-----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, BidTX3+MfRgOZBVEoOO6585zkqeYK99YNabyelVP/X+/XY+/tGxONblD8ZU7tJCu 4/vUZN2cVVWFDWpBo8jb4g== 0000950156-98-000554.txt : 19980831 0000950156-98-000554.hdr.sgml : 19980831 ACCESSION NUMBER: 0000950156-98-000554 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: 98699888 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 FIXED INCOME SEMI-ANNUAL LOOMIS SAYLES FUNDS FIXED INCOME FUNDS o o o SEMI-ANNUAL REPORT JUNE 30, 1998 o Bond Fund o Global Bond Fund o High Yield Fund o Intermediate Maturity Bond Fund o Investment Grade Bond Fund o Municipal Bond Fund o Short-Term Bond Fund o U.S. Government Securities 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................................................... 24 Statements of Assets and Liabilities....................................... 58 Statements of Operations................................................... 60 Statements of Changes in Net Assets........................................ 62 Financial Highlights....................................................... 70 Notes to Financial Statements.............................................. 84 Board of Trustees and Officers............................................. 97 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 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 increasing your 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 - ------------------------------------------------------------------------------ The first half of 1998 featured a general decline in interest rates despite strong economic growth and concerns over tightness in the labor market. The U.S. economy is in the sixth year of expansion and the Federal Reserve Bank is concerned about a potential jump in inflation. However, productivity growth and higher labor force participation rates have helped to keep inflation in check. For the first six months of the year, Asia's crisis may have made it difficult for Federal Reserve Bank Chairman Alan Greenspan to raise interest rates. First, raising rates would have intensified the Asian crisis and second, slower world economic growth relieved some of the pressure on the U.S. economy. 1ST QUARTER Yields bounced around during the first quarter and investors were left primarily with their coupon income. On the corporate side, supply jumped as companies replaced their high coupon debt with low coupon debt or issued new debt for business expansion. Despite a healthy supply of new bonds, the corporate and high yield markets posted strong results versus government bonds as investors looked for extra yield. The supply of U.S. Treasury bonds is decreasing as the federal government is a net redeemer of their bonds. In the first quarter, the Lehman Brothers Government/Corporate Bond Index gained 1.52%, the Merrill Lynch High Yield Master Index gained 2.79%. 2ND QUARTER Asia continued to make headlines in the second quarter and most 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 with testing of their new atomic capabilities. To compound this, Japan, Asia's largest economy, refused 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. The story during the second quarter was the "flight to quality" in the financial markets. U.S. Treasury bonds rallied and the 30-year Treasury bond hit all-time lows as investors focused on "safe" investments. A flat yield curve, where short-term yields are nearly the same as long-term yields, resulted from a decline in the yields for long-term bonds. The Lehman Brothers Government Bond Index posted a strong second quarter gain of 2.64%. Investment grade and high yield corporate bonds lagged and yield spreads widened versus Treasuries. Investors moved their money out of areas considered risky, such as Asia and emerging markets, resulting in a drop in value in those markets and a dramatic rise in the U.S. dollar as capital flowed to U.S. dollar-denominated assets. By the end of June, major stock indices had easily outpaced bonds. During the first half of 1998, the Standard and Poor's 500 Index gained 17.71%, the Dow Jones Industrial Index gained 13.20% and the Nasdaq Composite Index was up 20.66%. However, the rally in stocks was decidedly weaker among small cap stocks and the Russell 2000 Index gained only 4.93%. The Lehman Brothers Long Government Bond Index had a very respectable return of 6.25%. Shorter maturity bonds posted weaker results, with the Lehman Brothers 1-3 year Government/ Corporate Bond Index gaining 3.03% and the Merrill Lynch High Yield Master Index posting a 4.51% return. Overseas, many bond markets did well, but U.S. based investors saw their returns hurt by the rising value of the U.S. dollar. The Salomon Brothers World Government Bond Index gained 2.79% for the period. 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 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. However, the Asian crisis, the strike at GM and the old age of this economic expansion could put a damper on growth. On the other hand, Federal Reserve Bank Chairman Alan Greenspan, has noted that he is keeping a close eye on inflationary pressures. These factors will likely continue to affect the U.S. economy and financial markets but, as always, time will tell how well this balance can be kept. INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- TOTAL RETURN(1) VS. LIPPER CATEGORY AND LIPPER CATEGORY INDEX(2) - -------------------------------------------------------------------------------- GLOBAL HIGH BOND BOND YIELD - -------------------------------------------------------------------------------- YEAR TO DATE Loomis Sayles 4.29 1.86 1.61 Lipper 3.82 2.09 4.42 Rank 20 of 106 115 of 151 233 of 245 Percentile 19 77 96 Lipper Category Index 3.82 2.41 4.79 ONE YEAR Loomis Sayles 11.31 0.62 7.04 Lipper 10.51 4.67 11.45 Rank 33 of 99 127 of 140 201 of 215 Percentile 34 91 94 Lipper Category Index 10.65 5.18 12.11 THREE YEARS Loomis Sayles 12.90 11.79 N/A Lipper 8.66 7.61 Rank 1 of 61 17 of 108 Percentile 1 16 Lipper Category Index 8.57 7.67 FIVE YEARS Loomis Sayles 12.08 8.13 N/A Lipper 7.53 5.91 Rank 1 of 40 5 of 57 Percentile 1 9 Lipper Category Index 7.28 6.33 MODIFIED INCEPTION(3) Loomis Sayles 13.84 8.92 8.39 Lipper 9.93 7.22 11.95 Rank 1 of 22 4 of 29 162 of 170 Percentile 1 14 96 Lipper Category Index 9.15 7.51 12.40 ACTUAL INCEPTION(4) Loomis Sayles 13.70 8.84 8.93 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 returns shown reflect, 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) The 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 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.* - ------------------------------------------------------------------------------- INTERMEDIATE INVESTMENT SHORT- MATURITY GRADE MUNICIPAL TERM U.S. GOV'T. BOND BOND BOND BOND SECURITIES - -------------------------------------------------------------------------------- 3.68 3.50 2.16 3.22 4.42 3.61 3.82 2.26 2.82 3.62 111 of 233 80 of 106 150 of 246 9 of 102 14 of 194 48 76 61 9 8 3.77 3.82 2.45 2.90 3.54 6.71 11.81 8.88 7.49 14.68 9.42 10.51 8.39 6.28 10.17 210 of 212 17 of 99 59 of 233 5 of 101 10 of 181 99 18 26 5 6 9.66 10.65 8.67 6.50 9.96 N/A N/A 7.58 6.35 8.99 7.32 5.91 6.91 74 of 192 14 of 80 4 of 151 39 18 3 7.61 6.14 6.96 N/A N/A 5.89 5.90 7.55 5.77 5.34 5.72 50 of 124 9 of 50 2 of 96 41 18 3 5.99 5.49 5.58 6.80 12.02 7.61 5.94 10.20 8.17 9.38 7.53 5.37 7.48 182 of 192 2 of 89 35 of 90 7 of 34 1 of 62 95 3 39 21 1 8.41 9.44 7.60 5.64 7.20 6.80 12.02 7.65 5.94 10.20 (3) Modified inception reflects the nearest Lipper reporting period following actual inception. Lipper performance is reported as of month end. (4) Actual Inception Dates: Bond Fund .......................................... May 16, 1991 Global Bond Fund ................................... May 10, 1991 High Yield Fund .............................. September 11, 1996 Intermediate Maturity Bond Fund ............... December 31, 1996 Investment Grade Bond Fund .................... December 31, 1996 Municipal Bond Fund ................................ May 29, 1991 Short-Term Bond Fund ............................. August 3, 1992 U.S. Government Securities Fund .................... May 21, 1991 *Source: Lipper Analytical Services LOOMIS SAYLES BOND FUND - -------------------------------------------------------------------------------- [Photo of Daniel J. Fuss] Daniel J. Fuss KEY FUND FACTS [Photo of Kathleen C. Gaffney] Objective: High total investment return Kathleen C. Gaffney Strategy: Invests in debt securities, although up to 20% of total assets may be in preferred stocks. Fund Inception Date: 5/16/91 Commencement of Operations of Class: Institutional - 5/16/91, Retail - 1/2/97, Admin. - 1/2/98 Expense Ratio: Institutional - 0.74%, Retail - 1.00%, Admin. - 1.25% Total Net Assets (all classes): $1,682.6 MM PERFORMANCE SUMMARY The Institutional Class of the Loomis Sayles Bond Fund generated a 4.29% return for the first six months of 1998, slightly outperforming the 4.17% return of the Lehman Brothers Government/Corporate Bond Index. The Fund's structural and issue diversity allowed it to achieve returns close its benchmark despite lackluster performance from its Asian and emerging market holdings. We feel that these holdings offer attractive long-term opportunities and expect them to recover strongly. PORTFOLIO REVIEW The Fund's 16% exposure to select high yield issues in Asian and emerging market countries resulted in strong first quarter returns. This was followed by trailing returns during the quality-driven U.S. Treasury rally during May and June. The Fund's long U.S. Treasury positions performed well in this environment, partially offsetting the negative effects of our Asian and emerging market holdings. However, our emerging market holdings suffered as political, economic and social turmoil continued for the region. Domestic corporate issues, including the high yield segment, posted returns in line with the market for the first six months of the year. PORTFOLIO POSITIONING There have been no significant changes in the Bond Fund's portfolio position or investment strategy. Our focus remains on issue selection across a variety of global bond market segments. In our search for undervalued issues, we have exposure to bonds in emerging markets, domestic high yield and investment grade securities, and Canadian provincial and government bonds. The Fund maintains a significant position in U.S. Treasury issues as we believe they offer good yields while we search for more attractive issues. This structural diversity provides opportunity for growth while containing overall portfolio risk. In aggregate, our bond selections offer considerable yield advantage, call protection and value with the potential for significant bond price appreciation. /s/ Daniel J. Fuss /s/ Kathleen C. Gaffney Daniel J. Fuss Kathleen C. Gaffney AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998
YEAR SINCE TO DATE 1 YEAR 3 YEARS 5 YEARS INCEPTION(a) - -------------------------------------------------------------------------------------------------------------------- Loomis Sayles Bond Fund (Institutional) 4.29 11.31 12.90 12.08 13.70 Loomis Sayles Bond Fund (Retail) 4.15 10.94 N/A N/A 11.07 Loomis Sayles Bond Fund (Admin) 4.00 N/A N/A N/A 4.00 Lipper BBB Rated Corporate Bond Fund Index(b) 3.82 10.65 8.57 7.28 9.15 Lehman Brothers Government/Corp. Bond Index(c) 4.17 11.28 7.86 6.88 8.65
CUMULATIVE PERFORMANCE - MAY 31, 1991 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] LOOMIS LIPPER LEHMAN As of 5/31/91 10.00 10.00 10.00 Period Ended 6/30/91 09.85 09.97 09.99 9/30/91 10.52 10.55 10.56 12/31/91 10.93 11.14 11.13 3/31/92 11.29 11.03 10.96 6/30/92 11.84 11.47 11.40 9/30/92 12.40 12.04 11.96 12/31/92 12.49 12.04 11.97 3/31/93 13.45 12.67 12.53 6/30/93 14.16 13.08 12.90 9/30/93 14.79 13.55 13.33 12/31/93 15.27 13.58 13.29 3/31/94 15.04 13.13 12.88 6/30/94 14.61 12.88 12.72 9/30/94 14.87 12.98 12.78 12/31/94 14.65 12.96 12.83 3/31/95 15.73 13.58 13.46 6/30/95 17.41 14.53 14.34 9/30/95 18.16 14.88 14.61 12/31/95 19.33 15.58 15.29 3/31/96 19.14 15.26 14.94 6/30/96 19.45 15.33 15.01 9/30/96 20.21 15.66 15.27 12/31/96 21.32 16.24 15.74 3/31/97 21.27 16.13 15.60 6/30/97 22.51 16.80 16.17 9/30/97 23.90 17.46 16.74 12/31/97 24.02 17.91 17.27 3/31/98 24.94 18.22 17.53 6/30/98 25.05 18.59 17.99 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 Lehman Brothers Government/Corporate Bond Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. Inception date of the Retail and Admin Classes of shares are December 31, 1996 and January 2, 1998, respectively. (b): Source: Lipper Analytical Services. (c): Lehman Brothers Government/Corporate Bond Index is a composite of approximately 5,300 corporate and government issues with at least $100 million outstanding for government issues and $25 million for corporates, and greater than 1 year maturity. The index returns have not been lowered for ongoing management and operating expenses applicable to mutual fund investments. (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 GLOBAL BOND FUND - -------------------------------------------------------------------------------- [Photo of E. John deBeer] E. John deBeer KEY FUND FACTS Objective: High total investment return Strategy: Invests primarily in investment grade fixed income obligations (including convertibles) denominated in various currencies, including U.S. dollars or multicurrency units. Fund Inception Date: 5/10/91 Commencement of Operations of Class: Institutional - 5/10/91, Retail - 1/2/97 Expense Ratio: Institutional - 0.90%, Retail - 1.15% Total Net Assets (all classes): $36.3 MM PERFORMANCE SUMMARY The Institutional Class of the Global Bond Fund returned 1.86% for the first six months of 1998, slightly lagging the Lipper Average General World Income Fund at 2.09% and the Salomon Brothers World Government Bond Index at 2.79%. The Fund's long-term performance remains strong with the three-year annualized return of 11.79% outpacing the 7.61% for the Lipper Average and 2.84% for the Salomon Index. For the five year period, the Fund's 8.13% return surpassed the 5.91% return of the Lipper Average and the 6.33% return of the Salomon Index. PORTFOLIO REVIEW The Fund's exposure to Asia was the primary driver for performance during the first half of the year. Asian currencies and countries posted strong first quarter returns followed by weaker performance during the second quarter. While our basic portfolio strategy remained unchanged during the first six months of the year, we did add selectively to the Fund's Asian positions. Purchases included Bangkok Bank, Tenaga and three Japanese banks, all denominated in U.S. dollars. We also added to the Fund's Australian dollar and New Zealand dollar government positions. We deliberately kept average portfolio quality high, beginning at A1 on December 31 and ending at AA3 on June 30. PORTFOLIO POSITIONING Asia-related bonds of various types were the Fund's most important investments, representing about 36% of the portfolio on June 30. We believe the extremely bearish market sentiment has created some excellent values, despite the well-publicized economic slump. Approximately 40% of the Fund is invested in unhedged European bonds, as we believe Europe offers attractive opportunities and is somewhat overlooked due to investors' focus on Asia. /s/ E. John deBeer E. John deBeer AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998
