-----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, KSyiDHMCyhchVrOCvds/T9tFLZLnpjDPi9/qvAarlqe3uwzQqPMbhRMuQoZwmZD5 vEIqXaepMOXSTmWyWfGqRQ== 0000950156-98-000553.txt : 19980831 0000950156-98-000553.hdr.sgml : 19980831 ACCESSION NUMBER: 0000950156-98-000553 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980828 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOOMIS SAYLES FUNDS CENTRAL INDEX KEY: 0000872649 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 043113285 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06241 FILM NUMBER: 98699870 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 6174822450 MAIL ADDRESS: STREET 1: ONE FINANCIAL CENTER CITY: BOSTON STATE: MA ZIP: 02111 N-30D 1 LOOMIS SAYLES EQUITY FUNDS SEMI-ANNUAL LOOMIS SAYLES FUNDS EQUITY FUNDS o o o SEMI-ANNUAL REPORT JUNE 30, 1998 o Core Value Fund o Growth Fund o International Equity Fund o Mid-Cap Growth Fund o Mid-Cap Value Fund o Small Cap Growth Fund o Small Cap Value Fund o Strategic Value Fund o Worldwide Fund A Family of No-Load Funds LOOMIS ------ SAYLES ------ FUNDS ----- ONE FINANCIAL CENTER, BOSTON, MASSACHUSETTS 02111 617 o 482 o 2450 - -------------------------------------------------------------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- Corporate Overview....................................................... 1 Letter from the President, Loomis Sayles Funds........................... 2 Letter from the President, Loomis Sayles Distributors, L.P............... 3 Economic and Market Overview............................................. 4 Institutional Class Total Return vs. Lipper Category and Lipper Category Index .................................................. 6 Fund and Manager Reviews................................................. 8 Portfolio of Investments................................................. 26 Statements of Assets and Liabilities..................................... 60 Statements of Operations................................................. 62 Statements of Changes in Net Assets...................................... 64 Financial Highlights..................................................... 74 Notes to Financial Statements............................................ 90 Board of Trustees and Officers........................................... 101 - -------------------------------------------------------------------------------- CORPORATE OVERVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES FUNDS - -------------------------------------------------------------------------------- Loomis Sayles Funds is a Boston-based family of 17 no-load mutual funds advised by Loomis, Sayles & Company, L.P. At Loomis Sayles Funds, we follow a simple-strategy -- we pay close attention to what we hear from our clients and the marketplace, then work to deliver high-quality products and services that exceed expectations. Our "listening harder" creed lets us design products and services that truly answer our clients' needs. We offer a broad range of no-load funds to complement your investment objectives and strategies. We believe we run one of the most responsive support organizations in the business, providing timely information and insightful solutions. Beyond that, we're structured to take advantage of our institutional heritage. The research department at Loomis, Sayles & Company L.P. provides our portfolio managers with the fundamental research they need to make sound investment decisions. Our portfolio managers not only manage mutual funds - they manage large institutional accounts that demand and appreciate the style consistency that follows from our disciplined investment approach. FOR INFORMATION ABOUT: o Establishing an account o Account procedures and status o Exchanges o Shareholder services PHONE 800-626-9390 FOR ALL OTHER INFORMATION ABOUT THE FUNDS: PHONE 800-633-3330 To request any of the following, press or say the number |1| Literature and Information |2| Net Asset Values and Yields |3| Speak to a Marketing Representative |4| Advisory and Broker/Dealer Services |5| Institutional and High Net Worth Operations, Trading and Client Services As always, we are interested in your comments about the job we are doing and in answering any questions you may have. For more complete information about any of the Loomis Sayles Funds, including charges and expenses, please call Loomis Sayles Distributors, L.P. for a prospectus at 800-633-3330 Monday through Friday, 8:45 a.m. to 4:45 p.m. EST. Read it carefully before you invest or send money. - -------------------------------------------------------------------------------- LETTER FROM THE PRESIDENT - -------------------------------------------------------------------------------- DEAR SHAREHOLDERS, - -------------------------------------------------------------------------------- [Photo of Daniel J. Fuss] Daniel J. Fuss Federal Reserve Board Chairman Alan Greenspan, recently remarked before Congress that he had been in the economic forecasting business for over fifty years and felt he could forecast reasonably well, but "this is a tough one". I'm sure Chairman Greenspan would be happy to know that I agree with him. This is a tough one. Many are able to discern the obvious economic guideposts and extrapolate what might happen in the markets. Of course, the trouble with forecasting is none of us know what may lurk around the corner. My letter to you of last year spoke about many of the same issues we face today. So much has happened in the intervening year, and yet it is remarkable how little has changed. Fortunately, the world is still at peace and that's particularly good for worldwide financial markets. However, the Indian and Pakistani nuclear testing has jarred complacency about peace and the political instability in Indonesia is also very unsettling. There is abundant liquidity in the markets, which has recently become more unevenly distributed. Currently, there's a lot of money in what are perceived to be "safe" investments - U.S. Treasuries and the familiar names of large capitalization stocks, while more risky areas have much less. Liquidity in the system always invites mischief. Savvy money managers, looking for quick money, are shorting thinly traded currencies of countries with weak economies. This increases the risk to those countries and has hampered their attempts at economic recovery in the longer term. On the home front, the U.S. economy remains strong. But without clear signs of resurgent inflation or serious economic repercussions from the Asian crisis, the Federal Reserve seems reluctant to take significant monetary policy actions. Valuation levels on equities seem high, particularly as earnings growth is likely to slow. Large cap stocks have had a good run in this bull market, but the margin for error is higher now. This puts a premium on paying close attention to your investments and remaining well diversified. Diversifying into fixed income assets could be a prudent move for many. Markets go up and markets go down. That is their nature. It's always been tough to say just when. We can see the signs and evaluate the risks, but it's hard to know just when to expect the unexpected. Thanks for investing with us. Sincerely, /s/ Daniel J. Fuss Daniel J. Fuss President, Loomis Sayles Funds - -------------------------------------------------------------------------------- LETTER FROM THE PRESIDENT - -------------------------------------------------------------------------------- DEAR SHAREHOLDERS, - -------------------------------------------------------------------------------- [Photo of John F. Yeager, III] John F. Yeager, III One of the basic principles of investing is to broadly diversify investment holdings in stocks, bonds, money market instruments and the like. With the strong run-up of the equity markets, your portfolio's exposure to stocks may be increased enough to warrant adjustment. And with growing uncertainty over the sustainability of this market, now may be a propitious time to consider the merits of fixed income investments. As you know, Loomis Sayles Funds has a wide range of fixed income funds, which can help you rebalance your portfolio's investment allocation and risk profile. Loomis Sayles is known for our fixed income capabilities. Fundamental research is the cornerstone of both our fixed income and equity investment process. Our fixed income research department studies bonds in the same manner as other firms research stocks - by understanding industry dynamics, company specifics of bond issuers, "crunching" the financials of the issuer and meeting with management. Our approach to managing fixed income is value-oriented. We seek to provide superior long-term total rates of return, including capital gains potential, by focusing on undervalued, preferably "discount" fixed income securities from around the world. We offer a comprehensive range of fixed income funds. The Loomis Sayles Short- Term Bond Fund, U.S. Government Securities Fund, Global Bond Fund and our well-known Bond Fund, managed by Dan Fuss, all had top quartile performance and our Municipal Bond Fund was in the top half of its peer group, as ranked by Lipper Analytical Services, Inc.*. We recently added three new fixed income funds, Intermediate Maturity Bond Fund, Investment Grade Bond Fund and High Yield Fund, managed by Dan Fuss and his team, to complement our existing funds. Whether it's your intention to conservatively add bonds, or to significantly increase fixed income risk to your portfolio, we have a fund that meets your needs. Please call us, or visit our new website at www.loomissayles.com to learn more about our fixed income capabilities. Sincerely, /s/ John F. Yeager, III John F. Yeager, III President, Loomis Sayles Distributors, L. P. *For the five-year period ended 6/30/98, the following are the Loomis Sayles Funds rankings within the appropriate Lipper categories: Short-Term Bond Fund ranked 9/50 Short Investment Grade Debt Category U.S. Government Securities Fund ranked 2/96 General U.S. Government Category Global Bond Fund ranked 5/57 Global Income Category Bond Fund ranked 1/40 Corporate BBB Debt Category Municipal Bond Fund ranked 50/124 General Municipal Debt Category - -------------------------------------------------------------------------------- ECONOMIC AND MARKET OVERVIEW - -------------------------------------------------------------------------------- THE LOOMIS SAYLES FUNDS SEMI-ANNUAL REPORT ECONOMIC AND MARKET OVERVIEW -- 1998 - ------------------------------------------------------------------------------ STOCKS During the first half of 1998, the U.S. stock market kept up its record pace as the Standard & Poor's 500 Index gained 17.71%. This upward trend has become so routine that many investors are beginning to expect these kinds of returns as a matter of course. Even though the S&P 500 Index has gained at least 20% in each of the past three calendar years, investors surveying the scene in early 1998 had plenty of issues to be concerned about. 1ST QUARTER In Asia, political, economic and market turmoil combined to create a volatile environment. Economic contraction in nearly all of Asia led to a freefall in Asian financial markets and tremendous devaluation in their currencies. In response, capital fled Asian markets in search of markets considered safe. Liquidity dried up in Asian markets and eventually impacted portions of the U.S. market. Asian markets gained back some of the ground they lost in late 1997, but remained shaky. Strong U.S. economic growth continued throughout the first half of the year. With the economic expansion in its sixth year, domestic investors still seem willing to bet that U.S. companies can continue to grow earnings. Despite this growth and a tight labor market, the Federal Reserve Bank hasn't raised short- term rates. While no one is privy to the specifics of the decision, it must certainly be influenced by the remarkably low U.S. inflation statistics, the potential of the Asian slowdown to drag down the U.S. economy and the potential for higher interest rates to increase capital flow from the already damaged Asian economies. The robust U.S. economy, low interest rates and some reassuring news on corporate earnings helped the equity market to a strong first quarter, with the S&P 500 Index gaining a spectacular 13.95%. However, small cap stocks lagged large cap stocks, as the Russell 2000 Index gained a respectable 10.06% for the first three months of the year. 2ND QUARTER Asia continued to make headlines in the second quarter and most of the Asian market gains from earlier in the year were given back. Political unrest in Indonesia led to the resignation of long-time ruler Suharto. India and Pakistan revived concerns of a nuclear arms race on the subcontinent with testing of their new atomic capabilities. To compound this, Japan, Asia's largest economy, seemed unable to grapple with its failing economy. Despite intervention in the foreign exchange markets by the United States, the Japanese yen fell to new lows versus the U.S. dollar. Concerned investors now worry that China might devalue its currency, the yuan, which in turn could incite another round of economic turmoil. Against this backdrop, the U.S. bond market rallied, buoyed by a flight to quality that has helped U.S. Treasuries. The yield on the 30-year Treasury bond hit a new low of 5.62%. Falling bond yields and a preference for high-profile companies, perceived to be "safe", led large cap growth stocks to far outpace the rest of the market. The S&P Barra Growth Index gained 5.84% during the second quarter, while the S&P Barra Value Index gained only 0.41%. In general, small cap stocks lost ground in the second quarter, with the Russell 2000 Index posting a return of -4.66%. Liquidity in the market has shifted to areas considered "safe", particularly within North America and Europe. The economic scene at the end of June looks a lot like it did at the beginning of the year. There appears to be tension between solid economic growth in North America and Europe and the crisis in Asia. So far, the crisis has had a mixed impact here in the U.S. Falling energy prices, increased imports and lower interest rates have helped the economy to remain strong, while avoiding price inflation. This positive cycle has helped the economy maintain a fine balance of growth, low inflation and falling interest rates. The strength of the economy has helped to sustain earnings growth, which fuels the stock market rally. However, the Asian crisis, the strike at GM and the long-term nature of this economic expansion could put a damper on growth. Federal Reserve Bank Chairman, Alan Greenspan, has noted that he is keeping a close eye on inflationary pressures. The continued life of the bull market will be affected by how well that balance is kept. - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- TOTAL RETURN(1) VS. LIPPER CATEGORY AND LIPPER CATEGORY INDEX(2) - -------------------------------------------------------------------------------- CORE GROWTH INTERNATIONAL VALUE FUND EQUITY - -------------------------------------------------------------------------------- YEAR TO DATE Loomis Sayles 8.90 9.82 8.85 Lipper 12.11 15.10 15.50 Rank 587 of 755 801 of 1012 490 of 544 Percentile 78 80 91 Lipper Category Index 11.62 15.57 15.81 ONE YEAR Loomis Sayles 19.36 25.70 -1.64 Lipper 22.86 25.38 8.19 Rank 486 of 669 485 of 884 419 of 480 Percentile 73 55 88 Lipper Category Index 22.14 28.27 9.00 THREE YEARS Loomis Sayles 24.14 21.78 7.94 Lipper 24.74 23.85 12.78 Rank 259 of 432 398 of 560 245 of 292 Percentile 60 72 84 Lipper Category Index 24.30 24.79 15.12 FIVE YEARS Loomis Sayles 19.59 16.48 11.05 Lipper 18.93 18.91 12.22 Rank 114 of 275 266 of 338 79 of 134 Percentile 42 79 59 Lipper Category Index 18.98 19.47 13.53 MODIFIED INCEPTION(3) Loomis Sayles 16.58 15.30 9.20 Lipper 16.66 16.59 10.59 Rank 103 of 186 163 of 231 40 of 63 Percentile 56 71 64 Lipper Category Index 16.79 16.99 11.15 ACTUAL INCEPTION(4) Loomis Sayles 17.31 16.24 9.05 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (1) Total return assumes reinvestment of dividends and capital gains distributions. Total return shown for periods of one year or less represents cumulative total return. Total return for periods greater than one year represents average annual total return. Total return shown reflects, if any, the effect of fee waivers and/or expense reimbursements. Absent such fee waivers and/or expense reimbursements, total return would have been lower. (2) Lipper category total return represents the average total return for all funds in each Fund's corresponding investment category as determined by Lipper Analytical Services, Inc. The Lipper Category Index total return represents the average total return for 30 funds, or 10 funds for the Global Flex Portfolio Index, in each Fund's corresponding investment category as determined by Lipper Analytical Services, Inc. Rankings are based on the total return of each Fund for the period relative to the total return of all funds in that Fund's corresponding investment category.* *Source: Lipper Analytical Services. - ------------------------------------------------------------------------------ Mid-Cap Mid-Cap Small Cap Small Cap Strategic Growth Value Growth Value Value Worldwide - -------------------------------------------------------------------------------- 9.05 8.07 11.22 2.90 10.71 -0.10 10.66 10.66 6.45 6.45 15.10 9.16 175 of 325 204 of 325 82 of 621 467 of 621 769 of 1012 90 of 91 54 63 14 76 76 99 12.20 12.20 6.45 6.45 15.57 8.21 24.77 20.06 29.21 14.73 13.96 -1.59 22.22 22.22 17.63 17.63 25.38 11.34 104 of 284 181 of 284 39 of 524 335 of 524 774 of 884 84 of 87 37 64 8 64 88 97 21.95 21.95 15.52 15.52 28.27 11.34 NA NA NA 25.82 NA NA 19.68 37 of 311 12 16.89 NA NA NA 18.63 NA NA 16.74 56 of 158 36 15.52 21.46 23.13 20.90 20.23 20.72 5.57 20.33 20.33 18.12 16.79 27.45 13.37 117 of 258 94 of 258 172 of 466 11 of 84 659 of 810 69 of 73 46 37 37 14 82 95 20.21 20.21 14.44 15.38 29.85 13.87 21.46 23.13 20.90 20.45 20.72 5.79 (3) Modified inception reflects the nearest Lipper reporting period following actual inception. Lipper performance is reported as of month end. (4) Actual Inception Dates: Core Value Fund May 13, 1991 Growth Fund May 16, 1991 International Equity Fund May 10, 1991 Mid-Cap Growth Fund December 31, 1996 Mid-Cap Value Fund December 31, 1996 Small Cap Growth Fund December 31, 1996 Small Cap Value Fund May 13, 1991 Strategic Value Fund December 31, 1996 Worldwide Fund May 1, 1996 - -------------------------------------------------------------------------------- FUND AND MANAGER REVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES CORE VALUE FUND - -------------------------------------------------------------------------------- [Photo of James L. Carroll] James L. Carroll [Photo of Isaac H. Green] Isaac H. Green [Photo of Jeffrey W. Wardlow] Jeffrey W. Wardlow KEY FUND FACTS Objective: Long-term growth of capital and income Strategy: Invests in stocks considered to be undervalued in relation to the issuer's earnings, dividends, assets and growth prospects Fund Inception Date: 5/13/91 Commencement of Operations of Class: Institutional - 5/13/91, Retail - 1/2/97 Expense Ratio: Institutional - 0.82%, Retail - 1.10% Total Net Assets (all classes): $74.5 MM PERFORMANCE SUMMARY The Institutional Class of the Loomis Sayles Core Value Fund produced a total return of 8.90% as compared with 17.71% for the Standard & Poor's 500 Index and 12.11% for the average fund in the Lipper Growth & Income category. PORTFOLIO REVIEW During the first half of 1998, the Fund's performance was hindered by the equity market's bias towards growth stocks over value stocks. Our holdings in small capitalization companies also suffered, as large-cap stocks significantly outperformed mid-cap and small-cap issues. Positive influences on the Fund for the first half of the year included strong performance in the financial, basic materials, and communications services sectors. We seek to invest in companies that we believe are undervalued based on earnings, cash flow, or asset value. The Fund is comprised of large and medium-sized companies and is well diversified by industry type. PORTFOLIO POSITIONING The Fund currently is diversified with a modest overweight in consumer cyclicals and capital goods. Consumer staples remain underweighted in the portfolio. The stocks in the portfolio, on average, sell at a 20% discount to the price/earnings ratio of the S&P 500 Index, which is in keeping with our value investment strategy. /s/ James L. Carroll /s/ Isaac H. Green /s/ Jeffrey W. Wardlow - -------------------- ------------------------ ----------------------- James L. Carroll Isaac H. Green Jeffrey W. Wardlow AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998 YEAR 1 3 5 SINCE TO DATE YEAR YEARS YEARS INCEPTION(a) - -------------------------------------------------------------------------------- Loomis Sayles Core Value Fund (Institutional) 8.90 19.36 24.14 19.59 17.31 Loomis Sayles Core Value Fund (Retail) 8.74 19.08 N/A N/A 25.31 Lipper Growth & Income Fund Index(b) 11.62 22.14 24.30 18.98 16.79 S&P 500 Index (c) 17.71 30.15 30.24 23.08 19.22 CUMULATIVE PERFORMANCE - MAY 31, 1991 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] Loomis Lipper S&P As of 5/31/91 10.00 10.00 10.00 Period Ended 6/30/91 09.43 09.54 09.54 9/30/91 09.72 10.10 10.05 12/31/91 10.16 10.70 10.89 3/31/92 10.46 10.69 10.62 6/30/92 10.48 10.82 10.82 9/30/92 10.67 11.12 11.16 12/31/92 11.59 11.73 11.72 3/31/93 12.18 12.43 12.23 6/30/93 12.11 12.59 12.29 9/30/93 12.43 13.15 12.61 12/31/93 12.97 13.45 12.90 3/31/94 12.78 13.01 12.41 6/30/94 12.78 13.08 12.46 9/30/94 13.33 13.62 13.07 12/31/94 12.85 13.39 13.07 3/31/95 14.21 14.44 14.34 6/30/95 15.49 15.63 15.71 9/30/95 16.68 16.80 16.96 12/31/95 17.38 17.56 17.98 3/31/96 18.24 18.57 18.94 6/30/96 18.62 19.05 19.79 9/30/96 19.28 19.67 20.40 12/31/96 21.06 21.20 22.10 3/31/97 21.56 21.55 22.69 6/30/97 24.82 24.58 26.65 9/30/97 27.47 26.63 28.65 12/31/97 27.21 26.89 29.47 03/31/98 29.95 29.96 33.58 06/30/98 29.64 30.02 34.69 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (a): Inception date of the Institutional Class of shares is May 13, 1991. Since Lipper and S&P 500 Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. Inception date of the Retail Class of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): S&P 500 Index is a capitalization-weighted, total return index comprised of 500 widely held common stocks, representing industrial, utility, transportation, and financial companies traded on the New York Stock Exchange, the American Stock Exchange and in the Over-the-Counter market. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. (d): Cumulative performance is shown for the Institutional Class of shares. Performance of the Retail Class of shares would, due to the higher fees paid by the Retail Class of shares, be lower. - -------------------------------------------------------------------------------- FUND AND MANAGER REVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES GROWTH FUND [Photo of Jerome A. Castellini] Jerome A. Castellini KEY FUND FACTS Objective: Long-term growth of capital Strategy: Invests in companies with relatively small market capitalization, as well as larger companies, which are selected on the basis of their growth potential Fund Inception Date: 5/16/91 Commencement of Operations of Class: Institutional - 5/16/91, Retail - 1/2/97 Expense Ratio: Institutional - 0.85%, Retail - 1.10% Total Net Assets (all classes): $30.9 MM PERFORMANCE SUMMARY The Institutional Class of the Loomis Sayles Growth Fund produced a total return of 9.82% for the six month period ended June 30, 1998, lagging the 17.71% return on the Standard & Poor's 500 Index. Results were consistent with a broader universe of mutual funds, as measured by Lipper, where the Growth, Mid-Cap and Small-Cap category median returns were 15.64%, 9.54%, and 6.01%, respectively. PORTFOLIO REVIEW The Fund benefited from its holdings in blue chip growth stocks such as Lucent Technologies, Warner Lambert, Cisco Systems, Pfizer, and American International Group. The best performing sectors in the market during this period were consumer and technology, where the Fund's overweightings helped returns. Excellent operating trends from America Online, Compuware, and HBO and Company, as well as Home Depot, Starbucks and Kohl's also boosted results. In contrast, the Fund's overweighting in the energy sector detracted significantly from performance, as energy stocks experienced declines across- the-board. PORTFOLIO POSITIONING The drop in cost of international goods has had a net positive impact on the consumption sector of our economy. As a result, we have increased our positions in retail and consumer cyclical industries. Virtually every commodity in the world has suffered from inventory liquidation taking place in lesser developed economies. Even a sector like energy, where supply and demand are very closely balanced, has experienced significant price pressure. In response, we have slightly reduced our holdings in the oil, gas and oil service industries. Performance has been very strong in the networking and telecommunications equipment industries. We have increased the Fund's weightings and established new positions in a number of these companies. /s/ Jerome A. Castellini Jerome A. Castellini AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998 YEAR 1 3 5 SINCE TO DATE YEAR YEARS YEARS INCEPTION(a) - -------------------------------------------------------------------------------- Loomis Sayles Growth Fund (Institutional) 9.82 25.70 21.78 16.48 16.24 Loomis Sayles Growth Fund (Retail) 9.69 25.42 N/A N/A 22.97 Lipper Growth Fund Index(b) 15.57 28.27 24.79 19.47 16.99 S&P 500 Index(c) 17.71 30.15 30.24 23.08 19.22 CUMULATIVE PERFORMANCE - MAY 31, 1991 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] Loomis Lipper S&P As of 5/31/91 10.00 10.00 10.00 Period Ended 6/30/91 09.29 09.41 09.54 9/30/91 10.75 10.20 10.05 12/31/91 11.69 11.10 10.89 3/31/92 10.79 10.93 10.62 6/30/92 10.29 10.71 10.82 9/30/92 10.64 10.99 11.16 12/31/92 12.14 11.95 11.72 3/31/93 12.45 12.31 12.23 6/30/93 12.78 12.49 12.29 9/30/93 13.49 13.09 12.61 12/31/93 13.26 13.38 12.90 3/31/94 12.74 12.98 12.41 6/30/94 12.25 12.70 12.46 9/30/94 12.77 13.32 13.07 12/31/94 12.78 13.17 13.07 3/31/95 13.63 14.13 14.34 6/30/95 15.18 15.64 15.71 9/30/95 16.67 17.06 16.96 12/31/95 16.72 17.47 17.98 3/31/96 17.26 18.26 18.94 6/30/96 18.76 18.87 19.79 9/30/96 19.00 19.41 20.40 12/31/96 20.05 20.54 22.10 3/31/97 19.39 20.46 22.69 6/30/97 21.81 23.69 26.65 9/30/97 25.56 26.12 28.65 12/31/97 24.96 26.30 29.47 3/31/98 26.56 29.55 33.58 6/30/98 27.41 30.39 34.69 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (a): Inception date of the Institutional Class of shares is May 16, 1991. Since Lipper and S&P 500 Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. Inception date of the Retail Class of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): S&P 500 Index is a capitalization-weighted, total return index comprised of 500 widely held common stocks, representing industrial, utility, transportation, and financial companies traded on the New York Stock Exchange, the American Stock Exchange and in the Over-the-Counter market. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. (d): Cumulative performance is shown for the Institutional Class of shares. Performance of the Retail Class of shares would, due to the higher fees paid by the Retail Class of shares, be lower. - -------------------------------------------------------------------------------- FUND AND MANAGER REVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- [Photo of Paul H. Drexler] Paul H. Drexler KEY FUND FACTS Objective: High total investment return Strategy: Invests primarily in stocks of companies organized or headquartered outside of the United States Fund Inception Date: 5/10/91 Commencement of Operations of Class: Institutional - 5/10/91, Retail - 1/2/97 Expense Ratio: Institutional - 1.00%, Retail - 1.25% Total Net Assets (all classes): $80.5 MM PERFORMANCE SUMMARY The Institutional Class of the Loomis Sayles International Equity Fund returned 8.85% versus the 15.93% return of the Morgan Stanley Capital International EAFE Index, a broad market index representing 21 international markets in Europe, Australia, and the Far East. The Fund's underperformance was due primarily to our positions in the Pacific Basin, which suffered significant declines. PORTFOLIO REVIEW International stock markets enjoyed a strong first quarter, but markets in Europe and Asia experienced downturns during the second quarter. The correction in European markets in June ended a 12-month run of robust returns. The portfolio was focused primarily on the major European markets, where approximately two-thirds of Fund assets were invested. The remainder was invested in Canada and the Pacific Basin. Our strongest returns during the period (in U.S. dollar terms) were in Italy, up about 41%, Germany +34%, Spain +36%, and France +33%. Our Asian stock holdings held back performance, with the Fund's positions of 1% to 3% in Hong Kong, South Korea, Thailand, and Singapore suffering sharp declines. The decline in Asian markets also affected our holdings in Australia, New Zealand, and Canada, which experienced weak returns. PORTFOLIO POSITIONING The portfolio continues to be primarily invested in Europe. We have significantly reduced our Pacific Basin exposure. Europe currently offers excellent investment opportunities, despite the fact that valuations are no longer cheap. In addition, mutual fund investing is becoming more common in Europe, providing greater liquidity for stocks. Finally, the introduction of the common currency, the Euro, on January 4, 1999, is forcing companies to become more competitive on a pan-European basis. These developments are all positive for shareholders. We will continue to seek out financially sound companies with a record of strong performance that may not have been recognized by the broader marketplace. /s/ Paul H. Drexler Paul H. Drexler AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998 YEAR 1 3 5 SINCE TO DATE YEAR YEARS YEARS INCEPTION(a) - -------------------------------------------------------------------------------- Loomis Sayles International Equity Fund (Institutional) 8.85 -1.64 7.94 11.05 9.05 Loomis Sayles International Equity Fund (Retail) 8.60 -2.01 N/A N/A 4.77 Lipper International Equity Fund Index(b) 15.81 9.00 15.12 13.53 11.15 MSCI-EAFE Index(c) 15.93 6.10 10.69 10.03 8.53 CUMULATIVE PERFORMANCE - MAY 31, 1991 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] Loomis Lipper MSCI As of 5/31/91 10.00 10.00 10.00 Period Ended 6/30/91 09.51 09.48 09.27 9/30/91 10.41 10.09 10.06 12/31/91 10.42 10.23 10.23 3/31/92 10.89 10.02 09.01 6/30/92 11.27 10.47 09.20 9/30/92 10.58 09.91 09.34 12/31/92 09.89 09.79 08.98 3/31/93 10.82 10.63 10.06 6/30/93 11.05 11.21 11.07 9/30/93 12.20 12.29 11.81 12/31/93 13.70 13.62 11.91 3/31/94 13.71 13.48 12.32 6/30/94 13.49 13.60 12.95 9/30/94 13.71 14.12 12.97 12/31/94 13.46 13.52 12.83 3/31/95 13.75 13.19 13.07 6/30/95 14.84 13.86 13.17 9/30/95 14.85 14.61 13.72 12/31/95 14.63 14.88 14.27 3/31/96 15.30 15.53 14.69 6/30/96 15.80 16.17 14.92 9/30/96 16.01 16.18 14.90 12/31/96 17.31 17.03 15.14 3/31/97 17.36 17.45 14.90 6/30/97 18.97 19.40 16.83 9/30/97 19.08 19.77 16.71 12/31/97 17.14 18.26 15.40 3/31/98 19.89 20.97 17.67 6/30/98 18.66 21.15 17.86 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (a): Inception date of the Institutional Class of shares is May 10, 1991. Since Lipper and MSCI-EAFE Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. Inception date of the Retail Class of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): MSCI-EAFE Index is a capitalization-weighted average of the performance 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. (d): Cumulative performance is shown for the Institutional Class of shares. Performance of the Retail Class of shares would, due to the higher fees paid by the Retail Class of shares, be lower. - -------------------------------------------------------------------------------- FUND AND MANAGER REVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES MID-CAP GROWTH FUND - -------------------------------------------------------------------------------- [Photo of Jerome A. Castellini] Jerome A. Castellini [Photo of Scott S. Pape] Scott S. Pape KEY FUND FACTS Objective: Long term growth of capital Strategy: Invests primarily in stocks with market capitalization falling within the capitalization range of the Standard & Poor's Mid-Cap 400 Index Fund Inception Date: 12/31/96 Commencement of Operations of Class: Institutional - 1/2/97, Retail - 1/2/97 Expense Ratio: Institutional - 1.00%, Retail - 1.25% Total Net Assets (all classes): $2.2 MM PERFORMANCE SUMMARY The Institutional Class of the Loomis Sayles Mid-Cap Growth Fund posted a total return of 9.05% for the first half of the year, as compared with the Standard & Poor's Mid-Cap 400 Index return of 8.63% and the Lipper Average Mid-Cap Fund category return of 10.66%. PORTFOLIO REVIEW Performance was positively affected by the Fund's overweightings in the consumer and technology areas, which were the top performing sectors for the first half of the year. Returns were also boosted by excellent operating trends from America Online, Compuware, Electronic Arts, and Network Associates in the technology area, as well as Bed Bath & Beyond, Starbucks and Kohl's in the consumer sector. In contrast, the Fund's overweighting in the energy sector detracted significantly from performance, as these energy stocks experienced declines across-the-board. PORTFOLIO POSITIONING We continue to favor companies with less economic sensitivity (healthcare, consumer products and energy) and inherent unit growth opportunities (technology). Industrial, basic materials and capital goods sectors continue to be de-emphasized in the current environment. The drop in cost of international goods has had a net positive impact on the consumption sector of our economy. As a result, we have increased our positions in retail and consumer cyclical industries. Virtually every commodity in the world has suffered from inventory liquidation taking place in lesser developed economies. Even a sector like energy, where supply and demand are very closely balanced, has experienced significant price pressure. As a result, we have slightly reduced our holdings in the oil, gas and oil service industries. Finally, further consolidation in the networking and telecommunications equipment industries has made this an area of increasing focus for the portfolio. Performance has been very strong from this sector and we have increased weightings and established new positions in a number of these companies. /s/Jerome A. Castellini /s/ Scott S. Pape Jerome A. Castellini Scott S. Pape AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998 SINCE YEAR 1 INCEPTION TO DATE YEAR (a) - -------------------------------------------------------------------------------- Loomis Sayles Mid-Cap Growth Fund (Institutional) 9.05 24.77 21.46 Loomis Sayles Mid-Cap Growth Fund (Retail) 8.96 24.36 21.20 Lipper Mid-Cap Fund Index(b) 12.20 21.95 20.21 S&P Mid-Cap 400 Index(c) 8.63 27.10 27.32 CUMULATIVE PERFORMANCE - DECEMBER 31, 1996 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] Loomis Lipper S&P As of 12/31/96 10.00 10.00 10.00 Period Ended 3/31/97 09.63 09.33 09.85 6/30/97 10.72 10.81 11.30 9/30/97 12.57 12.33 13.12 12/31/97 12.27 11.75 13.23 3/31/98 12.98 13.23 14.68 6/30/98 13.38 13.18 14.37 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (a): Inception date of the Institutional and Retail Class of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): S&P Mid-Cap 400 Index consists of 400 domestic stocks chosen for market size liquidity and industry group representation. It is a market-weighted index (stock price times shares outstanding) with each stock affecting the index in proportion to its value. The index is comprised of industrials, utilities, financials and transportations, in size order. The index returns have not been lowered for ongoing management and operating expenses applicable to mutual fund investments. (d): Cumulative performance is shown for the Institutional Class of shares. Performance of the Retail Class of shares would, due to the higher fees paid by the Retail Class of shares, be lower. - -------------------------------------------------------------------------------- FUND AND MANAGER REVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES MID-CAP VALUE FUND - -------------------------------------------------------------------------------- [Photo of Dean A. Gulis] Dean A. Gulis [Photo of Gregg D. Watkins] Gregg D. Watkins KEY FUND FACTS Objective: Long-term growth of capital Strategy: Invests primarily in stocks with market capitalization falling within the capitalization range of the Standard & Poor's Mid-Cap 400 Index, which are believed to be undervalued by the market Fund Inception Date: 12/31/96 Commencement of Operations of Class: Institutional - 1/2/97, Retail - 1/2/97 Expense Ratio: Institutional - 1.00%, Retail - 1.25% Total Net Assets (all classes): $4.5 MM PERFORMANCE SUMMARY During the first six months of 1998, the Loomis Sayles Mid-Cap Value Fund's Institutional Class achieved an 8.07% return, as compared to the 8.63% total return for the Standard & Poor's Mid-Cap 400 Index. PORTFOLIO REVIEW The stock market's performance throughout the first half of 1998 was characterized by rapid and often dramatic swings in both stock sector performance and investor sentiment. Large capitalization stocks continued to outperform mid-cap and small capitalization issues with a 12.78% return spread between the pace-setting S&P 500 Index and the lagging Russell 2000 Index. The recession in Asia and the deceleration in the rate of U.S. corporate earnings growth whetted investors' appetites for traditional growth stocks based on the assumption that if the current pressure on corporate profits continues, these issues will be able to sustain earnings more effectively. The Fund's performance was negatively impacted by both of these factors as its average market capitalization was below that of its benchmark and its value-oriented investment discipline resulted in an underweighted position in high priced sectors such as the Internet. The Fund's performance was also hindered by its underweightings in the technology and health care sectors, which posted strong results, and its overweightings in the consumer staples and finance sectors, which lagged the broader market. We continued to focus on finding stocks with attractive valuations and good earnings potential. The Fund increased its exposure to technology, healthcare, and utilities, and reduced its exposure to basic materials, energy, financial and consumer cyclicals issues. PORTFOLIO POSITIONING We believe corporate earnings concerns will persist and that growth expectations will continue to be revised downward. In the first half of the year, investors gravitated toward large cap and growth-oriented issues. As the year progresses, we anticipate increasingly difficult earnings comparisons and expect investors to seek more defensive stocks and increase their allocations to sectors with a high degree of earnings predictability. We will continue to focus on companies with these characteristics and have modestly increased the Fund's exposure to the healthcare and consumer staples sectors while maintaining underweighted positions in the basic materials and energy sectors. /s/ Dean A. Gulis /s/ Gregg D. Watkins Dean A. Gulis Gregg D. Watkins AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998 SINCE YEAR INCEPTION TO DATE 1 YEAR (a) - -------------------------------------------------------------------------------- Loomis Sayles Mid-Cap Value Fund (Institutional) 8.07 20.06 23.13 Loomis Sayles Mid-Cap Value Fund (Retail) 7.89 19.77 22.78 Lipper Mid-Cap Fund Index(b) 12.20 21.95 20.21 S&P Mid-Cap 400 Index(c) 8.63 27.10 27.32 CUMULATIVE PERFORMANCE - DECEMBER 31, 1996 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] Loomis Lipper S&P As of 12/31/96 10.00 10.00 10.00 Period Ended 3/31/97 10.10 09.33 09.85 6/30/97 11.37 10.81 11.30 9/30/97 12.71 12.33 13.12 12/31/97 12.63 11.75 13.23 3/31/98 14.03 13.23 14.68 6/30/98 13.65 13.18 14.37 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (a): Inception date of the Institutional and Retail Classes of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): S&P Mid-Cap 400 Index consists of 400 domestic stocks chosen for market size, liquidity and industry group representation. It is a market- weighted index (stock price times shares outstanding) with each stock affecting the index in proportion to its value. The index is comprised of industrials, utilities, financials and transportation, in size order. The index returns have not been lowered for ongoing management and operating expenses applicable to mutual fund investments. (d): Cumulative performance is shown for the Institutional Class of shares. Performance of the Retail Class of shares would, due to the higher fees paid by the Retail Class of shares, be lower. - -------------------------------------------------------------------------------- FUND AND MANAGER REVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES SMALL CAP GROWTH FUND - -------------------------------------------------------------------------------- [Photo of Christopher R. Ely] Christopher R. Ely [Photo of Philip C. Fine] Philip C. Fine [Photo of David L. Smith] David L. Smith KEY FUND FACTS Objective: Long-term growth of capital Strategy: Invests in stocks of small, rapidly-growing companies, with the potential for accelerating earnings growth and rising profit margins Fund Inception Date: 12/31/96 Commencement of Operations of Class: Institutional - 1/2/97, Retail - 1/2/97 Expense Ratio: Institutional - 1.00%, Retail - 1.25% Total Net Assets (all classes): $20.7 MM PERFORMANCE SUMMARY The Institutional Class of the Loomis Sayles Small Cap Growth Fund performed well despite the market's volatility, gaining 11.22% versus a 4.93% gain for the Russell 2000 Index and a 6.45% return for the average fund in Lipper's Small Cap category. PORTFOLIO REVIEW We have not altered our investment strategy because of short-term fluctuations in the market. We continue to employ a security-driven stock selection process, evaluating each company on its own merits, rather than trying to predict the next shift in market sentiment. When corrections do occur, they provide an opportunity to invest in superior companies at much more attractive prices. One area where we have identified new opportunity is retail. We have been successful with our investment in Pacific Sunwear, a mall-based retailer of teen clothing. Recently we added to retail with the purchase of 99 Cents Only, a store that sells all its items at 99 cents, and Just for Feet, a large format footwear retailer. The portfolio benefited from its exposure to technology, particularly computer software and services. On the other hand, electronics related issues were hard hit due to excessive inventories of semiconductor chips and weakening demand in Asia. At this time, our exposure to electronics stocks is limited. PORTFOLIO POSITIONING We believe that the market for small-cap growth stocks holds great promise for investors. It is our opinion that there is growing evidence that the earnings growth of small companies is accelerating even as the earnings of the stocks in the Standard & Poor's 500 Index are slowing. At the same time, small-cap stocks currently are selling at very attractive price levels when compared to the S&P 500 Index. We believe this combination of strong fundamentals and attractive valuations provides a powerful argument for investing in small-cap stocks. /s/ Christopher R. Ely /s/ Philip C. Fine /s/ David L. Smith Christopher R. Ely Philip C. Fine David L. Smith AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998 SINCE YEAR 1 INCEPTION TO DATE YEAR (a) - -------------------------------------------------------------------------------- Loomis Sayles Small Cap Growth Fund (Institutional) 11.22 29.21 20.90 Loomis Sayles Small Cap Growth Fund (Retail) 11.15 28.84 20.67 Lipper Small Cap Fund Index(b) 6.45 15.52 14.44 Russell 2000 Index(c) 4.93 16.51 18.13 CUMULATIVE PERFORMANCE - DECEMBER 31, 1996 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] Loomis Lipper Russell As of 12/31/96 10.00 10.00 10.00 Period Ended 3/31/97 08.51 09.06 09.48 6/30/97 10.28 10.60 11.02 9/30/97 12.55 12.21 12.66 12/31/97 11.94 11.50 12.24 3/31/98 13.39 12.73 13.47 6/30/98 13.28 12.24 12.84 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (a): Inception date of the Institutional and Retail Classes of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): 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 Index total market capitalization. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. (d): Cumulative performance is shown for the Institutional Class of shares. Performance of the Retail Class of shares would, due to the higher fees paid by the Retail Class of shares, be lower. - -------------------------------------------------------------------------------- FUND AND MANAGER REVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES SMALL CAP VALUE FUND - -------------------------------------------------------------------------------- [Photo of Mary C. Champagne] Mary C. Champagne [Photo of Jeffrey C. Petherick] Jeffrey C. Petherick KEY FUND FACTS Objective: Long-term growth of capital Strategy: Invests primarily in stocks with market capitalization falling within the capitalization range of the Russell 2000 Index, which are considered undervalued by the market and with significant growth potential. Fund Inception Date: 5/13/91 Commencement of Operations of Class: Institutional - 5/13/91, Retail - 1/2/97, Admin. - 1/2/98 Expense Ratio: Institutional - 0.94%, Retail - 1.20%, Admin. - 1.50% Total Net Assets (all classes): $394.3 MM PERFORMANCE SUMMARY For the first half of the year, the Loomis Sayles Small Cap Value Fund's Institutional Class lagged the Russell 2000 Index, returning 2.90% versus the 4.93% return for the Index. While the portfolio held up well during the down days for the market, deep value and high growth issues drove the rebound in the second quarter. The Fund's focus on small-capitalization, undervalued stocks prevented it from fully participating in this rebound. PORTFOLIO REVIEW The Fund's slight overweighting in the health care and energy sectors and slight underweighting in consumer stocks hindered returns for the first six months of the year. Our underweighting in the financial services sector proved to be beneficial as it was one of the worst performing sectors for the period. Overall, it was stock selection that drove returns as is generally the case for our portfolio. In virtually every sector, we had a problem stock that contributed to the Fund's underperformance. Komag, Hologic, and Wallace Computer Services as well as the Fund's REIT holdings all experienced difficulties. The energy sector was also down across-the-board. While we certainly had some good stocks in the portfolio, they were not enough to outweigh the poor performers. Fore Systems, Trigon Healthcare, United Auto Group and Burlington Coat Factory posted positive results for the first half of the year. PORTFOLIO POSITIONING Small stocks have been lagging the Standard & Poor's 500 Index for over four years. Currently, valuations for small stocks are very attractive and the earnings growth picture is brighter than it has been for several years. However, as long as the market is in a consolidation or correction phase, small stocks will not perform well. We believe that when the current market correction is complete, that small-cap stocks will, once again, produce strong returns. /s/ Mary C. Champagne /s/ Jeffrey C. Petherick Mary C. Champagne Jeffrey C. Petherick AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998 YEAR 1 3 5 SINCE TO DATE YEAR YEARS YEARS INCEPTION(a) - -------------------------------------------------------------------------------- Loomis Sayles Small Cap Value Fund (Institutional) 2.90 14.73 25.82 18.63 20.45 Loomis Sayles Small Cap Value Fund (Retail) 2.79 14.45 N/A N/A 18.63 Loomis Sayles Small Cap Value Fund (Admin) 2.63 N/A N/A N/A 2.63 Lipper Small Cap Fund Index(b) 6.45 15.52 16.89 15.52 15.38 Russell 2000 Index(c) 4.93 16.51 18.86 16.04 15.99 CUMULATIVE PERFORMANCE - MAY 31, 1991 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] Loomis Lipper Russell 2000 As of 5/31/91 10.00 10.00 10.00 Period Ended 6/30/91 09.65 09.51 09.42 9/30/91 11.21 10.48 10.19 12/31/91 12.77 11.56 10.77 3/31/92 14.05 11.68 11.58 6/30/92 12.19 10.70 10.79 9/30/92 12.26 11.06 11.10 12/31/92 14.44 12.85 12.76 3/31/93 15.37 12.99 13.30 6/30/93 15.70 13.40 13.59 9/30/93 17.72 14.63 14.78 12/31/93 18.01 15.02 15.16 3/31/94 17.06 14.48 14.76 6/30/94 16.22 13.70 14.18 9/30/94 17.06 14.97 15.17 12/31/94 16.51 14.95 14.89 3/31/95 17.61 15.79 15.57 6/30/95 18.51 17.26 17.03 9/30/95 21.08 19.41 18.72 12/31/95 21.82 19.68 19.12 3/31/96 23.47 20.79 20.10 6/30/96 25.28 22.44 21.10 9/30/96 25.90 22.72 21.17 12/31/96 28.44 22.51 22.28 3/31/97 27.95 20.39 21.12 6/30/97 32.14 23.85 24.55 9/30/97 36.76 27.49 28.20 12/31/97 35.84 25.89 27.26 3/31.98 39.21 28.66 30.00 6/30/98 36.88 27.56 28.60 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (a): Inception date of the Institutional Class of shares is May 13, 1991. Since Lipper and Russell 2000 Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. Inception dates of the Retail and Admin Classes of shares are December 31, 1996 and January 2, 1998, respectively. (b): Source: Lipper Analytical Services. (c): Russell 2000 Index is comprised on 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. (d): Cumulative performance is shown for the Institutional Class of shares. Performance of the Retail and Admin Classes of shares would be lower, due to the higher fees paid by the Retail and Admin Classes of shares. - -------------------------------------------------------------------------------- FUND AND MANAGER REVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES STRATEGIC VALUE FUND - -------------------------------------------------------------------------------- [Photo of Philip J. Schettewi] Philip J. Schettewi KEY FUND FACTS Objective: Long-term growth of capital Strategy: Invests in stocks believed to be undervalued by the market Fund Inception Date: 12/31/96 Commencement of Operations of Class: Institutional - 1/2/97, Retail - 1/2/97 Expense Ratio: Institutional - 1.00%, Retail - 1.25% Total Net Assets (all classes): $1.5 MM PERFORMANCE SUMMARY The Institutional Class of the Strategic Value Fund posted a return of 10.71% for the first half of 1998, versus the Standard & Poor's 500 Index return of 17.71% and the 15.10% return of the average fund in Lipper's Growth Fund category. PORTFOLIO REVIEW Growth stocks significantly outpaced value stocks during the first six months of the year, resulting in weaker returns for the Fund. While large capitalization stocks continued to lead the equity market, we avoided many of these issues because of their rich valuations. The best performing sectors for the Fund were technology and consumer cyclicals. Shares of EMC Corporation have risen as the company continues to dominate the computer data storage market. Gateway 2000, a direct seller of personal computers, has benefited from strong demand, declining component costs and significant operational improvements. Within consumer cyclicals, Black & Decker posted the largest gains as their major restructuring initiatives are expected to result in a more focused company with greater earnings potential. Holdings in the basic materials and capital goods sectors have suffered from the turmoil in Asia which has reduced demand and diminished the pricing power of producers in these industries. PORTFOLIO POSITIONING In our opinion, the discrepancy in valuations between the largest "mega- capitalization" stocks and the rest of the market has grown too large to be sustainable for an extended period of time. We believe too high a premium is being paid for the liquidity and stability of earnings of these companies. We have found numerous opportunities to purchase stocks of other companies that we believe possess superior overall earnings potential, yet sell at significant discounts because their results are slightly more volatile. /S/ Philip J.Schettewi Philip J. Schettewi AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998 SINCE YEAR 1 INCEPTION TO DATE YEAR (a) - -------------------------------------------------------------------------------- Loomis Sayles Strategic Value Fund (Institutional) 10.71 13.96 20.72 Loomis Sayles Stategic Value Fund (Retail) 10.54 13.69 20.39 Lipper Growth Fund Index(b) 15.57 28.27 29.85 S&P 500 Index(c) 17.71 30.15 35.07 CUMULATIVE PERFORMANCE - DECEMBER 31, 1996 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] Loomis Lipper S&P As of 12/31/96 10.00 10.00 10.00 Period Ended 3/31/97 09.98 09.96 10.27 6/30/97 11.63 11.54 12.06 9/30/97 13.06 12.72 12.96 12/31/97 11.97 12.80 13.34 3/31/98 13.52 14.39 15.19 6/30/98 13.25 14.80 15.70 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (a): Inception date of the Institutional and Retail Classes of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): S&P 500 Index is a capitalization-weighted, total return index comprised of 500 widely held common stocks, representing industrial, utility, transportation, and financial companies traded on the New York Stock Exchange, the American Stock Exchange and in the Over-the-Counter market. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. (d): Cumulative performance is shown for the Institutional Class of shares. Performance of the Retail Class of shares would, due to the higher fees paid by the Retail Class of shares, be lower. LOOMIS SAYLES WORLDWIDE FUND - -------------------------------------------------------------------------------- [Photo of Daniel J. Fuss] Daniel J. Fuss [Photo of E. John deBeer] E. John deBeer [Photo of Paul H. Drexler] Paul H. Drexler [Photo of Quentin P. Faulkner] Quentin P. Faulkner KEY FUND FACTS Objective: High total investment return Strategy: Invests in U.S. and foreign equity and debt securities Fund Inception Date: 5/1/96 Commencement of Operations of Class: Institutional - 5/1/96, Retail - 1/2/97 Expense Ratio: Institutional - 1.00%, Retail - 1.25% Total Net Assets (all classes): $5.7 MM PERFORMANCE SUMMARY For the first six months of 1998, the Loomis Sayles Worldwide Fund's Institutional Class returned -0.10%, as compared with the Lipper Global Flex Portfolio category's 9.16% return, the Lehman Brothers Government/Corporate Bond Index's 4.17% return and the Standard & Poor's 500 Index's 17.71% return. PORTFOLIO REVIEW The Fund's weak performance was due primarily to its foreign equity holdings, which posted a -9.17% return versus the 15.93% return of the MSCI Europe, Australia, Far East Index. Our Asian equity holdings were particularly hard- hit. While the Fund's U.S. equities posted a strong return of 17.30%, the position was underweighted, comprising only 20% of the portfolio. The Fund's foreign bonds returned 7.99%, outperforming the Salomon Brothers World Government Bond Index's 2.79% return. In January 1998, we made significant changes to the Fund's asset allocation. U.S. equities were reduced from 40% to 20%, which worked against us. Foreign equities were increased from 23% to 30%, which also put a drag on performance, because Asian equity holdings were increased as a result. PORTFOLIO POSITIONING As of June 30, Asian holdings represent 24.8% of the portfolio, with 8.4% of this amount in equities and 16.4% in bonds. Given the volatility of these markets and securities, this is the key commitment for the Fund. We believe there is a strong foundation for vigorous economic growth in most Asian countries. It is our opinion that financial markets have overreacted to admittedly genuine financial, economic and political problems and we expect our Asian holdings to recover strongly. /s/Daniel J. Fuss /s/ Paul H. Drexler /s/ E. John deBeer /s/ Quentin P. Faulkner Daniel J. Fuss Paul H. Drexler E. John deBeer Quentin P. Faulkner AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998 SINCE YEAR 1 INCEPTION TO YEAR YEAR (a) - -------------------------------------------------------------------------------- Loomis Sayles Worldwide Fund (Institutional) -0.10 -1.59 5.79 Loomis Sayles Worldwide Fund (Retail) -0.41 -1.98 1.93 Lipper Global Flex Portfolio Index(b) 8.21 11.34 13.87 S&P 500 Index(c) 17.71 30.15 31.17 CUMULATIVE PERFORMANCE - MAY 31, 1996 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] Loomis Lipper S&P As of 5/31/96 10.00 10.00 10.00 Period Ended 6/30/96 10.03 10.04 10.04 9/30/96 10.25 10.22 10.35 12/31/96 10.83 10.80 11.21 3/31/97 10.83 10.88 11.51 6/30/97 11.38 11.77 13.52 9/30/97 12.16 12.41 14.53 12/31/97 11.21 12.11 14.95 3/31/98 12.37 13.12 17.03 6/30/98 11.20 13.11 17.60 Note: Past performance is not predictive of future performance. Total return assumes reinvestment of dividends and capital gains distributions. The investment return and principal value of an investment in the Fund will fluctuate so that investors' shares, when redeemed, may be worth more or less than their original cost. (a): Inception date of the Institutional Class of shares is May 1, 1996. Since Lipper and S&P 500 Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1996. Inception date of the Retail Class of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): S&P 500 Index is a capitalization-weighted, total return index comprised of 500 widely held common stocks, representing industrial, utility, transportation, and financial companies traded on the New York Stock Exchange, the American Stock Exchange and in the Over-the-Counter market. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. (d): Cumulative performance is shown for the Institutional Class of shares. Performance of the Retail Class of shares would, due to the higher fees paid by the Retail Class of shares, be lower. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- LOOMIS SAYLES CORE VALUE FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED) SHARES VALUE (a) - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.3% OF NET ASSETS Aerospace -- 1.0% Northrop Grumman Corp. ................... 7,500 $ 773,438 ------------ Auto & Related -- 1.5% TRW, Inc. ................................ 20,000 1,092,500 ------------ Banks/Savings & Loans -- 7.7% Chase Manhattan Corp. .................... 21,624 1,632,612 Fleet Financial Group, Inc. .............. 22,600 1,887,100 National City Corp. ...................... 16,300 1,157,300 PNC Bank Corp. ........................... 20,000 1,076,250 ------------ 5,753,262 ------------ Business Services -- 1.5% Dun & Bradstreet Corp. (b) ............... 30,000 1,083,750 ------------ Chemicals -- Major -- 0.9% Praxair, Inc. ............................ 15,000 702,188 ------------ Chemicals -- Specialty -- 1.6% E.I. du Pont DeNemours & Co. ............. 16,200 1,208,925 ------------ Commercial Services -- 1.6% Viad Corp. ............................... 41,500 1,151,625 ------------ Communications Equipment -- 0.9% Harris Corp. ............................. 14,400 643,500 ------------ Computer Hardware -- 3.3% International Business Machines Corp. .... 10,800 1,239,975 Sun Microsystems, Inc. (b) ............... 27,800 1,207,562 ------------ 2,447,537 ------------ Data Processing Services -- 1.2% First Data Corp. ......................... 27,000 899,437 ------------ Electronics -- 7.5% Applied Materials, Inc. (b) .............. 23,000 678,500 Litton Industries, Inc. (b) .............. 19,000 1,121,000 National Semiconductor Corp. (b) ......... 22,100 291,444 Philips Electronics NV ................... 18,500 1,572,500 Raytheon Co. ............................. 32,800 1,939,300 ------------ 5,602,744 ------------ Financial Services -- 3.5% Bear Stearns Companies, Inc. ............. 10,500 597,188 Finova Group, Inc. ....................... 24,724 1,399,996 Morgan Stanley Dean Witter & Co. ......... 7,000 639,625 ------------ 2,636,809 ------------ Food -- Packaged & Miscellaneous -- 2.8% ConAgra, Inc. ............................ 44,000 1,394,250 Sara Lee Corp. ........................... 12,000 671,250 ------------ 2,065,500 ------------ Forest Products -- 2.3% Georgia Pacific Corp. .................... 12,500 736,719 Georgia Pacific Timber Group ............. 42,500 980,156 ------------ 1,716,875 ------------ Freight Transportation -- 1.7% Ryder System, Inc. ....................... 41,000 1,294,062 ------------ Health Care -- Drugs -- 2.9% Abbott Laboratories ...................... 32,500 1,328,437 Pharmacia & Upjohn, Inc. ................. 18,700 862,538 ------------ 2,190,975 ------------ Health Care -- Services -- 2.5% Tenet Healthcare Corp. (b) ............... 60,000 1,875,000 ------------ Home Products -- 1.4% Premark International, Inc. .............. 32,500 1,048,125 ------------ Housing & Building Materials -- 3.4% Armstrong World Industries, Inc. ......... 18,100 1,219,487 Black & Decker Corp. ..................... 22,000 1,342,000 ------------ 2,561,487 ------------ Imaging -- 1.1% Xerox Corp. .............................. 7,700 782,513 ------------ Insurance -- 4.0% Ace Ltd. ................................. 39,450 1,538,550 Allstate Corp. ........................... 15,998 1,464,817 ------------ 3,003,367 ------------ Leisure -- 2.0% Hasbro, Inc. ............................. 38,000 1,493,875 ------------ Machinery -- 2.1% Deere & Co. .............................. 30,000 1,586,250 ------------ Manufacturing -- 3.4% Eaton Corp. .............................. 16,500 1,282,875 Tenneco, Inc. ............................ 24,600 936,338 York International Corp. ................. 7,700 335,431 ------------ 2,554,644 ------------ Natural Gas -- 1.5% Columbia Gas Systems, Inc. ............... 19,800 1,101,375 ------------ Oil & Gas Drilling Equipment -- 1.5% BJ Services Co. (b) ...................... 20,500 595,781 Cooper Cameron Corp. (b) ................. 10,300 525,300 ------------ 1,121,081 ------------ Oil & Gas Exploration -- 0.8% Oryx Energy Co. (b) ...................... 27,000 597,375 ------------ Oil & Gas -- Major Integrated -- 6.9% British Petroleum Plc ADR ................ 16,830 1,485,248 Exxon Corp. .............................. 11,300 805,831 Mobil Corp. .............................. 19,800 1,517,175 USX Marathon Group ....................... 38,000 1,303,875 ------------ 5,112,129 ------------ Personal Care -- 1.4% Kimberly Clark Corp. ..................... 22,000 1,009,250 ------------ Publishing -- 0.6% McGraw-Hill Cos., Inc. ................... 5,600 456,750 ------------ Real Estate Investment Trusts -- 2.6% Health Care Property Investments, Inc. ... 30,200 1,089,088 Meditrust Corp. .......................... 30,025 838,823 ------------ 1,927,911 ------------ Retail -- Food -- 1.1% Kroger Co. (b) ........................... 19,000 814,625 ------------ Retail -- General -- 4.1% Federated Department Stores, Inc. (b) .... 33,000 1,775,812 Sears Roebuck & Co. ...................... 21,000 1,282,313 ------------ 3,058,125 ------------ Telecommunications -- 9.4% American Home Products Corp. ............. 25,000 1,293,750 Ameritech Corp. .......................... 34,900 1,566,137 Bell Atlantic Corp. ...................... 24,400 1,113,250 BellSouth Corp. .......................... 30,000 2,013,750 Century Telephone Enterprises, Inc. ...... 21,600 990,900 ------------ 6,977,787 ------------ Textile & Apparel -- 0.7% Reebok International Ltd. (b) ............ 19,000 526,063 ------------ Tobacco -- 1.1% Philip Morris Cos., Inc. ................. 20,600 811,125 ------------ Utilities -- 3.8% Consolidated Edison, Inc. ................ 20,000 921,250 Pacificorp ............................... 45,000 1,018,125 Pinnacle West Capital Corp. .............. 19,700 886,500 ------------ 2,825,875 ------------ TOTAL COMMON STOCKS (Identified Cost $58,917,615)........... 72,507,859 ------------ SHORT-TERM INVESTMENT -- 2.7% OF NET ASSETS Associates Corp. of North America 5.950%, 7/01/98 ......................... $2,006,556 $ 2,006,556 ------------ TOTAL SHORT-TERM INVESTMENT (Identified Cost $2,006,556)............ 2,006,556 ------------ TOTAL INVESTMENTS -- 100.0% (IDENTIFIED COST $60,924,171) (c)....... 74,514,415 Cash and Other Assets, Less Liabilities -- 0.0%.............. 16,220 ------------ NET ASSETS -- 100%........................ $ 74,530,635 ============ (a) See Note 1. (b) Non-income producing security. (c) At June 30, 1998, the net unrealized appreciation on investments based on cost of $60,924,171 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $15,052,960, and $1,462,716, respectively, resulting in net unrealized appreciation of $13,590,244. Key to Abbreviations: ADR: American Depositary Receipt. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- LOOMIS SAYLES GROWTH FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED) SHARES VALUE (a) - -------------------------------------------------------------------------------- COMMON STOCKS -- 100.1% OF NET ASSETS Broadcasting -- 1.5% Tele Communications, Inc. (b) ............ 12,100 $ 465,094 ----------- Chemicals -- Major -- 3.4% E.I. du Pont DeNemours & Co. ............. 1,800 134,325 Monsanto Co. ............................. 16,600 927,525 ----------- 1,061,850 ----------- Communications Equipment -- 13.7% Ascend Communications, Inc. (b) .......... 9,600 475,800 Ciena Corp. (b) .......................... 16,200 1,127,925 Cisco Systems, Inc. (b) .................. 9,400 865,388 Loral Space & Communications Ltd. (b) .... 20,400 576,300 Lucent Technologies, Inc. ................ 9,900 823,556 Tellabs, Inc. (b) ........................ 5,100 365,287 ----------- 4,234,256 ----------- Computer Software & Services -- 11.5% America Online, Inc. (b) ................. 4,500 477,000 Automatic Data Processing, Inc. .......... 8,800 641,300 Compuware Corp. (b) ...................... 10,800 552,150 Fiserv, Inc. (b) ......................... 4,800 203,850 HBO & Co. ................................ 33,400 1,177,350 Paychex, Inc. ............................ 12,250 498,422 ----------- 3,550,072 ----------- Financial Services -- 6.4% Associates First Capital Corp. ........... 7,500 576,562 Federal National Mortgage Association .... 8,100 492,075 MGIC Investment Corp. .................... 5,800 330,963 SunAmerica, Inc. ......................... 9,900 568,631 ----------- 1,968,231 ----------- Health Care -- Biotechnology -- 2.2% MedImmune, Inc. (b) ...................... 6,500 405,438 Oncor, Inc. (b) .......................... 378,000 283,500 ----------- 688,938 ----------- Health Care -- Drugs -- 1.8% Pfizer, Inc. ............................. 5,000 543,438 ----------- Health Care -- Medical Technology -- 2.8% Allegiance Corp. ......................... 16,800 861,000 ----------- Health Care -- Services -- 2.5% Healthsouth Corp. (b) .................... 29,000 773,938 ----------- Insurance -- 5.0% American International Group, Inc. ....... 7,325 1,069,450 EXEL Ltd. ................................ 6,200 482,438 ----------- 1,551,888 ----------- Oil & Gas Drilling Equipment -- 15.1% Cooper Cameron Corp. (b) ................. 16,900 861,900 Halliburton Co. .......................... 22,100 984,831 Noble Drilling Corp. (b) ................. 26,100 628,031 Rowan Companies, Inc. (b) ................ 24,600 478,163 Schlumberger Ltd. ........................ 8,100 553,331 Unit Corp. (b) ........................... 191,300 1,159,756 ----------- 4,666,012 ----------- Oil & Gas Exploration -- 5.5% Anadarko Petroleum Corp. ................. 13,800 927,187 Cross Timbers Oil Co. .................... 31,100 592,844 Ocean Energy, Inc. (b) ................... 9,082 177,667 ----------- 1,697,698 ----------- Personal Care -- 1.8% Gillette Co. ............................. 9,500 538,531 ----------- Restaurants -- 4.8% Starbucks Corp. (b) ...................... 28,000 1,496,250 ----------- Retail -- Food & Drug -- 4.3% CVS Corp. .............................. 17,600 685,300 Walgreen Co. ........................... 15,200 627,950 ----------- 1,313,250 ----------- Retail -- General -- 5.6% Fastenal Co. ............................. 4,400 204,325 Kohl's Corp. (b) ......................... 10,900 565,437 Wal-Mart Stores, Inc. .................... 15,900 965,925 ----------- 1,735,687 ----------- Retail -- Specialty -- 8.8% Bed Bath & Beyond, Inc. (b) .............. 15,400 797,912 Borders Group, Inc. (b) .................. 16,500 610,500 Home Depot, Inc. ......................... 15,900 1,320,694 ----------- 2,729,106 ----------- Telecommunications -- 3.4% WorldCom, Inc. (b) ....................... 22,000 1,065,625 ----------- TOTAL COMMON STOCKS (Identified Cost $25,820,217)........... 