102 California State Department of Water Resources, 5.625%, 12/01/12 ....................... 100,000 102,927 Foothill Eastern, 6.000%, 1/01/16 ................... 250,000 250,940 Foothill Eastern, 1,000%, 1/01/23 ................... 500,000 91,705 Fresno Sewer Revenue, 6.250%, 9/01/14 ................................... 250,000 283,360 University California Revenues Issues, 5.000% 9/01/11 ................... 200,000 195,734 ---------- 1,286,219 ---------- COLORADO -- 2.1% El Paso County, Zero Coupon Bond, 9/01/15 ........................................... 500,000 170,350 ---------- CONNECTICUT -- 4.0% Connecticut State Resource Recovery Authority, 7.625%, 1/01/09 ................................... 200,000 210,612 Connecticut State Special Tax Obligation, 6.125%, 9/01/12 ........................................... 100,000 110,576 ---------- 321,188 ---------- FLORIDA -- 3.8% Florida State Board of Education Capital Outlay, 5.100%, 6/01/09 ................................... 100,000 100,410 Florida State Municipal Power Agency, 5.500%, 10/0112 ........................................... 200,000 204,018 ---------- 304,428 ---------- ILLINOIS -- 4.2% Chicago O'Hare International Airport, 5.000%, 1/1/16 .................................... 150,000 143,600 Illinois Development Finance Authority Pollution 25,000 26,850 Illinois St. Sales Tax Revenue, 6.375%, 6/15/14 ................................... 150,000 164,763 ---------- 335,213 ---------- LOUISIANA -- 3.0% Regional Transportation Authority, 8.000%, 12/01/08 .................................. 200,000 223,054 ---------- MAINE -- 2.7% Portland, 6.150%, 4/01/01 ........................... 200,000 218,088 ---------- MASSACHUSETTS -- 2.7% Plymouth County, Certificates of Participation, 6.500%, 4/01/01..................... 200,000 214,842 ---------- MICHIGAN -- 5.3% Michigan State Comprehensive, 6.000%, 5/15/07 ................................... $250,000 $ 269,277 150,000 153,039 ---------- 422,316 ---------- NEW JERSEY -- 3.9% New Jersey State Turnpike Authority, 6.500%, 1/01/08 ................................... 200,000 226,448 New Jersey State Turnpike Authority, 6.500%, 1/01/16 ................................... 75,000 84,128 ---------- 310,576 ---------- NEW YORK -- 16.7% New York City, 7.000%, 8/01/98 ...................... 5,000 5,271 New York State, Certificates of Participation, 5.650%, 8/01/02 ................................... 160,000 163,339 New York State Dormitory Authority, 5.250%, 5/15/04 . 150,000 149,489 New York State Dormitory Authority, 5.750%, 7/01/08 . 250,000 268,000 New York State Dormitory Authority, 6.375%, 7/01/08 . 200,000 212,738 New York State Environmental Pollution Control, 5.750%, 6/15/10 ................................... 250,000 267,005 New York Urban Development Corp., 5.625% 1/01/07 .... 150,000 151,317 Triborough Bridge & Tunnel Authority, 6.000%, 1/01/12 100,000 109,765 ---------- 1,326,924 ---------- NORTH CAROLINA -- 1.4% North Carolina Eastern Municipal Power, 7.250%, 1/01/07 ................................... 100,000 112,264 ---------- PENNSYLVANIA -- 2.7% Pennsylvania Finance Authority Revenue Bond, 6.600%, 11/01/09 .................................. 200,000 218,058 ---------- PUERTO RICO -- 1.6% Puerto Rico Telephone Authority Revenue Bond, 5.400%, 1/01/08 ................................... 125,000 130,246 ---------- TENNESSEE -- 3.7% Metropolitan Nashville Airport, 6.600%, 7/01/15 ................................... 30,000 32,925 Shelby County, 5.900%, 3/01/13 ...................... 250,000 262,830 ---------- 295,755 ---------- TEXAS -- 7.7% Dallas, Fort Worth Regional Airport, 6.000%, 11/01/02 .................................. 100,000 107,945 Manor Texas Independent School District, 5.8000%, 8/01/11 ........................ 250,000 261,355 United Independent School District, 4.800%, 8/15/07 ................................... 250,000 246,700 ---------- 616,000 ---------- LOOMIS SAYLES MUNICIPAL BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) BONDS -- (Continued) Face Amount Value (a) -------- ---------- UTAH -- 2.2% Intermountain Power Agency Utah, 5.000%, 7/01/05 ................................... $175,000 $ 176,979 ---------- VIRGINIA -- 1.3% Virginia State Public School Authority, 5.250%, 1/01/12 ................................... 100,000 100,231 ---------- WASHINGTON -- 8.0% King County, 5.875%, 1/01/13 ........................ 125,000 132,179 Snohomish County School District, 5.600%, 12/01/06 .................................. 250,000 264,618 Washington State, 6.375%, 2/01/14 ................... 225,000 241,375 ---------- 638,172 ---------- TOTAL BONDS (Identified Cost $7,290,328) ................................ 7,681,412 ---------- TOTAL INVESTMENTS -- 96.5% (Identified Cost $7,290,328) (b) .............................. 7,681,412 Cash, Receivables and Other Assets .............................. 316,429 Liabilities ..................................................... (37,000) ---------- TOTAL NET ASSETS -- 100% ........................................ $7,960,841 ========== (a) See Note 1A. (b) Federal Tax Information: At December 31, 1995 the net unrealized appreciation on investments based on cost of $7,290,328 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost .......... $ 398,275 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value .......... (7,191) ---------- Net unrealized appreciation ................................. $ 391,084 ========== See accompanying notes to financial statements. Face Amount Value (a) ---------- ----------- LOOMIS SAYLES SHORT-TERM BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- as of December 31, 1995 BONDS AND NOTES -- 98.1% OF TOTAL NET ASSETS Face Amount Value (a) ---------- ----------- AEROSPACE -- 0.8% Lockheed Corp., 5.875%, 3/15/98 .................. $ 200,000 $ 200,680 ----------- CABLE & MEDIA -- 2.8% TCI Communications Inc., 7.390%, 8/28/01 ................................ 700,000 733,355 ----------- FINANCE -- 7.2% Chrysler Financial Corp., 6.500%, 6/15/98 ................................ 200,000 203,768 Navistar Financial Corp., 9.500%, 6/01/96 ................................ 450,000 459,000 Sears Roebuck Acceptance Corp., 6.500%, 6/15/00 ................................ 1,000,000 1,023,030 Westinghouse Credit Corp., 8.700%, 5/20/96 ................................ 200,000 200,964 ----------- 1,886,762 ----------- FOOD & BEVERAGE -- 2.0% RJR Nabisco, 8.625%, 12/01/02 .................... 500,000 520,845 ----------- HEALTHCARE -- 3.2% Hospital Corp. of America, Zero Coupon Bond, 6/01/00 ........................... $1,100,000 $ 833,954 ----------- INDUSTRIAL -- 3.7% Unisys Corp., 9.750%, 9/15/96 .................. 1,000,000 970,000 ----------- INSURANCE -- 3.0% American Re Corp., 10.875%, 9/15/04 ............................... 700,000 780,920 ----------- MANUFACTURING -- 3.0% Tektronix Inc., 7.625%, 8/15/02 .................. 750,000 786,495 ----------- MEDIA & ENTERTAINMENT -- 2.4% Time Warner, 7.450%, 2/01/98 ..................... 400,000 411,140 Time Warner, 7.950%, 2/01/00 ..................... 200,000 210,836 ----------- 621,976 ----------- MISCELLANEOUS -- 1.7% News America Holdings, 9.125%, 10/15/99 ............................... 400,000 442,152 ----------- SECURITIES -- 6.6% Lehman Brothers Inc., 7.375%, 5/15/07 ................................ 700,000 734,559 Smith Barney Inc., 5.500%, 1/15/99 ................................ 990,000 981,664 ----------- 1,716,223 ----------- LOOMIS SAYLES SHORT-TERM BOND FUND - -------------------------------------------------------------------------------- INVESTMENTS -- (Continued) BONDS AND NOTES -- (Continued) Face Amount Value (a) ---------- ----------- TRANSPORTATION -- 3.2% Delta Air Lines, 7.790%, 12/01/98 $ 800,000 $ 830,168 ----------- U.S. GOVERNMENT -- 58.5% United States Treasury Notes, 5.750%, 10/31/97 ............................... 7,350,000 7,421,221 United States Treasury Notes, 5.125%, 3/01/98 ................................ 5,850,000 5,839,938 United States Treasury Notes, 6.875%, 8/31/99 ................................ 1,875,000 1,970,513 ----------- 15,231,672 ----------- TOTAL INVESTMENTS -- 98.1% (Identified Cost $25,231,864) (b) ............................ 25,555,202 Receivables and Other Assets ................................... 756,409 Liabilities .................................................... (272,179) ----------- TOTAL NET ASSETS -- 100% ....................................... $26,039,432 =========== (a) See Note 1A. (b) Federal Tax Information: At December 31, 1995 the net unrealized appreciation on investments based on cost of $25,231,864 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost ......... $ 419,417 Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value ......... (96,079) ----------- Net unrealized appreciation ................................ $ 323,338 =========== As of December 31, 1995 the Fund had total net tax basis loss carry- forwards of $134,110, which expires December 31, 2002. See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES -- December 31, 1995 Growth International Growth & Income Small Cap Equity ------------ ------------ ----------- ----------- ASSETS Investments at value: Securities ...... $44,258,190 $36,981,654 $79,759,047 $77,923,816 Repurchase agreements ..... 1,385,000 0 9,925,000 734,000 ----------- ----------- ----------- ----------- Total investments . 45,643,190 36,981,654 89,684,047 78,657,816 Cash .............. 337 0 448 212 Foreign currency at value ............ 0 0 0 492,875 Receivable for: Shares of the Fund sold ...... 102,108 234,594 136,704 518,290 Securities sold . 0 0 2,383,167 1,595,851 Dividends and interest -- net. 20,252 93,496 134,643 44,983 Foreign tax reclaim -- net . 0 2,802 0 124,277 Unamortized organization expenses ......... 1,795 1,743 1,743 1,795 ----------- ----------- ----------- ----------- 45,767,682 37,314,289 92,340,752 81,436,099 ----------- ----------- ----------- ----------- LIABILITIES Payable for: Securities purchased ...... 168,350 526,899 1,536,818 162,565 Foreign currency spot contracts -- net ......... 0 0 0 1,214 Shares of the Fund redeemed .. 526,487 232,087 106,729 1,418,966 Dividends declared 8,710 37,968 126,284 238,334 Accrued expenses: Management fees .. 28,687 22,636 73,680 67,795 Trustees' fees ... 1,250 1,250 1,250 1,250 Accounting and administration 1,008 1,008 1,008 1,008 Other expenses ... 22,418 27,145 40,048 56,757 ----------- ----------- ----------- ----------- 756,910 848,993 1,885,817 1,947,889 ----------- ----------- ----------- ----------- NET ASSETS .......... $45,010,772 $36,465,296 $90,454,935 $79,488,210 =========== =========== =========== =========== Net Assets consist of: Capital paid in .. $34,018,473 $29,507,158 $77,690,934 $78,194,131 Undistributed net investment income 0 8,080 15,556 26,969 Accumulated net realized gains (losses) 1,429,494 961,185 2,739,056 (396,600) Unrealized appreciation (depreciation) on: Investments 9,562,805 5,988,873 10,009,389 1,658,784 Foreign currency transactions 0 0 0 4,926 ----------- ----------- ----------- ----------- NET ASSETS .......... $45,010,772 $36,465,296 $90,454,935 $79,488,210 =========== =========== =========== =========== Shares of beneficial interest outstanding, no par value ....... 2,948,623 2,502,983 5,901,613 6,825,853 =========== =========== =========== =========== Computation of offering price: Net asset value and redemption price per share (Net assets / shares of beneficial interest outstanding) ..... $15.27 $14.57 $15.33 $11.65 =========== =========== =========== =========== Identified cost of investments ..... $36,080,385 $30,992,781 $79,674,658 $76,999,032 =========== =========== =========== =========== See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES -- December 31, 1995
U.S. Global Government Municipal Short-Term Bond Bond Securities Bond Bond ------------- ------------ ------------ ---------- ----------- ASSETS Investments at value: Securities ...... $248,099,261 $ 9,855,313 $19,219,322 $7,681,412 $25,555,202 Repurchase agreements ..... 4,524,000 1,038,000 0 0 0 ------------ ------------ ------------ ---------- ----------- Total investments 252,623,261 10,893,313 19,219,322 7,681,412 25,555,202 Cash ............ 479 4,531 49,741 170,806 0 Foreign currency at value ....... 1,071,029 475 0 0 0 Receivable for: Shares of the Fund sold ..... 4,244,334 33,487 134,347 0 394,210 Securities sold ......... 1,297,716 0 0 0 0 Dividends and interest -- net .......... 4,820,222 223,916 168,814 136,158 361,761 Foreign tax reclaim -- net . 0 13,665 0 0 0 Due from the adviser ........ 0 9,765 0 4,872 0 Unamortized organization expenses ....... 1,795 1,785 1,846 4,593 438 ------------ ------------ ------------ ---------- ----------- 264,058,836 11,180,937 19,574,070 7,997,841 26,311,611 ------------ ------------ ------------ ---------- ----------- LIABILITIES Payable for: Securities purchased ..... 6,665,515 701,531 0 0 0 Due Custodian Bank .......... 0 0 0 0 99,340 Forward foreign currency contracts -- net 0 33,083 0 0 0 Shares of the Fund redeemed . 792,249 75,398 16,381 0 99,949 Dividends declared ...... 706,538 35,396 11,405 11,350 4,273 Accrued expenses: Management fees 124,728 0 22,719 0 38,806 Trustees' fees . 1,250 1,250 1,250 1,250 1,250 Accounting and administration 1,008 1,008 1,008 1,008 1,008 Other expenses . 57,391 28,966 22,157 23,392 27,553 ------------ ------------ ------------ ---------- ----------- 8,348,679 876,632 74,920 37,000 272,179 ------------ ------------ ------------ ---------- ----------- NET ASSETS ........ $255,710,157 $10,304,305 $19,499,150 $7,960,841 $26,039,432 ============ =========== =========== ========== =========== Net Assets consist of: Capital paid in $236,723,445 $10,922,315 $19,464,937 $7,532,204 $26,081,446 Undistributed net investment income (loss) . 34,589 130,782 (1,533) 3,829 8,066 Accumulated net realized gains (losses) 1,627,425 (1,198,803) (600,275) 33,724 (373,418) Unrealized appreciation (depreciation) on: Investments ....... 17,329,590 482,461 636,021 391,084 323,338 Foreign currency transactions .... (4,892) (32,450) 0 0 0 ------------ ------------ ------------ ---------- ----------- NET ASSETS ........ $255,710,157 $10,304,305 $19,499,150 $7,960,841 $26,039,432 ============ =========== =========== ========== =========== Shares of beneficial interest outstanding, no par value ..... 20,811,808 904,452 1,832,320 690,228 2,653,389 ============ =========== =========== ========== =========== Computation of offering price: Net asset value and redemption price per share (Net assets / shares of beneficial interest outstanding) ..... $12.29 $11.39 $10.64 $11.53 $ 9.81 ============ =========== =========== ========== =========== Identified cost of investments ...... $235,293,671 $10,410,852 $18,583,301 $7,290,328 $25,231,864 ============ =========== =========== ========== ===========
See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS -- For the Year Ended December 31, 1995 Internation Growth al Growth & Income Small Cap Equity ------------ ----------- ----------- ---------- INVESTMENT INCOME Dividends .......... $ 271,585 $ 797,759* $ 842,858* $1,907,850* Interest ........... 62,722 112,130 447,163 134,908 ------------ ----------- ----------- ---------- 334,307 909,889 1,290,021 2,042,758 ------------ ----------- ----------- ---------- Expenses Management fees .. 319,009 243,025 839,470 781,765 Trustees' fees and expenses ........ 6,107 6,107 6,107 6,107 Accounting and administrative fees 9,581 9,581 9,581 9,581 Custodian ........ 55,984 64,768 99,652 254,054 Transfer agent ... 26,989 27,315 47,690 34,465 Audit and tax services ........ 14,333 14,333 14,333 14,958 Legal ............ 2,314 2,314 2,314 2,314 Printing ......... 2,609 2,412 8,769 4,536 Registration ..... 13,997 14,072 16,420 18,690 Amortization of organization expenses ........ 3,741 3,741 3,741 3,741 Miscellaneous .... 3,533 1,074 2,028 2,530 ------------ ----------- ----------- ---------- 458,197 388,742 1,050,105 1,132,741 ------------ ----------- ----------- ---------- Less expenses assumed by the investment adviser 0 0 0 0 ------------ ----------- ----------- ---------- Net investment income (loss) ..... (123,890) 521,147 239,916 910,017 ------------ ----------- ----------- ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Realized gain (loss) on: Investments -- net 4,581,895 3,594,928 11,656,271 594,383 Foreign currency transactions -- net ............. 0 0 0 4,270,563 ------------ ----------- ----------- ---------- Total realized gain (loss) on investments and foreign currency transactions ... 4,581,895 3,594,928 11,656,271 4,864,946 ------------ ----------- ----------- ---------- Unrealized appreciation (depreciation) on: Investments -- net 6,679,650 5,292,649 11,080,439 226,437 Foreign currency transactions -- net ............. 0 0 0 249 ------------ ----------- ----------- ---------- Total unrealized appreciation (depreciation) on investments and foreign currency transactions ... 6,679,650 5,292,649 11,080,439 226,686 ------------ ----------- ----------- ---------- Net gain (loss) on investments and foreign currency transactions ...... 