YEAR SINCE TO DATE 1 YEAR 3 YEARS 5 YEARS INCEPTION(a) - -------------------------------------------------------------------------------------------------------------------- Loomis Sayles Global Bond Fund (Institutional) 1.86 0.62 11.79 8.13 8.84 Loomis Sayles Global Bond Fund (Retail) 1.78 0.36 N/A N/A 2.56 Lipper General World Income Fund Index(b) 2.41 5.18 7.67 6.33 7.51 Salomon Brothers World Government Bond Index(c) 2.79 4.31 2.84 6.33 8.63
CUMULATIVE PERFORMANCE - MAY 31, 1991 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] LOOMIS LIPPER SB WORLD As of 5/31/91 10.00 10.00 10.00 Period Ended 6/30/91 09.56 09.83 09.90 9/30/91 10.53 10.45 10.71 12/31/91 11.69 10.94 11.56 3/31/92 11.11 10.75 11.17 6/30/92 12.04 11.22 11.92 9/30/92 11.85 11.36 12.66 12/31/92 11.79 11.33 12.20 3/31/93 12.36 11.86 12.85 6/30/93 12.39 12.29 13.22 9/30/93 13.19 12.72 13.95 12/31/93 13.51 13.09 13.82 3/31/94 13.01 12.41 13.82 6/30/94 12.19 12.12 13.91 9/30/94 12.16 12.25 14.07 12/31/94 12.33 12.15 14.14 3/31/95 11.97 12.66 15.69 6/30/95 13.12 13.38 16.52 9/30/95 14.18 13.66 16.35 12/31/95 15.28 14.31 16.83 3/31/96 15.40 14.23 16.52 6/30/96 16.15 14.54 16.58 9/30/96 16.79 15.10 17.04 12/31/96 17.57 15.74 17.44 3/31/97 17.49 15.43 16.72 6/30/97 18.20 15.88 17.23 9/30/97 18.56 16.27 17.45 12/31/97 17.98 16.31 17.48 3/31/98 18.51 16.64 17.62 6/30/98 18.31 16.71 17.97 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 Salomon Brothers World Government Bond Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. Inception date of the Retail Class of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): Salomon Brothers World Government Bond Index is a capitalization-weighted index which tracks the performance of 14 government bond markets. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. (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 HIGH YIELD FUND - -------------------------------------------------------------------------------- [Photo of Daniel J. Fuss] Daniel J. Fuss KEY FUND FACTS [Photo of Kathleen C. Gaffney] Objective: High total investment return Kathleen C. Gaffney Strategy: Invests in debt securities, although up to 20% of total assets may be in preferred stocks and up to 10% in common stocks. The Fund normally invests at least 65% of its assets in fixed income securities of below investment grade quality. Fund Inception Date: 9/11/96 Commencement of Operations of Class: Institutional - 9/11/96, Retail - 1/2/97 Expense Ratio: Institutional - 0.75%, Retail - 1.00% Total Net Assets (all classes): $13.0 MM PERFORMANCE SUMMARY The first six months of 1998 were challenging for the High Yield Fund. The Institutional Class of the Fund returned 1.61% for the first half of the year, underperforming the 4.51% return of the Merrill Lynch High Yield Master Index. PORTFOLIO REVIEW In the U.S., mutual fund inflows continued to be strong, providing liquidity for the increased amount of new issuance in high yield markets. Demand for Treasuries and high quality corporate bonds pushed the yield on the 30-year Treasury to 5.62% at the end of the second quarter. After posting strong first quarter results, economic and political turmoil resurfaced throughout Asia, dampening returns on emerging market and Asian securities. This volatile environment resulted in a "flight to quality" affecting markets around the world. Strong returns from the telecommunications and cable/media sectors following AT&T's landmark acquisition of Telecommunications Inc., a leading cable provider, helped to partially offset lackluster results in the emerging markets. Solid gains were also made among select consumer cyclicals, which continued to benefit from a strong domestic economy and high consumer confidence. International convertible issues were negatively influenced by weak results in global equity markets. Reduced demand for technology hardware in Asia hurt the performance of some of our convertible issues. PORTFOLIO POSITIONING We remain committed to our current international exposure as a means of diversifying the Fund and adding additional yield. We are comfortable with the portfolio's overall structure and will continue to focus on discounted bonds with call protection that offer good yield advantage. We believe that, over the long-term, economic growth will return to the Pacific Rim and Latin America and we have positioned the Fund to take advantage of opportunities in these areas. /s/ Daniel J. Fuss /s/ Kathleen C. Gaffney Daniel J. Fuss Kathleen C. Gaffney AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998
YEAR SINCE TO DATE 1 YEAR INCEPTION(a) - ---------------------------------------------------------------------------------------------------------- Loomis Sayles High Yield Fund (Institutional) 1.61 7.04 8.93 Loomis Sayles High Yield Fund (Retail) 1.45 6.79 8.37 Lipper High Current Yield Fund Index(b) 4.79 12.11 12.40 Merrill Lynch High Yield Master Index(c) 4.51 11.40 12.32
CUMULATIVE PERFORMANCE - SEPTEMBER 30, 1996 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] LOOMIS LIPPER ML As of 9/30/96 10.00 10.00 10.00 Period Ended 12/31/96 10.17 10.35 10.39 3/31/97 10.15 10.39 10.50 6/30/97 10.76 10.94 11.00 9/30/97 11.66 11.54 11.43 12/31/97 11.33 11.71 11.73 3/31/98 12.08 12.22 12.05 6/30/98 11.51 12.27 12.25 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 September 11, 1996. Since Lipper and Merrill Lynch High Yield Master Index performance data is not available coincident with this date, comparative performance is presented from September 30, 1996. Inception date of the Retail Class of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): Merrill Lynch High Yield Master Index consists of fixed-rate, coupon-bearing bonds with an outstanding par which is greater than or equal to $50 million, a maturity range greater than or equal to one year and must be less than BBB/Baa3 rated but not in default. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. (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 INTERMEDIATE MATURITY BOND FUND - -------------------------------------------------------------------------------- [Photo of Anthony J. Wilkins] Anthony J. Wilkins KEY FUND FACTS Objective: High total investment return Strategy: Invests in investment grade debt securities, with a dollar-weighted average maturity between three and ten years. Fund Inception Date: 12/31/96 Commencement of Operations of Class: Institutional - 1/2/97, Retail - 1/2/97 Expense Ratio: Institutional - 0.55%, Retail - 0.80% Total Net Assets (all classes): $9.0 MM PERFORMANCE SUMMARY For the first half of 1998, the Institutional Class of the Intermediate Maturity Bond Fund returned 3.68%, outpacing the 3.47% return of the Lehman Brothers Government/Corporate Intermediate Bond Index. While the Fund gave back some of its first quarter gains during the second quarter, it finished ahead of its benchmark for the first six months of the year. PORTFOLIO REVIEW Strong returns from the telecommunications and cable/media sectors following AT&T's landmark acquisition of Telecommunications Inc., a leading cable provider, helped to partially offset lackluster returns in Latin American and Asian issues. Solid gains were also made in the finance sector, which continued to benefit from a strong domestic economy and high consumer confidence. Tobacco-related issues weakened over the first half of the year, as uncertainty remains over a national settlement agreement currently under negotiation. PORTFOLIO POSITIONING We have maintained the overall structure of the portfolio with a bias towards the longer end of our maturity parameters and good diversification among U.S. corporate, U.S. government and foreign issues. We are focusing on undervalued bonds with call protection that offer good yield advantage. The Fund's duration remains longer than that of its benchmark index to capture the higher yields offered by longer maturity corporate issues and to enhance capital appreciation if yield spreads narrow. /s/ Anthony J. Wilkins Anthony J. Wilkins AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998
YEAR SINCE TO DATE 1 YEAR INCEPTION(a) - ---------------------------------------------------------------------------------------------------------- Loomis Sayles Intermediate Maturity Bond Fund (Institutional) 3.68 6.71 6.80 Loomis Sayles Intermediate Maturity Bond Fund (Retail) 3.61 6.46 6.63 Lipper Intermediate Investment Grade Bond Fund Index(b) 3.77 9.66 8.41 Lehman Brothers Gov't/Corp. Intermediate Bond Index(c) 3.47 8.54 7.60
CUMULATIVE PERFORMANCE - DECEMBER 31, 1996 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] LOOMIS LIPPER LEHMAN As of 12/31/96 10.00 10.00 10.00 Period Ended 3/31/97 09.99 09.95 09.99 6/30/97 10.34 10.29 10.28 9/30/97 10.63 10.62 10.56 12/31/97 10.64 10.88 10.79 3/31/98 10.92 11.05 10.95 6/30/98 11.03 11.29 11.16 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): Lehman Brothers Government/Corporate Intermediate Bond Index consists a of those bonds held within the Lehman Brothers Government/Corporate Bond Index which have an average maturity of 1-10 years. The Lehman Brothers Government/Corporate Bond Index consists of approximately 5,300 corporate and government issues with at least $100 million outstanding for government issues and $25 million for corporates, and greater than 1 year maturity. The index returns have not been lowered for ongoing management and operating expenses applicable to mutual fund investments. (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 INVESTMENT GRADE BOND FUND - -------------------------------------------------------------------------------- [Photo of Daniel J. Fuss] Daniel J. Fuss KEY FUND FACTS Objective: High total investment return Strategy: Invests in investment grade debt securities, including convertibles, although up to 20% of assets may be in preferred stocks. Fund Inception Date: 12/31/96 Commencement of Operations of Class: Institutional - 1/2/97, Retail - 1/2/97 Expense Ratio: Institutional - 0.55%, Retail - 0.80% Total Net Assets (all classes): $4.4 MM PERFORMANCE SUMMARY The first half of 1998 was a challenging time for fixed income investors. Volatility in global markets brought uncertainty to investors, which meant that even purchasing high quality bonds did not guarantee positive results. The Institutional Class of the Investment Grade Bond Fund posted a 3.50% return in this environment, lagging the 4.17% return of the Lehman Brothers Government/Corporate Bond Index. PORTFOLIO REVIEW Home construction, realty, and consumer related issues turned in positive results for the first half of the year as they continued to benefit from historically low interest rates, strong domestic consumption, and mild inflation. Asian and Latin American spreads widened during the second quarter as countries such as Japan, Korea, and Thailand have yet to establish a credible plan to reform their troubled banking systems. While Canadian provincial and government debt issues posted modest gains, they underperformed on a relative basis as the U.S. dollar appreciated versus the Canadian dollar. The Fund benefited from its modest allocation to preferred issues, which comprised approximately 6.3% of the portfolio. PORTFOLIO POSITIONING There has been no significant change in the Fund's management strategy over the past six months. Our focus continues to be on uncovering longer maturity, call-protected bonds selling at a discount to par value. We believe that the portfolio remains well structured and offers significant yield versus comparable Treasuries. The Fund is diversified among U.S. government, U.S. corporate, foreign issues and other areas which should help to provide a buffer against general market movements. /s/ Daniel J. Fuss Daniel J. Fuss AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998
YEAR SINCE TO DATE 1 YEAR INCEPTION(a) - ---------------------------------------------------------------------------------------------------------- Loomis Sayles Investment Grade Bond Fund (Institutional) 3.50 11.81 12.02 Loomis Sayles Investment Grade Bond Fund (Retail) 3.24 11.45 11.69 Lipper BBB Rated Corporate Bond Fund Index(b) 3.82 10.65 9.44 Lehman Brothers Government/Corporate Bond Index(c) 4.17 11.28 9.34