30,940,864 ----------- FACE AMOUNT VALUE(a) - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT -- 0.7% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $228,032 on 7/01/98 collateralized by $230,000 U.S. Treasury Note, 6.250%, due 6/30/02, with a value of $235,247 ............... $228,000 $ 228,000 ----------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $228,000).............. 228,000 ----------- TOTAL INVESTMENTS -- 100.8% (IDENTIFIED COST $26,048,217) (c)....... 31,168,864 Liabilities, Less Cash and Other Assets -- (0.8%)............ (239,789) ----------- NET ASSETS -- 100%........................ $30,929,075 =========== (a) See Note 1. (b) Non-income producing security. (c) At June 30, 1998, the net unrealized appreciation on investments based on cost of $26,048,217 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $7,065,230, and $1,944,583, respectively, resulting in net unrealized appreciation of $5,120,647. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED) SHARES (a) VALUE (b) - -------------------------------------------------------------------------------- COMMON STOCKS -- 95.7% OF NET ASSETS Australia -- 3.2% Brambles Industries Ltd. ................. 63,000 $ 1,239,308 Leighton Holdings Ltd. ................... 172,000 603,779 Southcorp Ltd. ........................... 235,000 684,159 ----------- 2,527,246 ----------- Brazil -- 0.4% SABESP ................................... 2,848,000 342,287 Telemig SA ............................... 42,776 2,977 ----------- 345,264 ----------- Canada -- 8.3% Bombardier, Inc. ......................... 43,000 1,168,836 Canadian National Railway Co. ............ 16,750 890,116 Donohue, Inc. ............................ 40,500 915,106 Northern Telecom Ltd. .................... 19,400 1,099,494 Petro-Canada ............................. 58,300 942,910 Royal Bank of Canada ..................... 20,000 1,202,813 Torstar Corp. ............................ 15,000 479,087 ----------- 6,698,362 ----------- Denmark -- 6.3% Carlsberg A/S ............................ 14,000 1,018,997 Sophus Berendsen ......................... 20,000 829,755 The Codan Group .......................... 2,895 400,357 Tryg-Baltica Forsikring A/S .............. 43,250 1,177,342 Unidanmark A/S ........................... 18,500 1,664,313 ----------- 5,090,764 ----------- France -- 11.1% Axa-UAP Re SA ............................ 8,500 956,051 Banque Nationale de Paris ................ 13,500 1,103,098 Comptoirs Modernes ....................... 1,540 802,388 Elf Aquitaine SA ......................... 9,000 1,265,362 L' Air Liquide ........................... 6,412 1,060,589 Michelin ................................. 17,000 981,359 St. Gobain ............................... 6,900 1,279,405 Valeo .................................... 14,500 1,482,211 ----------- 8,930,463 ----------- Germany -- 10.8% Allianz AG ............................... 4,500 1,500,873 Daimler Benz AG .......................... 9,800 964,540 Henkel KGAA (Preferred) .................. 14,000 1,385,677 Lufthansa AG ............................. 50,000 1,260,085 MAN AG (Preferred) ....................... 3,600 972,137 Veba AG .................................. 21,800 1,466,872 Volkswagen AG ............................ 1,200 1,159,777 ----------- 8,709,961 ----------- Italy -- 7.9% Credito Italiano ......................... 243,000 1,272,613 Edison Spa ............................... 140,000 1,124,018 ENI Spa .................................. 215,000 1,409,737 Ericsson Spa ............................. 19,900 1,179,384 Telecom Italia Spa ....................... 279,000 1,351,228 ----------- 6,336,980 ----------- Japan -- 9.6% Canon, Inc. .............................. 45,000 1,025,168 Familymart Co. ........................... 30,000 1,145,585 Fuji Photo Film Co. ...................... 30,000 1,047,950 Nichii Gakkan Co. ........................ 20,000 666,811 Nintendo Co. Ltd. ........................ 8,000 743,473 Nippon Telegraph & Telephone Corp. ....... 120 998,047 Nomura Securities Co. Ltd. ............... 75,000 876,004 Uny Co. Ltd. ............................. 73,000 1,187,893 ----------- 7,690,931 ----------- Netherlands -- 7.1% ABN Amro Holdings ........................ 35,000 819,579 Fortis Amev .............................. 17,000 996,040 Grolsch .................................. 21,900 581,774 Hollandsche Beton Groep .................. 42,000 876,055 Koninklijke KPN NV ....................... 17,000 654,827 Koninklijke Pakhoed ...................... 15,000 487,025 Philips Electronics ...................... 10,500 883,286 TNT Post Group NV ........................ 17,000 434,879 ----------- 5,733,465 ----------- New Zealand -- 1.7% Air New Zealand Ltd. ..................... 269,000 289,747 Corporate Investments Ltd. ............... 1,378,600 559,537 Nuplex Industries Ltd. ................... 440,000 526,594 ----------- 1,375,878 ----------- Portugal -- 5.8% BPI ...................................... 30,000 968,743 Brisa-Auto Estradas de Portugal SA ....... 19,000 813,109 Electricidade Portugal ................... 20,000 465,222 Engil -- SGPS ............................ 70,000 795,937 Portugal Telecom SA ...................... 30,000 1,591,008 ----------- 4,634,019 ----------- Singapore -- 1.6% Development Bank of Singapore ............ 180,000 998,813 Singapore Telecommunications ............. 225,000 320,475 ----------- 1,319,288 ----------- Spain -- 9.0% Acerinox ................................. 7,800 1,037,626 Azucarera Ebro Agricolas SA .............. 31,295 930,585 Banco Bilboa Vizcaya SA .................. 20,000 1,026,410 Banco Santander SA ....................... 44,124 1,129,356 Fomento de Construction y Contratas SA ... 19,000 980,046 Iberdrola SA ............................. 55,000 893,055 Repsol SA ................................ 22,325 1,227,256 ----------- 7,224,334 ----------- Thailand -- 1.2% Advanced Info Service Public Co. Ltd. .... 67,000 285,782 Electricity Generating Public Co. Ltd. ... 239,000 370,960 Industrial Finance Corp. of Thailand ..... 77,000 15,874 Phatra Thanakit Public Co. Ltd. .......... 500,000 45,024 Thai Farmers Bank Public Co. Ltd. ........ 250,000 220,675 ----------- 938,315 ----------- United Kingdom -- 11.7% Anglian Water ............................ 75,000 1,053,163 Boots Co. Plc ............................ 80,000 1,326,410 British Aerospace Plc .................... 175,000 1,341,187 Commercial Union ......................... 45,000 840,777 FKI Plc .................................. 358,333 1,044,049 Lloyds TSB Group ......................... 65,000 913,284 Rolls-Royce Plc .......................... 260,000 1,072,281 Scottish & Newcastle ..................... 70,000 986,459 Scottish Hydro ........................... 97,000 851,914 ----------- 9,429,524 ----------- TOTAL COMMON STOCKS (Identified Cost $73,876,358)........... 76,984,794 ----------- RIGHTS -- 0.0% OF NET ASSETS Brazil -- 0.0% Telemig SA, expiring 7/21/98 (c) ......... 26 0 ----------- Thailand -- 0.0% Industrial Finance Corp. of Thailand, expiring 7/19/98 (c) ..................... 38,500 0 ----------- TOTAL RIGHTS (Identified Cost $0).................... 0 ----------- FACE AMOUNT VALUE (b) - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT -- 3.7% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $2,988,415 on 7/01/98 collateralized by $2,325,000 U.S. Treasury Bond, 8.125%, due 8/15/19 with a value of $3,054,078 ............ $ 2,988,000 $ 2,988,000 ----------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $2,988,000)............ 2,988,000 ----------- TOTAL INVESTMENTS -- 99.4% (IDENTIFIED COST $76,864,358) (d)....... 79,972,794 Cash and Other Assets, Less Liabilities -- 0.6%............ 512,198 ----------- NET ASSETS -- 100%........................ $80,484,992 =========== (a) Ordinary shares unless otherwise noted. (b) See Note 1. (c) Non-income producing security. (d) At June 30, 1998, the net unrealized appreciation on investments based on cost of $76,864,358 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $8,575,834, and $5,467,398, respectively, resulting in net unrealized appreciation of $3,108,436. Ten Largest Sector Holdings at June 30, 1998 as a Percentage of Net Assets Bank & Finance 15.2% Telecommunications 8.1% Insurance 7.3% Oil & Gas 7.3% Utilities 6.0% Auto & Related 5.7% Retail 5.6% Manufacturing 5.1% Transportation 4.8% Beverages 3.2% See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- LOOMIS SAYLES MID-CAP GROWTH FUND PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED) SHARES VALUE(a) - -------------------------------------------------------------------------------- COMMON STOCKS -- 92.7% OF NET ASSETS Business Services -- 3.0% ABR Information Services, Inc. (b) ....... 1,000 $ 23,750 Cintas Corp. ............................. 800 40,800 ----------- 64,550 ----------- Chemicals -- Major -- 3.1% Monsanto Co. ............................. 1,200 67,050 ----------- Communications Equipment -- 11.3% Ciena Corp. (b) .......................... 1,400 97,475 Cisco Systems, Inc. (b) .................. 500 46,031 Loral Space & Communications Ltd. (b) .... 800 22,600 Lucent Technologies, Inc. ................ 500 41,594 Tellabs, Inc. (b) ........................ 500 35,813 ----------- 243,513 ----------- Computer Software & Services -- 19.3% America Online, Inc. (b) ................. 400 42,400 Compuware Corp. (b) ...................... 700 35,788 Electronic Arts (b) ...................... 700 37,800 Fiserv, Inc. (b) ......................... 1,050 44,592 HBO & Co. ................................ 1,600 56,400 Network Associates, Inc. (b) ............. 900 43,088 Paychex, Inc. ............................ 1,500 61,031 SunGard Data Systems, Inc. (b) ........... 1,200 46,050 Symantec Corp. (b) ....................... 1,900 49,637 ----------- 416,786 ----------- Financial Services -- 4.9% MGIC Investment Corp. .................... 600 34,237 SunAmerica, Inc. ......................... 1,250 71,797 ----------- 106,034 ----------- Health Care -- Biotechnology -- 3.2% MedImmune, Inc. (b) ...................... 800 49,900 Oncor, Inc. (b) .......................... 25,900 19,425 ----------- 69,325 ----------- Health Care -- Drugs -- 2.0% Pfizer, Inc. ............................. 400 43,475 ----------- Health Care -- Medical Technology -- 7.3% Allegiance Corp. ......................... 1,200 61,500 Arterial Vascular Engineering, Inc. (b) .. 1,100 39,325 Steris Corp. (b) ......................... 900 57,234 ----------- 158,059 ----------- Health Care -- Services -- 2.1% Healthsouth Corp. (b) .................... 1,700 45,369 ----------- Insurance -- 3.3% EXEL Ltd. ................................ 900 70,031 ----------- Oil & Gas Drilling Equipment -- 11.3% Cooper Cameron Corp. (b) ................. 1,200 61,200 Noble Drilling Corp. (b) ................. 3,600 86,625 Rowan Companies, Inc. (b) ................ 1,400 27,212 Unit Corp. (b) ........................... 11,100 67,294 ----------- 242,331 ----------- Oil & Gas Exploration -- 5.4% Abacan Resources Corp. (New) (b) ......... 6,100 3,812 Anadarko Petroleum Corp. ................. 500 33,594 Cross Timbers Oil Co. .................... 2,000 38,125 Ocean Energy, Inc. (b) ................... 2,106 41,199 ----------- 116,730 ----------- Restaurants -- 4.6% Starbucks Corp. (b) ...................... 1,850 98,859 ----------- Retail -- Food & Drug -- 2.2% CVS Corp. ................................ 1,200 46,725 ----------- Retail -- General -- 3.9% Kohl's Corp. (b) ......................... 1,600 83,000 ----------- Retail -- Specialty -- 5.8% Bed Bath & Beyond, Inc. (b) .............. 900 46,632 Borders Group, Inc. (b) .................. 1,000 37,000 Home Depot, Inc. ......................... 500 41,531 ----------- 125,163 ----------- TOTAL COMMON STOCKS (Identified Cost $1,756,797)............ 1,997,000 ----------- FACE AMOUNT VALUE (a) - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT -- 6.9% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $150,021 on 7/01/98 collateralized by $150,000 U.S. Treasury Bond, 6.250%, due 6/30/02 with a value of $153,422 ...... $ 150,000 $ 150,000 TOTAL SHORT-TERM INVESTMENT (Identified Cost $150,000).............. 150,000 ----------- TOTAL INVESTMENTS -- 99.6% (Identified cost $1,906,797) (c)........ 2,147,000 Cash and Other Assets, Less Liabilities -- 0.4%................... 7,927 ----------- NET ASSETS -- 100%........................ $ 2,154,927 =========== (a) See Note 1. (b) Non-income producing security. (c) At June 30, 1998, the net unrealized appreciation on investments based on cost of $1,906,797 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $422,600, and $182,397, respectively, resulting in net unrealized appreciation of $240,203. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- LOOMIS SAYLES MID-CAP VALUE FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED) SHARES VALUE(a) - -------------------------------------------------------------------------------- COMMON STOCKS -- 100.4% of Net Assets Advertising -- 1.5% Young & Rubicam, Inc. (b) ................ 2,150 $ 68,800 ----------- Aerospace -- 1.7% Gencorp, Inc. ............................ 2,000 50,500 Gulfstream Aerospace Corp. (b) ........... 500 23,250 ----------- 73,750 ----------- Auto & Related -- 1.4% Magna International, Inc. ................ 900 61,763 ----------- Banks/Savings & Loans -- 6.7% AmSouth Bancorp .......................... 2,250 88,453 Imperial Bancorp (b) ..................... 1,000 30,000 M&T Bank Corp. ........................... 200 110,800 Provident Financial Group, Inc. .......... 1,500 68,438 ----------- 297,691 ----------- Broadcasting -- 2.0% United Video Satellite Group, Inc. (b) ... 2,300 91,138 ----------- Business Services -- 2.7% Dun & Bradstreet Corp. (b) ............... 3,280 118,490 ----------- Chemicals -- Specialty -- 2.1% Ecolab, Inc. ............................. 1,400 43,400 Solutia, Inc. ............................ 1,800 51,637 ----------- 95,037 ----------- Computer Hardware -- 4.2% Gateway 2000, Inc. (b) ................... 1,800 91,125 Lexmark International Group, Inc. (b) .... 1,600 97,600 ----------- 188,725 ----------- Computer Software & Services -- 4.4% Symantec Corp. (b) ....................... 3,700 96,662 Synopsys, Inc. (b) ....................... 2,200 100,650 ----------- 197,312 ----------- Consumer Products -- 1.7% American Greetings Corp. ................. 1,500 76,406 ----------- Diversified Operations -- 1.2% Lancaster Colony Corp. ................... 1,400 53,025 ----------- Electronics -- 3.3% CHS Electronics, Inc. (b) ................ 3,000 53,625 Integrated Device Technology, Inc. (b) ... 3,200 22,900 Novellus Systems, Inc. (b) ............... 1,960 69,947 ----------- 146,472 ----------- Financial Services -- 6.3% A.G. Edwards, Inc. ....................... 800 34,150 AMRESCO, Inc. (b) ........................ 1,900 55,338 Bear Stearns Companies, Inc. ............. 400 22,750 Countrywide Credit Industries, Inc. ...... 1,200 60,900 First Plus Financial Group, Inc. (b) ..... 1,200 43,200 Omega Worldwide, Inc. (b) ................ 66 499 Reliastar Financial Corp. ................ 1,300 62,400 ----------- 279,237 ----------- Food -- Packaged & Miscellaneous -- 4.6% Dean Foods Co. ........................... 1,500 82,406 Smithfield Foods, Inc. (b) ............... 4,050 123,525 ----------- 205,931 ----------- Forest Products -- 1.0% Georgia Pacific Timber Group ............. 2,000 46,125 ----------- Health Care -- Drugs -- 1.3% Biovail Corp. International (b) .......... 1,800 57,600 ----------- Health Care -- Medical Technology -- 4.7% Invacare Corp. ........................... 1,800 46,125 Steris Corp. (b) ......................... 2,600 165,344 ----------- 211,469 ----------- Health Care -- Services -- 2.2% PhyCor, Inc. (b) ......................... 3,700 61,281 Sierra Health Services, Inc. (b) ......... 1,500 37,781 ----------- 99,062 ----------- Home Builders -- 3.3% Champion Enterprises, Inc. (b) ........... 5,075 149,078 ----------- Insurance -- 5.2% Old Republic International Corp. ......... 1,600 46,900 PartnerRe Ltd. ........................... 1,700 86,700 Reliance Group Holdings, Inc. ............ 5,500 96,250 ----------- 229,850 ----------- Machinery -- 1.4% United Dominion Industries Ltd. .......... 1,900 63,413 ----------- Manufacturing -- 3.9% MascoTech, Inc. .......................... 3,100 74,400 Pentair, Inc. ............................ 1,300 55,250 Regal-Beloit Corp. ....................... 1,500 42,750 ----------- 172,400 ----------- Natural Gas -- 2.7% Columbia Gas Systems, Inc. ............... 1,650 91,781 MCN Energy Group, Inc. ................... 1,100 27,363 ----------- 119,144 ----------- Oil & Gas Drilling Equipment -- 2.6% National Oilwell, Inc. (b) ............... 2,000 53,625 Noble Drilling Corp. (b) ................. 2,500 60,156 ----------- 113,781 ----------- Oil & Gas Refining -- 1.2% Ashland, Inc. ............................ 1,000 51,625 ----------- Real Estate Investment Trusts -- 2.3% Mack California Realty Corp. ............. 1,000 34,375 OMEGA Healthcare Investors ............... 2,000 70,250 ----------- 104,625 ----------- Refrigeration Systems -- 1.5% Hussmann International, Inc. ............. 3,500 64,969 ----------- Restaurants -- 2.6% Wendy's International, Inc. .............. 4,950 116,325 ----------- Retail -- Food -- 1.7% Food Lion, Inc. .......................... 7,300 77,563 ----------- Retail -- General -- 1.4% Fingerhut Companies, Inc. ................ 1,860 61,380 ----------- Retail -- Specialty -- 6.1% CDW Computer Centers, Inc. (b) ........... 1,200 60,000 Claire's Stores, Inc. .................... 2,200 45,100 Gucci Group NV ........................... 400 21,200 Payless Shoesource, Inc. (b) ............. 600 44,213 Saks Holdings, Inc. (b) .................. 1,600 44,200 Zale Corp. (b) ........................... 1,800 57,262 ----------- 271,975 ----------- Security Systems -- 0.8% Sensormatic Electronics Corp. ............ 2,500 35,000 ----------- Telecommunications -- 1.0% Century Telephone Enterprises, Inc. ...... 1,000 45,875 ----------- Utilities -- 8.1% BEC Energy ............................... 1,600 66,400 CalEnergy, Inc. (b) ...................... 2,500 75,156 Energy East Corp. ........................ 2,000 83,250 Florida Progress Corp. ................... 1,600 65,800 Peco Energy Co. .......................... 2,400 70,050 ----------- 360,656 ----------- Waste Management -- 1.6% Browning Ferris Industries Inc. .......... 2,000 69,500 ----------- TOTAL COMMON STOCKS (Identified Cost $4,248,758)............ 4,475,192 ----------- TOTAL INVESTMENTS -- 100.4% (IDENTIFIED COST $4,248,758) (c)........ 4,475,192 Liabilities, Less Cash and Other Assets -- (0.4%)................ (18,375) ----------- NET ASSETS -- 100%.......................... $ 4,456,817 =========== (a) See Note 1. (b) Non-income producing security. (c) At June 30, 1998, the net unrealized appreciation on investments based on cost of $4,248,758 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $344,315, and $117,881, respectively, resulting in net unrealized appreciation of $226,434. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- LOOMIS SAYLES SMALL CAP GROWTH FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED) SHARES VALUE(a) - -------------------------------------------------------------------------------- COMMON STOCKS -- 96.7% OF NET ASSETS Advertising -- 1.6% Lamar Advertising Co. (b) ................ 9,350 $ 335,431 ----------- Aerospace -- 2.1% Kellstrom Industries, Inc. (b) ........... 15,300 443,222 ----------- Agricultural -- 3.2% Agribiotech, Inc. (b) .................... 15,600 431,925 Delta & Pine Land Co. .................... 5,165 229,842 ----------- 661,767 ----------- Banks/Savings & Loans -- 7.9% Astoria Financial Corp. .................. 6,800 363,800 FirstFed Financial Corp. (b) ............. 9,550 496,600 PBOC Holdings, Inc. (b) .................. 14,900 205,806 Peoples Heritage Financial Group, Inc. ... 14,600 344,925 Staten Island Bancorp, Inc. (b) .......... 10,200 232,050 ----------- 1,643,181 ----------- Broadcasting -- 3.0% Emmis Broadcasting Corp. (b) ............. 7,400 353,812 Metro Networks, Inc. (b) ................. 6,100 263,063 ----------- 616,875 ----------- Business Services -- 13.0% Abacus Direct Corp. (b) .................. 8,700 451,856 CheckFree Holdings Corp. (b) ............. 11,450 337,059 Ha Lo Industries, Inc. (b) ............... 12,600 392,175 Labor Ready, Inc. (b) .................... 19,300 582,619 Lason Holdings, Inc. (b) ................. 7,750 422,375 Saville Systems Ireland Plc ADR (b) ...... 3,700 185,463 Staff Leasing, Inc. (b) .................. 10,400 306,800 ----------- 2,678,347 ----------- Communications Equipment -- 0.9% Uniphase Corp. (b) ..................... 3,000 188,344 ----------- Computer Hardware -- 2.0% Network Appliance, Inc. (b) .............. 10,450 406,897 ----------- Computer Software & Services -- 18.7% Advantage Learning Systems, Inc. (b) ..... 6,300 172,463 BroadVision, Inc. (b) .................... 12,350 294,856 Ciber, Inc. (b) .......................... 9,400 357,200 Concord Communications, Inc. (b) ......... 9,600 245,400 Diamond Technology Partners, Inc. (b) .... 15,800 477,950 Gemstar International Group Ltd. (b) ..... 4,300 160,981 Geotel Communications Corp. (b) .......... 11,900 484,925 Lernout & Hauspie Speech Products NV (b) . 2,300 137,281 Lycos, Inc. (b) .......................... 6,000 452,250 Mastech Corp. (b) ........................ 15,600 438,750 Pegasus Systems, Inc. (b) ................ 7,800 199,875 Sapient Corp. (b) ........................ 8,400 443,100 ----------- 3,865,031 ----------- Electronics -- 2.0% Sipex Corp. (b) .......................... 19,550 420,325 ----------- Entertainment -- 1.4% Sportsline USA, Inc. (b) ................. 7,700 281,531 ----------- Financial Services -- 3.3% Hambrecht & Quist Group, Inc. (b) ........ 5,900 214,244 Healthcare Financial Partners, Inc. (b) .. 7,800 478,237 ----------- 692,481 ----------- Food -- Packaged & Miscellaneous -- 3.9% Hain Food Group, Inc. (b) ................ 17,100 442,463 NBTY, Inc. (b) ........................... 19,550 359,231 ----------- 801,694 ----------- Health Care -- Biotechnology -- 3.4% Gilead Sciences, Inc. (b) ................ 5,200 166,725 MedImmune, Inc. (b) ...................... 3,100 193,363 Pharmacyclics, Inc. (b) .................. 7,500 178,125 Sepracor, Inc. (b) ....................... 4,200 174,300 ----------- 712,513 ----------- Health Care -- Medical Technology -- 2.0% Novoste Corp. (b) ........................ 6,500 143,406 Theragenics Corp. (b) .................... 10,000 260,625 ----------- 404,031 ----------- Health Care -- Services -- 3.5% MedQuist, Inc. (b) ....................... 18,000 519,750 Sunrise Assisted Living, Inc. (b) ........ 5,750 197,656 ----------- 717,406 ----------- Home Builders -- 3.6% D.R. Horton, Inc. ........................ 22,750 474,906 Lennar Corp. ............................. 9,400 277,300 ----------- 752,206 ----------- Insurance -- 1.4% Annuity and Life Re (Holdings) Ltd. (b) .. 13,000 287,625 ----------- Oil & Gas Drilling Equipment -- 2.5% Dril-Quip, Inc. (b) ...................... 5,900 154,875 Veritas DGC, Inc. (b) .................... 