11,261,545 8,887,577 22,736,710 5,091,632 ------------ ----------- ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .......... $11,137,655 $9,408,724 $22,976,626 $6,001,649 =========== ========== =========== ========== *Net of foreign withholding taxes of $1,140, $588, and $371,977, respectively. See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS -- For the Year Ended December 31, 1995 U.S. Global Government Municipal Short-Term Bond Bond Securities Bond Bond ------------ ----------- ----------- ---------- ---------- INVESTMENT INCOME Dividends .... $ 850,005 $ 0 $ 0 $ 0 $ 0 Interest ..... 13,085,917 1,372,760 1,339,980 437,660 1,856,919 ------------ ----------- ----------- ---------- ---------- 13,935,922 1,372,760 1,339,980 437,660 1,856,919 ------------ ----------- ----------- ---------- ---------- Expenses Management fees ....... 917,444 106,447 107,664 45,872 124,536 Trustees' fees and expenses ... 6,107 6,107 6,107 6,107 6,107 Accounting and administrative fees ....... 9,581 9,581 9,581 9,581 9,581 Custodian ... 135,646 55,984 40,795 37,177 58,276 Transfer agent 85,318 21,476 21,141 20,954 23,306 Audit and tax services ... 14,333 14,333 14,333 14,333 14,333 Legal ....... 2,314 2,314 2,314 2,314 2,314 Printing .... 13,008 874 791 712 1,093 Registration 20,251 14,572 12,188 12,970 13,484 Amortization of organization expenses ... 3,741 3,741 3,741 3,741 1,569 Miscellaneous 3,005 4,314 621 441 856 ------------ ----------- ----------- ---------- ---------- 1,210,748 239,743 219,276 154,202 255,455 Less expenses assumed by the investment adviser .... 0 (26,849) (39,836) (77,750) (6,383) ------------ ----------- ----------- ---------- ---------- Net investment income ...... 12,725,174 1,159,866 1,160,540 361,208 1,607,847 ------------ ----------- ----------- ---------- ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Realized gain (loss) on: Investments -- net ......... 3,447,177 (1,498,225) 425,319 77,654 (206,571) Foreign currency transactions -- net ........ 73,512 1,239,618 0 0 0 ------------ ----------- ----------- ---------- ---------- Total realized gain (loss) on investments and foreign currency transactions . 3,520,689 (258,607) 425,319 77,654 (206,571) ------------ ----------- ----------- ---------- ---------- Unrealized appreciation (depreciation) on: Investments -- net ........ 25,344,384 1,843,562 2,181,498 733,237 1,090,876 Foreign currency transactions -- net ........ 5,808 (366,433) 0 0 0 ------------ ----------- ----------- ---------- ---------- Total unrealized appreciation (depreciation) on investments and foreign currency transactions . 25,350,192 1,477,129 2,181,498 733,237 1,090,876 ------------ ----------- ----------- ---------- ---------- Net gain (loss) on investments and foreign currency transaction . 28,870,881 1,218,522 2,606,817 810,891 884,305 ------------ ----------- ----------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ... $41,596,055 $2,378,388 $3,767,357 $1,172,099 $2,492,152 =========== ========== ========== ========== ========== See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS Growth Growth & Income --------------------------- ------------------------- Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 1995 1994 1995 1994 ------------ ------------ ----------- ----------- FROM OPERATIONS Net investment income (loss) ... $ (123,890) $ (47,848) $ 521,147 $ 320,518 Net realized gain (loss) on investments ..... 4,581,895 105,409 3,594,928 893,844 Unrealized appreciation (depreciation) on investments ..... 6,679,650 (1,325,406) 5,292,649 (1,577,639) ------------ ------------ ----------- ----------- Increase (decrease) in net assets from operations ..... 11,137,655 (1,267,845) 9,408,724 (363,277) ------------ ------------ ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......... 0 0 (513,067) (312,118) Net realized gain on investments .. (3,016,659) (102,926) (2,633,743) (894,725) Paid in capital .. 0 (29,640) 0 0 ------------ ------------ ----------- ----------- (3,016,659) (132,566) (3,146,810) (1,206,843) ------------ ------------ ----------- ----------- FROM CAPITAL SHARES TRANSACTIONS Proceeds from the sale of shares .. 6,743,238 9,906,845 9,763,336 8,560,900 Net asset value of shares issued in connection with the reinvestment of: Dividends from net investment income ........ 0 0 498,057 302,574 Distributions from net realized gain .......... 2,999,240 131,815 2,571,637 876,351 ------------ ------------ ----------- ----------- 9,742,478 10,038,660 12,833,030 9,739,825 Cost of shares redeemed ........ (9,432,496) (4,442,960) (8,575,637) (2,880,455) ------------ ------------ ----------- ----------- Increase (decrease) in net assets derived from capital share transactions ... 309,982 5,595,700 4,257,393 6,859,370 ------------ ------------ ----------- ----------- Total increase (decrease) in net assets ........ 8,430,978 4,195,289 10,519,307 5,289,250 NET ASSETS Beginning of the year ............ 36,579,794 32,384,505 25,945,989 20,656,739 ------------ ------------ ----------- ----------- End of the year .. $ 45,010,772 $ 36,579,794 $36,465,296 $25,945,989 ============ ============ =========== =========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the year ............ $ 0 $ 0 $ 7,159 $ 15,915 ============ ============ =========== =========== End of the year .. $ 0 $ 0 $ 8,080 $ 7,159 ============ ============ =========== =========== NUMBER OF SHARES OF THE FUND: Issued from the sale of shares .. 455,569 781,197 685,323 675,145 Issued in connection with the reinvestment of: Dividends from net investment income .......... 0 0 34,349 25,642 Distributions from net realized gain .......... 197,448 10,537 177,354 74,267 ------------ ------------ ----------- ----------- 653,017 791,734 897,026 775,054 Redeemed ......... (630,949) (352,549) (592,596) (230,737) ------------ ------------ ----------- ----------- Net change ....... 22,068 439,185 304,430 544,317 ============ ============ =========== =========== See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS Small Cap International Equity --------------------------- ------------------------- Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 1995 1994 1995 1994 ------------ ------------ ----------- ----------- FROM OPERATIONS Net investment income (loss) ... $ 239,916 $ (235,167) $ 910,017 $ 867,407 Net realized gain (loss) on: Investments .... 11,656,271 690,139 594,383 3,416,858 Foreign currency transactions .. 0 0 4,270,563 1,942,221 Unrealized appreciation (depreciation) on: Investments .... 11,080,439 (7,356,776) 226,437 (7,681,437) Foreign currency transactions .. 0 0 249 10,680 ----------- ----------- ----------- ----------- Increase (decrease) in net assets from operations ...... 22,976,626 (6,901,804) 6,001,649 (1,444,271) ----------- ----------- ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......... (224,360) 0 (910,769) (816,621) In excess of net investment income 0 0 0 0 Net realized gain on investments .. (8,478,430) (600,008) (5,260,890) (5,359,079) In excess of net realized gain on investments ..... 0 0 0 (24,788) ----------- ----------- ----------- ----------- (8,702,790) (600,008) (6,171,659) (6,200,488) ----------- ----------- ----------- ----------- FROM CAPITAL SHARES TRANSACTIONS Proceeds from the sale of shares .. 29,603,453 37,113,524 18,394,310 28,715,883 Net asset value of shares issued in connection with the reinvestment of: Dividends from net investment income ......... 189,254 0 650,344 574,913 Distributions from net realized gain .......... 8,261,382 583,526 4,560,342 4,624,273 ----------- ----------- ----------- ----------- 38,054,089 37,697,050 23,604,996 33,915,069 Cost of shares redeemed ........ (34,998,594) (24,622,631) (17,135,420) (9,641,811) ----------- ----------- ----------- ----------- Increase (decrease) in net assets derived from capital share transactions ... 3,055,495 13,074,419 6,469,576 24,273,258 ----------- ----------- ----------- ----------- Total increase (decrease) in net assets ....... 17,329,331 5,572,607 6,299,566 16,628,499 NET ASSETS Beginning of the year ........... 73,125,604 67,552,997 73,188,644 56,560,145 ----------- ----------- ----------- ----------- End of the year . $90,454,935 $73,125,604 $79,488,210 $73,188,644 =========== =========== =========== =========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the year ............ $ 0 $ 0 $ 30,955 $ 47,084 =========== =========== =========== =========== End of the year .. $ 15,556 $ 0 $ 26,969 $ 30,955 =========== =========== =========== =========== NUMBER OF SHARES OF THE FUND: Issued from the sale of shares ... 1,963,189 2,724,510 1,461,365 2,208,547 Issued in connection with the reinvestment of: Dividends from net investment income ......... 12,525 0 56,064 49,519 Distributions from net realized gain ........... 