CUMULATIVE PERFORMANCE - DECEMBER 31, 1996 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] LOOMIS LIPPER LEHMAN As of 12/31/96 10.00 10.00 10.00 Period Ended 3/31/97 09.94 09.93 09.91 6/30/97 10.60 10.35 10.27 9/31/97 11.28 10.75 10.63 12/31/97 11.45 11.03 10.98 3/31/98 11.74 11.22 11.14 6/30/98 11.85 11.45 11.43 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): Lehman Brothers Government/Corporate Bond Index consists of approximately 5,300 corporate and government issues with at least $100 million outstanding for government issues and $25 million for corporates, and greater than 1 year maturity. The index returns have not been lowered for ongoing management and operating expenses applicable to mutual fund investments. (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 MUNICIPAL BOND FUND - -------------------------------------------------------------------------------- [Photo of Martha F. Hodgman] Martha F. Hodgman KEY FUND FACTS Objective: Current income Strategy: Invests in fixed income securities the income of which is exempt from federal income tax. Fund Inception Date: 5/29/91 Commencement of Operations of Class: Institutional - 5/29/91 Expense Ratio: Institutional - 0.60%, Total Net Assets: $9.4 MM PERFORMANCE SUMMARY For the first half of 1998, the Loomis Sayles Municipal Bond Fund's 2.16% return performed in line with the Lipper General Municipal Bond Fund Average's 2.26% return and slightly lagged the 2.69% return of the Lehman Brothers Municipal Bond Index. The Fund's best performing issues were long-term discount bonds, such as our Foothills zero coupon bond of 2023. Short-term premium bonds were the weakest performing issues for the period. PORTFOLIO REVIEW Two competing forces have been difficult to ignore during the past six months and have held the municipal market in check. First, low interest rates enticed many issuers into the market. $142 billion has been issued so far this year, which is over 50% more than last year at this time. Second, demand barely kept pace with the supply so while other fixed income markets rallied for much of the first part of 1998, municipals lagged their taxable counterparts. Municipals appear particularly attractive to us at the present time since we anticipate that this relationship should revert to more traditional levels as new issue supply winds down over the balance of the year. PORTFOLIO POSITIONING We continue to maintain a portfolio of well-researched, undervalued securities with good call protection. We have added a few new names during this year's crush of new issuance including, Long Island Power Authority which came to market in mid-May with a $2.3 billion issue, and Pocahontas Parkway, which issued bonds for a new toll road in Richmond, Virginia. We have also pared back our holdings in pre-refunded securities as these issues have become relatively more expensive and we believe they have limited potential for price improvement. /s/ Martha F. Hodgman Martha F. Hodgman AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998
YEAR SINCE TO DATE 1 YEAR 3 YEARS 5 YEARS INCEPTION(a) - -------------------------------------------------------------------------------------------------------------------- Loomis Sayles Municipal Bond Fund 2.16 8.88 7.58 5.89 7.65 Lipper General Municipal Bond Fund Index(b) 2.45 8.67 7.61 5.99 7.60 Lehman Brothers Municipal Bond Index(c) 2.69 8.66 7.85 6.46 7.86
CUMULATIVE PERFORMANCE - MAY 31, 1991 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] LOOMIS LIPPER LEHMAN As of 5/31/91 10.00 10.00 10.00 Period Ended 6/30/91 10.01 09.97 09.99 9/30/91 10.42 10.37 10.38 12/31/91 10.78 10.73 10.73 3/31/92 10.78 10.74 10.76 6/30/92 11.24 11.20 11.17 9/30/92 11.54 11.45 11.46 12/31/92 11.79 11.68 11.67 3/31/93 12.18 12.15 12.11 6/30/93 12.63 12.56 12.50 9/30/93 13.07 12.99 12.92 12/31/93 13.15 13.13 13.11 3/31/94 12.42 12.41 12.39 6/30/94 12.58 12.48 12.52 9/30/94 12.61 12.54 12.61 12/31/94 12.44 12.34 12.43 3/31/95 13.26 13.22 13.31 6/30/95 13.50 13.49 13.63 9/30/95 13.83 13.82 14.02 12/31/95 14.50 14.48 14.60 3/31/96 14.23 14.22 14.42 6/30/96 14.28 14.30 14.53 9/30/96 14.60 14.64 14.87 12/31/96 14.98 15.00 15.24 3/31/97 14.90 14.94 15.21 6/30/97 15.44 15.46 15.73 9/30/97 15.96 15.95 16.21 12/31/97 16.46 16.40 16.65 3/31/98 16.58 16.58 16.84 6/30/98 16.81 16.81 17.09 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 Loomis Sayles Municipal Bond Fund is May 29, 1991. Since Lipper and Lehman Brothers Municipal Bond Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. (b): Source: Lipper Analytical Services. (c): Lehman Brothers Municipal Bond Index is computed from prices on approximately 21,000 bonds consisting of roughly 30% revenue bonds, 30% government obligations bonds, 27% insured and 13% prerefunded bonds. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. FUND AND MANAGER REVIEW - -------------------------------------------------------------------------------- LOOMIS SAYLES SHORT-TERM BOND FUND - -------------------------------------------------------------------------------- [Photo of John Hyll] John Hyll KEY FUND FACTS Objective: High total investment return Strategy: Invest in debt securities (including convertibles), although up to 20% may be invested in non-convertible preferred stocks. Fund Inception Date: 8/3/92 Commencement of Operations of Class: Institutional - 8/3/92, Retail - 1/2/97 Expense Ratio: Institutional - 0.50%, Retail - 0.75% Total Net Assets (all classes): $27.3 MM PERFORMANCE SUMMARY For the first six months of 1998, the Institutional Class of the Loomis Sayles Short-Term Bond Fund's 3.22% return outpaced the 3.03% return of the Lehman Brothers 1-3 year Government/Corporate Bond Index. PORTFOLIO REVIEW Our strategy of maintaining the Fund's maturity at the longer end of its three-year maximum proved beneficial as yields declined during the first half of the year. Bond prices have an inverse relationship to yields, with prices rising when yields decline and vice versa. During the second quarter, the Fund's heavy weighting in corporate bonds put a drag on performance when Treasuries rallied sharply. However, our higher than usual allocation to Treasuries buoyed performance during this period. The yield advantage of our mortgage holdings helped them to outperform equal-duration U.S. Treasury securities. PORTFOLIO POSITIONING As of June 30, 1998, the Fund holds approximately 43.3% in corporates, 10.4% in mortgages, 1.3% in asset backed securities, 36.6% in U.S. Treasuries and 8.4% in cash and equivalents. The average maturity is 2.89 years, which is near the longer end of its three-year maturity limit. The average yield-to- maturity is 5.93%. The Fund is positioned for an environment of moderate economic growth with low inflationary pressures. Our focus remains on the long end of the Fund's maturity range with an emphasis on government and corporate issues. We will continue to stress asset selection as we believe this strategy will enhance yield and provide the potential for capital appreciation. /s/ John Hyll John Hyll AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998
YEAR SINCE TO DATE 1 YEAR 3 YEARS 5 YEARS INCEPTION(a) - -------------------------------------------------------------------------------------------------------------------- Loomis Sayles Short-Term Bond Fund (Institutional) 3.22 7.49 6.35 5.90 5.94 Loomis Sayles Short-Term Bond Fund (Retail) 3.08 7.15 N/A N/A 6.69 Lipper Short Investment Grade Bond Fund Index(b) 2.90 6.50 6.14 5.49 5.64 Lehman Brothers 1-3 Year Government/Corp. Bond Index(c) 3.03 6.79 6.32 5.64 5.63
CUMULATIVE PERFORMANCE - AUGUST 31, 1992 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] LOOMIS LIPPER LEHMAN As of 8/31/92 10.00 10.00 10.00 10/31/92 09.92 09.94 09.94 11/30/92 09.88 09.96 09.93 Period Ended 12/31/92 09.95 10.03 10.02 3/31/93 10.26 10.31 10.24 6/30/93 10.40 10.47 10.36 9/30/93 10.55 10.66 10.51 12/31/93 10.63 10.79 10.58 3/31/94 10.59 10.72 10.52 6/30/94 10.61 10.70 10.53 9/30/94 10.77 10.80 10.63 12/31/94 10.82 10.78 10.63 3/31/95 11.18 11.07 10.99 6/30/95 11.52 11.44 11.35 9/30/95 11.68 11.61 11.52 12/31/95 11.97 11.90 11.80 3/31/96 11.99 11.91 11.85 6/30/96 12.08 12.03 11.97 9/30/96 12.27 12.24 12.18 12/31/96 12.53 12.48 12.41 3/31/97 12.58 12.57 12.49 6/30/97 12.89 12.85 12.77 9/30/97 13.20 13.10 12.87 12/31/97 13.43 13.30 13.23 3/31/98 13.64 13.49 13.42 6/30/98 13.86 13.68 13.63 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 August 3, 1992. Since Lipper and Lehman Brothers 1-3 Year Government/Corporate Bond Index performance data is not available coincident with this date, comparative performance is presented from August 31, 1992. Inception date of the Retail Class of shares is December 31, 1996. (b): Source: Lipper Analytical Services. (c): Lehman Brothers 1-3 Year Government/Corporate Bond Index consists of fixed rate debt issues rated investment grade or higher. All issues have at least one year to three years to maturity and an outstanding par value of at least $100 million for U.S. Gov't issues. 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 U.S. GOVERNMENT SECURITIES FUND - -------------------------------------------------------------------------------- [Photo of Kent P. Newmark] Kent P. Newmark KEY FUND FACTS Objective: High total investment return Strategy: Invests in securities issued or guaranteed by the U.S. Government or its authorities, agencies or instrumentalities Fund Inception Date: 5/21/91 Commencement of Operations of Class: Institutional - 5/21/91 Expense Ratio: Institutional - 0.60%, Total Net Assets: $21.3 MM PERFORMANCE SUMMARY The U.S. Government Securities Fund returned 4.42% for the first half of 1998, surpassing the 3.62% return of the average fund in Lipper's General U.S. Government category, and the 4.18% return of the Lehman Brothers Government Bond Index. A long duration and tactical swapping among Treasury and Federal Agency sectors helped performance. PORTFOLIO REVIEW We maintained the Fund's duration at 7.7 years when long-term yields fell below 5.70% in January. We also increased our mortgage position when the sector was out of favor. Lastly, we extended the Fund's duration to 8.1 years when long-term Treasuries yielded over 6% during the first quarter. The result was strong first quarter returns, as the yield advantage added to our performance in a relatively stable interest rate environment. During the second quarter, we made a series of successful timing decisions and ended the period with a portfolio duration of 7.3 years. Only one-third of the Fund was invested in long-term Treasuries, so we did not capture the full benefit of the strong June rally. PORTFOLIO POSITIONING As of June 30, approximately 33% percent of the portfolio was invested in Government National Mortgage Association (GNMA) securities, which currently offer higher yields than Treasuries. GNMAs tend to do well in a stable interest rate environment but post weaker returns when interest rates are declining. The Fund's commitment to Treasury Inflation Protected Securities (TIPS) is now approximately 23%. We believe this sector has been overlooked since inflation has been low, but should gain favor if inflation begins to rise. While the U.S. economy continues to be strong, Asian markets are experiencing a deep recession. The Federal Reserve Bank is not likely to raise interest rates in this environment and we believe that the Treasury market will remain stable or move slightly higher for the remainder of the year. /s/ Kent P. Newmark Kent P. Newmark AVERAGE ANNUAL RETURNS (%) - PERIODS ENDED JUNE 30, 1998
YEAR SINCE TO DATE 1 YEAR 3 YEARS 5 YEARS INCEPTION(a) - -------------------------------------------------------------------------------------------------------------------- Loomis Sayles U.S. Government Securities Fund 4.42 14.68 8.99 7.55 10.20 Lipper General U.S. Gov't Bond Fund Index(b) 3.54 9.96 6.96 5.58 7.20 Lehman Brothers Government Bond Index(c) 4.18 11.25 7.68 6.66 8.40
CUMULATIVE PERFORMANCE - MAY 31, 1991 TO JUNE 30, 1998 [A line graph depicting the following plot points appears here.] LOOMIS LIPPER LEHMAN As of 5/31/91 10.00 10.00 10.00 Period Ended 6/30/91 09.97 09.97 09.99 9/30/91 10.69 10.54 10.56 12/31/91 11.49 11.07 11.12 3/31/92 11.11 10.88 10.93 6/30/92 11.59 11.27 11.36 9/30/92 12.40 11.72 11.92 12/31/92 12.50 11.75 11.92 3/31/93 13.22 12.16 12.46 6/30/93 13.83 12.47 12.82 9/30/93 14.60 12.77 13.24 12/31/93 14.47 12.73 13.20 3/31/94 13.71 12.33 12.80 6/30/94 13.33 12.09 12.65 9/30/94 13.32 12.11 12.71 12/31/94 13.56 12.12 12.75 3/31/95 14.33 12.67 13.35 6/30/95 15.37 13.37 14.18 9/30/95 15.84 13.61 14.43 12/31/95 16.68 14.18 15.09 3/31/96 15.90 13.84 14.75 6/30/96 15.91 13.85 14.82 9/30/96 16.19 14.07 15.07 12/31/96 16.90 14.48 15.51 3/31/97 16.49 14.37 15.38 6/30/97 17.35 14.88 15.91 9/30/97 18.25 15.36 16.45 12/31/97 19.06 15.80 16.99 3/31/98 19.31 16.01 17.25 6/30/98 19.90 16.36 17.70 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 Loomis Sayles U.S. Government Securities Fund is May 21, 1991. Since Lipper and Lehman Brothers Government Bond Index performance data is not available coincident with this date, comparative performance is presented from May 31, 1991. (b): Source: Lipper Analytical Services. (c): Lehman Brothers Government Bond Index is composed of all publicly issued, nonconvertible, domestic debt of the U.S. government or any of its agencies, quasi- federal corporations, or corporate debt guaranteed by the U.S. government. The index returns have not been reduced for ongoing management and operating expenses applicable to mutual fund investments. LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- LOOMIS SAYLES BOND FUND - -------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED)