7,200 359,550 ----------- 514,425 ----------- Oil & Gas Exploration -- 0.8% Cross Timbers Oil Co. .................... 9,200 175,375 ----------- Restaurants -- 1.5% Papa John's International, Inc. (b) ...... 7,800 307,613 ----------- Retail -- General -- 2.1% 99 Cents Only Stores (b) ................. 10,300 427,450 ----------- Retail -- Specialty -- 6.6% CD Now, Inc. (b) ......................... 10,300 207,287 Just For Feet, Inc. (b) .................. 15,200 433,200 Pacific Sunwear of California (b) ........ 15,200 532,000 Restoration Hardware, Inc. (b) ........... 7,300 183,413 ----------- 1,355,900 ----------- Telecommunications -- 4.5% IDT Corp. (b) ............................ 14,750 443,422 Metromedia Fiber Network, Inc. (b) ....... 6,100 284,413 WinStar Communications, Inc. (b) ......... 4,700 201,806 ----------- 929,641 ----------- Transportation -- 1.8% Coach USA, Inc. (b) ...................... 8,100 369,563 ----------- TOTAL COMMON STOCKS (Identified Cost $18,248,762)........... 19,988,874 ----------- FACE AMOUNT - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT -- 7.5% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $1,554,216 on 7/01/98 collateralized by $1,210,000 U.S. Treasury Bond, 8.125%, due 8/15/19 with a value of $1,589,434 ......................... $ 1,554,000 1,554,000 ----------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $1,554,000)............ 1,554,000 ----------- TOTAL INVESTMENTS -- 104.2% (IDENTIFIED COST $19,802,762) (c)....... 21,542,874 Liabilities, Less Cash and Other Assets -- (4.2%)................ (875,366) ----------- NET ASSETS -- 100%........................ $20,667,508 =========== (a) See Note 1. (b) Non-income producing security. (c) At June 30, 1998, the net unrealized appreciation on investments based on cost of $19,802,762 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $1,966,459, and $226,347, respectively, resulting in net unrealized appreciation of $1,740,112. Key to Abbreviations: ADR: American Depositary Receipt. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- LOOMIS SAYLES SMALL CAP VALUE FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED) SHARES VALUE(a) - -------------------------------------------------------------------------------- COMMON STOCKS -- 91.0% OF NET ASSETS Aerospace -- 2.1% Alliant Techsystems, Inc. (b) ............ 58,200 $ 3,681,150 Gencorp, Inc. ............................ 114,200 2,883,550 Nichols Research Corp. (b) ............... 67,450 1,842,228 ----------- 8,406,928 ----------- Auto & Related -- 0.9% Dura Automotive Systems, Inc. (b) ........ 51,600 1,657,650 Intermet Corp. ........................... 105,700 1,915,813 ----------- 3,573,463 ----------- Banks/Savings & Loans -- 5.1% Bank United Corp. ........................ 82,300 3,940,113 City National Corp. ...................... 50,700 1,872,731 CNB Bancshares, Inc. ..................... 41,600 1,996,800 Commercial Federal Corp. ................. 85,450 2,702,356 Downey Financial Corp. ................... 96,125 3,142,086 Imperial Bancorp (b) ..................... 132,000 3,960,000 Local Financial Corp. (b) ................ 97,500 1,267,500 UST Corp. ................................ 46,400 1,229,600 ----------- 20,111,186 ----------- Beverages -- 1.0% Whitman Corp. ............................ 178,100 4,085,169 ----------- Business Services -- 1.5% ACNielson Corp. (b) ...................... 97,100 2,451,775 Cort Business Services Corp. (b) ......... 57,900 1,823,850 Wallace Computer Services, Inc. .......... 68,300 1,622,125 ----------- 5,897,750 ----------- Chemicals -- Specialty -- 2.5% Cuno, Inc. (b) ........................... 100,000 2,162,500 General Chemical Group, Inc. ............. 68,700 1,906,425 M.A. Hanna Co. ........................... 67,700 1,239,756 Mississippi Chemical Corp. ............... 47,800 785,713 Solutia, Inc. ............................ 135,200 3,878,550 ----------- 9,972,944 ----------- Commercial Services -- 1.2% Viad Corp. ............................... 168,300 4,670,325 ----------- Communications Equipment -- 0.7% California Microwave, Inc. (b) ........... 83,800 1,466,500 Xylan Corp. (b) .......................... 45,100 1,344,544 ----------- 2,811,044 ----------- Computer Hardware -- 2.4% Digi International, Inc. (b) ............. 119,500 2,419,875 Fore Systems, Inc. (b) ................... 62,900 1,666,850 Komag, Inc. (b) .......................... 122,400 654,075 Micron Electronics, Inc. (b) ............. 60,600 730,988 Telxon Corp. ............................. 86,700 2,806,912 Xircom, Inc. (b) ......................... 75,700 1,178,081 ----------- 9,456,781 ----------- Computer Software & Services -- 3.3% American Management Systems, Inc. (b) .... 95,700 2,865,019 DSP Group, Inc. (b) ...................... 88,200 1,741,950 Inprise Corp. (b) ........................ 169,400 1,249,325 Platinum Technology, Inc. (b) ............ 149,700 4,275,806 Rational Software Corp. (b) .............. 187,500 2,859,375 ----------- 12,991,475 ----------- Data Processing Services -- 1.0% ChoicePoint, Inc. (b) .................... 25,600 1,296,000 Information Resources, Inc. (b) .......... 133,700 2,473,450 ----------- 3,769,450 ----------- Electronics -- 2.4% Alpha Industries, Inc. (b) ............... 66,800 997,825 AVX Corp. ................................ 74,500 1,196,656 Berg Electronics Corp. (b) ............... 69,200 1,353,725 Cirrus Logic, Inc. (b) ................... 118,100 1,313,862 EG & G, Inc. ............................. 26,800 804,000 Exar Corp. (b) ........................... 60,700 1,274,700 Integrated Device Technology, Inc. (b) ... 155,300 1,111,366 Vishay Intertechnology, Inc. (b) ......... 73,440 1,317,330 ----------- 9,369,464 ----------- Entertainment -- 0.6% Midway Games, Inc. (b) ................... 156,100 2,439,063 ----------- Environmental Services -- 1.0% IMCO Recycling, Inc. ..................... 102,100 1,888,850 World Fuel Services Corp. ................ 114,875 1,988,773 ----------- 3,877,623 ----------- Financial Services -- 4.2% AMRESCO, Inc. (b) ........................ 100,900 2,938,713 DVI, Inc. (b) ............................ 98,200 2,504,100 Financial Federal Corp. (b) .............. 74,100 1,986,806 Franchise Mortgage Acceptance Co. (b) .... 115,600 3,012,825 UniCapital Corp. (b) ..................... 203,700 3,895,762 Webster Financial Corp. .................. 69,200 2,300,900 ----------- 16,639,106 ----------- Food -- Packaged & Miscellaneous -- 3.0% Dean Foods Co. ........................... 54,400 2,988,600 Earthgrains Co. .......................... 35,200 1,966,800 International Multifoods Corp. ........... 100,200 2,755,500 Keebler Foods Co. (b) .................... 31,800 874,500 Vlasic Foods International, Inc. (b) ..... 83,200 1,674,400 Weider Nutrition International, Inc. ..... 98,700 1,677,900 ----------- 11,937,700 ----------- Freight Transportation -- 0.5% US Freightways Corp. ..................... 59,000 1,937,781 ----------- Health Care -- Drugs -- 0.5% Biovail Corp. International (b) .......... 61,500 1,968,000 ----------- Health Care -- Medical Technology -- 3.5% Allegiance Corp. ......................... 73,800 3,782,250 Conmed Corp. (b) ......................... 133,075 3,060,725 Dentsply International, Inc. ............. 130,100 3,252,500 Invacare Corp. ........................... 97,200 2,490,750 Sola International, Inc. (b) ............. 42,700 1,395,756 ----------- 13,981,981 ----------- Health Care -- Services -- 5.2% Alternative Living Services, Inc. (b) .. 75,900 2,049,300 Genesis Health Ventures, Inc. (b) ...... 68,600 1,715,000 Health Care & Retirement Corp. (b) ..... 67,900 2,677,806 HealthPlan Services Corp. (b) .......... 115,000 2,012,500 Pharmerica, Inc. (b) ................... 110,200 1,329,288 PhyCor, Inc. (b) ....................... 220,800 3,657,000 Sierra Health Services, Inc. (b) ....... 118,600 2,987,237 Trigon Healthcare, Inc. (b) ............ 61,000 2,207,437 Vitalink Pharmacy Services, Inc. (b) ... 85,945 1,896,162 ----------- 20,531,730 ----------- Home Builders -- 1.2% Champion Enterprises, Inc. (b) ........... 164,300 4,826,312 ----------- Home Products -- 2.3% Furniture Brands International, Inc. (b) . 110,800 3,109,325 Premark International, Inc. .............. 128,000 4,128,000 Scotts Co. (b) ........................... 44,600 1,661,350 ----------- 8,898,675 ----------- Housing & Building Materials -- 1.4% Giant Cement Holding, Inc. (b) ........... 76,700 2,195,537 Shaw Industries, Inc. .................... 187,200 3,299,400 ----------- 5,494,937 ----------- Insurance -- 5.5% Capital Reinsurance Corp. ................ 61,700 4,419,263 Everest Reinsurance Holdings, Inc. ....... 93,900 3,609,281 Horace Mann Educators Corp. .............. 28,300 976,350 Protective Life Corp. .................... 112,700 4,134,681 Reinsurance Group of America ............. 83,000 4,907,375 Reliance Group Holdings, Inc. ............ 210,900 3,690,750 ----------- 21,737,700 ----------- Machinery -- 0.4% Chart Industries, Inc. ................... 64,700 1,544,713 ----------- Manufacturing -- 5.0% A.O. Smith Corp. ......................... 47,500 2,455,156 Cognex Corp. (b) ......................... 84,100 1,555,850 Federal Signal Corp. ..................... 102,700 2,496,894 MascoTech, Inc. .......................... 127,400 3,057,600 Millipore Corp. .......................... 61,600 1,678,600 Pentair, Inc. ............................ 88,800 3,774,000 Regal-Beloit Corp. ....................... 157,800 4,497,300 ----------- 19,515,400 ----------- Metals -- 1.1% Agnico-Eagle Mines Ltd. .................. 147,100 809,050 Lone Star Technologies, Inc. (b) ......... 71,500 1,090,375 Worthington Industries, Inc. ............. 158,000 2,379,875 ----------- 4,279,300 ----------- Natural Gas -- 1.2% Eastern Enterprises ...................... 89,600 3,841,600 Public Service Company of North Carolina, Inc. 49,900 1,085,325 ----------- 4,926,925 ----------- Office Equipment -- 2.1% Bell & Howell Co. (b) .................... 124,300 3,208,494 HON Industries, Inc. ..................... 69,300 2,356,200 National Computer Systems, Inc. .......... 109,200 2,620,800 ----------- 8,185,494 ----------- Oil & Gas Drilling Equipment -- 2.0% Atwood Oceanics, Inc. (b) ................ 34,600 1,377,513 IRI International Corp. (b) .............. 127,900 1,374,925 Key Energy Group, Inc. (b) ............... 78,000 1,023,750 National Oilwell, Inc. (b) ............... 51,200 1,372,800 Offshore Logistics, Inc. (b) ............. 84,000 1,491,000 Veritas DGC, Inc. (b) .................... 23,500 1,173,531 ----------- 7,813,519 ----------- Oil & Gas Exploration -- 1.9% Forcenergy, Inc. (b) ..................... 111,200 1,980,750 Lomak Petroleum, Inc. .................... 110,000 1,148,125 Plains Resources, Inc. (b) ............... 84,000 1,501,500 Vintage Petroleum, Inc. .................. 151,100 2,852,012 ----------- 7,482,387 ----------- Paper Products -- 0.7% Chesapeake Corp. ......................... 66,300 2,581,556 ----------- Personal Care -- 0.8% Dial Corp. (New) ......................... 118,100 3,063,219 ----------- Printing -- 1.3% Banta Corp. .............................. 104,174 3,216,372 Cadmus Communications Corp. .............. 79,300 1,923,025 ----------- 5,139,397 ----------- Real Estate Investment Trusts -- 7.0% American General Hospitality Corp. ....... 174,900 3,716,625 Anthracite Mortgage Capital, Inc. (b) .... 115,100 1,597,013 Brandywine Realty Corp. .................. 118,000 2,640,250 Capital Automotive (b) ................... 154,300 2,189,131 Capstone Capital Corp. ................... 116,200 2,672,600 Imperial Credit Commercial Mortgage Investment Corp. (b) ................... 265,800 3,472,012 Koger Equity, Inc. ....................... 155,400 3,137,138 Liberty Property ......................... 96,400 2,464,225 Mack California Realty Corp. ............. 85,600 2,942,500 Sun Communities, Inc. .................... 87,200 2,888,500 ----------- 27,719,994 ----------- Refrigeration Systems -- 0.6% Hussmann International, Inc. ............. 135,400 2,513,363 ----------- Restaurants -- 0.4% Cracker Barrel Old Country Store, Inc. ... 54,300 1,724,025 ----------- Retail -- Food -- 0.7% Hannaford Brothers Co. ................... 63,700 2,802,800 ----------- Retail -- General -- 0.7% BJ's Wholesale Club, Inc. (b) ............ 67,100 2,725,938 ----------- Retail -- Specialty -- 6.0% Burlington Coat Factory Warehouse Corp. .. 167,900 3,777,750 Claire's Stores, Inc. .................... 128,900 2,642,450 Family Dollar Stores, Inc. ............... 46,800 865,800 Heilig-Meyers Co. ........................ 198,900 2,448,956 Jostens, Inc. ............................ 94,000 2,244,250 OfficeMax, Inc. (b) ...................... 165,000 2,722,500 Petco Animal Supplies, Inc. (b) .......... 128,400 2,559,975 Saks Holdings, Inc. (b) .................. 75,800 2,093,975 The Wet Seal, Inc. (b) ................... 36,800 1,177,600 United Auto Group, Inc. (b) .............. 83,300 1,822,187 Zale Corp. (b) ........................... 34,700 1,103,894 ----------- 23,459,337 ----------- Security Systems -- 0.8% Sensormatic Electronics Corp. ............ 220,645 3,089,030 ----------- Telecommunications -- 0.9% Aliant Communications, Inc. .............. 126,500 3,470,844 ----------- Textile & Apparel -- 0.9% Burlington Industries Ltd. (b) ........... 72,400 1,018,125 Oshkosh B Gosh, Inc. ..................... 20,800 925,600 Stride Rite Corp. ........................ 104,500 1,574,031 Timberland Co. (b) ....................... 2,100 151,069 ----------- 3,668,825 ----------- Utilities -- 3.5% BEC Energy ............................... 80,100 3,324,150 Commonwealth Energy System ............... 29,700 1,121,175 Rochester Gas & Electric Corp. ........... 121,400 3,877,212 Southern California Water Co. ............ 55,700 1,510,863 WPS Resources Corp. ...................... 116,700 3,829,219 ----------- 13,662,619 ----------- TOTAL COMMON STOCKS (Identified Cost $336,087,134).......... 358,755,272 ----------- WARRANTS -- 0.0% OF NET ASSETS Entertainment -- 0.0% Iwerks Entertainment, Inc. expiring 7/2/99 (b) 1,364 0 ----------- TOTAL WARRANTS (Identified Cost $0).................... 0 ----------- FACE AMOUNT VALUE (a) - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS -- 8.9% OF NET ASSETS Associates Corp. of North America, 5.950%, 7/01/98 ........................ $19,351,415 $ 19,351,415 Chevron USA, Inc., 5.800%, 7/01/98 ....... 15,700,000 15,700,000 ------------ TOTAL SHORT-TERM INVESTMENTS (Identified Cost $35,051,415)........... 35,051,415 ------------ TOTAL INVESTMENTS -- 99.9% (IDENTIFIED COST $371,138,549) (c)...... 393,806,687 Cash and Other Assets, Less Liabilities -- 0.1%................... 460,338 ------------ NET ASSETS -- 100%........................ $394,267,025 ============ (a) See Note 1. (b) Non-income producing security. (c) At June 30, 1998, the net unrealized appreciation on investments based on cost of $371,138,549 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $43,060,365, and $20,392,227, respectively, resulting in net unrealized appreciation of $22,668,138. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- LOOMIS SAYLES STRATEGIC VALUE FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED) SHARES VALUE(a) - -------------------------------------------------------------------------------- COMMON STOCKS -- 96.7% OF NET ASSETS Aerospace -- 4.8% Boeing Co. ............................... 700 $ 31,194 Sundstrand Corp. ......................... 700 40,075 ----------- 71,269 ----------- Banks/Savings & Loans -- 2.8% Fleet Financial Group, Inc. .............. 500 41,750 ----------- Broadcasting -- 4.7% CBS Corp. ................................ 2,200 69,850 ----------- Chemicals -- Major -- 4.8% IMC Global, Inc. ......................... 1,100 33,137 Praxair, Inc. ............................ 800 37,450 ----------- 70,587 ----------- Chemicals -- Specialty -- 8.7% Crompton & Knowles Corp. ................. 1,500 37,781 E.I. du Pont DeNemours & Co. ............. 700 52,237 Solutia, Inc. ............................ 1,300 37,294 ----------- 127,312 ----------- Commercial Services -- 3.2% Viad Corp. ............................... 1,700 47,175 ----------- Communications Equipment -- 2.7% Loral Space & Communications Ltd. (b) .... 1,400 39,550 ----------- Computer Hardware -- 10.9% 3Com Corp. (b) ........................... 800 24,550 Cabletron Systems, Inc. (b) .............. 800 10,750 EMC Corp. (b) ............................ 1,000 44,812 Gateway 2000, Inc. (b) ................... 800 40,500 Sun Microsystems, Inc. (b) ............... 900 39,094 ----------- 159,706 ----------- Computer Software & Services -- 4.4% Unisys Corp. (b) ......................... 2,300 64,975 ----------- Electrical Equipment -- 2.0% Raychem Corp. ............................ 1,000 29,563 ----------- Electronics -- 5.4% Applied Materials, Inc. (b) .............. 1,100 32,450 Texas Instruments, Inc. .................. 800 46,650 ----------- 79,100 ----------- Forest Products -- 1.6% Georgia Pacific Corp. .................... 400 23,575 ----------- Freight Transportation -- 8.5% Burlington Northern Santa Fe Corp. ....... 300 29,456 CNF Transportation, Inc. ................. 900 38,250 FDX Corp. (b) ............................ 400 25,100 Ryder System, Inc. ....................... 1,000 31,563 ----------- 124,369 ----------- Gaming -- 1.9% Harrah's Entertainment, Inc. (b) ......... 1,200 27,900 ----------- Housing & Building Materials -- 7.0% Black & Decker Corp. ..................... 900 54,900 Masco Corp. .............................. 800 48,400 ----------- 103,300 ----------- Insurance -- 2.5% Travelers, Inc. .......................... 600 36,375 ----------- Metals -- 2.9% UCAR International, Inc. (b) ............. 800 23,350 USX-US Steel Group, Inc. ................. 600 19,800 ----------- 43,150 ----------- Retail -- Food -- 3.8% Kroger Co. (b) ........................... 1,300 55,738 ----------- Retail -- General -- 3.3% Federated Department Stores, Inc. (b) .... 900 48,431 ----------- Telecommunications -- 2.4% Ameritech Corp. .......................... 800 35,900 ----------- Textile & Apparel -- 6.3% Reebok International Ltd. (b) ............ 700 19,381 Republic Industries, Inc. (b) ............ 1,400 35,000 Warnaco Group, Inc. ...................... 900 38,194 ----------- 92,575 ----------- Waste Management -- 2.1% Waste Management, Inc. ................... 900 31,500 ----------- TOTAL COMMON STOCKS (Identified Cost $1,200,725)............ 1,423,650 ----------- TOTAL INVESTMENTS -- 96.7% (IDENTIFIED COST $1,200,725) (c)........ 1,423,650 Cash and Other Assets, Less Liabilities -- 3.3%................... 48,916 ----------- NET ASSETS -- 100%.......................... $ 1,472,566 =========== (a) See Note 1. (b) Non-income producing security. (c) At June 30, 1998, the net unrealized appreciation on investments based on cost of $1,200,725 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $296,947, and $74,022, respectively, resulting in net unrealized appreciation of $222,925. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- LOOMIS SAYLES WORLDWIDE FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED) FACE AMOUNT VALUE (a) - -------------------------------------------------------------------------------- BONDS AND NOTES -- 45.9% OF NET ASSETS Australia -- 2.1% QTC Global Aud Bon, 8.000%, 9/14/07 .... AUD 100,000 $ 71,492 South Australia Government Finance Authority, Zero Coupon Bond, 12/21/15 ............................. 220,000 47,198 ----------- 118,690 ----------- New Zealand -- 1.5% Government of New Zealand, 8.000%, 11/15/06 .............................. NZD 150,000 85,631 ----------- Philippines -- 3.1% FLI Capital Cayman, 3.750%, 2/01/02 (step to 6.250% on 8/01/99) (b) (c) ... USD 150,000 114,750 MBIA, Inc., Zero Coupon Bond, 12/18/01 (b) 100,000 60,000 ----------- 174,750 ----------- South Korea -- 1.0% Samsung Electronics Co. Ltd., Zero Coupon Bond, 12/31/07 (b) ..................... 75,000 58,500 ----------- Thailand -- 2.9% Bangkok Bank Public Co. Ltd., 3.250%, 3/03/04 (b) ................... 300,000 97,500 Loxley Public Co. Ltd., 2.500%, 4/04/01 (b) ........................... 200,000 64,000 ----------- 161,500 ----------- United States -- 35.3% Apple Computer, Inc., 6.500%, 2/15/04 .... 250,000 230,000 Arch Communications Group, Inc., Zero Coupon Bond, 3/15/08 (step to 10.875% on 3/15/01) (c) ................. 300,000 171,000 Boston Chicken, Inc., 4.500%, 2/01/04 (b) 125,000 19,375 Builders Transportation, Inc., 8.000%, 8/15/05 (b) (d) ............... 95,000 9,500 Chesapeake Energy Corp., 7.875%, 3/15/04 ........................ 100,000 93,750 CML Group, Inc., 5.500%, 1/15/03 (b) .... 150,000 93,000 Dillon Read Structured Finance Corp., 6.660%, 8/15/10 ......................... 168,884 156,647 Envirotest Systems Corp., 9.625%, 4/01/03 ........................ 50,000 49,000 Exide Corp., 2.900%, 12/15/05 144A (b) (e) ........................... 125,000 77,188 Kent Electronics Corp., 4.500%, 9/01/04 (b) .................... 50,000 40,875 Lam Research Corp., 5.000%, 9/01/02 (b) . 150,000 123,000 Shoney's, Inc., Zero Coupon Bond, 4/11/04 (b) ........................... 50,000 21,000 Thermedics, Inc., Zero Coupon Bond, 6/01/03 (b) ............................ 100,000 75,000 United States Treasury Bonds, 6.000%, 2/15/26 ........................ 800,000 832,248 ---------- 1,991,583 ---------- TOTAL BONDS AND NOTES (Identified Cost $2,905,872) ............ 2,590,654 ---------- SHARES VALUE(a) - -------------------------------------------------------------------------------- COMMON STOCKS -- 45.4% OF NET ASSETS Canada -- 0.7% Abacan Resources Corp. (New) (f) ......... 12,450 7,781 Magna International, Inc. ................ 450 30,881 ----------- 38,662 ----------- France -- 3.6% Bank Nationale de Paris .................. 2,500 203,863 ----------- Germany -- 2.6% MAN AG ................................... 550 148,254 ----------- Italy -- 5.7% ENI Spa .................................. 30,000 196,360 Ericsson Spa ............................. 2,100 124,237 ----------- 320,597 ----------- Korea -- 1.1% Hyundai Housing & Industry Development ... 3,000 63,365 ----------- New Zealand -- 2.6% Air New Zealand Ltd. ..................... 138,000 148,386 ----------- Portugal -- 3.5% Portugal Telecom SA ...................... 3,750 198,489 ----------- Singapore -- 2.3% Keppel Corp. Ltd. ........................ 85,000 128,245 ----------- Thailand -- 2.6% Advanced Info Service Public Co. Ltd. .... 29,500 125,979 Industrial Finance Corp. of Thailand ..... 50,000 10,320 Phatra Thanakit Public Co. Ltd. .......... 137,700 12,414 ----------- 148,713 ----------- United Kingdom -- 2.7% Boots Co. Plc ............................ 9,000 149,203 ----------- United States -- 18.0% AES Corp. (f) ............................ 500 26,281 American Express Co. ..................... 250 28,500 Anadarko Petroleum Corp. ................. 450 30,234 Analog Devices, Inc. (f) ................. 900 22,106 Burlington Resources, Inc. ............... 650 27,991 CBS Corp. ................................ 1,000 31,750 Chrysler Corp. ........................... 700 39,462 Circuit City Stores, Inc. ................ 650 30,469 Cisco Systems, Inc. (f) .................. 400 36,825 Computer Associates International, Inc. .. 600 33,337 CVS Corp. ................................ 800 31,150 EMC Corp. (f) ............................ 700 31,369 International Business Machines Corp. .... 350 40,184 McDonald's Corp. ......................... 500 34,500 Medtronic, Inc. .......................... 450 28,688 Meritor Automotive, Inc. ................. 1 24 Monsanto Co. ............................. 650 36,319 Pfizer, Inc. ............................. 300 32,606 Schering-Plough Corp. .................... 350 32,069 Staples, Inc. (f) ........................ 1,200 34,725 Star Banc Corp. .......................... 200 12,775 Tellabs, Inc. (f) ........................ 350 25,069 The Learning Company, Inc. (f) ........... 7,105 210,486 Time Warner, Inc. ........................ 400 34,175 Warner Lambert Co. ....................... 450 31,219 Wells Fargo & Co. ........................ 100 36,900 WorldCom, Inc. (f) ....................... 700 33,906 Xerox Corp. .............................. 250 25,406 ----------- 1,018,525 ----------- TOTAL COMMON STOCKS (Identified Cost $2,727,825) ........... 2,566,302 ----------- PREFERRED STOCKS -- 2.2% OF NET ASSETS Japan -- 2.2% Sakura Finance, 0.750% ................... 24,000,000 122,359 ----------- TOTAL PREFERRED STOCKS (Identified Cost $186,152) ............. 122,359 ----------- RIGHTS -- 0.0% OF NET ASSETS Thailand -- 0.0% Industrial Finance Corp. of Thailand (f) ........................ 25,000 0 ----------- TOTAL RIGHTS (Identified Cost $0) ................... 0 ----------- - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT -- 7.8% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $443,062 on 7/01/98 collateralized by $345,000 U.S. Treasury Bond, 8.125%, due 8/15/19 with a value of $453,186 ... USD 443,000 $ 443,000 ---------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $443,000) ............. 443,000 ---------- TOTAL INVESTMENTS -- 101.3% (IDENTIFIED COST $6,262,849) (g) ....... 5,722,315 Liabilities, Less Cash and Other Assets -- (1.3%) .............. (71,455) ---------- NET ASSETS -- 100% ....................... $5,650,860 ========== (a)See Note 1. (b)Convertible Bond. (c)Step Bond: Coupon is zero or below market rate for an initial period and increases at a specified date and rate. (d)Security in default. (e)Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. (f)Non-income producing security. (g)At June 30, 1998, the net unrealized depreciation on investments based on cost of $6,262,849 for federal income tax purposes was as follows: Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value were $385,936, and $926,470, respectively, resulting in net unrealized depreciation of $540,534. Key to Abbreviations: AUD: Australian Dollar. NZD: New Zealand Dollar. USD: United States Dollar. Ten Largest Sector Holdings at June 30, 1998 as a Percentage of Net Assets Telecommunications 9.6% Computers 7.4% Banking & Finance 7.1% Retail -- General 5.7% Electronics 5.4% Financial 4.2% Oil & Gas 3.3% Airlines 2.5% Manufacturing 2.5% Auto & Related 2.5% See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF ASSETS AND LIABILITIES - -------------------------------------------------------------------------------- June 30, 1998 (unaudited)