546,749 45,947 393,133 398,301 ----------- ----------- ----------- ----------- 2,522,463 2,770,457 1,910,562 2,656,367 Redeemed ......... (2,308,929) (1,862,760) (1,386,940) (738,241) ----------- ----------- ----------- ----------- Net change ....... 213,534 907,697 523,622 1,918,126 =========== =========== =========== =========== See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS Bond Global Bond ---------------------------- ------------------------- Year Ended Year Ended Year Ended Year Ended December 31, December 31, December 31, December 31, 1995 1994 1995 1994 ------------- ------------ ----------- ----------- FROM OPERATIONS Net investment income ......... $ 12,725,174 $ 6,753,560 $ 1,159,866 $ 1,840,144 Net realized gain (loss) on: Investments ..... 3,447,177 (1,696,227) (1,498,225) (1,349,342) Foreign currency transactions .. 73,512 621,420 1,239,618 (1,759,902) Unrealized appreciation (depreciation) on: Investments ... 25,344,384 (9,721,915) 1,843,562 (1,727,496) Foreign currency transactions . 5,808 (10,884) (366,433) 280,853 ------------ ----------- ----------- ----------- Increase (decrease) in net assets from operations .... 41,596,055 (4,054,046) 2,378,388 (2,715,743) ------------ ----------- ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............ (12,732,055) (6,780,562) (662,906) (121,785) In excess of net investment income . (38,412) (200,240) 0 0 Net realized gain on investments .... (1,623,664) 0 0 0 Paid in capital .... 0 0 0 (668,902) ------------ ----------- ----------- ----------- (14,394,131) (6,980,802) (662,906) (790,687) ------------ ----------- ----------- ----------- FROM CAPITAL SHARES TRANSACTIONS Proceeds from sale of shares .... 177,617,553 65,325,712 2,253,543 14,337,545 Net asset value of shares issued in connection with reinvestment of: Dividends from net investment income ........... 10,366,906 6,198,617 591,588 581,971 Distributions from net realized gain ............. 1,355,342 0 0 0 ------------ ----------- ----------- ----------- 189,339,801 71,524,329 2,845,131 14,919,516 Cost of shares redeemed ......... (43,817,094) (41,725,661) (19,840,371) (7,207,147) ------------ ----------- ----------- ----------- Increase (decrease) in net assets derived from capital share transactions ... 145,522,707 29,798,668 (16,995,240) 7,712,369 ------------ ----------- ----------- ----------- Total increase (decrease) in net assets ....... 172,724,631 18,763,820 (15,279,758) 4,205,939 NET ASSETS Beginning of the year ........... 82,985,526 64,221,706 25,584,063 21,378,124 ------------ ----------- ----------- ----------- End of the year . $255,710,157 $82,985,526 $10,304,305 $25,584,063 ============ =========== =========== =========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the year ........... $ 6,881 $ 27,002 $ (311,874) $ 77,870 ============ =========== =========== =========== End of the year . $ 34,589 $ 6,881 $ 130,782 $ (311,874) ============ =========== =========== =========== NUMBER OF SHARES OF THE FUND: Issued from the sale of shares .. 15,342,582 5,904,763 202,475 1,335,387 Issued in connection with the reinvestment of: Dividends from net investment income .......... 874,768 596,401 52,122 58,018 Distributions from net realzed gain .......... 110,640 0 0 0 ------------ ----------- ----------- ----------- 16,327,990 6,501,164 254,597 1,393,405 Redeemed ........ (3,771,731) (3,894,082) (1,954,416) (721,264) ------------ ----------- ----------- ----------- Net change ...... 12,556,259 2,607,082 (1,699,819) 672,141 ============ =========== =========== =========== See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS U.S. Government Securities Municipal Bond --------------------------- ----------------------- Year Ended Year Ended Year Ended Year Ended December December December 31, December 31, 31, 31, 1995 1994 1995 1994 ------------ ------------ ---------- ---------- FROM OPERATIONS Net investment income ............. $ 1,160,540 $ 1,171,185 $ 361,208 $ 292,976 Net realized gain (loss) on investments 425,319 (1,031,245) 77,654 (13,074) Unrealized appreciation (depreciation) on investments ........ 2,181,498 (1,303,804) 733,237 (587,181) ----------- ----------- ---------- ---------- Increase (decrease) in net assets from operations ........ 3,767,357 (1,163,864) 1,172,099 (307,279) ----------- ----------- ---------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income ............. (1,161,263) (1,178,783) (361,164) (292,976) Net realized gain on investments ........ 0 0 (28,145) 0 ----------- ----------- ---------- ---------- (1,161,263) (1,178,783) (389,309) (292,976) ----------- ----------- ---------- ---------- FROM CAPITAL SHARES TRANSACTIONS Proceeds from sale of shares .......... 5,690,298 2,935,499 797,246 3,640,279 Net asset value of shares issued in connection with reinvestment of: Dividends from net investment income . 1,106,365 1,150,274 261,821 224,980 Distributions from net realzed gain .. 0 0 22,507 0 ----------- ----------- ---------- ---------- 6,796,663 4,085,773 1,081,574 3,865,259 Cost of shares redeemed ........... (7,244,201) (2,719,268) (1,173,536) (1,154,790) ----------- ----------- ---------- ---------- Increase (decrease) in net assets derived from capital share transactions ....... (447,538) 1,366,505 (91,962) 2,710,469 ----------- ----------- ---------- ---------- Total increase (decrease) in net assets ........... 2,158,556 (976,142) 690,828 2,110,214 NET ASSETS Beginning of the year ............... 17,340,594 18,316,736 7,270,013 5,159,799 ----------- ----------- ---------- ---------- End of the year .... $19,499,150 $17,340,594 $7,960,841 $7,270,013 =========== =========== ========== ========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the year ............... $ 7,255 $ 13,380 $ 3,028 $ 0 =========== =========== ========== ========== End of the year ..... $ (1,533) $ 7,255 $ 3,829 $ 3,028 =========== =========== ========== ========== NUMBER OF SHARES OF THE FUND: Issued from the sale of shares .......... 559,951 298,272 71,573 335,233 Issued in connection with the reinvestment of: Dividends from net investment income . 108,429 122,953 23,555 20,892 Distributions from net realized gain . 0 0 1,957 0 ----------- ----------- ---------- ---------- 668,380 421,225 97,085 356,125 Redeemed ........... (717,258) (278,946) (105,539) (104,387) ----------- ----------- ---------- ---------- Net change ......... (48,878) 142,279 (8,454) 251,738 =========== =========== ========== ========== See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS Short-Term Bond ------------------------- Year Ended Year Ended December 31, December 31, 1995 1994 ---------- ----------- FROM OPERATIONS Net investment income .......................... $ 1,607,847 $ 1,119,522 Net realized gain (loss) on investments ........ (206,571) (144,945) Unrealized appreciation (depreciation) on investments ................................... 1,090,876 (694,367) ----------- ----------- Increase (decrease) in net assets from operations .................................... 2,492,152 280,210 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income .......................... (1,607,847) (1,111,090) In excess of net investment income ............. (366) 0 ----------- ----------- (1,608,213) (1,111,090) ----------- ----------- FROM CAPITAL SHARES TRANSACTIONS Proceeds from sale of shares ................... 25,274,557 10,555,297 Net asset value of shares issued in connection with reinvestment of: Dividends from net investment income ......... 1,534,306 1,067,645 ----------- ----------- 26,808,863 11,622,942 Cost of shares redeemed ........................ (21,093,620) (6,578,066) ----------- ----------- Increase (decrease) in net assets derived from capital share transactions .................... 5,715,243 5,044,876 ----------- ----------- Total increase (decrease) in net assets ........ 6,599,182 4,213,996 NET ASSETS Beginning of the year .......................... 19,440,250 15,226,254 ----------- ----------- End of the year ................................ $26,039,432 $19,440,250 =========== =========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the year .......................... $ 0 $ 0 =========== =========== End of the year ................................ $ 8,066 $ 0 =========== =========== NUMBER OF SHARES OF THE FUND: Issued from the sale of shares ................. 2,610,568 1,092,193 Issued in connection with the reinvestment of: Dividends from net investment income ......... 158,326 110,671 ----------- ----------- 2,768,894 1,202,864 Redeemed ....................................... (2,169,448) (678,594) ----------- ----------- Net change ..................................... 599,446 524,270 =========== =========== See accompanying notes to financial statements.
LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS Growth Fund -------------------------------------------------------------- Year Ended December 31, May 16* to -------------------------------------------- December 31, 1995 1994 1993 1992 1991 ------- ------ ------ ------ ------------ Net asset value, beginning of period ........................ $12.50 $13.02 $12.46 $12.01 $10.00 ------ ------ ------ ------ ------ Income from investment operations -- Net investment income (loss) .............................. (0.00) (0.02) 0.00 (0.04) 0.00 Net realized and unrealized gain (loss) on investments .... 3.86 (0.45) 1.16 0.49 2.45 ------ ------ ------ ------ ------ Total from investment operations ...................... 3.86 (0.47) 1.16 0.45 2.45 ------ ------ ------ ------ ------ Less distributions -- Distributions from net realized capital gains ............. (1.09) (0.04) (0.60) 0.00 (0.44) Distributions from capital ................................ 0.00 (0.01) 0.00 0.00 0.00 ------ ------ ------ ------ ------ Total distributions ................................... (1.09) (0.05) (0.60) 0.00 (0.44) ------ ------ ------ ------ ------ Net asset value, end of period .............................. $15.27 $12.50 $13.02 $12.46 $12.01 ====== ====== ====== ====== ====== Total return (%) ............................................ 30.9 (3.7) 9.3 3.8 24.5 Net assets, end of period (000) ............................. $45,011 $36,580 $32,385 $24,451 $16,105 Ratio of operating expenses to average net assets (%) ....... 1.08 1.16 1.20 1.50 1.50** Ratio of net investment income to average net assets (%) .... (0.29) (0.14) (0.17) (0.45) 0.01** Portfolio turnover rate (%) ................................. 48 46 64 98 69** The ratios of expenses to average net assets without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements would have been (%) .... 1.08 1.16 1.20 1.51 1.66** Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net $ 0.00 $(0.02) $ 0.00 $(0.04) $(0.01) - ---------- (*)Commencement of operations. (**)Computed on an annualized basis.
See accompanying notes to financial statements.
LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS Growth & Income Fund -------------------------------------------------------------- Year Ended December 31, May 13* to -------------------------------------------- December 31, 1995 1994 1993 1992 1991 ------- ------ ------ ------ ------------ Net asset value, beginning of period ........................ $11.80 $12.49 $11.53 $10.54 $10.00 ------ ------ ------ ------ ------ Income from investment operations -- Net investment income ..................................... 0.23 0.15 0.13 0.13 0.12 Net realized and unrealized gain (loss) on investments .... 3.93 (0.26) 1.24 1.36 0.59 ------ ------ ------ ------ ------ Total from investment operations ...................... 4.16 (0.11) 1.37 1.49 0.71 ------ ------ ------ ------ ------ Less distributions -- Dividends from net investment income ...................... (0.23) (0.15) (0.12) (0.13) (0.12) Distributions from net realized capital gains ............. (1.16) (0.43) (0.29) (0.37) (0.05) ------ ------ ------ ------ ------ Total distributions ................................... (1.39) (0.58) (0.41) (0.50) (0.17) ------ ------ ------ ------ ------ Net asset value, end of period .............................. $14.57 $11.80 $12.49 $11.53 $10.54 ====== ====== ====== ====== ====== Total return (%) ............................................ 35.2 (0.9) 11.9 14.1 7.2 Net assets, end of period (000) ............................. $36,465 $25,946 $20,657 $12,279 $7,689 Ratio of operating expenses to average net assets (%) ....... 1.20 1.33 1.50 1.50 1.50** Ratio of net investment income to average net assets (%) .... 1.61 1.28 1.23 1.42 2.09** Portfolio turnover rate (%) ................................. 60 48 53 67 27** The ratios of expenses to average net assets without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements would have been (%) .... 1.20 1.33 1.56 2.19 2.59** Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net $ 0.23 $ 0.15 $ 0.12 $ 0.07 $ 0.06 - ---------- (*)Commencement of operations. (**)Computed on an annualized basis.
See accompanying notes to financial statements.
LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS Small Cap Fund -------------------------------------------------------------- Year Ended December 31, May 13* to -------------------------------------------- December 31, 1995 1994 1993 1992 1991 ------- ------ ------ ------ ------------ Net asset value, beginning of period ........................ $12.86 $14.13 $12.88 $12.49 $10.00 ------ ------ ------ ------ ------ Income from investment operations -- Net investment income (loss) .............................. 0.04 (0.04) 0.00 (0.06) (0.01) Net realized and unrealized gain (loss) on investments .... 4.06 (1.12) 3.15 1.67 3.03 ------ ------ ------ ------ ------ Total from investment operations ...................... 4.10 (1.16) 3.15 1.61 3.02 ------ ------ ------ ------ ------ Less distributions -- Dividends from net investment income ...................... (0.04) 0.00 0.00 0.00 0.00 Distributions from net realized capital gains ............. (1.59) (0.11) (1.90) (1.22) (0.53) ------ ------ ------ ------ ------ Total distributions ................................... (1.63) (0.11) (1.90) (1.22) (0.53) ------ ------ ------ ------ ------ Net asset value, end of period .............................. $15.33 $12.86 $14.13 $12.88 $12.49 ====== ====== ====== ====== ====== Total return (%) ............................................ 32.1 (8.2) 24.7 13.1 30.5 Net assets, end of period (000) ............................. $90,455 $73,126 $67,553 $39,244 $14,581 Ratio of operating expenses to average net assets (%) ....... 1.25 1.27 1.35 1.50 1.50** Ratio of net investment income to average net assets (%) .... 0.29 (0.30) (0.38) (0.79) (0.19)** Portfolio turnover rate (%) ................................. 155 87 106 109 56** The ratios of expenses to average net assets without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements would have been (%) .... 1.25 1.27 1.35 1.66 2.43** Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net $ 0.04 $ (0.04) $ 0.00 $ (0.07) $ (0.06) - ---------- (*)Commencement of operations. (**)Computed on an annualized basis.
See accompanying notes to financial statements.
LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS International Equity Fund -------------------------------------------------------------- Year Ended December 31, May 10* to -------------------------------------------- December 31, 1995 1994 1993 1992 1991 ------- ------ ------ ------ ------------ Net asset value, beginning of period ........................ $11.61 $12.90 $ 9.64 $10.27 $10.00 ------ ------ ------ ------ ------ Income from investment operations -- Net investment income ..................................... 0.14 0.15 0.11 0.10 0.08 Net realized and unrealized gain (loss) on investments .... 0.87 (0.38) 3.61 (0.62) 0.29 ------ ------ ------ ------ ------ Total from investment operations ...................... 1.01 (0.23) 3.72 (0.52) 0.37 ------ ------ ------ ------ ------ Less distributions -- Dividends from net investment income ...................... (0.14) (0.14) (0.10) (0.10) (0.08) Distributions from net realized capital gains ............. (0.83) (0.92) (0.36) (0.01) 0.00 Distributions from paid-in capital ........................ 0.00 0.00 0.00 0.00 (0.02) ------ ------ ------ ------ ------ Total distributions ................................... (0.97) (1.06) (0.46) (0.11) (0.10) ------ ------ ------ ------ ------ Net asset value, end of period .............................. $11.65 $11.61 $12.90 $ 9.64 $10.27 ====== ====== ====== ====== ====== Total return (%) ............................................ 8.7 (1.8) 38.5 (5.1) 3.7 Net assets, end of period (000) ............................. $79,488 $73,189 $56,560 $14,937 $ 6,916 Ratio of operating expenses to average net assets (%) ....... 1.45 1.46 1.50 1.50 1.50** Ratio of net investment income to average net assets (%) .... 1.16 1.30 1.20 1.64 1.55** Portfolio turnover rate (%) ................................. 133 116 128 101 109** The ratios of expenses to average net assets without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements would have been (%) .... 1.45 1.46 1.72 2.77 3.66** Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net $ 0.14 $ 0.15 $ 0.09 $ 0.02 $ (0.03) - ---------- (*)Commencement of operations. (**)Computed on an annualized basis.
See accompanying notes to financial statements.
LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS Bond Fund -------------------------------------------------------------- Year Ended December 31, May 16* to -------------------------------------------- December 31, 1995 1994 1993 1992 1991 ------- ------ ------ ------ ------------ Net asset value, beginning of period ....................... $10.05 $11.37 $10.36 $10.23 $10.00 ------ ------ ------ ------ ------ Income from investment operations -- Net investment income .................................... 0.82 0.83 0.84 0.76 0.52 Net realized and unrealized gain (loss) on investments ... 2.32 (1.29) 1.43 0.67 0.36 ------ ------ ------ ------ ------ Total from investment operations ..................... 3.14 (0.46) 2.27 1.43 0.88 ------ ------ ------ ------ ------ Less distributions -- Dividends from net investment income ..................... (0.82) (0.84) (0.81) (0.76) (0.52) Distributions in excess of net investment income ......... 0.00 (0.02) 0.00 0.00 0.00 Distributions from net realized capital gains ............ (0.08) 0.00 (0.45) (0.54) (0.13) ------ ------ ------ ------ ------ Total distributions .................................. (0.90) (0.86) (1.26) (1.30) (0.65) ------ ------ ------ ------ ------ Net asset value, end of period ............................. $12.29 $10.05 $11.37 $10.36 $10.23 ====== ====== ====== ====== ====== Total return (%) ........................................... 32.0 (4.1) 22.2 14.3 8.9 Net assets, end of period (000) ............................ $255,710 $82,985 $64,222 $18,472 $9,922 Ratio of operating expenses to average net assets (%) ...... 0.79 0.84 0.94 1.00 1.00** Ratio of net investment income to average net assets (%) ... 8.34 7.92 8.26 7.50 8.97** Portfolio turnover rate (%) ................................ 35 87 170 101 126** The ratios of expenses to average net assets without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements would have been (%) ... 0.79 0.84 0.94 1.55 1.78** Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net $ 0.82 $ 0.83 $ 0.84 $ 0.70 $ 0.47 - ---------- (*)Commencement of operations. (**)Computed on an annualized basis.
See accompanying notes to financial statements.
LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS Global Bond Fund -------------------------------------------------------------- Year Ended December 31, May 10* to -------------------------------------------- December 31, 1995 1994 1993 1992 1991 ------- ------ ------ ------ ------------ Net asset value, beginning of period ........................ $ 9.82 $11.06 $10.32 $11.38 $10.00 ------ ------ ------ ------ ------ Income from investment operations -- Net investment income ..................................... 1.04 0.67 0.54 0.70 0.37 Net realized and unrealized gain (loss) on investments .... 1.31 (1.63) 0.96 (0.60) 1.31 ------ ------ ------ ------ ------ Total from investment operations ...................... 2.35 (0.96) 1.50 0.10 1.68 ------ ------ ------ ------ ------ Less distributions -- Dividends from net investment income ...................... (0.78) (0.04) (0.49) (0.77) (0.30) Distributions from net realized capital gains ............. 0.00 0.00 (0.27) (0.39) 0.00 Distributions from capital ................................ 0.00 (0.24) 0.00 0.00 0.00 ------ ------ ------ ------ ------ Total distributions ................................... (0.78) (0.28) (0.76) (1.16) (0.30) ------ ------ ------ ------ ------ Net asset value, end of period .............................. $11.39 $ 9.82 $11.06 $10.32 $11.38 ====== ====== ====== ====== ====== Total return (%) ............................................ 23.9 (8.7) 14.6 0.8 16.9 Net assets, end of period (000) ............................. $10,304 $25,584 $21,378 $9,968 $4,308 Ratio of operating expenses to average net assets (%) ....... 1.50 1.30 1.50 1.50 1.50** Ratio of net investment income to average net assets (%) .... 8.17 7.02 5.54 6.99 6.81** Portfolio turnover rate (%) ................................. 148 153 150 72 137** The ratios of expenses to average net assets without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements would have been (%) .... 1.69 1.30 1.51 2.58 3.99** Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net $ 1.02 $ 0.67 $ 0.54 $ 0.59 $ 0.23 - ---------- (*)Commencement of operations. (**)Computed on an annualized basis.
See accompanying notes to financial statements.
LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS U.S. Government Securities Fund -------------------------------------------------------------- Year Ended December 31, May 21* to -------------------------------------------- December 31, 1995 1994 1993 1992 1991 ------- ------ ------ ------ ------------ Net asset value, beginning of period ........................ $ 9.22 $10.53 $10.45 $10.77 $10.00 ------ ------ ------ ------ ------ Income from investment operations -- Net investment income ..................................... 0.66 0.64 0.64 0.64 0.40 Net realized and unrealized gain (loss) on investments .... 1.42 (1.30) 1.00 0.27 1.11 ------ ------ ------ ------ ------ Total from investment operations ........................ 2.08 (0.66) 1.64 0.91 1.51 ------ ------ ------ ------ ------ Less distributions -- Dividends from net investment income ...................... (0.66) (0.65) (0.65) (0.59) (0.40) Distributions from net realized capital gains ............. 0.00 0.00 (0.91) (0.64) (0.34) ------ ------ ------ ------ ------ Total distributions ..................................... (0.66) (0.65) (1.56) (1.23) (0.74) ------ ------ ------ ------ ------ Net asset value, end of period .............................. $10.64 $ 9.22 $10.53 $10.45 $10.77 ====== ====== ====== ====== ====== Total return (%) ............................................ 23.0 (6.3) 15.7 8.8 15.3 Net assets, end of period (000) ............................. $19,499 $17,341 $18,317 $10,899 $6,248 Ratio of operating expenses to average net assets (%) ....... 1.00 1.00 1.00 1.00 1.00** Ratio of net investment income to average net assets (%) .... 6.47 6.60 5.95 6.54 7.01** Portfolio turnover rate (%) ................................. 169 242 277 344 273** The ratios of expenses to average net assets without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements would have been (%) .... 1.22 1.22 1.29 2.01 2.39** Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net $ 0.64 $ 0.62 $ 0.61 $ 0.54 $ 0.32 - ---------- (*)Commencement of operations. (**)Computed on an annualized basis.
See accompanying notes to financial statements.
LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS Municipal Bond Fund -------------------------------------------------------------- Year Ended December 31, May 29* to -------------------------------------------- December 31, 1995 1994 1993 1992 1991 ------- ------ ------ ------ ------------ Net asset value, beginning of period ........................ $10.41 $11.54 $10.95 $10.55 $10.00 ------ ------ ------ ------ ------ Income from investment operations -- Net investment income ..................................... 0.52 0.52 0.51 0.51 0.24 Net realized and unrealized gain (loss) on investments .... 1.16 (1.13) 0.74 0.46 0.56 ------ ------ ------ ------ ------ Total from investment operations ........................ 1.68 (0.61) 1.25 0.97 0.80 ------ ------ ------ ------ ------ Less distributions -- Dividends from net investment income ...................... (0.52) (0.52) (0.51) (0.51) (0.23) Distributions from net realized capital gains ............. (0.04) 0.00 (0.15) (0.06) (0.02) ------ ------ ------ ------ ------ Total distributions ..................................... (0.56) (0.52) (0.66) (0.57) (0.25) ----- ----- ----- ----- ----- Net asset value, end of period .............................. $11.53 $10.41 $11.54 $10.95 $10.55 ====== ====== ====== ====== ====== Total return (%) ............................................ 16.5 (5.4) 11.6 9.4 8.1 Net assets, end of period (000) ............................. $7,961 $7,270 $5,160 $2,200 $706 Ratio of operating expenses to average net assets (%) ....... 1.00 1.00 1.00 1.00 1.00** Ratio of net investment income to average net assets (%) .... 4.72 4.79 4.50 4.81 5.03** Portfolio turnover rate (%) ................................. 41 28 36 32 26** The ratios of expenses to average net assets without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements would have been (%) .... 2.02 2.37 3.22 7.65 21.58** Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net $ 0.41 $ 0.37 $ 0.26 $ (0.19) $ (0.74) - ---------- (*)Commencement of operations. (**)Computed on an annualized basis.
See accompanying notes to financial statements.
LOOMIS SAYLES FUNDS - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS Short-Term Bond Fund -------------------------------------------------------- Year Ended December 31, August 3* to ----------------------------------- December 31, 1995 1994 1993 1992 ------ ------ ------ ------------ Net asset value, beginning of period ......................... $ 9.46 $ 9.95 $ 9.87 $10.00 ------ ------ ------ ------ Income from investment operations -- Net investment income ...................................... 0.63 0.66 0.59 0.22 Net realized and unrealized gain (loss) on investments ..... 0.35 (0.49) 0.08 (0.13) ------ ------ ------ ------ Total from investment operations ....................... 0.98 0.17 0.67 0.09 ------ ------ ------ ------ Less distributions -- Dividends from net investment income ....................... (0.63) (0.66) (0.59) (0.22) Distributions from net realized capital gains .............. 0.00 0.00 0.00 0.00 ------ ------ ------ ------ Total distributions .................................... (0.63) (0.66) (0.59) (0.22) ------ ------ ------ ------ Net asset value, end of period ............................... $ 9.81 $ 9.46 $ 9.95 $ 9.87 ====== ====== ====== ====== Total return (%) ............................................. 10.6 1.8 7.0 0.9 Net assets, end of period (000) .............................. $26,039 $19,440 $15,226 $5,121 Ratio of operating expenses to average net assets (%) ........ 1.00 1.00 1.00 1.00** Ratio of net investment income to average net assets (%) ..... 6.46 6.88 5.97 5.49** Portfolio turnover rate (%) .................................. 214 34 81 31** The ratios of expenses to average net assets without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements would have been (%) ..... 1.03 1.33 1.55 3.74** Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ............... $ 0.62 $ 0.63 $ 0.54 $ 0.11 - ---------- (*)Commencement of operations. (**)Computed on an annualized basis.