FACE AMOUNT VALUE (A) - ---------------------------------------------------------------------------------------------------- BONDS AND NOTES -- 96.0% of Net Assets NON-CONVERTIBLE BONDS -- 88.8% Airlines -- 0.0% NWA Trust, 9.360%, 3/10/06 ...................... USD 748,800 $ 839,721 --------------- Banks/Savings & Loans -- 0.4% First Union Institutional Trust, 7.850%, 1/01/27 2,000,000 2,124,360 First Union Institutional Trust, 8.040%, 12/01/26. 5,000,000 5,427,415 --------------- 7,551,775 --------------- Broadcasting -- 0.6% CBS, Inc., 7.125%, 11/01/23 ..................... 1,435,000 1,370,439 Fox Family Worldwide, Inc., Zero Coupon Bond, 11/ 01/07 (step to 10.250% on 11/01/02) (b) ....... 13,000,000 8,450,000 --------------- 9,820,439 --------------- Canadian -- 17.9% Canadian Government, Zero Coupon Bond, 6/01/21 .. CAD 115,650,000 22,199,731 Canadian Government, Zero Coupon Bond, 6/01/22 .. 11,050,000 2,015,312 Canadian Government, Zero Coupon Bond, 6/01/25 .. 302,435,000 47,440,379 Clearnet Communications, Inc., Zero Coupon Bond, 8/13/07 (step to 11.750% on 8/13/02) (b) ...... 40,000,000 17,965,905 Clearnet Communications, Inc., Zero Coupon Bond, 5/15/08 (step to 10.400% on 5/15/03) (b) ...... USD 1,250,000 502,952 Hydro Quebec, Zero Coupon Bond, 8/15/20 ......... CAD 35,000,000 6,264,249 International Semi-Tech Corp., Zero Coupon Bond, 8/15/03 (step to 11.500% on 8/15/00) (b) ...... USD 15,525,000 4,657,500 MetroNet Communications Corp., Zero Coupon Bond, 6/15/08 (step to 9.500% on 6/15/03) 144A (b)(c). 1,500,000 928,125 Milit Air, Inc., 5.750%, 6/30/19 144A (c) ....... CAD 6,950,000 4,735,809 New Brunswick FM Project, Zero Coupon Bond, 11/30/27 (step to 6.470% on 5/30/03) 144A (b)(c) 10,000,000 5,263,262 Province of Alberta, 5.930%, 9/16/16 ............ 28,018,127 19,658,164 Province of British Columbia, Zero Coupon Bond, 8/23/13 ........................................ 33,000,000 9,378,202 Province of British Columbia, Zero Coupon Bond, 6/09/14 ........................................ 10,000,000 2,707,816 Province of British Columbia, Zero Coupon Bond, 9/05/20 ........................................ 54,528,000 10,030,228 Province of British Columbia, Zero Coupon Bond, 6/09/22 ........................................ 96,208,000 15,955,555 Province of British Columbia, Zero Coupon Bond, 8/19/22 ........................................ 25,037,000 4,104,538 Province of British Columbia, Zero Coupon Bond, 9/08/23 ........................................ 37,950,000 5,847,004 Province of British Columbia, Zero Coupon Bond, 8/23/24 ........................................ 122,250,000 17,803,600 Province of British Columbia, Zero Coupon Bond, 11/19/27 ...................................... 41,600,000 4,934,418 Province of British Columbia, 7.875%, 11/30/23 .. 1,250,000 1,058,006 Province of British Columbia, 8.000%, 9/08/23 ... 7,000,000 6,109,381 Province of Manitoba, Zero Coupon Bond, 7/22/13 . 2,500,000 706,897 Province of Manitoba, Zero Coupon Bond, 3/05/31 . 36,929,000 3,729,466 Province of Manitoba, 6.500%, 9/22/17 ........... 34,300,000 25,512,880 Province of Manitoba, 7.750%, 12/22/25 .......... 39,245,000 34,039,218 Province of Newfoundland, 6.150%, 4/17/28 ....... 2,500,000 1,742,999 Province of Ontario, Zero Coupon Bond, 7/13/22 .. 13,000,000 2,167,478 Province of Saskatchewan, Zero Coupon Bond, 4/10/14 ........................................ CAD 19,000,000 5,195,277 Province of Saskatchewan, 8.750%, 5/30/25 ....... 11,735,000 11,148,430 Province of Saskatchewan (Certificate of Deposit), Zero Coupon Bond, 2/04/22 ..................... 2,350,000 403,488 Province of Saskatchewan (Certificate of Deposit), Zero Coupon Bond, 5/30/25 ..................... 25,055,000 3,543,114 Rogers Cablesystems Ltd., 9.650%, 1/15/14 ....... 5,550,000 4,355,964 --------------- 302,105,347 --------------- Communications -- 0.9% Arch Communications Group, Inc., Zero Coupon Bond, 3/15/08 (step to 10.875% on 3/15/01) (b) ...... USD 17,435,000 9,937,950 Century Communications Corp., 8.375%, 11/15/17 .. 5,000,000 4,787,500 --------------- 14,725,450 --------------- Computers -- 2.0% Apple Computer, Inc., 6.500%, 2/15/04 ........... 14,945,000 13,749,400 Seagate Technology, Inc., 7.370%, 3/01/07 ....... 6,000,000 5,933,580 Seagate Technology, Inc., 7.450%, 3/01/37 ....... 3,850,000 3,781,894 Seagate Technology, Inc., 7.875%, 3/01/17 ....... 10,250,000 9,910,212 Streamlogic Corp., 14.000%, 10/07/98 (d) (e) .... 139,170 6,958 --------------- 33,382,044 --------------- Electronics -- 1.3% Pioneer Standard Electronics, Inc., 8.500%, 8/01/06 ........................................ 1,000,000 1,075,596 Westinghouse Electric Corp., 7.875%, 9/01/23 .... 20,350,000 20,915,119 --------------- 21,990,715 --------------- Entertainment -- 4.4% Time Warner Entertainment Co., 6.875%, 6/15/18 .. 8,710,000 8,743,969 Time Warner Entertainment Co., 6.950%, 1/15/28 .. 36,900,000 37,005,534 Time Warner Entertainment Co., 7.570%, 2/01/24 .. 27,170,000 29,224,595 --------------- 74,974,098 --------------- Environmental Services -- 0.1% Envirotest Systems Corp., 9.625%, 4/01/03 ....... 1,525,000 1,494,500 --------------- Food & Beverage -- 0.3% Borden, Inc., 7.875%, 2/15/23 ................... 5,500,000 5,410,790 --------------- Foreign Government/Agency -- 6.0% BCO Central Costa Rica, 6.250%, 5/21/10 ......... 3,200,000 2,848,000 Escom, 11.000%, 6/01/08 ......................... ZAR 26,500,000 3,419,538 Republic of Argentina, 6.625%, 3/31/05 (f) ...... USD 1,116,250 985,091 Republic of Brazil, 10.125%, 5/15/27 ............ 42,481,000 36,576,141 Republic of Brazil C Bond, 8.000%, 4/15/14 PIK (g) 34,342,325 25,327,465 Republic of Ecuador, 6.625%, 2/27/15 PIK (f) (g) 6,175,293 3,693,442 Republic of Korea, 8.875%, 4/15/08 .............. 2,000,000 1,808,900 Republic of South Africa, 12.000%, 2/28/05 ...... ZAR 20,000,000 2,893,348 Republic of South Africa, 12.500%, 12/21/06 ..... 42,450,000 6,143,800 Republic of South Africa, 13.500%, 9/15/15 ...... ZAR 14,850,000 2,219,490 Republic of Venezuela, 9.250%, 9/15/27 .......... USD 19,150,000 14,793,375 --------------- 100,708,590 --------------- Foreign Issuer -- 10.1% Bangko Sentral Pilipinas, 8.600%, 6/15/27 ....... 10,550,000 9,073,000 Bangkok Bank Public Co. Ltd., 8.250%, 3/15/16 144A(c) 5,370,000 4,020,036 Bangkok Bank Public Co. Ltd., 8.375%, 1/15/27 144A(c) 31,275,000 22,874,222 Compania de Transporte Energia, 9.250%, 4/01/08 144A (c) .............................. 2,250,000 2,193,750 Espirito Santo-Escelsa, 10.000%, 7/15/07 144A (c). 2,000,000 1,680,000 Export Import Bank of Korea, 6.375%, 2/15/06 .... 1,000,000 751,602 Hyundai Motor Co. Ltd., 7.600%, 7/15/07 144A (c) 4,000,000 3,112,480 Hyundai Semiconductor, 8.625%, 5/15/07 144A (c) . 500,000 365,000 Industrial Finance Corp. of Thailand, 7.375%, 1/14/07 144A (c) .............................. 1,500,000 1,312,875 Korea Electric Power Corp., 6.750%, 8/01/27 ..... 1,500,000 1,193,265 Korea Electric Power Corp., 7.000%, 2/01/27 ..... 1,500,000 1,141,770 Korea Electric Power Corp., 7.400%, 4/01/16 ..... 11,903,375 9,544,007 Korea Electric Power Corp., 7.750%, 4/01/13 ..... 8,975,000 6,635,397 Multicanal SA, 10.500%, 4/15/18 144A (c) ........ 4,000,000 3,720,000 National Power Corp., 9.625%, 5/15/28 ........... 3,765,000 3,463,800 Pan Pacific Industrial Investment Plc, Zero Coupon Bond, 4/28/07 144A (c) ........................ 8,760,000 3,370,322 Perez Companc SA, 8.125%, 7/15/07 144A (c) ...... 3,590,000 3,275,875 Petroleos Mexicanos, Medium Term, 8.625%, 12/01/23 3,100,000 2,669,875 Philippine Long Distance Telephone Co., 8.350%, 3/06/17 ........................................ 4,950,000 4,220,212 Pindo Deli Finance Mauritius Ltd., 10.750%, 10/01/07 ....................................... 7,750,000 5,425,000 Pindo Deli Finance Mauritius Ltd., 10.875%, 10/01/27 ....................................... 15,500,000 9,145,000 Pindo Deli Finance Mauritius Ltd., 11.750%, 10/01/17 ....................................... 1,500,000 1,003,125 Pohang Iron & Steel Co. Ltd., 7.125%, 11/01/06 .. 1,500,000 1,157,835 Pycsa Panama SA, 10.280%, 12/15/12 144A (c) ..... 2,000,000 1,887,500 Quezon Power Philippines Co., 8.860%, 6/15/17 ... 7,675,000 6,602,035 Samsung Electronics Co. Ltd., 7.450%, 10/01/02 144A (c) ....................................... 1,500,000 1,212,915 Samsung Electronics Co. Ltd., 7.700%, 10/01/27 144A (c) ....................................... 12,500,000 8,125,000 Samsung Electronics Co. Ltd., 8.500%, 11/01/02 144A (c) ....................................... 1,000,000 906,820 Siam Commercial Bank Public Co., 7.500%, 3/15/06 144A (c) .............................. 7,000,000 5,749,660 Tata Electric Co., 8.500%, 8/19/17 144A (c) ..... 9,000,000 7,560,000 Tenaga Nasional Berhad, 7.500%, 11/01/25 144A (c). 6,825,000 5,098,685 TFM SA de CV, Zero Coupon Bond, 6/15/09 (step to 11.750% on 6/15/02) (b) ....................... 4,650,000 2,906,250 Thai Farmers Bank Plc, 8.250%, 8/21/16 144A (c) . 7,740,000 5,450,972 Tjiwi Kimia Mauritius Ltd., 10.000%, 8/01/04 .... 16,200,000 11,502,000 Total Access Communication Public Co. Ltd., 7.625%, 11/04/01 144A (c) ..................... USD 5,400,000 4,104,000 Total Access Communication Public Co. Ltd., 8.375%, 11/04/06 144A (c) ..................... 10,575,000 7,614,000 --------------- 170,068,285 --------------- Government Agencies -- 2.3% Federal Home Loan Mortgage Corp., 6.000%, 4/15/28. 5,000,000 4,760,900 Federal National Mortgage Association, Zero Coupon Bond, 10/29/07 ................................ NZD 103,925,000 29,216,057 Federal National Mortgage Association, 5.000%, 9/25/22 ....................................... USD 1,000,000 945,000 Federal National Mortgage Association, 6.000%, 11/25/08 PIK (g) ...................... 3,848,428 3,726,933 --------------- 38,648,890 --------------- Health Care -- Services -- 0.3% Columbia/HCA Healthcare Corp., 7.050%, 12/01/27 . 3,500,000 3,135,195 Columbia/HCA Healthcare Corp., 7.580%, 9/15/25 .. 1,300,000 1,243,372 --------------- 4,378,567 --------------- Home Builders -- 0.4% Pulte Corp., 7.300%, 10/24/05 ................... 1,000,000 1,019,340 Pulte Corp., 7.625%, 10/15/17 ................... 5,000,000 5,259,700 --------------- 6,279,040 --------------- Oil & Gas -- 1.2% Chesapeake Energy Corp., 8.500%, 3/15/12 ........ 2,075,000 1,940,125 R&B Falcon Corp., 7.375%, 4/15/18 144A (c) ...... 14,000,000 14,258,580 Seagull Energy Corp., 7.500%, 9/15/27 ........... 3,850,000 3,838,604 --------------- 20,037,309 --------------- Rail -- Transport -- 0.0% Missouri Pacific Railroad Co., 5.000%, 1/01/45 .. 108,000 69,525 --------------- Real Estate Investment Trusts -- 2.2% AMB Property Corp., 7.500%, 6/30/18 ............. 7,500,000 7,536,150 First Industrial, 7.500%, 12/01/17 .............. 5,000,000 5,101,830 Highwoods Forsyth LP, 7.500%, 4/15/18 ........... 3,750,000 3,824,100 Security Capital Group, Inc., 7.700%, 6/15/28 144A (c) ........................................... 16,725,000 16,920,682 Trinet Corporate Realty Trust, 7.700%, 7/15/17 .. 4,000,000 4,157,240 --------------- 37,540,002 --------------- Retail -- General -- 1.9% Bradlees, Inc., 9.250%, 3/01/03 (d) (e) ......... 250,000 1,875 Bradlees, Inc., 11.000%, 8/01/02 (d) (e) ........ 250,000 2,500 Dillon Read Structured Finance Corp., 6.660%, 8/15/10 ....................................... 2,533,264 2,349,703 Dillon Read Structured Finance Corp., 7.430%, 8/15/18 ....................................... 2,000,000 1,862,500 Dillon Read Structured Finance Corp., 7.600%, 8/15/07 ....................................... 223,465 217,878 Dillon Read Structured Finance Corp., 8.375%, 8/15/15 ....................................... 2,425,000 2,421,969 Dillon Read Structured Finance Corp., 8.550%, 8/15/19 ....................................... 500,000 500,625 K Mart Corp., 7.950%, 2/01/23 ................... 14,365,000 14,472,737 Penn Traffic Co., 8.625%, 12/15/03 .............. 1,000,000 750,000 Penn Traffic Co., 9.625%, 4/15/05 ............... 17,083,000 6,619,663 Woolworth Corp., 8.500%, 1/15/22 ................ 3,000,000 3,308,910 --------------- 32,508,360 --------------- Supranational -- 3.3% International Bank for Reconstruction & Development, Zero Coupon Bond, 8/20/07 ........ NZD 159,375,000 44,456,807 International Bank for Reconstruction & Development, 8.000%, 5/23/07 .................. 19,000,000 10,481,462 --------------- 54,938,269 --------------- Taxable Municipal -- 0.1% Orange County, California Pension Obligation, Zero Coupon Bond, 9/01/16 .......................... USD 5,000,000 1,561,000 --------------- Telecommunications -- 7.1% Nextel Communications, Inc., Zero Coupon Bond, 10/31/07 (step to 9.750% on 10/31/02) (b) ..... 29,160,000 19,026,900 Nextel Communications, Inc., Zero Coupon Bond, 2/ 15/08 (step to 9.950% on 2/15/03) 144A (b) (c) 1,800,000 1,147,500 Nextel International, Inc., Zero Coupon Bond, 4/ 15/08 (step to 12.125% on 4/15/03) 144A (b) (c). 19,650,000 11,298,750 RCN Corp., Zero Coupon Bond, 10/15/07 (step to 11.125% on 10/15/02) (b) ...................... 4,350,000 2,794,875 RCN Corp., Zero Coupon Bond, 2/15/08 (step to 9.800% on 2/15/03) (b) ........................ 2,500,000 1,500,000 RCN Corp., Zero Coupon Bond, 7/01/08 (step to 11.000% on 7/01/03) (b) ....................... 15,650,000 9,311,750 TCI Communications, Inc., 7.125%, 2/15/28 ....... 14,700,000 15,346,800 TCI Communications, Inc., 7.875%, 8/01/13 ....... 12,850,000 14,340,985 TCI Communications, Inc., 7.875%, 2/15/26 ....... 35,252,000 40,073,064 Teligent, Inc., Zero Coupon Bond, 3/01/08 (step to 11.500% on 3/01/03) 144A (b) (c) .............. 