CORE GROWTH INTERNATIONAL VALUE FUND FUND EQUITY FUND ---------- ---- ----------- ASSETS Investments at value ........................ $74,514,415 $31,168,864 $79,972,794 Cash ........................................ 1 423 373 Foreign currency at value ................... 0 0 200,309 Receivable for: Fund Shares sold .......................... 147 7,223 7,522 Securities sold ........................... 656,665 464,500 1,858,169 Dividends and interest -- net ............. 92,078 8,049 167,887 Foreign tax reclaim ....................... 1,578 0 102,758 Due from the adviser (Note 3) ............... 3,824 16,295 39,921 Other assets (Note 1I) ...................... 0 0 0 ----------- ----------- ----------- 75,268,708 31,665,354 82,349,733 ----------- ----------- ----------- LIABILITIES Payable for: Securities purchased .................... 393,955 364,548 1,615,678 Fund Shares redeemed .................... 263,485 331,236 112,400 Foreign taxes ........................... 1,815 0 34,203 Accrued expenses: Management fees (Note 3) ................ 30,452 12,476 49,024 Trustees' fees (Note 3A) ................ 1,555 1,555 1,555 Administrative fees ..................... 3,652 1,686 3,823 Other expenses .......................... 43,159 24,778 48,058 ----------- ----------- ----------- 738,073 736,279 1,864,741 ----------- ----------- ----------- NET ASSETS .................................. $74,530,635 $30,929,075 $80,484,992 =========== =========== =========== Net Assets consist of: Capital paid in ......................... $53,992,385 $20,528,882 $73,757,534 Undistributed (or Distribution in excess of) net investment income ............. 455,743 (45,864) 797,885 Accumulated net realized gain (loss) .... 6,492,263 5,325,410 2,820,434 Unrealized appreciation (depreciation) on: Investments ........................... 13,590,244 5,120,647 3,108,436 Foreign currency translations ......... 0 0 703 ----------- ----------- ----------- NET ASSETS .................................. $74,530,635 $30,929,075 $80,484,992 =========== =========== =========== INSTITUTIONAL CLASS: Net assets ................................ $72,729,987 $30,342,484 $80,278,041 Shares of beneficial interest outstanding, no par value ............... 3,785,826 2,187,644 6,527,407 Net asset value and redemption price per Institutional share ..................... $ 19.21 $ 13.87 $ 12.30 RETAIL CLASS: Net assets ................................ $ 1,800,648 $ 586,591 $ 206,951 Shares of beneficial interest outstanding, no par value ............... 93,973 42,480 16,888 Net asset value and redemption price per Retail share ............................ $ 19.16 $ 13.81 $ 12.25 ADMIN CLASS: Net assets ................................ -- -- -- Shares of beneficial interest outstanding, no par value ............... -- -- -- Net asset value and redemption price per Admin Share ............................. -- -- -- Identified cost of investments .............. $60,924,171 $26,048,217 $76,864,358 =========== =========== ===========
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------- MID-CAP MID-CAP SMALL CAP SMALL CAP STRATEGIC GROWTH VALUE GROWTH VALUE VALUE WORLDWIDE FUND FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------- $2,147,000 $4,475,192 $21,542,874 $393,806,687 $1,423,650 $5,722,315 5 45,086 900 0 35,984 577 0 0 0 0 0 8,050 0 48 0 1,592,580 0 40,000 0 190,052 0 1,917,949 6,882 68,256 253 1,689 556 563,220 816 56,377 0 0 0 0 0 650 32,166 33,784 33,865 1,427 36,426 37,355 0 0 0 0 0 2,567 ---------- ---------- ----------- ------------ ---------- ---------- 2,179,424 4,745,851 21,578,195 397,881,863 1,503,758 5,936,147 ---------- ---------- ----------- ------------ ---------- ---------- 3,850 187,929 845,615 2,770,071 10,556 223,560 283 76,787 21,140 463,138 215 28,694 0 64 0 0 0 1,328 3,894 8,542 20,585 237,383 1,859 11,335 1,555 1,555 1,555 1,555 1,555 1,555 564 685 2,113 17,667 509 639 14,351 13,472 19,679 125,024 16,498 18,176 ---------- ---------- ----------- ------------ ---------- ---------- 24,497 289,034 910,687 3,614,838 31,192 285,287 ---------- ---------- ----------- ------------ ---------- ---------- $2,154,927 $4,456,817 $20,667,508 $394,267,025 $1,472,566 $5,650,860 ========== ========== =========== ============ ========== ========== $1,746,666 $3,889,483 $19,019,274 $359,463,611 $1,205,117 $5,815,401 (4,265) 5,053 (21,287) 1,783,933 (2,002) 124,650 172,323 335,847 (70,591) 10,351,343 46,526 251,488 240,203 226,434 1,740,112 22,668,138 222,925 (540,534) 0 0 0 0 0 (145) ---------- ---------- ----------- ------------ ---------- ---------- $2,154,927 $4,456,817 $20,667,508 $394,267,025 $1,472,566 $5,650,860 ========== ========== =========== ============ ========== ========== $2,053,741 $4,241,565 $18,814,888 $334,135,360 $1,163,455 $5,571,367 163,858 340,464 1,493,944 17,438,759 89,339 565,860 $ 12.53 $ 12.46 $ 12.59 $ 19.16 $ 13.02 $ 9.85 $ 101,186 $ 215,252 $ 1,852,620 $ 59,436,573 $ 309,111 $ 79,493 8,084 17,302 147,500 3,105,758 23,770 8,096 $ 12.52 $ 12.44 $ 12.56 $ 19.14 $ 13.00 $ 9.82 -- -- -- $ 695,092 -- -- -- -- -- 36,370 -- -- -- -- -- $ 19.11 -- -- $1,906,797 $4,248,758 $19,802,762 $371,138,549 $1,200,725 $6,262,849 ========== ========== =========== ============ ========== ==========
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
CORE GROWTH INTERNATIONAL VALUE FUND FUND EQUITY FUND ---------- ---- ----------- INVESTMENT INCOME Dividends* ................................ $ 644,102 $ 67,716 $ 1,121,218 Interest .................................. 89,928 21,435 85,458 ----------- ----------- ----------- 734,030 89,151 1,206,676 ----------- ----------- ----------- Expenses Management fees (Note 3) ................ 178,028 79,059 305,710 12b-1 fees (Retail Class) ............... 1,950 614 270 12b-1 fees (Admin Class) ................ 0 0 0 Trustees' fees and expenses (Note 3A) ... 2,815 2,815 2,815 Administrative fees ..................... 18,309 8,558 19,995 Custodian and accounting fees ........... 36,616 31,492 114,494 Transfer Agent fees (Institutional Class) 11,563 10,582 10,041 Transfer Agent fees (Retail Class) ...... 9,127 9,095 9,043 Transfer Agent fees (Admin Class) ....... 0 0 0 Audit and tax services fees ............. 6,347 6,347 6,347 Legal fees .............................. 2,125 2,124 2,124 Printing fees ........................... 3,246 1,496 3,837 Registration fees ....................... 14,587 11,314 10,990 Amortization of organization expenses (Note 1I): Institutional Class ................... 0 0 0 Amortization of deferred registration costs (Note 1I): Institutional Class ................... 0 0 0 Retail Class .......................... 652 481 488 Miscellaneous expenses .................. 16,660 1,577 1,209 ----------- ----------- ----------- Total expenses .......................... 302,025 165,554 487,363 Less expenses waived and reimbursed by the investment adviser (Note 3) ........... (8,590) (30,539) (78,785) ----------- ----------- ----------- Net expenses ............................ 293,435 135,015 408,578 ----------- ----------- ----------- Net investment income (loss) .............. 440,595 (45,864) 798,098 ----------- ----------- ----------- NET REALIZED GAIN (LOSS) ON: Investments ................................. 5,846,476 4,093,998 2,699,236 Foreign currency transactions ............... 0 0 (10,665) ----------- ----------- ----------- Total net realized gain (loss) .............. 5,846,476 4,093,998 2,688,571 ----------- ----------- ----------- CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments ................................. (390,260) (1,056,562) 3,501,852 Foreign currency translations ............... 0 0 1,837 ----------- ----------- ----------- Total net change in unrealized appreciation (depreciation) .............................. (390,260) (1,056,562) 3,503,689 ----------- ----------- ----------- Total net realized gain (loss) and change in unrealized appreciation (depreciation) ...... 5,456,216 3,037,436 6,192,260 ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .................................. $ 5,896,811 $ 2,991,572 $ 6,990,358 =========== =========== ===========
*Net of foreign withholding taxes of $4,874, $173,188, $151, $288 and $4,224 for the Core Value, International Equity, Mid-Cap Value, Small Cap Value and the Worldwide Funds, respectively. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------- MID-CAP MID-CAP SMALL CAP SMALL CAP STRATEGIC GROWTH VALUE GROWTH VALUE VALUE WORLDWIDE FUND FUND FUND FUND FUND FUND - ------------------------------------------------------------------------------------------- $ 3,461 $ 22,131 $ 4,564 $ 1,970,987 $ 5,001 $ 29,017 2,289 3,791 16,910 1,233,491 552 133,795 ---------- ---------- ----------- ------------ ---------- ---------- 5,750 25,922 21,474 3,204,478 5,553 162,812 ---------- ---------- ----------- ------------ ---------- ---------- 7,438 16,106 30,604 1,280,504 3,587 22,360 99 249 1,955 60,034 381 109 0 0 0 62 0 0 2,815 2,815 2,815 2,815 2,815 2,815 2,201 2,779 4,683 84,262 2,042 2,580 24,913 29,985 35,600 78,170 24,391 33,826 9,011 9,228 9,124 16,246 8,988 9,048 8,984 8,988 9,061 10,663 8,975 9,002 0 0 0 1,500 0 0 6,808 6,808 6,808 6,347 6,808 6,347 2,124 2,124 2,124 2,124 2,125 2,124 91 195 272 14,682 66 281 9,298 9,616 9,939 38,769 12,417 11,030 0 0 0 0 0 451 942 901 916 0 5,060 0 37 40 215 521 745 915 1,384 1,393 493 66,463 201 1,400 ---------- ---------- ----------- ------------ ---------- ---------- 76,145 91,227 114,609 1,663,162 78,601 102,288 (66,130) (69,504) (71,848) (1,427) (71,046) (72,366) ---------- ---------- ----------- ------------ ---------- ---------- 10,015 21,723 42,761 1,661,735 7,555 29,922 ---------- ---------- ----------- ------------ ---------- ---------- (4,265) 4,199 (21,287) 1,542,743 (2,002) 132,890 ---------- ---------- ----------- ------------ ---------- ---------- 111,959 351,527 196,758 7,318,288 34,413 119,080 0 0 0 0 0 (4,599) ---------- ---------- ----------- ------------ ---------- ---------- 111,959 351,527 196,758 7,318,288 34,413 114,481 ---------- ---------- ----------- ------------ ---------- ---------- 68,427 (41,595) 910,542 (4,072,646) 108,568 (262,945) 0 0 0 0 0 120 ---------- ---------- ----------- ------------ ---------- ---------- 68,427 (41,595) 910,542 (4,072,646) 108,568 (262,825) ---------- ---------- ----------- ------------ ---------- ---------- 180,386 309,932 1,107,300 3,245,642 142,981 (148,344) ---------- ---------- ----------- ------------ ---------- ---------- $ 176,121 $ 314,131 $ 1,086,013 $ 4,788,385 $ 140,979 $ (15,454) ========== ========== =========== ============ ========== ==========
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- CORE VALUE FUND ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 ---------------- ------------------ (UNAUDITED) FROM OPERATIONS Net investment income (loss) ........ $ 440,595 $ 598,356 Net realized gain (loss) ............ 5,846,476 6,931,274 Change in unrealized appreciation (depreciation) .................... (390,260) 5,392,568 ----------- ----------- Increase (decrease) in net assets from operations ................. 5,896,811 12,922,198 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ............. 0 (590,731) Net realized gain on investments .. 0 (7,124,536) RETAIL CLASS Net investment income ............. 0 (10,346) Net realized gain on investments .. 0 (138,784) ----------- ----------- 0 (7,864,397) ----------- ----------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 4) Increase (decrease) in net assets derived from capital share transactions ...................... 4,006,576 15,853,992 ----------- ----------- Total increase (decrease) in net assets ............................ 9,903,387 20,911,793 NET ASSETS Beginning of the period ............. 64,627,248 43,715,455 ----------- ----------- End of the period ................... $74,530,635 $64,627,248 UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ............. $ 15,148 $ 17,869 =========== =========== End of the period ................... $ 455,743 $ 15,148 =========== =========== See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- GROWTH FUND ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 ---------------- ------------------ (UNAUDITED) FROM OPERATIONS Net investment income (loss) ........ $ (45,864) $ (92,402) Net realized gain (loss) ............ 4,093,998 8,211,774 Change in unrealized appreciation (depreciation) .................... (1,056,562) (649,029) ----------- ----------- Increase (decrease) in net assets from operations ................. 2,991,572 7,470,343 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ............. 0 0 Net realized gain on investments .. 0 (7,950,061) RETAIL CLASS Net investment income ............. 0 0 Net realized gain on investments .. 0 (47,193) ----------- ----------- 0 (7,997,254) ----------- ----------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 4) Increase (decrease) in net assets derived from capital share transactions ...................... (4,406,039) (6,626,458) ----------- ----------- Total increase (decrease) in net assets ............................ (1,414,467) (7,153,369) NET ASSETS Beginning of the period ............. 32,343,542 39,496,911 ----------- ----------- End of the period ................... $30,929,075 $32,343,542 =========== =========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ............. $ 0 $ 11,723 =========== =========== End of the period ................... $ (45,864) $ 0 =========== =========== See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 ---------------- ------------------ (UNAUDITED) FROM OPERATIONS Net investment income (loss) ........ $ 798,098 $ 1,058,259 Net realized gain (loss) ............ 2,688,571 9,242,680 Change in unrealized appreciation (depreciation) .................... 3,503,689 (10,490,463) ----------- ----------- Increase (decrease) in net assets from operations ................. 6,990,358 (189,524) ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ............. 0 (834,647) Net realized gain on investments .. 0 (10,657,570) RETAIL CLASS Net investment income ............. 0 (2,582) Net realized gain on investments .. 0 (28,988) ----------- ----------- 0 (11,523,787) ----------- ----------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 4) Increase (decrease) in net assets derived from capital share transactions ...................... (8,926,498) 3,472,008 ----------- ----------- Total increase (decrease) in net assets ............................ (1,936,140) (8,241,303) NET ASSETS Beginning of the period ............. 82,421,132 90,662,435 ----------- ----------- End of the period ................... $80,484,992 $82,421,132 =========== =========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ............. $ (213) $ 25,444 =========== =========== End of the period ................... $ 797,885 $ (213) =========== =========== See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- MID-CAP GROWTH FUND ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997* ---------------- ------------------ (UNAUDITED) FROM OPERATIONS Net investment income (loss) ........ $ (4,265) $ (6,248) Net realized gain (loss) ............ 111,959 156,302 Change in unrealized appreciation (depreciation) .................... 68,427 171,776 ----------- ---------- Increase (decrease) in net assets from operations ................. 176,121 321,830 ----------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ............. 0 0 In excess of net investment income 0 (18,310) Net realized gain on investments .. 0 (92,139) RETAIL CLASS Net investment income ............. 0 0 In excess of net investment income 0 (571) Net realized gain on investments .. 0 (3,752) ----------- ---------- 0 (114,772) ----------- ---------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 4) Increase (decrease) in net assets derived from capital share transactions ...................... 57,254 1,714,474 ----------- ---------- Total increase (decrease) in net assets ............................ 233,375 1,921,532 NET ASSETS Beginning of the period ............. 1,921,552 20 ----------- ---------- End of the period ................... $ 2,154,927 $1,921,552 =========== ========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ............. $ 0 $ 0 =========== ========== End of the period ................... $ (4,265) $ 0 =========== ========== *Commencement of operations, January 2, 1997. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- MID-CAP VALUE FUND ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997* ---------------- ------------------ (UNAUDITED) FROM OPERATIONS Net investment income (loss) ........ $ 4,199 $ 18,110 Net realized gain (loss) ............ 351,527 261,370 Change in unrealized appreciation (depreciation) .................... (41,595) 268,029 ---------- ---------- Increase (decrease) in net assets from operations ................. 314,131 547,509 ---------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ............. 0 (17,197) In excess of net investment income 0 (23,118) Net realized gain on investments .. 0 (264,726) RETAIL CLASS Net investment income ............. 0 (913) In excess of net investment income 0 (620) Net realized gain on investments .. 0 (12,852) ---------- ---------- 0 (319,426) ---------- ---------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 4) Increase (decrease) in net assets derived from capital share transactions ...................... 238,182 3,676,401 ---------- ---------- Total increase (decrease) in net assets ............................ 552,313 3,904,484 NET ASSETS Beginning of the period ............. 3,904,504 20 ---------- ---------- End of the period ................... $4,456,817 $3,904,504 ========== ========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ............. $ 854 $ 0 ========== ========== End of the period ................... $ 5,053 $ 854 ========== ========== *Commencement of operations, January 2, 1997. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- SMALL CAP VALUE FUND ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997* ---------------- ------------------ (UNAUDITED) FROM OPERATIONS Net investment income (loss) ....... $ (21,287) $ (23,431) Net realized gain (loss) ........... 196,758 (38,055) Change in unrealized appreciation (depreciation) ................... 910,542 829,570 ----------- ---------- Increase (decrease) in net assets from operations ................ 1,086,013 768,084 ----------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ............ 0 0 In excess of net investment income 0 (1,797) Net realized gain on investments . 0 0 In excess of net realized gain on investments .................... 0 (176,105) RETAIL CLASS Net investment income ............ 0 0 Net realized gain on investments . 0 0 In excess of net realized gain on investments .................... 0 (53,076) ----------- ---------- 0 (230,978) ----------- ---------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 4) Increase (decrease) in net assets derived from capital share transactions ..................... 14,548,994 4,495,375 ----------- ---------- Total increase (decrease) in net assets ........................... 15,635,007 5,032,481 NET ASSETS Beginning of the period ............ 5,032,501 20 ----------- ---------- End of the period .................. $20,667,508 $5,032,501 =========== ========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ............ $ 0 $ 0 =========== ========== End of the period .................. $ (21,287) $ 0 =========== ========== *Commencement of operations, January 2, 1997. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- SMALL CAP VALUE FUND ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 ---------------- ------------------ (UNAUDITED) FROM OPERATIONS Net investment income (loss) ........ $ 1,542,743 $ 2,025,041 Net realized gain (loss) ............ 7,318,288 39,443,172 Change in unrealized appreciation (depreciation) .................... (4,072,646) 4,289,783 ------------ ------------ Increase (decrease) in net assets from operations ................. 4,788,385 45,757,996 ------------ ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ............. 0 (1,647,014) Net realized gain on investments .. 0 (34,182,555) RETAIL CLASS Net investment income ............. 0 (125,063) Net realized gain on investments .. 0 (4,383,758) ADMIN CLASS Net investment income ............. 0 0 Net realized gain on investments .. 0 0 ------------ ------------ 0 (40,338,390) ------------ ------------ FROM CAPITAL SHARES TRANSACTIONS (NOTE 4) Increase (decrease) in net assets derived from capital share transactions ...................... 109,948,350 110,485,816 ------------ ------------ Total increase (decrease) in net assets ............................ 114,736,735 115,905,422 NET ASSETS Beginning of the period ............. 279,530,290 163,624,868 ------------- ------------ End of the period ................... $394,267,025 $279,530,290 ============ ============ UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ............. $ 241,190 $ 67,474 ============ ============ End of the period ................... $ 1,783,933 $ 241,190 ============ ============ See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- STRATEGIC VALUE FUND ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997* ---------------- ------------------ (UNAUDITED) FROM OPERATIONS Net investment income (loss) ........ $ (2,002) $ (1,131) Net realized gain (loss) ............ 34,413 12,191 Change in unrealized appreciation (depreciation) .................... 108,568 114,357 ---------- ----------- Increase (decrease) in net assets from operations ................. 140,979 125,417 ---------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ............. 0 0 In excess of net investment income 0 (14,759) Net realized gain on investments .. 0 0 RETAIL CLASS Net investment income ............. 0 0 In excess of net investment income 0 (4,144) Net realized gain on investments .. 0 0 ---------- ----------- 0 (18,903) ---------- ----------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 4) Increase (decrease) in net assets derived from capital share transactions ...................... 86,806 1,138,247 ---------- ----------- Total increase (decrease) in net assets ............................ 227,785 1,244,761 NET ASSETS Beginning of the period ............. 1,244,781 20 ---------- ----------- End of the period ................... $1,472,566 $1,244,781 ========== =========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ............. $ 0 $ 0 ========== =========== End of the period ................... $ (2,002) $ 0 ========== =========== *Commencement of operations, January 2, 1997. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- WORLDWIDE FUND ---------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 ---------------- ------------------ (UNAUDITED) FROM OPERATIONS Net investment income (loss) ......... $ 132,890 $ 287,881 Net realized gain (loss) ............. 114,481 532,609 Change in unrealized appreciation (depreciation) ..................... (262,825) (570,405) ---------- ---------- Increase (decrease) in net assets from operations .................. (15,454) 250,085 ---------- ---------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income .............. 0 (284,030) Net realized gain on investments ... 0 (410,676) RETAIL CLASS Net investment income .............. 0 (811) Net realized gain on investments ... 0 (1,202) ---------- ---------- 0 (696,719) ---------- ---------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 4) Increase (decrease) in net assets derived from capital share transactions ....................... 49,710 873,745 ---------- ---------- Total increase (decrease) in net assets ............................. 34,256 427,111 NET ASSETS Beginning of the period .............. 5,616,604 5,189,493 ---------- ---------- End of the period .................... $5,650,860 $5,616,604 ========== ========== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period .............. $ (8,240) $ 12,271 ========== ========== End of the period .................... $ 124,650 $ (8,240) ========== ========== See accompanying notes to financial statements. [THIS PAGE INTENTIONALLY LEFT BLANK] - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, CORE VALUE FUND ------------------------ INSTITUTIONAL CLASS ------------------------ 1998* 1997 ------- ------- (UNAUDITED) Net asset value, beginning of period ................. $ 17.64 $ 15.60 -------- ------- Income from investment operations -- Net investment income (loss) ....................... 0.11 0.18 Net realized and unrealized gain (loss) on investments ...................................... 1.46 4.32 -------- ------- Total from investment operations ................. 1.57 4.50 -------- ------- Less distributions -- Dividends from net investment income ............... 0.00 (0.19) Distributions from net realized capital gains ...... 0.00 (2.27) -------- ------- Total distributions .............................. 0.00 (2.46) -------- ------- Net asset value, end of period ....................... $ 19.21 $ 17.64 ======== ======= Total return (%)(a) .................................. 8.9 29.2 Net assets, end of period (000) ...................... $ 72,730 $63,303 Ratio of operating expenses to average net assets (%)(b) ...................................... 0.82 0.84 Ratio of net investment income to average net assets (%) ......................................... 1.24 1.12 Portfolio turnover rate (%) .......................... 34 64 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 (%)(b) ............................. 0.82 0.84 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ......................................... $ 0.11 $ 0.18 * For the six months ended June 30, 1998. ** From commencement of class operations on January 2, 1997. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher. (d) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- CORE VALUE FUND - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS - -------------------------------------------------- ------------------- 1996 1995 1994 1993 1998* 1997** -------- -------- -------- -------- ------- ------ (UNAUDITED) $ 14.57 $ 11.80 $ 12.49 $ 11.53 $ 17.62 $ 15.60 -------- -------- -------- -------- -------- -------- 0.22 0.23 0.15 0.13 0.09 0.15(d) 2.83 3.93 (0.26) 1.24 1.45 4.30 -------- -------- -------- -------- -------- -------- 3.05 4.16 (0.11) 1.37 1.54 4.45 -------- -------- -------- -------- -------- -------- (0.22) (0.23) (0.15) (0.12) 0.00 (0.16) (1.80) (1.16) (0.43) (0.29) 0.00 (2.27) -------- -------- -------- -------- -------- -------- (2.02) (1.39) (0.58) (0.41) 0.00 (2.43) -------- -------- -------- -------- -------- -------- $ 15.60 $ 14.57 $ 11.80 $ 12.49 $ 19.16 $ 17.62 ======== ======== ======== ======== ======== ======== 21.2 35.2 (0.9) 11.9 8.7 28.9 $ 43,715 $ 36,465 $ 25,946 $ 20,657 $ 1,801 $ 1,324 1.13 1.20 1.33 1.50 1.10 1.10 1.44 1.61 1.28 1.23 0.95 0.84 58 60 48 53 34 64 1.13 1.20 1.33 1.56 2.20 6.17 $ 0.22 $ 0.23 $ 0.15 $ 0.12 $ (0.01) $ (0.73)(d) - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, GROWTH FUND ----------------------- INSTITUTIONAL CLASS ---------------------- 1998* 1997 ------- ------- (UNAUDITED) Net asset value, beginning of period ................. $ 12.63 $ 13.44 -------- ------- Income from investment operations -- Net investment income (loss) ........................ (0.02) (0.04) Net realized and unrealized gain (loss) on investments 1.26 3.17 -------- ------- Total from investment operations .................. 1.24 3.13 -------- ------- Less distributions -- Dividends from net investment income .............. 0.00 0.00 Distributions from capital ........................ 0.00 0.00 Distributions from net realized capital gains ..... 0.00 (3.94) -------- ------- Total distributions ............................. 0.00 (3.94) -------- ------- Net asset value, end of period ...................... $ 13.87 $ 12.63 ======== ======= Total return (%)(a) ................................. 9.8 24.5 Net assets, end of period (000) ..................... $ 30,342 $32,149 Ratio of operating expenses to average net assets (%)(b)(c)................................ 0.85 0.85 Ratio of net investment income to average net assets (%)(b) .................................. (0.29) (0.26) Portfolio turnover rate (%) ......................... 82 116 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 (%)(b) .................. 0.99 0.98 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ................. $ (0.03) $ (0.05) * For the six months ended June 30, 1998. ** From commencement of class operations on January 2, 1997. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher. (d) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- GROWTH FUND - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS - -------------------------------------------------- ------------------- 1996 1995 1994 1993 1998* 1997** -------- -------- -------- -------- ------- ------ (UNAUDITED) $ 15.27 $ 12.50 $ 13.02 $ 12.46 $ 12.59 $ 13.44 -------- -------- -------- -------- -------- -------- (0.07) 0.00 (0.02) 0.00 (0.03)(d) (0.07) 3.08 3.86 (0.45) 1.16 1.25 3.16 -------- -------- -------- -------- -------- -------- 3.01 3.86 (0.47) 1.16 1.22 3.09 -------- -------- -------- -------- -------- -------- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.01) 0.00 0.00 0.00 (4.84) (1.09) (0.04) (0.60) 0.00 (3.94) -------- -------- -------- -------- -------- -------- (4.84) (1.09) (0.05) (0.60) 0.00 (3.94) -------- -------- -------- -------- -------- -------- $ 13.44 $ 15.27 $ 12.50 $ 13.02 $ 13.81 $ 12.59 ======== ======== ======== ======== ======== ======== 19.9 30.9 (3.7) 9.3 9.7 24.2 $ 39,497 $ 45,011 $ 36,580 $ 32,385 $ 587 $ 194 1.10 1.08 1.16 1.20 1.10 1.10 (0.47) (0.29) (0.14) (0.17) (0.54) (0.42) 99 48 46 64 82 116 1.10 1.08 1.16 1.20 4.87 12.96 $ (0.07) $ 0.00 $ (0.02) $ 0.00 $ (0.28)(d) $ (2.00) - ----------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUND - ----------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ----------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, INSTITUTIONAL EQUITY FUND ----------------------- INSTITUTIONAL CLASS ----------------------- 1998* 1997 ------- ------- (UNAUDITED) Net asset value, beginning of period ................ $ 11.30 $ 13.16 -------- ------- Income from investment operations -- Net investment income (loss) ...................... 0.12 0.15(d) Net realized and unrealized gain (loss) on investment 0.88 (0.27) -------- ------- Total from investment operations ................ 1.00 (0.12) -------- ------- Less distributions -- Dividends from net investment income .............. 0.00 (0.19) Distributions from net realized capital gains ..... 0.00 (1.55) -------- ------- Total distributions ............................. 0.00 (1.74) -------- ------- Net asset value, end of period ...................... $ 12.30 $ 11.30 ======== ======= Total return (%)(a) ................................. 8.9 (1.0) Net assets, end of period (000) ..................... $ 80,278 $82,188 Ratio of operating expenses to average net assets (%)(b)(c) .................................. 1.00 1.00 Ratio of net investment income to average net assets (%((b) ..................................... 1.96 1.12 Portfolio turnover rate (%) ......................... 70 119 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 (%)(b) ................. 1.17 1.16 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ......................................... $ 0.11 $ 0.13(d) * For the six months ended June 30, 1998. ** From commencement of class operations on January 2, 1997. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher. (d) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUND - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS - -------------------------------------------------- ------------------- 1996 1995 1994 1993 1998* 1997** -------- -------- -------- -------- ------- ------ (UNAUDITED) $ 11.65 $ 11.61 $ 12.90 $ 9.64 $ 11.28 $ 13.16 -------- -------- -------- -------- -------- -------- 0.12 0.14 0.15 0.11 0.09 0.10(d) 2.01 0.87 (0.38) 3.61 0.88 (0.26) -------- -------- -------- -------- -------- -------- 2.13 1.01 (0.23) 3.72 0.97 (0.16) -------- -------- -------- -------- -------- -------- (0.09) (0.14) (0.14) (0.10) 0.00 (0.17) (0.53) (0.83) (0.92) (0.36) 0.00 (1.55) -------- -------- -------- -------- -------- -------- (0.62) (0.97) (1.06) (0.46) 0.00 (1.72) -------- -------- -------- -------- -------- -------- $ 13.16 $ 11.65 $ 11.61 $ 12.90 $ 12.25 $ 11.28 ======== ======== ======== ======== ======== ======== 18.3 8.7 (1.8) 38.5 8.6 (1.3) $ 90,662 $ 79,488 $ 73,189 $ 56,560 $ 207 $ 233 1.42 1.45 1.46 1.50 1.25 1.25 0.96 1.16 1.30 1.20 1.54 0.73 151 133 116 128 70 119 1.42 1.45 1.46 1.72 9.75 16.24 $ 0.12 $ 0.14 $ 0.15 $ 0.09 $ (0.39) $ (1.93)(d) - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, MID-CAP GROWTH FUND --------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS ---------------- ---------------- 1998* 1997** 1998* 1997** ----- ------ ----- ------ (UNAUDITED) (UNAUDITED) Net asset value, beginning of period $ 11.49 $ 10.00 $ 11.49 $ 10.00 ------- ------- ------- ------- Income from investment operations -- Net investment income (loss) ...... (0.02) (0.03) (0.03) (0.06) Net realized and unrealized gain (loss) on investments ...... 1.06 2.26 1.06 2.27 ------- ------- ------- ------- Total from investment operations 1.04 2.23 1.03 2.21 ------- ------- ------- ------- Less distributions -- Dividends from net investment income ........................ 0.00 0.00 0.00 0.00 Distributions in excess of net investment income ......... 0.00 (0.12) 0.00 (0.10) Distributions from net realized capital gains ................. 0.00 (0.62) 0.00 (0.62) ------- ------- ------- ------- Total distributions ........... 0.00 (0.74) 0.00 (0.72) ------- ------- ------- ------- Net asset value, end of period ...... $ 12.53 $ 11.49 $ 12.52 $ 11.49 ======= ======= ======= ======= Total return (%)(a) ................. 9.1 22.7 9.0 22.4 Net assets, end of period (000) ..... $ 2,054 $ 1,848 $ 101 $ 74 Ratio of operating expenses to average net assets(%)(b)(c) ...... 1.00 1.00 1.25 1.25 Ratio of net investment income to average net assets(%)(b) ...... (0.42) (0.38) (0.67) (0.67) Portfolio turnover rate (%) ......... 70 174 70 174 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 (%)(b) ........... 6.80 9.35 28.89 36.58 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ................. $ (0.36) $ (0.60) $ (1.33) $ (3.29) * For the six months ended June 30, 1998. ** Commencement of operations on January 2, 1997. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, MID-CAP VALUE FUND --------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS ---------------- ---------------- 1998* 1997** 1998* 1997** ----- ------ ----- ------ (UNAUDITED) (UNAUDITED) Net asset value, beginning of period $ 11.53 $ 10.00 $ 11.53 $ 10.00 ------- ------- ------- ------- Income from investment operations -- Net investment income (loss) ...... 0.01 0.07 0.00 0.03 Net realized and unrealized gain (loss) on investments ..................... 0.92 2.54 0.91 2.55 ------- ------- ------- ------- Total from investment operations 0.93 2.61 0.91 2.58 ------- ------- ------- ------- Less distributions -- Dividends from net investment income ........................... 0.00 (0.14) 0.00 (0.11) Distributions from net realized capital gains ..................... 0.00 (0.94) 0.00 (0.94) ------- ------- ------- ------- Total distributions ........... 0.00 (1.08) 0.00 (1.05) ------- ------- ------- ------- Net asset value, end of period ...... $ 12.46 $ 11.53 $ 12.44 $ 11.53 ======= ======= ======= ======= Total return (%)(a) ................. 8.1 26.3 7.9 26.0 Net assets, end of period (000) ..... $ 4,242 $ 3,736 $ 215 $ 168 Ratio of operating expenses to average net assets (%)(b)(c) .. 1.00 1.00 1.25 1.25 Ratio of net investment income to average net assets (%)(b) ..... 0.21 0.74 (0.04) 0.42 Portfolio turnover rate (%) ......... 152 130 152 130 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 (%)(b) ........... 3.84 6.65 12.55 27.99) Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ................. $ (0.16) $ (0.49) $ (0.24) $ (1.90) * For the six months ended June 30, 1998. ** Commencement of operations on January 2, 1997. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, SMALL CAP GROWTH FUND --------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS ---------------- ---------------- 1998* 1997** 1998* 1997** ----- ------ ----- ------ (UNAUDITED) (UNAUDITED) Net asset value, beginning of period $ 11.32 $ 10.00 $ 11.30 $ 10.00 ------- ------- ------- ------- Income from investment operations -- Net investment income (loss) ..... (0.01) (0.07)(d) (0.04) (0.10)(d) Net realized and unrealized gain (loss) on investments ...... 1.28 1.99 1.30 1.99 ------- ------- ------- ------- Total from investment operations 1.27 1.92 1.26 1.89 ------- ------- ------- ------- Less distributions -- Dividends from net investment income .............. 0.00 0.00 0.00 0.00 Distributions in excess of net investment income ........... 0.00 (0.01) 0.00 0.00 Distributions from net realized capital gains .......... 0.00 0.00 0.00 0.00 Distributions in excess of net realized capital gains ............................ 0.00 (0.59) 0.00 (0.59) ------- ------- ------- ------- Total distributions ........... 0.00 (0.60) 0.00 (0.59) ------- ------- ------- ------- Net asset value, end of period ...... $ 12.59 $ 11.32 $ 12.56 $ 11.30 ======= ======= ======= ======= Total return (%)(a) ................. 11.2 19.4 11.2 19.2 Net assets, end of period (000) ..... $18,815 $ 3,893 $ 1,853 $ 1,139 Ratio of operating expenses to average net assets (%)(b)(c) ......................... 1.00 1.00 1.25 1.25 Ratio of net investment income to average net assets (%)(b) .................... (0.46) (0.65) (0.79) (0.94) Portfolio turnover rate (%) ......... 68 211 68 211 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 (%)(b) ........... 2.54 5.81 3.92 7.82 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ....................... $ (0.04) $ (0.56)(d) $ (0.19) $ (0.77)(d) * For the six months ended June 30, 1998. ** Commencement of operations on January 2, 1997. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher. (d) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. [THIS PAGE INTENTIONALLY LEFT BLANK] - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, SMALL CAP VALUE FUND ------------------------ INSTITUTIONAL CLASS ------------------------ 1998* 1997 ------- ------- (UNAUDITED) Net asset value, beginning of period ................. $ 18.62 $ 17.39 -------- ------- Income from investment operations -- Net investment income (loss) ...................... 0.07 0.17 Net realized and unrealized gain (loss) on investment 0.47 4.26 -------- ------- Total from investment operations ................ 0.54 4.43 -------- ------- Less distributions -- Dividends from net investment income .............. 0.00 (0.15) Distributions from net realized capital gains ..... 0.00 (3.05) -------- ------- Total distributions ............................. 0.00 (3.20) -------- ------- Net asset value, end of period ...................... $ 19.16 $ 18.62 ======== ======= Total return (%)(a) ................................. 2.9 26.0 Net assets, end of period (000) ..................... $334,135 $245,177 Ratio of operating expenses to average net assets (%)(b)(c) ............................... 0.94 0.94 Ratio of net investment income to average net assets (%)(b) .................................. 0.94 0.97 Portfolio turnover rate (%) ......................... 45 94 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 (%)(b) ............................. 0.94 0.94 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: .................. $ 0.07 $ 0.17 * For the six months ended June 30, 1998. ** From commencement of class operations on January 2, 1997. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher. (d) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- SMALL CAP VALUE FUND - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS - -------------------------------------------------- ------------------- 1996 1995 1994 1993 1998* 1997** -------- -------- -------- -------- ------- ------ (UNAUDITED) $ 15.33 $ 12.86 $ 14.13 $ 12.88 $ 18.62 $ 17.39 -------- -------- -------- -------- -------- -------- 0.11 0.04 (0.04) 0.00 0.06 0.15(d) 4.47 4.06 (1.12) 3.15 0.46 4.21 -------- -------- -------- -------- -------- -------- 4.58 4.10 (1.16) 3.15 0.52 4.36 -------- -------- -------- -------- -------- -------- (0.11) (0.04) 0.00 0.00 0.00 (0.08) (2.41) (1.59) (0.11) (1.90) 0.00 (3.05) -------- -------- -------- -------- -------- -------- (2.52) (1.63) (0.11) (1.90) 0.00 (3.13) -------- -------- -------- -------- -------- -------- $ 17.39 $ 15.33 $ 12.86 $ 14.13 $ 19.14 $ 18.62 ======== ======== ======== ======== ======== ======== 30.4 32.1 (8.2) 24.7 2.8 25.6 $163,625 $ 90,455 $ 73,126 $ 67,553 $ 59,437 $ 34,353 1.19 1.25 1.27 1.35 1.20 1.25 0.80 0.29 (0.30) (0.38) 0.69 0.79 73 155 87 106 45 94 1.19 1.25 1.27 1.35 1.20 1.35 $ 0.11 $ 0.04 $ (0.04) $ 0.00 $ 0.06 $ 0.13(d) - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------------- PERIOD ENDED JUNE 30, 1998 (UNAUDITED) SMALL CAP VALUE FUND ---------- ADMIN CLASS ----------- 1998*** ---------- Net asset value, beginning of period ............................. $ 18.62 -------- Income from investment operations -- Net investment income (loss) ................................... 0.02 Net realized and unrealized gain (loss) on investments ......... 0.47 -------- Total from investment operations ............................. 0.49 -------- Less distributions -- Dividends from net investment income ........................... 0.00 Distributions from capital ..................................... 0.00 -------- Total distributions .......................................... 0.00 -------- Net asset value, end of period ................................... $ 19.11 ======== Total return (%)(a) .............................................. 2.6 Net assets, end of period (000) .................................. $ 695 Ratio of operating expenses to average net assets (%)(b)(c) ...... 1.50 Ratio of net investment income to average net assets (%)(b) ...... 2.17 Portfolio turnover rate (%)(c) ................................... 45 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 (%)(b) .............................. 7.10 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ..................................... $ (0.02) *** From commencement of class operations on January 2, 1998. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher.