See accompanying notes to financial statements. LOOMIS SAYLES FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - December 31, 1995 1. The Loomis Sayles Funds are a group of nine no-load mutual funds (the "Funds"). Each Fund is a series of Loomis Sayles Funds (the "Trust"). The Trust is a diversified open-end management investment company organized as a Massachusetts business trust. The Trust is authorized to issue an unlimited number of full and fractional shares of beneficial interest in multiple series. Each Fund is separately managed and has its own investment objective and policies. Loomis, Sayles & Company, L.P. ("Loomis Sayles") is the investment adviser of each Fund. The Trust consists of the following funds: FUND FUND ---- ---- Loomis Sayles Growth Fund Loomis Sayles Bond Fund Loomis Sayles Growth & Income Fund Loomis Sayles Global Bond Fund Loomis Sayles Small Cap Fund Loomis Sayles U.S. Government Securities Fund Loomis Sayles International Loomis Sayles Municipal Bond Fund Equity Fund Loomis Sayles Short-Term Bond Fund The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles for investment companies. A. SECURITY VALUATION -- Equity securities listed on an established securities exchange or on the NASDAQ National Market System are normally valued at their last sale price on the exchange where primarily traded or, if there is no reported sale during the day, and in the case of over the counter securities not so listed, at the last bid price. Long-term debt securities are valued by a pricing service which determines valuations of normal institutional-size trading units of long-term debt securities. Such valuations are determined using methods based on market transactions for comparable securities and on various relationships between securities which are generally recognized by institutional traders. Other securities for which current market quotations are not readily available (including restricted securities, if any) and all other assets are carried at fair value as determined in good faith by the Board of Trustees, although the actual calculations may be made by persons acting pursuant to the direction of the Board. B. REPURCHASE AGREEMENTS -- The Funds engage in repurchase agreement transactions. Under the terms of a typical repurchase agreement, the Funds take possession of an underlying debt obligation subject to an obligation of the seller to repurchase, and the Funds to resell, the obligation at an agreed-upon price and time, thereby determining yield during the Funds' holding period. This arrangement results in a fixed rate of return that is not subject to market fluctuations during the Funds' holding period. The Funds, through their Custodian, receive the delivery of the underlying securities collateralizing repurchase agreements. It is the Funds' policy that the market value of the collateral be at least equal to 100% of the repurchase price. Loomis Sayles is responsible for determining that the value of the collateral is at all times at least equal to the repurchase price. In connection with transactions in repurchase agreements, if the seller defaults and the value of the collateral declines or if the seller enters an insolvency proceeding, realization of the collateral by the Funds may be delayed or limited. C. FOREIGN CURRENCY TRANSLATION -- The books and records of the Loomis Sayles International Equity, Global Bond and Bond Funds are maintained in U.S. dollars. The value of securities, currencies and other assets and liabilities denominated in currencies other than U.S. dollars is translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the period. Purchases and sales of investment securities, income and expenses are translated on the respective dates of such transactions. The results of operations resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in market prices of securities held are not isolated. Such fluctuations are included with net realized and unrealized gain or loss from investments. Net realized and unrealized gains and losses on foreign currency transactions represent foreign exchange gains and losses from the sale of short-term securities and holdings of foreign currencies, foreign currency gains and losses between trade dates and settlement dates on investment securities transactions, and the difference between the amounts of daily interest accruals on the books of the Funds and the amounts actually received resulting from changes in exchange rates on the payable date. FORWARD FOREIGN CURRENCY CONTRACTS -- Loomis Sayles International Equity and Global Bond Funds, upon the purchase or sale of a security denominated in a foreign currency, may enter into forward foreign currency contracts for the purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign currency involved in the underlying security transaction. In such cases, the Funds have not realized currency gains or losses between the trade and settlement dates on these security transactions. In addition, a Fund may enter into a forward foreign currency contract to sell, for a fixed amount, a foreign currency in which securities held are denominated to hedge against anticipated declines in the value of the currency it believes may adversely affect the value of the Fund's portfolio securities. Forward foreign currency contracts are valued at the forward rate and are marked-to-market daily. The change in market value is recorded as unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of forward foreign exchange contracts does not eliminate fluctuations in the underlying price of a Fund's investment securities, but does establish a rate of exchange that can be achieved in the future. Although forward foreign currency exchange contracts limit the risk of loss due to a decline in the value of hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, the Funds could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. D. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security transactions are accounted for on the trade date (the date the buy or sell is executed). Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Interest income is increased by the accretion of discount and is reduced by the amortization of premium. In determining net gain or loss on securities sold, the cost of securities has been determined on the identified cost basis. E. WHEN-ISSUED SECURITIES -- Delivery and payment for securities purchased on a when-issued or delayed delivery basis can take place one month or more after the date of the transactions. The securities so purchased are subject to market fluctuation during this period. Each Fund instructs the custodian to segregate assets in a separate account with a current value at least equal to the amount of its when-issued purchase commitments. At December 31, 1995 the Funds held no such commitments. F. FEDERAL INCOME TAXES -- Each Fund is a separate entity for federal income tax purposes. Each Fund intends to meet the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute to its shareholders all of its net investment income and any net realized capital gains. Accordingly, no provision for federal income tax has been made. G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Each of the equity funds pays its net investment income to shareholders annually. The Bond, Global Bond and U.S. Government Securities Funds pay their net investment income quarterly. Distributions from net realized capital gains are declared and paid on an annual basis by all of the Funds. The Municipal Bond Fund and Short-Term Bond Fund dividends are declared daily to shareholders of record at the time and are paid monthly. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarly due to differing treatments of income and gains on various investment securities held by the Funds, timing differences and differing characterization of distributions made by the Funds. H. ORGANIZATION EXPENSE -- Costs incurred in 1991 in connection with the Funds' organization and registration, amounting to approximately $149,700 in the aggregate, were allocated equally among the Funds, were paid by the Funds and are being amortized equally by each of the eight funds over 60 months. In 1992, costs approximating $7,800 were incurred in connection with the organization and registration of the Short-Term Bond Fund. These costs were paid by the Fund and are being amortized by the Fund over 60 months. 2. PURCHASE AND SALE OF SECURITIES (excluding short-term investments) for each Fund for the year ended December 31, 1995 were as follows:
PURCHASES SALES -------------------------------- --------------------------------- FUND U.S. GOVERNMENT OTHER U.S. GOVERNMENT OTHER ---- --------------- ----- --------------- ----- Growth Fund ................................. $ 20,027,578 $ 23,290,794 Growth & Income Fund ........................ 19,401,936 18,068,377 Small Cap Fund .............................. 88,047,154 99,340,407 International Equity Fund ................... 102,360,662 100,909,513 Bond Fund ................................... $13,262,141 175,118,681 $ 4,573,008 47,690,127 Global Bond Fund ............................ 2,432,957 18,134,459 2,579,781 34,413,234 U.S. Government Securities Fund ............. 22,499,621 6,792,628 27,603,482 1,993,802 Municipal Bond Fund ......................... 3,280,181 2,985,233 Short-Term Bond Fund ........................ 47,675,060 10,201,178 36,324,526 14,797,689
3. A. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES -- During the year ended December 31, 1995, the Funds incurred management fees payable to Loomis Sayles. Certain officers and directors of Loomis Sayles are also officers or trustees of the Trust. Loomis Sayles is a majority owned subsidiary of New England Investment Companies, L.P., which is a subsidiary of New England Mutual Life Insurance Company ("The New England"). Separate management agreements for each Fund in effect during the year ended December 31, 1995 provided for fees as set forth below:
FUND FEES EARNED(A) ANNUAL PERCENTAGE RATE ---- -------------- ---------------------- Growth Fund .................................. $319,009 0.75% of the Fund's average daily net assets Growth & Income Fund ......................... 243,025 0.75% of the Fund's average daily net assets Small Cap Fund ............................... 839,470 1.00% of the Fund's average daily net assets International Equity Fund .................... 781,765 1.00% of the Fund's average daily net assets Bond Fund .................................... 917,444 0.60% of the Fund's average daily net assets Global Bond Fund ............................. 106,447 0.75% of the Fund's average daily net assets U.S. Government Securities Fund .............. 107,664 0.60% of the Fund's average daily net assets Municipal Bond Fund .......................... 45,872 0.60% of the Fund's average daily net assets Short-Term Bond Fund ......................... 124,536 0.50% of the Fund's average daily net assets
(a) Prior to the voluntary expense limitation. B. Loomis Sayles has voluntarily agreed, for an indefinite period, to reduce its advisory fees and/or bear other Fund expenses, to the extent necessary to limit Fund total operating expenses to 1.00% of average annual net assets for the Bond, Municipal Bond, U.S. Government Securities and Short-Term Bond Funds and to 1.50% of average annual net assets for each other Fund. Loomis Sayles may change or terminate these voluntary arrangements at any time, but the Fund prospectus would be supplemented at that time to describe the change. Loomis Sayles waived management fees of $118,940 for the year ended December 31, 1995 and has borne expenses and fees, other than the compensation of trustees described in Note 3.D, totalling $31,878. C. OTHER EXPENSES -- New England Funds, L.P. (a subsidiary of New England Investment Companies) performs certain administrative, accounting and other services for the Trust. The expenses of those services, which are paid to New England Funds, L.P. by the Trust, include the following: (i) expenses for personnel performing bookkeeping, accounting, internal auditing, financial reporting functions and clerical functions relating to the Fund, and (ii) expenses for services required in connection with the preparation of registration statements and prospectuses, shareholder reports and reports and questionnaires for SEC compliance. For the year ended December 31, 1995 these expenses amounted to $86,229 for the nine Loomis Sayles Funds presented herein and are shown separately in the financial statements as Accounting and Administrative fees. D. TRUSTEES FEES AND EXPENSES -- The Trust does not pay any compensation directly to its officers or trustees who are directors, officers or employees of Loomis Sayles, The New England or their affiliates. Each other trustee is compensated by the Trust on behalf of each Fund at the rate of $1,250 per Fund, per year plus travel expenses for each meeting attended. E. SHAREHOLDERS -- At December 31, 1995, Loomis Sayles held 12,612 shares of beneficial interest in the Municipal Bond Fund. In addition, Loomis Sayles Funded Pension Plan and Loomis, Sayles & Company, Employees Profit Sharing Retirement Plan held shares of beneficial interest in the Funds as follows: PROFIT PENSION SHARING PLAN PLAN ------- -------- Growth Fund .................................. 409,242 818,925 Growth & Income Fund ......................... 553,456 540,175 Small Cap Fund ............................... 258,251 829,986 International Equity Fund .................... 725,592 479,726 Bond Fund .................................... 395,001 930,476 Global Bond Fund ............................. 500,141 171,006 U.S. Government Securities Fund .............. 440,734 192,727 Short-Term Bond Fund ......................... 201,336 338,117 4. CREDIT RISK -- The Bond Fund may invest up to 35% of total net assets in securities offering high current income which generally will be in the lower rated categories of recognized rating agencies. These securities are regarded as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligations and will generally involve more credit risk than securities in the higher rated categories. In addition, the trading market for high yield securities may be relatively less liquid than the market for higher- rated securities. 5. FOREIGN SECURITIES -- The Loomis Sayles International Equity, Bond and Global Bond Funds purchase securities of foreign issuers. Investing in securities of foreign companies and foreign governments involves special risks and consideration not typically associated with investing in U.S. companies and the U.S. government. The risks include re-evaluation of currencies and future adverse economic developments. Moreover, securities of many foreign companies and foreign governments and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies and the U.S. government. REPORT OF INDEPENDENT ACCOUNTANTS - ------------------------------------------------------------------------------- TO THE SHAREHOLDERS AND TRUSTEES OF THE LOOMIS SAYLES FUNDS: We have audited the accompanying statements of assets and liabilities of the Loomis Sayles Funds (consisting of the Loomis Sayles Growth Fund, Growth and Income Fund, Small Cap Fund, International Equity Fund, Bond Fund, Global Bond Fund, Municipal Bond Fund, U.S. Government Securities Fund and Short-Term Bond Fund), (collectively, the "Funds"), including the schedules of portfolio investments and forward foreign currency contracts (Global Bond Fund), as of December 31, 1995 and the related statements of operations, statements of changes in net assets and financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1995 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Loomis Sayles Funds as of December 31, 1995, the results of their operations, the changes in their net assets and the financial highlights for each of the periods indicated therein, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Boston, Massachusetts February 7, 1996 - ------------------------------------------------------------------------------ SHAREHOLDER MEETING At a special shareholders' meeting of the Loomis Sayles Funds held on December 8, 1995, shareholders approved new investment advisory arrangements to be effective upon the merger of New England Mutual Life Insurance Company into Metropolitan Life Insurance Company, such arrangements to be substantially identical to the investment advisory arrangements for the Series in effect immediately prior to such merger. In addition, the following persons were elected members of the Board of Trustees of the Loomis Sayles Funds: Daniel J. Fuss Michael T. Murray Richard S. Holway Terry R. Lautenbach Earl W. Foell The voting results from the meeting are as follows:
APPROVAL OF ADVISORY AGREEMENTS FOR AGAINST ABSTAIN WITHHOLD --- ------- ------- -------- Growth ..................... 1,705,025.203 6,598.629 0.0 1,174,964.126 Growth & Income ............ 1,486,791.999 8,352.837 3,132.856 919,127.146 Small Cap .................. 3,278,058.231 12,075.688 14,137.293 2,137,067.376 International Equity ....... 3,611,112.512 1,343.749 381,370.103 2,477,898.939 Bond ....................... 12,780,482.016 63,259.864 243,594.721 4,861,889.730 Global Bond ................ 706,448.178 8.811 222.420 115,066.396 U.S. Government Securities . 1,143,324.004 4,384.827 1,249.204 760,876.087 Municipal Bond ............. 404,140.910 12,630.436 7,569.918 278,753.682 Short-Term Bond ............ 1,793,656.734 256.937 240.000 1,117,178.171 ELECTION OF TRUSTEES FOR AGAINST ABSTAIN WITHHOLD --- ------- ------- -------- Daniel J. Fuss ............. 27,540,914.396 128,553.684 0 13,842,821.658 Michael T. Murray .......... 27,543,008.720 126,459.360 0 13,842,821.658 Richard S. Holway .......... 27,540,745.242 128,722.838 0 13,842,821.658 Terry R. Lautenbach ........ 27,543,413.743 126,054.337 0 13,842,821.658 Earl W. Foell .............. 27,530,194.827 139,273.253 0 13,842,821.658
- ------------------------------------------------------------------------------- BOARD OF TRUSTEES EARL W. FOELL DANIEL J. FUSS RICHARD S. HOLWAY TERRY R. LAUTENBACH MICHAEL T. MURRAY OFFICERS PRESIDENT DANIEL J. FUSS VICE PRESIDENTS TREASURER AND SECRETARY ROBERT J. BLANDING MARK W. HOLLAND JEROME A. CASTELLINI MARY C. CHAMPAGNE ASSISTANT TREASURERS E. JOHN DEBEER LOUIS T. BALLERENE PAUL H. DREXLER PETER H. DUFFY QUENTIN P. FAULKNER MARTHA F. HODGMAN ASSISTANT SECRETARY JOHN HYLL LAURIE M. GALLAGHER FRANK E. JEDLICKA JEFFREY L. MEADE KENT P. NEWMARK JEFFREY C. PETHERICK JEFFREY W. WARDLOW JOHN F. YEAGER III INVESTMENT ADVISER Loomis, Sayles & Company, L.P. One Financial Center Boston, Massachusetts 02111 TRANSFER AND DIVIDEND PAYING AGENT AND CUSTODIAN OF ASSETS State Street Bank and Trust Company Boston, Massachusetts 02102 SHAREHOLDER SERVICING AGENT FOR STATE STREET BANK AND TRUST COMPANY Boston Financial Data Services, Inc. P.O. Box 8314 Boston, Massachusetts 02266 For information about: o Establishing an account o Account procedures and status o Exchanges o Shareholder services Call 800-626-9390 For all other information about the Funds: Call 800-633-3330 This report has been prepared for the shareholders of the Funds and is not authorized for distribution to prospective investors in the Funds unless it is accompanied or preceded by an effective prospectus. [LOGO] LOOMIS SAYLES FUNDS A FAMILY OF NO-LOAD FUNDS ANNUAL REPORT DECEMBER 31, 1995 ONE FINANCIAL CENTER BOSTON, MASSACHUSETTS 02111 (617) 482-2450 -----END PRIVACY-ENHANCED MESSAGE-----