7,500,000 4,143,750 --------------- 118,984,374 --------------- Textile & Apparel -- 0.9% Burlington Industries, Inc., 7.250%, 8/01/27 .... 9,000,000 9,284,760 Fruit of the Loom, Inc., 7.375%, 11/15/23 ....... 3,000,000 2,715,360 Kellwood Co., 7.625%, 10/15/17 .................. 2,500,000 2,648,825 Phillips Van Heusen Corp., 7.750%, 11/15/23 ..... 1,000,000 928,570 --------------- 15,577,515 --------------- Tobacco -- 5.4% Loews Corp., 7.000%, 10/15/23 ................... USD 3,500,000 3,389,365 Philip Morris Cos., Inc., 7.750%, 1/15/27 ....... 48,410,000 51,782,241 RJR Nabisco, Inc., 7.625%, 9/15/03 .............. 12,550,000 12,477,837 RJR Nabisco, Inc., 8.500%, 7/01/07 .............. 1,550,000 1,609,381 RJR Nabisco, Inc., 8.750%, 8/15/05 .............. 5,500,000 5,735,785 RJR Nabisco, Inc., 9.250%, 8/15/13 .............. 14,143,000 15,255,488 --------------- 90,250,097 --------------- Transportation -- 0.1% American President Cos. Ltd., 8.000%, 1/15/24 ... 1,425,000 1,005,509 --------------- U.S. Government -- 17.6% U.S. Treasury Bonds, 6.000%, 2/15/26 ............ 182,775,000 190,142,660 U.S. Treasury Bonds, 6.250%, 8/15/23 ............ 71,200,000 76,228,144 U.S. Treasury Bonds, 6.500%, 11/15/26 ........... 18,750,000 20,821,313 U.S. Treasury Strips, Zero Coupon Bond, 8/15/20 . 14,000,000 3,960,040 U.S. Treasury Strips, Zero Coupon Bond, 8/15/23 . 19,000,000 4,606,550 --------------- 295,758,707 --------------- Utilities -- 2.0% AES Corp., 8.875%, 11/01/27 ..................... 5,000,000 4,937,500 Boston Edison Co., 7.800%, 3/15/23 .............. 1,000,000 1,059,981 Comed Financing II, 8.500%, 1/15/27 ............. 5,000,000 5,352,900 Commonwealth Edison Co., 4.750%, 12/01/11 ....... 901,000 757,984 KN Capital Trust, 7.630%, 4/15/28 ............... 15,750,000 16,137,135 Mobile Energy Services Co. LLC, 8.665%, 1/01/17 . 6,064,985 3,093,143 Niagara Mohawk Power Corp., Zero Coupon Bond, 7/01/10 (step to 8.500% on 7/01/03) (b) ....... 2,500,000 1,728,125 --------------- 33,066,768 --------------- TOTAL NON-CONVERTIBLE BONDS (Identified Cost $1,448,604,565) ............... 1,493,675,686 --------------- CONVERTIBLE BONDS -- 7.2% Auto & Related -- 0.1% Exide Corp., 2.900%, 12/15/05 144A (c) .......... 3,375,000 2,084,063 --------------- Canadian -- 0.1% Rogers Communications, Inc., 2.000%, 11/26/05 ... 3,000,000 1,860,000 --------------- Chemicals -- Major -- 0.1% FMC Corp., 6.750%, 1/16/05 ...................... 1,325,000 1,245,500 Hexcel Corp., 7.000%, 8/01/11 ................... 675,000 695,250 --------------- 1,940,750 --------------- Commercial Services -- 0.0% Molten Metal Technology, Inc., 5.500%, 5/01/06 (d) 4,600,000 184,000 Molten Metal Technology, Inc., 5.500%, 5/01/06 144A (c) (d) .................................. 3,000,000 120,000 --------------- 304,000 --------------- Computers -- 0.9% Apple Computer, Inc., 6.000%, 6/01/01 ........... USD 3,190,000 3,610,666 Cray Research, Inc., 6.125%, 2/01/11 ............ 635,000 517,525 Maxtor Corp., 5.750%, 3/01/12 ................... 3,100,000 2,170,000 Read Rite Corp., 6.500%, 9/01/04 ................ 2,225,000 1,401,750 Silicon Graphics, Inc., 5.250%, 9/01/04 ......... 625,000 533,200 Softkey International, Inc., 5.500%, 11/01/00 ... 6,965,000 6,660,281 Telxon Corp., 5.750%, 1/01/03 ................... 225,000 266,906 --------------- 15,160,328 --------------- Diversified Operations -- 0.1% Ogden Corp., 5.750%, 10/20/02 ................... 1,750,000 1,719,375 Ogden Corp., 6.000%, 6/01/02 .................... 500,000 495,000 --------------- 2,214,375 --------------- Electronics -- 0.8% Cirrus Logic, Inc., 6.000%, 12/15/03 144A (c) ... 1,600,000 1,266,000 Cypress Semiconductor Corp., 6.000%, 10/01/02 ... 1,000,000 875,000 EDO Corp., 7.000%, 12/15/11 ..................... 434,000 347,200 Kent Electronics Corp., 4.500%, 9/01/04 ......... 5,850,000 4,782,375 Lam Research Corp., 5.000%, 9/01/02 ............. 4,570,000 3,747,400 National Semiconductor Corp., 6.500%, 10/01/02 .. 500,000 456,250 Richardson Electronics Ltd., 7.250%, 12/15/06 ... 450,000 432,000 Thermedics, Inc., Zero Coupon Bond, 6/01/03 ..... 950,000 712,500 Zenith Corp., 6.250%, 4/01/11 (d) ............... 2,405,000 610,269 --------------- 13,228,994 --------------- Environmental Services -- 0.3% Air & Water Technologies Corp., 8.000%, 5/15/15 . 1,450,000 1,203,500 Thermo TerraTech, Inc., 4.625%, 5/01/03 ......... 400,000 375,000 Thermo TerraTech, Inc., 4.625%, 5/01/03 144A (c) 3,890,000 3,486,412 --------------- 5,064,912 --------------- Foreign Issuer -- 2.5% Advanced Agro Public Co., 3.500%, 6/17/01 ....... 1,625,000 1,462,500 APP Finance VII Mauritius Ltd., 3.500%, 4/30/03 . 1,250,000 990,625 APP Finance VII Mauritius Ltd., 3.500%, 4/30/03 144A (c) 8,125,000 6,439,062 Bangkok Bank Public Co. Ltd., 3.250%, 3/03/04 ... 10,250,000 3,331,250 Banpu Public Co., 2.750%, 4/10/03 ............... 5,030,000 3,445,550 Burns, Philp, 5.500%, 4/30/04 ................... 4,480,000 2,553,600 Empresas ICA Sociedad, 5.000%, 3/15/04 .......... 3,700,000 2,640,875 Loxley Public Co. Ltd., 2.500%, 4/04/01 ......... 7,700,000 2,464,000 Piltel, 1.750%, 7/17/06 ......................... 1,350,000 1,049,625 Samsung Corp., 0.250%, 6/26/06 .................. 3,150,000 2,898,000 Samsung Electronics Co. Ltd., Zero Coupon Bond, 12/31/07 ...................................... 4,175,000 3,256,500 Sappi BVI Finance, 7.500%, 8/01/02 .............. 4,400,000 4,103,000 Siam Commercial Bank Public Co., 3.250%, 1/24/04 3,075,000 1,045,500 Ssangyong Oil Refining Co., Inc., 3.000%, 12/31/04 1,930,000 907,100 Foreign Issuer -- continued Ssangyong Oil Refining Co., Inc., 3.750%, 12/31/08 USD 330,000 $ 262,350 Telekom Malaysia Berhad, 4.000%, 10/03/04 ....... 600,000 438,000 Telekom Malaysia Berhad, 7.875%, 8/01/25 144A (c). 1,900,000 1,530,260 Total Access Communication Public Co. Ltd., 2.000%, 5/31/06 ............................... 3,400,000 2,584,000 --------------- 41,401,797 --------------- Freight Transportation -- 0.1% Builders Transportation, Inc., 8.000%, 8/15/05 (d) 1,000,000 100,000 Preston Corp., 7.000%, 5/01/11 .................. 750,000 611,250 Worldway Corp., 6.250%, 4/15/11 ................. 1,463,000 1,214,290 --------------- 1,925,540 --------------- Health Care -- Drugs -- 0.3% Chiron Corp., 1.900%, 11/17/00 144A (c) ......... 1,000,000 913,750 Glycomed, Inc., 7.500%, 1/01/03 ................. 1,148,100 1,079,214 NABI, Inc., 6.500%, 2/01/03 ..................... 3,750,000 2,470,312 --------------- 4,463,276 --------------- Health Care -- Medical Technology -- 0.1% Heartport, Inc., 7.250%, 5/01/04 ................ 1,000,000 700,000 --------------- Health Care -- Services -- 0.0% Physicians Resource Group, Inc., 6.000%, 12/01/01 144A (c) ............................. 850,000 670,438 --------------- Home Builders -- 0.0% Schuler Homes, Inc., 6.500%, 1/15/03 ............ 750,000 675,000 --------------- Machinery -- 0.1% Intevac, Inc., 6.500%, 3/01/04 .................. 1,250,000 1,071,875 --------------- Oil & Gas -- 0.1% Houston Industries, Inc., 6.000%, 3/15/12 ....... 447,500 425,125 Key Energy Group, Inc., 5.000%, 9/15/04 ......... 2,000,000 1,525,000 --------------- 1,950,125 --------------- Publishing -- 0.1% Scholastic Corp., 5.000%, 8/15/05 144A (c) ...... 2,550,000 2,342,813 --------------- Real Estate Investment Trusts -- 0.5% Federal Realty Investors Trust, 5.250%, 10/28/03 2,250,000 2,103,750 Rockefeller Properties, Zero Coupon Bond, 12/31/00 7,000,000 5,442,500 Sizeler Property Investors, Inc., 8.000%, 7/15/03. 1,175,000 1,169,125 --------------- 8,715,375 --------------- Restaurants -- 0.4% Boston Chicken, Inc., Zero Coupon Bond, 6/01/15 . USD 4,125,000 206,250 Boston Chicken, Inc., 4.500%, 2/01/04 ........... 3,250,000 503,750 Einstein/Noah Bagel Corp., 7.250%, 6/01/04 ...... 2,880,000 1,872,000 Shoney's, Inc., Zero Coupon Bond, 4/11/04 ....... 8,060,000 3,385,200 TPI Enterprises, Inc., 8.250%, 7/15/02 .......... 700,000 581,000 --------------- 6,548,200 --------------- Retail -- Specialty -- 0.1% Bell Sports Corp., 4.250%, 11/15/00 ............. 500,000 431,250 CML Group, Inc., 5.500%, 1/15/03 ................ 1,224,000 758,880 Jacobson Stores, Inc., 6.750%, 12/15/11 ......... 540,000 465,075 --------------- 1,655,205 --------------- Telecommunications -- 0.4% Broadband Technologies, Inc., 5.000%, 5/15/01 ... 9,800,000 6,468,000 --------------- Textile & Apparel -- 0.1% Dixie Yarns, Inc., 7.000%, 5/15/12 .............. 282,000 245,340 Fieldcrest Cannon, Inc., 6.000%, 3/15/12 ........ 890,000 778,750 --------------- 1,024,090 --------------- TOTAL CONVERTIBLE BONDS (Identified Cost $143,545,416) ................. 121,469,156 --------------- TOTAL BONDS AND NOTES (Identified Cost $1,592,149,981) ............... 1,615,144,842 --------------- SHARES - ------------------------------------------------------------------------------------------------------ COMMON STOCKS -- 0.4% of Net Assets Computers -- 0.0% Streamlogic Corp. (d) (h) ....................... 266,066 266 --------------- Restaurants -- 0.4% Advantica Restaurant Group, Inc. (h) ............ 646,448 6,302,868 --------------- TOTAL COMMON STOCKS (Identified Cost $8,226,376) ................... 6,303,134 --------------- PREFERRED STOCKS -- 1.2% of Net Assets Building Materials -- 0.2% Owens Corning, 6.500% 144A (c) .................. 66,000 3,522,750 --------------- Chemicals -- Major -- 0.0% E.I. du Pont DeNemours & Co., $3.50 ............. 3,775 261,419 --------------- Computers -- 0.1% Unisys Corp., $3.75 ............................. 27,300 1,426,425 --------------- Entertainment -- 0.0% Time Warner Entertainment Co., 10.250% PIK (g) .. 297 329,670 --------------- Financial Services -- 0.2% Hvide Capital Trust, 6.500% ..................... 77,500 3,313,125 --------------- Freight Transportation -- 0.1% Arkansas Best Corp., $2.875 ..................... 39,670 1,492,584 --------------- Metals -- 0.3% Aluminum Co. of America, $3.75 .................. 10,000 746,250 Bethlehem Steel Corp., $3.50 144A (c) ........... 99,050 4,519,156 --------------- 5,265,406 --------------- Oil & Gas -- 0.1% Chesapeake Energy Corp., 7.000% 144A (c) ........ 35,000 1,496,250 --------------- Retail -- General -- 0.1% K Mart Financing Corp., 7.750% .................. 10,000 700,000 --------------- Telecommunications -- 0.0% Hyperion Telecommunications, Inc., 12.875% PIK (g) 573 570,135 --------------- Utilities -- 0.1% Central Maine Power Co., 3.500% ................. 2,190 120,998 Cleco Corp., 4.750% ............................. 1,500 127,687 Commonwealth Energy Systems, $4.80 .............. 3,206 261,289 Connecticut Light & Power Co., $1.90 ............ 2,925 67,275 Entergy Louisiana, Inc., 4.160% ................. 2,600 172,250 Jersey Central Power & Light Co., 4.000% ........ 2,020 129,280 MDU Resources Group, Inc., 5.100% ............... 4,250 393,125 Minnesota Power & Light Co., 5.000% ............. 200 16,250 Nevada Power Co., 4.700% ........................ 16,845 326,372 Niagara Mohawk Power Corp., 4.850% .............. 5,000 400,000 Northern States Power Co., $3.60 ................ 900 54,000 Public Service Co., 4.000% ...................... 360 24,434 --------------- 2,092,960 --------------- TOTAL PREFERRED STOCKS (Identified Cost $18,459,745) .................. 20,470,724 --------------- WARRANTS -- 0.0% of Net Assets Computers -- 0.0% Streamlogic Corp., expiring 10/7/01 (d) (h) ..... 1,228 0 --------------- TOTAL WARRANTS (Identified Cost $0) ........................... 0 --------------- Face Amount Value (a) - ------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENT -- 0.4% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $6,943,964 on 7/01/98 collateralized by $5,395,000 U.S. Treasury Bond, 8.125%, due 8/15/19 with a value of $7,086,775 ................................. USD 6,943,000 $ 6,943,000 --------------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $6,943,000) ................... 6,943,000 --------------- TOTAL INVESTMENTS -- 98.0% (IDENTIFIED COST $1,625,779,102) (i) ............. 1,648,861,700 Cash and Other Assets, Less Liabilities -- 2.0% .... 33,748,749 --------------- NET ASSETS -- 100% ................................. $ 1,682,610,449 =============== (a) See Note 1. (b) Step Bond: Coupon is zero or below market rate for an initial period and then increases at a specified date and rate. (c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. (d) Company in Chapter 11 Bankruptcy. (e) Security in default. (f) Floating Rate Bond: Coupon is six month London Interbank Offered Rate (LIBOR) plus .8125%. (g) All or a portion of income may be received as additional securities. (h) Non-income producing security. (i) At June 30, 1998, the net unrealized appreciation on investments based on cost of $1,625,779,102 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 $110,652,196 and $87,569,598, respectively, resulting in net unrealized appreciation of $23,082,598. Key to Abbreviations: CAD: Canadian Dollar NZD: New Zealand Dollar USD: United States Dollar ZAR: South African Rand
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- LOOMIS SAYLES GLOBAL BOND FUND - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED)