- -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, STRATEGIC VALUE FUND --------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS ---------------- ---------------- 1998* 1997** 1998* 1997** ----- ------ ----- ------ (UNAUDITED) (UNAUDITED) Net asset value, beginning of period $ 11.76 $ 10.00 $ 11.76 $ 10.00 ------- ------- ------- ------- Income from investment operations -- Net investment income (loss) ..... (0.01) (0.01)(d) (0.03) (0.06)(d) Net realized and unrealized gain (loss) on investments ...... 1.27 1.98 1.27 2.00 ------- ------- ------- ------- Total from investment operations 1.26 1.97 1.24 1.94 ------- ------- ------- ------- Less distributions -- Dividends from net investment income ............... 0.00 0.00 0.00 0.00 Distributions in excess of net investment income ........... 0.00 (0.21) 0.00 (0.18) Distributions from net realized capital gains .......... 0.00 0.00 0.00 0.00 ------- ------- ------- ------- Total distributions ........... 0.00 (0.21) 0.00 (0.18) ------- ------- ------- ------- Net asset value, end of period ...... $ 13.02 $ 11.76 $ 13.00 $ 11.76 ======= ======= ======= ======= Total return (%)(a) ................. 10.7 19.7 10.5 19.4 Net assets, end of period (000) ..... $ 1,163 $ 965 $ 309 $ 279 Ratio of operating expenses to average net assets(%)(b)(c) ... 1.00 1.00 1.25 1.25 Ratio of net investment income to average net assets(%)(b) ...... (0.23) (0.05) (0.47) (0.49) Portfolio turnover rate (%) ......... 21 34 21 34 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 (%)(b) ................. 9.99 16.55 14.54 21.33 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ....................... $ (0.60) $ (1.76)(d) $ (0.88) $ (2.50)(d)
* For the six months ended June 30, 1998. ** Commencement of fund operations on January 2, 1997. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher. (d) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS (continued) - -------------------------------------------------------------------------------- PERIOD ENDED JUNE 30, 1998 (UNAUDITED) WORLDWIDE FUND ---------- INSTITUTIONAL CLASS ------------ 1998* ------------ (UNAUDITED) Net asset value, beginning of period ............................. $ 9.86 ------- Income from investment operations -- Net investment income (loss) ................................... 0.23 Net realized and unrealized gain (loss) on investments ......... (0.24) ------- Total from investment operations ............................. (0.01) ------- Less distributions -- Dividends from net investment income ........................... 0.00 Distributions from net realized capital gains .................. 0.00 ------- Total distributions .......................................... 0.00 ------- Net asset value, end of period ................................... $ 9.85 ======= Total return (%)(a) .............................................. (0.1) Net assets, end of period (000) .................................. $ 5,571 Ratio of operating expenses to average net assets (%)(b)(c) ...... 1.00 Ratio of net investment income to average net assets (%)(b) ...... 4.47 Portfolio turnover rate (%) ...................................... 61 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 (%)(b) .................... 3.13 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: .............................. $ 0.12 * For the six months ended June 30, 1998. ** Commencement of operations on May 1, 1996 and January 2, 1997, for the Institutional and Retail Classes, respectively. (a) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other operating expenses. (b) Annualized for periods less than one year. (c) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this reimbursement the Fund's ratio of operating expenses would have been higher. (d) Per share net investment income has been determined on the basis of the weighted average number of shares outstanding during the period. - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- WORLDWIDE FUND - ------------------------------------------------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS ------------------------- ----------------------------- 1997 1996** 1998* 1997** ---- ------ ----- ------ (UNAUDITED) $ 10.63 $ 10.00 $ 9.86 $ 10.63 ------- -------- ------- ------- 0.47 0.30 0.20(d) 0.38(d) (0.10) 0.63 (0.24) (0.03) ------- -------- ------- ------- 0.37 0.93 (0.04) 0.35 ------- -------- ------- ------- (0.47) (0.30) 0.00 (0.45) (0.67) 0.00 0.00 (0.67) ------- -------- ------- ------- (1.14) (0.30) 0.00 (1.12) ------- -------- ------- ------- $ 9.86 $ 10.63 $ 9.82 $ 9.86 ======= ======== ======= ======= 3.5 9.2 (0.4) 3.3 $ 5,597 $ 5,189 $ 79 $ 20 1.00 1.00 1.25 1.25 3.89 4.62 3.87 3.58 134 76 61 134 2.62 3.72 23.52 214.91 $ 0.27 $ 0.13 $ (0.97)(d) $(23.33)(d) - -------------------------------------------------------------------------------- LOOMIS SAYLES EQUITY FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- JUNE 30, 1998 (UNAUDITED) 1. Loomis Sayles Funds is comprised of seventeen 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:
Fixed Income Funds Equity Funds - ------------------ ------------ Loomis Sayles Bond Fund Loomis Sayles Core Value Fund Loomis Sayles Global Bond Fund Loomis Sayles Growth Fund Loomis Sayles High Yield Fund Loomis Sayles International Equity Fund Loomis Sayles Intermediate Maturity Bond Fund Loomis Sayles Mid-Cap Growth Fund Loomis Sayles Investment Grade Bond Fund Loomis Sayles Mid-Cap Value Fund Loomis Sayles Municipal Bond Fund Loomis Sayles Small Cap Growth Fund Loomis Sayles Short-Term Bond Fund Loomis Sayles Small Cap Value Fund Loomis Sayles U.S. Government Securities Fund Loomis Sayles Strategic Value Fund Loomis Sayles Worldwide Fund
The Equity Funds offer Institutional and Retail Class shares. Each class has equal pro rata interest in the assets of the relevant fund and general voting privileges. Retail and Institutional Classes differ with respect to distribution and certain other class-specific expenses and expense reductions. Retail Class shares are subject to distribution fees at an annual rate of 0.25% of the relevant fund's average net assets, pursuant to a distribution plan adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940. Retail Class shares have exclusive voting rights with respect to its distribution plan. January 2, 1998, the Small Cap Value Fund commenced operations of an additional class of shares ("Admin Class"). These shares are subject to distribution fees at an annual rate of 0.25% of the Fund's average net assets, pursuant to a distribution plan adopted in accordance with Rule 12b-1 under the Investment Company Act of 1940, and to administrative fees at an annual rate of 0.25% of the Fund's average daily net assets attributable to the Admin Class. 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 summarizes the significant accounting policies of the Equity Funds: A. SECURITY VALUATION -- Equity securities for which quotations are readily available are valued at their last sale price on the exchange where primarily traded or, if there is no reported sale during the day, at the closing bid price. Long-term debt securities for which quotations are readily available are valued by a pricing service, approved by the Board of Trustees, which generally uses the most recent bid prices in the principal market in which such securities are normally traded. Short-term securities with a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. Other securities for which quotations are not readily available (including restricted securities, if any) are valued primarily using dealer supplied quotations or at their fair values as determined in good faith under the general supervision of the Board of Trustees. B. REPURCHASE AGREEMENTS -- The Funds may engage in repurchase agreement transactions. Under the terms of a typical repurchase agreement, the Funds take possession of an underlying debt obligation subject to an obligation of the seller to repurchase, and the Funds to resell, the obligation at an agreed-upon price and time. This arrangement results in a fixed rate of return that is not subject to market fluctuations during the Funds' holding period. The Funds, through their custodian, receive delivery of the underlying securities collateralizing repurchase agreements. It is the Funds' policy that the market value of the collateral be at least equal to 102% of the repurchase price. These securities are marked-to-market daily. Loomis Sayles is responsible for determining that the value of the collateral is at all times at least equal to 102% of the repurchase price. In connection with transactions in repurchase agreements, if the seller defaults and the value of the collateral declines or if the seller enters into insolvency proceedings, realization of the collateral by the Funds may be delayed or limited. C. FOREIGN CURRENCY TRANSLATION AND FOREIGN INVESTMENTS -- The books and records of each of the Funds (including those Funds that invest in foreign securities) are maintained in U.S. dollars. The value of securities, currencies and other assets and liabilities denominated in currencies other than U.S. dollars is translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the period. Purchases and sales of investment securities are translated at contractual currency exchange rates established at the time of the trade. Income and expenses are translated at prevailing exchange rates on the respective dates of such transactions. The results of operations resulting from changes in foreign exchange rates on investments are not isolated from fluctuations arising from changes in market prices of securities held. All such fluctuations are included with net realized and unrealized gain or loss 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, sales and maturities of forward foreign currency contracts, and the difference between the amounts of daily interest accruals on the books of the Funds and the amounts actually received resulting from changes in exchange rates on the payable date. Certain funds use foreign currency exchange contracts to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms. The U.S. dollar value of foreign currency contracts is determined using contractual currency exchange rates established at the time of each trade. The cost of foreign currency contracts is included in the cost basis of the associated investment. Each Fund may purchase securities of foreign issuers. Investing in securities of foreign companies and foreign governments involves special risks and considerations not typically associated with investing in U.S. companies and securities of the U.S. government. These risks include revaluation of currencies and the risk of appropriation. Moreover, the markets for securities of many foreign companies and foreign governments and their markets may be less liquid and the prices of such securities may be more volatile than those of securities of comparable U.S. companies and the U.S. government. D. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- Each Fund that may invest in foreign securities may enter into forward foreign currency exchange contracts to protect its securities against changes in future foreign exchange rates. A forward foreign currency exchange contract is an agreement between two parties to buy or sell currency at a set price on a future date. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked-to-market daily using the forward currency exchange rate and the change in market value is recorded as unrealized appreciation (depreciation) on foreign currency translations in the Funds' Statements of Assets and Liabilities. Realized gain or loss is recognized when the contract is closed equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed and recorded as realized gain (loss) on foreign currency transactions in the Funds' Statements of Operations. Risks may arise upon entering into forward foreign currency exchange contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At June 30, 1998, there were no open forward foreign currency exchange contracts. E. SECURITY TRANSACTIONS, RELATED INVESTMENT INCOME AND EXPENSES -- Security transactions are accounted for on the trade date (the date the buy or sell is executed). Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Interest income is increased by the accretion of discount. Discounts on zero coupon bonds, original issues, step bonds and payment in kind bonds are accreted according to the effective interest method. In determining net gain or loss on securities sold, the cost of securities are determined on the identified cost basis. Most expenses of the Trust can be directly attributed to a particular fund. Expenses which cannot be directly attributed are apportioned among the Funds based upon relative net assets. Investment income, realized and unrealized gains and losses, and the common expenses of a fund are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. Each class of shares differs in its respective distribution and certain other class specific fees and expense reductions. F. WHEN-ISSUED SECURITIES -- Each Fund may purchase securities on a when- issued basis. Securities purchased on a when-issued basis are purchased for delivery beyond the normal settlement period at a stated price and yield, and no income accrues to the Fund on such securities prior to delivery. Each Fund instructs the custodian to establish a segregated account in which it maintains liquid assets at least equal to the amount of its when-issued purchase commitments. Purchasing securities on a when-issued basis may involve a risk that the market price at the time of delivery may be lower than the agreed-upon purchase price, in which case there could be an unrealized loss at the time of delivery. At June 30, 1998, the Funds had no such commitments. G. FEDERAL INCOME TAXES -- Each Fund is a separate entity for federal income tax purposes. Each Fund intends to meet the requirements of the Internal Revenue Code applicable to regulated investment companies, and to distribute to its shareholders all of its net investment income and any net realized capital gains. Accordingly, no provision for federal income tax or excise tax has been made. H. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Each Fund pays its net investment income to shareholders annually. Distributions from net realized capital gains are declared and paid on an annual basis by all of the Funds. Income and capital gain distributions, if any, are determined in accordance with Federal income tax regulations which may differ from generally accepted accounting principles. These differences, which may result in reclassifications to the Fund's capital accounts to reflect income and gains available for distribution, are primarily due to differing book and tax treatments for litigation proceeds, foreign currency transactions, non- deductible organization costs, deferred losses due to wash sales and excise tax regulations and net operating losses. Some of these classifications may include temporary book and tax basis differences that will reverse in subsequent periods. Dividends from net investment income are determined on a class level. Capital gains are determined on a Fund level. I. ORGANIZATION EXPENSE AND DEFERRED REGISTRATION COSTS -- Amortization of initial registration costs incurred in 1996 and 1997 related to commencement of new funds and/or classes are amortized over 12 months. Organization costs incurred by the Worldwide Fund are being amortized over 60 months. 2. PURCHASES AND SALES OF SECURITIES -- (excluding long-term U.S. Government securities and short-term investments) for each Fund for the period ended June 30, 1998 were as follows: Purchases Sales ---------------- ------------- Core Value Fund ......................... $ 28,498,930 $ 23,014,895 Growth Fund ............................. 25,655,284 28,520,978 International Equity Fund ............... 54,313,239 59,054,601 Mid-Cap Growth Fund ..................... 1,332,988 1,324,543 Mid-Cap Value Fund ...................... 6,870,738 6,213,515 Small Cap Growth Fund ................... 20,070,252 5,976,767 Small Cap Value ......................... 245,761,748 134,663,648 Strategic Value Fund .................... 518,031 288,062 Worldwide Fund .......................... 2,512,647 3,547,418 Purchases and sales of long-term U.S. Government securities occurred in the Worldwide Fund and totaled $864,563 and $49,812, respectively. 3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES -- During the period ended June 30, 1998, the Funds incurred management fees payable to Loomis Sayles. Certain officers and employees of Loomis Sayles are also officers or Trustees of the Trust. Loomis Sayles' general partner is indirectly owned by NVEST, L.P., a publicly-traded limited partnership whose general partner is indirectly owned by Metropolitan Life Insurance Company. Separate management agreements for each Fund in effect during the period ended June 30, 1998 provided for fees at the following annual percentage rate of each Fund's average daily net assets: Annual Percentage Fund Rate ---- ---- Core Value Fund .................................................... 0.50% Growth Fund ........................................................ 0.50% International Equity Fund .......................................... 0.75% Mid-Cap Growth Fund ................................................ 0.75% Mid-Cap Value Fund ................................................. 0.75% Small Cap Growth Fund .............................................. 0.75% Small Cap Value Fund ............................................... 0.75% Strategic Value Fund ............................................... 0.50% Worldwide Fund ..................................................... 0.75% Loomis Sayles voluntarily agreed, for an indefinite period, to reduce its advisory fees and/or bear other expenses, to the extent necessary to limit the total operating expenses of each Fund to the following percentage rate of the Fund's average daily net assets: Maximum Expense Ratios --------------------------------------- Institutional Retail Admin Fund Class Class Class ---- ----- ----- ----- Core Value Fund ..................... 0.85% 1.10% -- Growth Fund ......................... 0.85% 1.10% -- International Equity Fund ........... 1.00% 1.25% -- Mid-Cap Growth Fund ................. 1.00% 1.25% -- Mid-Cap Value Fund .................. 1.00% 1.25% -- Small Cap Growth Fund ............... 1.00% 1.25% -- Small Cap Value Fund ................ 1.00% 1.25% 1.50% Strategic Value Fund ................ 1.00% 1.25% -- Worldwide Fund ...................... 1.00% 1.25% -- Loomis Sayles may change or terminate these voluntary agreements at any time, but the relevant prospectus would be supplemented at the time to describe the change. A. TRUSTEES FEES AND EXPENSES -- The Trust does not pay any compensation directly to its officers or Trustees who are directors, officers or employees of Loomis Sayles, NVEST or their affiliates. Each independent Trustee is compensated by the Trust on behalf of each Fund at the rate of $1,250 per Fund per year, plus travel expenses for each meeting attended. B. SHAREHOLDERS -- At June 30, 1998, Loomis Sayles Funded Pension Plan and the Loomis Sayles & Company, Employees Profit Sharing Retirement Plan held shares of beneficial interest in the Funds as follows: Profit Pension Sharing Plan Plan ---- ---- Core Value Fund ............................... 372,470 540,129 Growth Fund ................................... 136,863 736,966 International Equity Fund ..................... 1,002,404 457,250 Mid-Cap Growth Fund ........................... -- 148,757 Mid-Cap Value Fund ............................ -- 140,650 Small Cap Growth Fund ......................... 238,178 194,611 Small Cap Value Fund .......................... 159,082 963,681 Strategic Value Fund .......................... -- 70,825 Worldwide Fund ................................ 458,729 77,408 4. CAPITAL STOCK TRANSACTIONS -- The tables below summarize the transactions in Fund shares for the period indicated:
Loomis Sayles Core Value Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ------------------------------ ---------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 375,032 $ 7,004,093 921,281 $ 16,764,969 ---------- ------------ ---------- ------------- Issued in connection with the reinvestment of distributions .... 0 0 411,076 7,179,304 Redeemed ........................... (178,425) (3,369,345) (544,799) (9,494,995) ---------- ------------ ---------- ------------- Net change ......................... 196,607 $ 3,634,748 787,558 $ 14,449,278 ========== ============ ---------- ------------- Retail Class Shares Shares Amount Shares* Amount* - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 44,521 $ 856,260 107,737 $ 1,958,564 Issued in connection with the reinvestment of distributions .... 0 0 8,390 145,675 Redeemed ........................... (25,703) (484,432) (40,972) (699,525) ---------- ------------ ---------- ------------- Net change ......................... 18,818 $ 371,828 75,155 $ 1,404,714 ========== ============ ========== ============= *From January 2, 1997 (commencement of class operations). Loomis Sayles Growth Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ------------------------------ ---------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 70,497 $ 895,642 253,404 $ 3,601,402 Issued in connection with the reinvestment of distributions .... 0 0 616,053 7,726,539 Redeemed ........................... (428,782) (5,625,526) (1,261,701) (18,196,471) ---------- ------------ ---------- ------------- Net change ......................... (358,285) $ (4,729,884) (392,244) $ (6,868,530) ========== ============ ========== ============= Retail Class Shares Shares Amount Shares* Amount* - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 29,478 $ 354,709 76,184 $ 1,122,980 Issued in connection with the reinvestment of distributions .... 0 0 3,662 45,392 Redeemed ........................... (2,408) (30,864) (64,436) (926,300) ---------- ------------ ---------- ------------- Net change ......................... 27,070 $ 323,845 15,410 $ 242,072 ========== ============ ========== ============= *From January 2, 1997 (commencement of class operations). Loomis Sayles International Equity Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ------------------------------ ---------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 424,636 $ 5,385,895 784,236 $ 10,550,546 Issued in connection with the reinvestment of distributions .... 0 0 821,217 9,502,779 Redeemed ........................... (1,168,141) (14,266,890) (1,224,562) (16,864,605) ---------- ------------ ---------- ------------- Net change ......................... (743,505) $ (8,880,995) 380,891 $ 3,188,720 ========== ============ ========== ============= Loomis Sayles International Equity Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ------------------------------ ---------------------------------- Retail Class Shares Shares Amount Shares* Amount* - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 18,652 $ 239,509 61,345 $ 821,531 Issued in connection with the reinvestment of distributions .... 0 0 2,712 31,215 Redeemed ........................... (22,439) (285,012) (43,382) (569,458) ---------- ------------ ---------- ------------- Net change ......................... (3,787) $ (45,503) 20,675 $ 283,288 ========== ============ ========== ============= *From January 2, 1997 (commencement of class operations). Loomis Sayles MidCap Growth Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997* ------------------------------ ---------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 12,347 $ 143,669 177,686 $ 1,840,192 Issued in connection with the reinvestment of distributions .... 0 0 9,562 106,040 Redeemed ........................... (9,311) (106,395) (26,426) (302,973) ---------- ------------ ---------- ------------- Net change ......................... 3,036 $ 37,274 160,822 $ 1,643,259 ========== ============ ========== ============= Retail Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 1,682 $ 19,992 7,906 $ 88,646 Issued in connection with the reinvestment of distributions .... 0 0 390 4,320 Redeemed ........................... (1) (12) (1,893) (21,751) ---------- ------------ ---------- ------------- Net change ......................... 1,681 $ 19,980 6,403 $ 71,215 ========== ============ ========== ============= *From January 2, 1997 (commencement of operations). Loomis Sayles Mid-Cap Value Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997* ------------------------------ ---------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 47,284 $ 575,053 309,654 $ 3,352,605 Issued in connection with the reinvestment of distributions .... 0 0 26,150 296,025 Redeemed ........................... (31,017) (369,158) (11,607) (141,399) ---------- ------------ ---------- ------------- Net change ......................... 16,267 $ 205,895 324,197 $ 3,507,231 ========== ============ ========== ============= Retail Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 2,721 $ 32,300 13,686 $ 159,030 Issued in connection with the reinvestment of distributions .... 0 0 902 10,219 Redeemed ........................... (1) (13) (6) (79) ---------- ------------ ---------- ------------- Net change ......................... 2,720 $ 32,287 14,582 $ 169,170 ========== ============ ========== ============= *From January 2, 1997 (commencement of class operations). Loomis Sayles Small Cap Growth Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997* ------------------------------ ---------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 1,209,755 $ 14,743,000 365,308 $ 3,697,821 Issued in connection with the reinvestment of distributions .... 0 0 16,122 174,112 Redeemed ........................... (59,821) (734,715) (37,420) (420,264) ---------- ------------ ---------- ------------- Net change ......................... 1,149,934 $ 14,008,285 344,010 $ 3,451,669 ========== ============ ========== ============= Retail Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 64,606 $ 750,471 108,337 $ 1,114,195 Issued in connection with the reinvestment of distributions .... 0 0 4,792 51,662 Redeemed ........................... (17,923) (209,762) (12,312) (122,151) ---------- ------------ ---------- ------------- Net change ......................... 46,683 $ 540,709 100,817 $ 1,043,706 ========== ============ ========== ============= *From January 2, 1997 (commencement of operations). Loomis Sayles Small-Cap Growth Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ------------------------------ ---------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 5,562,589 $109,743,674 3,738,215 $ 74,208,026 Issued in connection with the reinvestment of distributions .... 0 0 1,901,950 34,745,871 Redeemed ........................... (1,292,786) (24,886,212) (1,877,683) (35,245,314) ---------- ------------ ---------- ------------- Net change ......................... 4,269,803 $ 84,857,462 3,762,482 $ 73,708,583 ========== ============ ========== ============= Retail Class Shares Shares Amount Shares* Amount* - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 1,682,778 $ 32,541,420 1,876,793 $ 37,883,528 Issued in connection with the reinvestment of distributions .... 0 0 225,201 4,104,426 Redeemed ........................... (422,151) (8,121,942) (256,863) (5,210,721) ---------- ------------ ---------- ------------- Net change ......................... 1,260,627 $ 24,419,478 1,845,131 $ 36,777,233 ========== ============ ========== ============= Admin Class Shares** Shares Amount - -------------------------- ------ ------ Issued from the sale of shares ..... 36,548 $ 674,729 Issued in connection with the reinvestment of distributions .... 0 0 Redeemed ........................... (178) (3,319) ---------- ------------ Net change ......................... 36,370 $ 671,410 ========== ============ *From January 2, 1997 (commencement of class operations). **From January 2, 1998 (commencement of class operations).
Loomis Sayles Strategic Value Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997* ------------------------------ ---------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 9,408 $ 116,110 83,725 $ 892,822 Issued in connection with the reinvestment of distributions .... 0 0 1,198 13,783 Redeemed ........................... (2,168) (29,291) (2,824) (34,372) ---------- ------------ ---------- ------------- Net change ......................... 7,240 $ 86,819 82,099 $ 872,233 ========== ============ ========== ============= Retail Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 0 $ 0 24,027 $ 269,111 Issued in connection with the reinvestment of distributions .... 0 0 360 4,143 Redeemed ........................... (1) (13) (616) (7,240) ---------- ------------ ---------- ------------- Net change ......................... (1) $ (13) 23,771 $ 266,014 ========== ============ ========== ============= *From January 2, 1997 (commencement of operations). Loomis Sayles Worldwide Fund ------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ------------------------------ ---------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 2,770 $ 28,379 220,662 $ 2,356,777 Issued in connection with the reinvestment of distributions .... 0 0 70,014 694,603 Redeemed ........................... (4,715) (47,381) (211,051) (2,199,192) ---------- ------------ ---------- ------------- Net change ......................... (1,945) $ (19,002) 79,625 $ 852,188 ========== ============ ========== ============= Retail Class Shares Shares Amount Shares* Amount* - ------------------- ------ ------ ------ ------ Issued from the sale of shares ..... 24,785 $ 266,317 1,794 $ 19,549 Issued in connection with the reinvestment of distributions .... 0 0 204 2,008 Redeemed ........................... (18,687) (197,605) 0 0 ---------- ------------ ---------- ------------- Net change ......................... 6,098 $ 68,712 1,998 $ 21,557 ========== ============ ========== =============
*From January 2, 1997 (commencement of class operations). [THIS PAGE INTENTIONALLY LEFT BLANK] - -------------------------------------------------------------------------------- BOARD OF TRUSTEES AND OFFICERS - -------------------------------------------------------------------------------- BOARD OF TRUSTEES - ------------------------------------------------------------------------------- Earl W. Foell Terry R. Lautenbach Daniel J. Fuss Michael T. Murray Richard S. Holway OFFICERS - ------------------------------------------------------------------------------- PRESIDENT Daniel J. Fuss EXECUTIVE VICE PRESIDENT TREASURER Robert J. Blanding Mark W. Holland VICE PRESIDENTS ASSISTANT TREASURERS James L. Carroll Philip R. Murray Jerome A. Castellini Nicholas H. Palmerino Mary C. Champagne E. John deBeer SECRETARY Paul H. Drexler Sheila M. Barry William H. Eigen, Jr. Christopher R. Ely ASSISTANT SECRETARY Quentin P. Faulkner Bonnie S. Thompson Philip C. Fine Kathleen C. Gaffney Isaac H. Green Dean A. Gulis Martha F. Hodgman John Hyll Jeffrey L. Meade Kent P. Newmark Scott S. Pape Jeffrey C. Petherick Lauren B. Pitalis Philip J. Schettewi David L. Smith Sandra P. Tichenor Jeffrey W. Wardlow Gregg D. Watkins Anthony J. Wilkins 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 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP One Post Office Square Boston, Massachusetts 02109 This report has been prepared for the shareholders of the Funds and is not authorized for distribution to prospective investors in the Funds unless it is accompanied or preceded by an effective prospectus. -----END PRIVACY-ENHANCED MESSAGE-----