FACE AMOUNT VALUE (A) - ------------------------------------------------------------------------------------------------------------ BONDS AND NOTES -- 90.0% OF NET ASSETS Australia -- 10.9% New South Wales Trust, 6.500%, 5/01/06 ............. AUD 1,900,000 $ 1,213,438 News America Holdings, Inc., 8.625%, 2/07/14 ....... 1,240,000 856,966 QTC Global Aud Bon, 8.000%, 9/14/07 ................ 1,600,000 1,143,868 Queensland Treasury, 6.500%, 6/14/05 ............... 215,000 139,238 South Australia Government Finance Authority, Zero Coupon Bond, 12/21/15 ............................ 2,750,000 589,978 ---------------- 3,943,488 ---------------- Canada -- 4.1% Government of Canada, 8.750%, 12/01/05 ............. CAD 700,000 574,177 Province of British Columbia, Zero Coupon Bond, 9/05/ 20 ................................................ 5,025,000 924,330 ---------------- 1,498,507 ---------------- Denmark -- 3.1% Kingdom of Denmark, 8.000%, 5/15/03 ................ DKK 6,800,000 1,129,974 ---------------- Finland -- 3.8% Republic of Finland, 6.000%, 4/25/08 ............... FIM 7,000,000 1,378,840 ---------------- Germany -- 26.4% Bayerische Vereinsbank, 6.000%, 1/23/06 ............ DEM 2,000,000 1,185,698 Deutsche Finance BV, 7.500%, 2/10/03 ............... 2,300,000 1,413,073 Federal Republic of Germany, 6.000%, 2/16/06 ....... 2,050,000 1,227,481 Federal Republic of Germany, 6.500%, 3/15/00 ....... 2,000,000 1,152,156 Geberit International SA, 10.125%, 4/16/07 ......... 800,000 507,002 Germany Unity, 8.000%, 1/21/02 ..................... 2,200,000 1,363,691 Kreditanstalt Wierdarauf, 6.000%, 2/09/06 .......... 1,100,000 654,812 Treuhandanstalt, 6.625%, 7/09/03 ................... 300,000 182,006 Treuhandanstalt, 6.750%, 5/13/04 ................... 1,700,000 1,045,575 Westdt Landesbank, 5.250%, 10/14/05 ................ 1,500,000 852,908 ---------------- 9,584,402 ---------------- Ireland -- 4.0% Irish Permanent Plc, 8.500%, 7/15/04 ............... IEP 600,000 978,239 Ulysses Securitization Plc, 7.625%, 8/18/06 ........ 300,000 474,273 ---------------- 1,452,512 ---------------- Japan -- 3.3% MBL International Finance (Bermuda), 3.000%, 11/30/02 USD 300,000 285,375 MBL International Finance (Bermuda), 3.000%, 11/30/02(b) ....................................... 950,000 912,000 ---------------- 1,197,375 ---------------- Malaysia -- 1.2% Tenaga Nasional Berhad, 7.500%, 11/01/25 144A (c) .. 575,000 429,560 ---------------- Netherlands -- 2.8% Dutch Government, 5.750%, 9/15/02 .................. NLG 2,000,000 1,031,938 ---------------- New Zealand -- 4.6% Government of New Zealand, 7.000%, 7/15/09 ......... NZD 1,820,000 991,251 Government of New Zealand, 8.000%, 11/15/06 ........ 1,200,000 685,051 ---------------- 1,676,302 ---------------- Philippines -- 5.3% Bangko Sentral Pilipinas, 8.600%, 6/15/27 .......... USD 900,000 774,000 FLI Capital Cayman, 3.750%, 2/01/02 (step to 6.250% on 8/01/99) (b) (d) .............. 900,000 688,500 MBIA, Inc., Zero Coupon Bond, 12/18/01 (b) ......... 800,000 480,000 ---------------- 1,942,500 ---------------- Poland -- 2.2% Government of Poland, 4.000%, 10/27/14 (step to 5.000% on 10/27/98) (d) .......................... 900,000 804,420 ---------------- South Africa -- 6.6% Escom, 11.000%, 6/01/08 ............................ ZAR 6,000,000 774,235 Republic of South Africa, 8.500%, 6/23/17 .......... USD 1,000,000 952,780 Sappi BVI Finance, 7.500%, 8/01/02 ................. 700,000 652,750 ---------------- 2,379,765 ---------------- South Korea -- 4.0% Korea Development Bank, 6.625%, 11/21/03 ........... 800,000 646,360 Korea Development Bank, 6.750%, 12/01/05 ........... 200,000 160,740 Samsung Electronics Co. Ltd., 5.375%, 12/16/01 ..... DEM 500,000 246,305 Samsung Electronics Co. Ltd., Zero Coupon Bond, 12/31/07 (b) ..................................... USD 500,000 390,000 ---------------- 1,443,405 ---------------- Supranational -- 1.2% International Bank for Reconstruction & Development, Zero Coupon Bond, 8/20/07 ........................ NZD 1,500,000 418,417 ---------------- Thailand -- 3.2% Bangkok Bank Public Co. Ltd., 3.250%, 3/03/04 (b) .. USD 1,850,000 601,250 Kingdom of Thailand, 7.750%, 4/15/07 ............... 400,000 347,084 Loxley Public Co. Ltd., 2.500%, 4/04/01 (b) ........ 700,000 224,000 ---------------- 1,172,334 ---------------- United States -- 3.3% Federal National Mortgage Association, 7.250%, 6/20/02 ........................................... NZD 1,300,000 666,844 RJR Nabisco, Inc., 9.250%, 8/15/13 ................. USD 500,000 539,330 ---------------- 1,206,174 ---------------- TOTAL BONDS AND NOTES (Identified Cost $34,827,842) ..................... 32,689,913 ---------------- SHARES VALUE (A) - ------------------------------------------------------------------------------------------------------------ PREFERRED STOCKS -- 3.7% OF NET ASSETS Japan -- 3.7% Sakura Finance, 0.750% ............................. 186,000,000 948,293 Sanwa International Ltd. (Bermuda), 1.250%, 144A (c). 54,000,000 396,371 ---------------- 1,344,664 ---------------- TOTAL PREFERRED STOCKS (Identified Cost $1,725,040) ...................... 1,344,664 ---------------- Face AMOUNT - ------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENT -- 4.6% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $1,679,233 on 7/01/98 collateralized by $1,305,000 U.S. Treasury Bond, 8.125%, due 8/15/19 with a value of $1,714,225 .............................. USD 1,679,000 1,679,000 ---------------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $1,679,000) ...................... 1,679,000 ---------------- TOTAL INVESTMENTS -- 98.3% (IDENTIFIED COST $38,231,882) (d) ................... 35,713,577 Cash and Other Assets, Less Liabilities -- 1.7% ....... 623,518 ---------------- NET ASSETS -- 100% .................................... $ 36,337,095 ================ (a) See Note 1. (b) Convertible Bond. (c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. (d) Step Bond: Coupon is zero or below market rate for an initial period and then increases at a specified date and rate. (e) At June 30, 1998, the net unrealized depreciation on investments based on cost of $38,231,882 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 $629,995 and $3,148,300, respectively, resulting in net unrealized depreciation of $2,518,305. Key to Abbreviations: AUD: Australian Dollar IEP: Irish Punt CAD: Canadian Dollar NLG: Dutch Guilder DEM: Deutsche Mark NZD: New Zealand Dollar DKK: Danish Krone USD: United States Dollar FIM: Finnish Markka ZAR: South African Rand Ten Largest Sector Holdings at June 30, 1998 as a Percentage of Net Assets Foreign Government/Agency 44.0% U.S. Government 1.8% Banking & Finance 19.6% Electronics 1.7% Financial Services 14.2% Tobacco 1.5% Canadian 4.1% Consumer Durables 1.4% Media & Entertainment 2.4% Utilities 1.2%
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- LOOMIS SAYLES HIGH YIELD FUND - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED)
FACE AMOUNT VALUE (A) - ------------------------------------------------------------------------------------------------------------ BONDS AND NOTES -- 87.5% OF NET ASSETS NON-CONVERTIBLE BONDS -- 61.5% Broadcasting -- 1.4% CBS, Inc., 7.125%, 11/01/23 ............................ USD 50,000 $ 47,751 Fox Family Worldwide, Inc., Zero Coupon Bond, 11/01/07 (step to 10.250% on 11/01/02) (b) .................... 200,000 130,000 ---------------- 177,751 ---------------- Canadian -- 5.2% Clearnet Communications, Inc., Zero Coupon Bond, 8/13/07 (step to 11.750% on 8/13/02) (b) ..................... CAD 600,000 269,489 International Semi-Tech Corp., Zero Coupon Bond, 8/15/03 (step to 11.500% on 8/15/00) (b) ..................... USD 525,000 157,500 MetroNet Communications Corp., Zero Coupon Bond, 6/15/08 (step to 9.500% on 6/15/03) 144A (b)(c) .............. 250,000 154,687 Microcell Telecommunications, Inc., Zero Coupon Bond, 10/15/07 (step to 11.125% on 10/15/02)(b) ............ CAD 235,000 100,752 ---------------- 682,428 ---------------- Communications -- 2.4% Arch Communications Group, Inc., Zero Coupon Bond, 3/15/08 (step to 10.875% on 3/15/01) (b) ............. USD 540,000 307,800 ---------------- Computers -- 1.1% Apple Computer, Inc., 6.500%, 2/15/04 .................. 155,000 142,600 ---------------- Electronics -- 1.6% Westinghouse Electric Corp., 7.875%, 9/01/23 ........... 200,000 205,554 ---------------- Foreign Government/Agency -- 9.2% Escom, 11.000%, 6/01/08 ................................ ZAR 275,000 35,486 Republic of Argentina, 6.625%, 3/31/05 (d) ............. USD 47,500 41,919 Republic of Brazil, 10.125%, 5/15/27 ................... 255,000 219,555 Republic of Brazil C Bond, 8.000%, 4/15/14 PIK (e) ..... 493,090 363,654 Republic of Ecuador, 6.625%, 2/27/15 PIK (d) (e) ....... 166,898 99,822 Republic of Panama, 3.750%, 7/17/14 (step to 4.000% on 7/17/98) (b) ...................................... 150,000 117,375 Republic of Peru, 3.250%, 3/07/17 (step to 3.750% on 3/07/99) (b) ...................................... 200,000 118,500 Republic of South Africa, 12.500%, 12/21/06 ............ ZAR 500,000 72,365 Republic of Venezuela, 9.250%, 9/15/27 ................. USD 175,000 135,187 ---------------- 1,203,863 ---------------- Foreign Issuer -- 23.0% Bangko Sentral Pilipinas, 8.600%, 6/15/27 .............. 350,000 301,000 Bangkok Bank Public Co. Ltd., 8.250%, 3/15/16 144A (c) . 100,000 74,861 Bangkok Bank Public Co. Ltd., 8.375%, 1/15/27 144A (c) . 250,000 182,848 Export Import Bank of Korea, 6.375%, 2/15/06 ........... 50,000 37,580 Hyundai Motor Co. Ltd., 7.600%, 7/15/07 144A (c) ....... 100,000 77,812 Korea Electric Power Corp., 7.400%, 4/01/16 ............ 238,067 190,880 Korea Electric Power Corp., 7.750%, 4/01/13 ............ 200,000 147,864 Multicanal SA, 10.500%, 4/15/18 144A (c) ............... 125,000 116,250 Murrin Murrin Holdings Property Ltd., 9.375%, 8/31/07 .. USD 50,000 49,000 National Power Corp., 9.625%, 5/15/28 .................. 100,000 92,000 Pan Pacific Industrial Investment Plc, Zero Coupon Bond, 4/28/07 144A (c) ..................................... 200,000 76,948 Petroleos Mexicanos, Medium Term, 8.625%, 12/01/23 ..... 145,000 124,881 Philippine Long Distance Telephone Co., 8.350%, 3/06/17 150,000 127,885 Pindo Deli Finance Mauritius Ltd., 10.750%, 10/01/07 ... 200,000 140,000 Pindo Deli Finance Mauritius Ltd., 10.875%, 10/01/27 ... 360,000 212,400 Pycsa Panama SA, 10.280%, 12/15/12 144A (c) ............ 100,000 94,375 Quezon Power Philippines Co., 8.860%, 6/15/17 .......... 225,000 193,545 Samsung Electronics Co. Ltd., 8.500%, 11/01/02 144A (c) 100,000 90,682 Siam Commercial Bank Public Co., 7.500%, 3/15/06 144A (c) 100,000 82,138 Tenaga Nasional Berhad, 7.500%, 11/01/25 144A (c) ...... 250,000 186,765 Tjiwi Kimia Mauritius Ltd., 10.000%, 8/01/04 ........... 150,000 106,500 Total Access Communication Public Co. Ltd., 7.625%, 11/04/01 144A (c) .................................... 100,000 76,000 Total Access Communication Public Co. Ltd., 8.375%, 11/04/06 144A (c) .................................... 300,000 216,000 ---------------- 2,998,214 ---------------- Health Care -- Services -- 0.5% Columbia/HCA Healthcare Corp., 7.050%, 12/01/27 ........ 75,000 67,183 ---------------- Oil & Gas -- 2.2% Chesapeake Energy Corp., 7.875%, 3/15/04 ............... 50,000 46,875 Chesapeake Energy Corp., 8.500%, 3/15/12 ............... 250,000 233,750 ---------------- 280,625 ---------------- Rail -- Transport -- 0.2% Missouri Pacific Railroad Co., 4.750%, 1/01/20 ......... 30,000 20,663 ---------------- Retail -- General -- 3.5% Dillon Read Structured Finance Corp., 7.430%, 8/15/18 .. 300,000 279,375 Dillon Read Structured Finance Corp., 8.375%, 8/15/15 .. 65,000 64,919 Penn Traffic Co., 9.625%, 4/15/05 ...................... 275,000 106,562 ---------------- 450,856 ---------------- Telecommunications -- 4.2% Nextel Communications, Inc., Zero Coupon Bond, 10/31/07 (step to 9.750% on 10/31/02) (b) ..................... 145,000 94,612 Nextel Communications, Inc., Zero Coupon Bond, 2/15/08 (step to 9.950% on 2/15/03) 144A (b) (c) ............. 100,000 63,750 RCN Corp., Zero Coupon Bond, 10/15/07 (step to 11.125% on 10/15/02) (b) ..................................... 175,000 112,437 RCN Corp., Zero Coupon Bond, 2/15/08 (step to 9.800% on 2/15/03) (b) ...................................... 100,000 60,000 RCN Corp., Zero Coupon Bond, 7/01/08 (step to 11.000% on 7/01/03) (b) ..................... USD 100,000 59,500 Teligent, Inc., Zero Coupon Bond, 3/01/08 (step to 11.500% on 3/01/03) 144A (b) (c) ..................... 275,000 151,938 ---------------- 542,237 ---------------- Textile & Apparel -- 1.8% Phillips Van Heusen Corp., 7.750%, 11/15/23 ............ 250,000 232,142 ---------------- Transportation -- 0.5% American President Cos. Ltd., 8.000%, 1/15/24 .......... 100,000 70,562 ---------------- U.S. Government -- 3.8% U.S. Treasury Bonds, 6.000%, 2/15/26 ................... 475,000 494,147 ---------------- Utilities -- 0.9% Mobile Energy Services Co. LLC, 8.665%, 1/01/17 ........ 233,269 118,967 ---------------- TOTAL NON-CONVERTIBLE BONDS (Identified Cost $8,435,286) .......................... 7,995,592 ---------------- CONVERTIBLE BONDS -- 26.0% Auto & Related -- 0.5% Exide Corp., 2.900%, 12/15/05 144A (c) ................. 100,000 61,750 ---------------- Canadian -- 0.9% Rogers Communications, Inc., 2.000%, 11/26/05 .......... 190,000 117,800 ---------------- Commercial Services -- 0.0% Molten Metal Technology, Inc., 5.500%, 5/01/06 (f) (g) . 75,000 3,000 ---------------- Computers -- 2.9% Apple Computer, Inc., 6.000%, 6/01/01 .................. 100,000 113,187 Cray Research, Inc., 6.125%, 2/01/11 ................... 113,000 92,095 Data General Corp., 6.000%, 5/15/04 .................... 50,000 45,250 Read Rite Corp., 6.500%, 9/01/04 ....................... 150,000 94,500 S3, Inc., 5.750%, 10/01/03 ............................. 50,000 36,062 ---------------- 381,094 ---------------- Electronics -- 7.7% Cirrus Logic, Inc., 6.000%, 12/15/03 144A (c) .......... 150,000 118,687 Cypress Semiconductor Corp., 6.000%, 10/01/02 .......... 100,000 87,500 EDO Corp., 7.000%, 12/15/11 ............................ 25,000 20,000 Integrated Device Technology, 5.500%, 6/01/02 .......... 50,000 40,250 Kent Electronics Corp., 4.500%, 9/01/04 ................ 150,000 122,625 Lam Research Corp., 5.000%, 9/01/02 .................... 575,000 471,500 Richardson Electronics Ltd., 7.250%, 12/15/06 .......... 50,000 48,000 Zenith Corp., 6.250%, 4/01/11 (f) ...................... 350,000 88,813 ---------------- 997,375 ---------------- Environmental Services -- 0.2% Air & Water Technologies Corp., 8.000%, 5/15/15 ........ 25,000 20,750 ---------------- Foreign Issuer -- 5.3% Advanced Agro Public Co., 3.500%, 6/17/01 .............. USD 125,000 112,500 APP Finance VII Mauritius Ltd., 3.500%, 4/30/03 144A (c) 125,000 99,062 Bangkok Bank Public Co. Ltd., 3.250%, 3/03/04 .......... 175,000 56,875 Banpu Public Co., 2.750%, 4/10/03 ...................... 25,000 17,125 Burns, Philp, 5.500%, 4/30/04 .......................... 50,000 28,500 Empresas ICA Sociedad, 5.000%, 3/15/04 ................. 75,000 53,531 Loxley Public Co. Ltd., 2.500%, 4/04/01 ................ 100,000 32,000 Samsung Electronics Co. Ltd., Zero Coupon Bond, 12/31/07 100,000 78,000 Sappi BVI Finance, 7.500%, 8/01/02 ..................... 75,000 69,938 Siam Commercial Bank Public Co., 3.250%, 1/24/04 ....... 250,000 85,000 Ssangyong Oil Refining Co., Inc., 3.000%, 12/31/04 ..... 125,000 58,750 ---------------- 691,281 ---------------- Freight Transportation -- 0.4% Builders Transportation, Inc., 8.000%, 8/15/05 (g) ..... 75,000 7,500 Worldway Corp., 6.250%, 4/15/11 ........................ 62,000 51,460 ---------------- 58,960 ---------------- Health Care -- Drugs -- 2.2% Dura Pharmaceuticals, Inc., 3.500%, 7/15/02 ............ 125,000 110,781 Glycomed, Inc., 7.500%, 1/01/03 ........................ 100,000 94,000 NABI, Inc., 6.500%, 2/01/03 ............................ 125,000 82,344 ---------------- 287,125 ---------------- Health Care -- Services -- 0.5% Tenet Healthcare Corp., 6.000%, 12/01/05 ............... 75,000 63,938 ---------------- Home Builders -- 0.5% Schuler Homes, Inc., 6.500%, 1/15/03 ................... 70,000 63,000 ---------------- Leisure -- 0.5% AMF Bowling, Inc., Zero Coupon Bond, 5/12/18 ........... 250,000 65,937 ---------------- Machinery -- 0.2% Intevac, Inc., 6.500%, 3/01/04 ......................... 25,000 21,438 ---------------- Metals -- 0.3% Battle Mountain Gold Co., 6.000%, 1/04/05 .............. 50,000 40,500 ---------------- Oil & Gas -- 0.3% Key Energy Group, Inc., 5.000%, 9/15/04 ................ 50,000 38,125 ---------------- Real Estate Investment Trusts -- 0.2% Sizeler Property Investors, Inc., 8.000%, 7/15/03 ...... 25,000 24,875 ---------------- Restaurants -- 1.9% Boston Chicken, Inc., Zero Coupon Bond, 6/01/15 ........ USD 625,000 31,250 Boston Chicken, Inc., 4.500%, 2/01/04 .................. 100,000 15,500 Einstein/Noah Bagel Corp., 7.250%, 6/01/04 ............. 50,000 32,500 Shoney's, Inc., Zero Coupon Bond, 4/11/04 .............. 350,000 147,000 TPI Enterprises, Inc., 8.250%, 7/15/02 ................. 25,000 20,750 ---------------- 247,000 ---------------- Retail -- Specialty -- 0.8% CML Group, Inc., 5.500%, 1/15/03 ....................... 100,000 62,000 Jacobson Stores, Inc., 6.750%, 12/15/11 ................ 50,000 43,062 ---------------- 105,062 ---------------- Telecommunications -- 0.5% Broadband Technologies, Inc., 5.000%, 5/15/01 .......... 100,000 66,000 ---------------- Textile & Apparel -- 0.2% Converse, Inc., 7.000%, 6/01/04 ........................ 50,000 32,313 ---------------- TOTAL CONVERTIBLE BONDS (Identified Cost $3,912,819) .......................... 3,387,323 ---------------- TOTAL BONDS AND NOTES (Identified Cost $12,348,105) ......................... 11,382,915 ---------------- SHARES - ------------------------------------------------------------------------------------------------------------ COMMON STOCKS -- 5.2% OF NET ASSETS Foreign Issuer -- 0.6% Sappi Ltd., ADR (h) .................................... 17,500 65,275 Siam Commercial Bank Public Co. (h) .................... 16,500 5,285 ---------------- 70,560 ---------------- Oil & Gas -- 0.5% Chesapeake Energy Corp. (h) ............................ 16,000 64,000 ---------------- Real Estate Investment Trusts -- 1.6% Associated Estates Realty Corp. ........................ 7,200 134,550 Berkshire Realty Co., Inc. ............................. 6,000 70,125 ---------------- 204,675 ---------------- Restaurants -- 0.5% Advantica Restaurant Group, Inc. (h) ................... 7,197 70,171 ---------------- Utilities -- 2.0% Eastern Utilities Associates ........................... 10,000 262,500 ---------------- TOTAL COMMON STOCKS (Identified Cost $717,938) ............................ 671,906 ---------------- PREFERRED STOCKS -- 3.8% of Net Assets Computers -- 0.4% Unisys Corp., $3.75 .................................... 1,000 52,250 ---------------- Foreign Issuer -- 0.4% Philippine Long Distance Telephone Co., $3.50, GDS ..... 1,000 46,000 ---------------- Metals -- 0.7% Bethlehem Steel Corp., $3.50 144A (c) .................. 2,000 91,250 ---------------- Oil & Gas -- 1.2% Chesapeake Energy Corp., 7.000% 144A (c) ............... 3,500 149,625 ---------------- Utilities -- 1.1% Central Maine Power Co., 3.500% ........................ 1,260 69,615 Consumers Energy Co., $4.16 ............................ 250 17,500 Entergy Gulf States, Inc., 4.400% ...................... 150 9,375 Niagara Mohawk Power Corp., 3.600% ..................... 200 11,725 Niagara Mohawk Power Corp., 3.900% ..................... 100 6,500 Ohio Edison Co., 4.440% ................................ 450 31,725 ---------------- 146,440 ---------------- TOTAL PREFERRED STOCKS (Identified Cost $443,962) ............................ 485,565 ---------------- FACE AMOUNT - ------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENT -- 1.6% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $212,029 on 7/01/98 collateralized by $165,000 U.S. Treasury Bond, 8.125%, due 8/15/19 with a value of $216,741 ................. USD 212,000 212,000 ---------------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $212,000) ............................ 212,000 ---------------- TOTAL INVESTMENTS -- 98.1% (IDENTIFIED COST $13,722,005) (i) ....................... 12,752,386 Cash and Other Assets, Less Liabilities -- 1.9% ........... 252,378 ---------------- NET ASSETS -- 100% ........................................ $ 13,004,764 ================ (a) See Note 1. (b) Step Bond: Coupon is zero or below market rate for an initial period and then increases at a specified date and rate. (c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. (d) Floating Rate Bond: Coupon is six month London Interbank Offered Rate (LIBOR) plus .8125%. (e) All or a portion of income may be received as additional securities. (f) Company in Chapter 11 Bankruptcy. (g) Security in default. (h) Non-income producing security. (i) At June 30, 1998, the net unrealized depreciation on investments based on cost of $13,722,005 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 $396,318 and $1,365,937, respectively, resulting in net unrealized depreciation of $969,619. Key to Abbreviations: ADR: American Depositary Receipts CAD: Canadian Dollar GDS: Global Depositary Shares USD: United States Dollar ZAR: South African Rand
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- LOOMIS SAYLES INTERMEDIATE MATURITY BOND FUND - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED)
FACE AMOUNT VALUE (A) - ------------------------------------------------------------------------------------------------------- BONDS AND NOTES -- 94.2% OF NET ASSETS Banks/Savings & Loans -- 4.7% Capital One Bank, 5.950%, 2/15/01 ........................... $ 200,000 $ 198,388 Capital One Bank, 6.375%, 2/15/03 ........................... 100,000 100,090 Capital One Bank, 6.830%, 5/17/99 ........................... 70,000 70,492 NationsBank Corp., 7.000%, 9/15/01 .......................... 55,000 56,523 --------------- 425,493 --------------- Canadian -- 2.5% International Semi-Tech Corp., Zero Coupon Bond, 8/15/03 (step to 11.500% on 8/15/00) (b) ................................ 250,000 75,000 MacMillan Bloedel Ltd., 6.750%, 2/15/06 ..................... 150,000 147,420 --------------- 222,420 --------------- Entertainment -- 1.9% Time Warner Entertainment Co., Inc., 7.750%, 6/15/05 ........ 155,000 166,355 --------------- Financial Services -- 5.5% Associated Manufactured Housing, 6.475%, 3/15/28 ............ 50,000 50,870 Green Tree Financial Corp., 6.950%, 3/15/27 ................. 200,000 204,342 OSCC Home Equity Loan Trust, 6.025%, 6/15/08 ................ 243,999 243,184 --------------- 498,396 --------------- Foreign Government/Agency -- 4.2% Republic of Brazil C Bond, 8.000%, 4/15/14 PIK (c) .......... 174,032 128,349 Republic of South Africa, 8.375%, 10/17/06 .................. 250,000 252,627 --------------- 380,976 --------------- Foreign Issuer -- 11.3% Espirito Santo-Escelsa, 10.000%, 7/15/07 144A (d) ........... 150,000 126,000 Gruma SA de CV, 7.625%, 10/15/07 ............................ 150,000 150,814 Perez Companc SA, 8.125%, 7/15/07 144A (d) .................. 250,000 228,125 Southern Peru Ltd., 7.900%, 5/30/07 ......................... 220,000 221,474 Tenaga Nasional Berhad, 7.625%, 4/29/07 144A (d) ............ 125,000 107,231 Total Access Communication Public Co. Ltd., 8.375%, 11/04/06 144A (d) .................................................. 220,000 158,400 YPF SA, 7.000%, 10/26/02 .................................... 28,304 28,369 --------------- 1,020,413 --------------- Government Agencies -- 7.3% Federal Home Loan Mortgage Corp., 6.000%, 4/15/06 ........... 55,000 54,914 Federal Home Loan Mortgage Corp., 6.250%, 10/15/07 .......... 55,000 55,515 Federal National Mortgage Association, 6.000%, 5/25/08 ...... 197,588 196,847 Federal National Mortgage Association, 6.500%, 1/18/16 ...... 180,000 180,731 Federal National Mortgage Association, 6.500%, 8/15/16 ...... 165,000 165,721 --------------- 653,728 --------------- Oil & Gas -- 6.0% Pioneer Natural Resources Co., 6.500%, 1/15/08 .............. 250,000 242,313 R&B Falcon Corp., 6.750%, 4/15/05 144A (d) .................. 300,000 298,389 --------------- 540,702 --------------- Real Estate Investment Trusts -- 20.7% American Health Properties, Inc., 7.050%, 1/15/02 ........... 65,000 66,410 American Health Properties, Inc., 7.500%, 1/15/07 ........... 275,000 282,040 Excel Realty Trust, Inc., 6.875%, 10/15/04 .................. 165,000 168,114 First Industrial, 7.000%, 12/01/06 .......................... 250,000 252,403 Highwoods/Forsyth Ltd., 6.750%, 12/01/03 .................... 350,000 350,206 Oasis Residential, Inc., 6.750%, 11/15/01 ................... 350,000 355,320 Trinet Corporate Realty Trust, Inc., 6.750%, 3/01/03 ........ 335,000 335,342 Trinet Corporate Realty Trust, Inc., 7.300%, 5/15/01 ........ 55,000 55,870 --------------- 1,865,705 --------------- Retail -- General -- 0.7% Woolworth Corp., 7.000%, 6/01/00 ............................ 65,000 65,781 --------------- Securities -- 5.1% Lehman Brothers Holdings, Inc., 5.750%, 11/15/98 ............ 190,000 189,818 Lehman Brothers Holdings, Inc., 6.125%, 2/01/01 ............. 60,000 59,993 Lehman Brothers Holdings, Inc., 7.125%, 9/15/03 ............. 100,000 103,574 Salomon, Inc., 6.700%, 12/01/98 ............................. 105,000 105,363 --------------- 458,748 --------------- Telecommunications -- 6.6% Cox Communications, Inc., 6.500%, 11/15/02 .................. 165,000 165,972 Intermedia Communications, Inc., 8.600%, 6/01/08 144A (d) ... 125,000 125,938 TCI Communications, Inc., 6.875%, 2/15/06 ................... 290,000 299,149 --------------- 591,059 --------------- Textile & Apparel -- 2.2% Tommy Hilfiger Corp., 6.500%, 6/01/03 ....................... 200,000 199,824 --------------- Tobacco -- 4.3% Philip Morris Cos., Inc., 7.250%, 9/15/01 ................... 65,000 66,672 RJR Nabisco, Inc., 7.625%, 9/15/03 .......................... 65,000 64,627 RJR Nabisco, Inc., 8.250%, 7/01/04 .......................... 90,000 91,591 RJR Nabisco, Inc., 8.750%, 8/15/05 .......................... 160,000 166,859 --------------- 389,749 --------------- Trucking & Leasing -- 2.3% Amerco, 7.490%, 9/18/01 ..................................... 200,000 206,716 --------------- U.S. Government -- 8.7% U.S. Treasury Notes, 5.500%, 5/31/00 ........................ 300,000 299,952 U.S. Treasury Notes, 5.625%, 2/15/06 ........................ 480,000 481,949 --------------- 781,901 --------------- Utilities -- 0.2% Salton Sea Funding Corp., 7.020%, 5/30/00 .................... 20,107 20,262 --------------- TOTAL BONDS AND NOTES (Identified Cost $8,547,633)................................ 8,488,228 --------------- 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 $678,094 on 7/ 01/98 collateralized by $530,000 U.S. Treasury Bond, 8.125%, due 8/15/19 with a value of $696,198 ....................... 678,000 678,000 --------------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $678,000).................................. 678,000 --------------- TOTAL INVESTMENTS -- 101.7% (IDENTIFIED COST $9,225,633) (d) ............................. 9,166,228 Liabilities, Less Cash and Other Assets -- (1.7%)............... (154,003) --------------- NET ASSETS -- 100% ............................................. $ 9,012,225 =============== (a) See Note 1. (b) Step Bond: Coupon is zero or below market rate for an initial period and then increases at a specified date and rate. (c) All or a portion of income may be received as additional securities. (d) 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. (e) At June 30, 1998, the net unrealized depreciation on investments based on cost of $9,225,633 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 $132,114 and $191,519, respectively, resulting in net unrealized depreciation of $59,405.
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- LOOMIS SAYLES INVESTMENT GRADE BOND FUND - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED)
FACE AMOUNT VALUE (A) - ------------------------------------------------------------------------------------------------------------ BONDS AND NOTES -- 89.2% OF NET ASSETS NON-CONVERTIBLE BONDS -- 78.5% Canadian -- 20.4% Canadian Government, Zero Coupon Bond, 6/01/21 ........ CAD 150,000 $ 28,793 Canadian Government, Zero Coupon Bond, 6/01/25 ........ 940,000 147,450 Canadian Pacific Ltd., 4.000%, 1/29/49 ................ USD 15,000 11,250 MacMillan Bloedel, 7.700%, 2/15/26 .................... 100,000 100,460 New Brunswick FM Project, Zero Coupon Bond, 11/30/27 (step to 6.470% on 5/30/03) 144A (b) (c) ............ CAD 75,000 39,474 Ontario Hydro, 8.900%, 8/18/22 ........................ 55,000 52,146 Province of Alberta, 5.930%, 9/16/16 .................. 48,558 34,070 Province of British Columbia, Zero Coupon Bond, 6/09/22. 250,000 41,461 Province of British Columbia, Zero Coupon Bond, 8/19/22. 605,000 99,183 Province of British Columbia, Zero Coupon Bond, 8/23/24 ...................................................... 200,000 29,127 Province of Manitoba, Zero Coupon Bond, 3/05/31 ....... 1,100,000 111,089 Province of Manitoba, 6.500%, 9/22/17 ................. 25,000 18,596 Province of Manitoba, 7.750%, 12/22/25 ................ 55,000 47,704 Province of Saskatchewan (Certificate of Deposit), Zero Coupon Bond, 2/04/22 ................................ 650,000 111,603 Province of Saskatchewan (Certificate of Deposit), Zero Coupon Bond, 5/30/25 ................................ 215,000 30,404 --------------- 902,810 --------------- Communications -- 0.7% Arch Communications Group, Inc., Zero Coupon Bond, 3/15/ 08 (step to 10.875% on 3/15/01) (b) ................. USD 50,000 28,500 --------------- Computers -- 2.2% Seagate Technology, Inc., 7.450%, 3/01/37 ............. 25,000 24,558 Seagate Technology, Inc., 7.875%, 3/01/17 ............. 75,000 72,514 --------------- 97,072 --------------- Foreign Government/Agency -- 4.0% New South Wales Treasury, Zero Coupon Bond, 11/23/20 .. AUD 300,000 49,527 Republic of Brazil, 10.125%, 5/15/27 .................. USD 10,000 8,610 Republic of Brazil C Bond, 8.000%, 4/15/14 PIK (d) .... 29,005 21,391 Republic of South Africa, 12.500%, 12/21/06 ........... ZAR 400,000 57,892 Republic of South Africa, 13.000%, 8/31/10 ............ 125,000 18,313 Republic of South Africa, 13.500%, 9/15/15 ............ 150,000 22,419 --------------- 178,152 --------------- Foreign Issuer -- 5.7% Bangkok Bank Public Co. Ltd., 8.375%, 1/15/27 144A (c) USD 50,000 36,569 Pindo Deli Finance Mauritius Ltd., 10.875%, 10/01/27 .. 100,000 59,000 Samsung Electronics Co. Ltd., 7.700%, 10/01/27 144A (c). 100,000 65,000 Tenaga Nasional Berhad, 7.500%, 11/01/25 144A (c) ..... 100,000 74,706 Total Access Communication Public Co. Ltd., 8.375%, 11/04/06 144A (c) ................................... 25,000 18,000 --------------- 253,275 --------------- Government Agencies -- 1.3% Federal National Mortgage Association, Zero Coupon Bond, 10/29/07 ............................................ NZD 200,000 56,225 --------------- Health Care -- Services -- 3.0% Columbia/HCA Healthcare Corp., 7.050%, 12/01/27 ....... USD 150,000 134,365 --------------- Home Builders -- 0.6% Pulte Corp., 7.625%, 10/15/17 ......................... 25,000 26,299 --------------- Oil & Gas -- 7.3% Pioneer Natural Resources Co., 7.200%, 1/15/28 ........ 40,000 38,914 R&B Falcon Corp., 7.375%, 4/15/18 144A (c) ............ 100,000 101,847 Seagull Energy Corp., 7.500%, 9/15/27 ................. 180,000 179,467 --------------- 320,228 --------------- Paper Products -- 3.4% Mead Corp., 7.125%, 8/01/25 ........................... 50,000 50,303 Westvaco Corp., 7.000%, 8/15/23 ....................... 100,000 99,711 --------------- 150,014 --------------- Rail -- Transport -- 3.5% Louisville & Nashville Railroad Co., 2.875%, 4/01/03 .. 1,000 847 Louisville & Nashville Railroad Co., 3.375%, 4/01/03 .. 12,000 10,660 Missouri Pacific Railroad Co., 4.250%, 1/01/05 ........ 39,000 34,011 Missouri Pacific Railroad Co., 4.750%, 1/01/20 ........ 34,000 23,418 Missouri Pacific Railroad Co., 4.750%, 1/01/30 ........ 86,000 56,760 Missouri Pacific Railroad Co., 5.000%, 1/01/45 ........ 46,000 29,612 --------------- 155,308 --------------- Real Estate Investment Trusts -- 10.4% First Industrial, 7.500%, 12/01/17 .................... 100,000 102,037 Highwoods Forsyth LP, 7.500%, 4/15/18 ................. 50,000 50,988 Security Capital Group, Inc., 7.700%, 6/15/28 144A (c) 125,000 126,462 Trinet Corporate Realty Trust, 7.700%, 7/15/17 ........ 175,000 181,879 --------------- 461,366 --------------- Supranational -- 3.3% International Bank for Reconstruction & Development, Zero Coupon Bond, 8/20/07 ........................... NZD 425,000 118,551 International Bank for Reconstruction & Development, 8.000%, 5/23/07 ..................................... 45,000 24,825 --------------- 143,376 --------------- Textile & Apparel -- 0.6% Kellwood Co., 7.625%, 10/15/17 ........................ USD 25,000 26,488 --------------- Tobacco -- 5.9% Loews Corp., 7.000%, 10/15/23 ......................... USD 70,000 $ 67,787 Philip Morris Cos., Inc., 7.750%, 1/15/27 ............. 120,000 128,359 RJR Nabisco, Inc., 9.250%, 8/15/13 .................... 60,000 64,720 --------------- 260,866 --------------- U.S. Government -- 4.7% U.S. Treasury Bonds, 6.000%, 2/15/26 .................. 200,000 208,062 --------------- Utilities -- 1.5% Comed Financing II, 8.500%, 1/15/27 ................... 60,000 64,235 --------------- TOTAL NON-CONVERTIBLE BONDS (Identified Cost $3,406,225) ......................... 3,466,641 --------------- CONVERTIBLE BONDS -- 10.7% Electronics -- 1.7% Thermedics, Inc., Zero Coupon Bond, 6/01/03 ........... 100,000 75,000 --------------- Environmental Services -- 2.2% Thermo TerraTech, Inc., 4.625%, 5/01/03 144A (c) ...... 110,000 98,587 --------------- Foreign Issuer -- 4.5% Banpu Public Co., 2.750%, 4/10/03 ..................... 20,000 13,700 Burns, Philp, 5.500%, 4/30/04 ......................... 20,000 11,400 Samsung Corp., 0.250%, 6/26/06 ........................ 20,000 18,400 Ssangyong Oil Refining Co., Inc., 3.000%, 12/31/04 .... 30,000 14,100 Telekom Malaysia Berhad, 4.000%, 10/03/04 ............. 50,000 36,500 Telekom Malaysia Berhad, 7.875%, 8/01/25 144A (c) ..... 100,000 80,540 Total Access Communication Public Co. Ltd., 2.000%, 5/31/06 ............................................. 30,000 22,800 --------------- 197,440 --------------- Oil & Gas -- 1.3% Houston Industries, Inc., 6.000%, 3/15/12 ............. 60,000 57,000 --------------- Publishing -- 1.0% Scholastic Corp., 5.000%, 8/15/05 144A (c) ............ 50,000 45,938 --------------- TOTAL CONVERTIBLE BONDS (Identified Cost $502,360) ........................... 473,965 --------------- TOTAL BONDS AND NOTES (Identified Cost $3,908,585) ......................... 3,940,606 --------------- PREFERRED STOCKS -- 6.3% OF NET ASSETS Chemicals -- Major -- 3.0% E.I. du Pont DeNemours & Co., $3.50 ................... 1,250 $ 86,562 E.I. du Pont DeNemours & Co., $4.50 ................... 500 44,250 --------------- 130,812 --------------- Utilities -- 3.3% Duquesne Light Co., 3.750% ............................ 100 3,500 Duquesne Light Co., 4.000% ............................ 500 16,500 Entergy New Orleans, Inc., 4.750% ..................... 175 12,819 Houston Lighting & Power Co., $4.00 ................... 79 5,214 Jersey Central Power & Light Co., 4.000% .............. 310 19,840 New York State Electric & Gas Corp., 3.750% ........... 460 28,060 Northern Indiana Public Service Co., 4.250% ........... 210 14,490 Wisconsin Electric Power Co., 3.600% .................. 850 48,025 --------------- 148,448 --------------- TOTAL PREFERRED STOCKS (Identified Cost $246,209) ........................... 279,260 --------------- Face Amount - ------------------------------------------------------------------------------------------------------------ SHORT-TERM INVESTMENT -- 8.5% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $374,052 on 7/01/98 to be collateralized by $295,000 U.S. Treasury Bond, 8.125%, due 8/15/19 with a value of $387,507 ............................................. USD 374,000 374,000 --------------- TOTAL SHORT-TERM INVESTMENT (Identified Cost $374,000) ........................... 374,000 --------------- TOTAL INVESTMENTS -- 104.0% (IDENTIFIED COST $4,528,794) (d) ....................... 4,593,866 Liabilities, Less Cash and Other Assets -- (4.0%) ........ (175,949) --------------- NET ASSETS -- 100% ....................................... $ 4,417,917 =============== (a) See Note 1. (b) Step Bond: Coupon is zero or below market rate for an initial period and then increases at a specified date and rate. (c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. (d) All or a portion of income may be received as additional securities. (e) At June 30, 1998, the net unrealized appreciation on investments based on cost of $4,528,794 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 $253,487 and $188,415, respectively, resulting in net unrealized appreciation of $65,072. Key to Abbreviations: AUD: Australian Dollar CAD: Canadian Dollar NZD: New Zealand Dollar USD: United States Dollar ZAR: South African Rand
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- LOOMIS SAYLES MUNICIPAL BOND FUND - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED)
FACE AMOUNT VALUE (A) - ------------------------------------------------------------------------------------------------------- MUNICIPAL BONDS AND NOTES - 94.7% OF NET ASSETS Alaska - 1.0% Alaska State Housing Finance Corp., 6.600%, 12/01/15 ........ $ 90,000 $ 95,747 --------------- Arizona - 1.7% Phoenix Street & Highway User, 6.250%, 7/01/11 .............. 150,000 163,124 --------------- California - 11.8% California State Department Water Resources, 5.625%, 12/01/12. 100,000 105,071 California State Public Works Lease, 5.500%, 6/01/14 ........ 300,000 320,754 Foothill Eastern Transportation Corridor, Zero Coupon Bond, 1/01/23 ................................................... 500,000 132,310 Foothill Eastern Transportation Corridor, 6.000%, 1/01/16 ... 250,000 269,397 Fresno Sewer Revenue, (AMBAC Insured), 6.250%, 9/01/14 ...... 250,000 289,505 --------------- 1,117,037 --------------- Connecticut - 2.2% Connecticut State Resources Recovery Authority, 7.625%, 1/01/09 .................................................... 200,000 207,280 --------------- District of Columbia - 2.8% District of Columbia Water & Sewer, (FSA Insured), 5.500%, 10/01/11 .......................................... 250,000 266,992 --------------- Florida - 2.7% Florida State, General Obligation, 5.250%, 7/01/15 .......... 250,000 255,268 --------------- Hawaii - 2.2% Honolulu, Hawaii, General Obligation, 5.000%, 10/01/13 ...... 200,000 203,344 --------------- Illinois - 14.6% Chicago Metropolitan Water Reclamation, 5.950%, 12/01/07 .... 300,000 334,062 Chicago O'Hare International Airport, 5.000%, 1/01/16 ....... 300,000 295,872 Chicago, Illinois, General Obligation, (AMBAC Insured), 5.250%, 1/01/15 ........................................... 250,000 253,360 Illinois Development Finance Authority Pollution Control, 7.250%, 6/01/11 ........................................... 25,000 27,077 Illinois State Sales Tax Revenue, 6.375%, 6/15/14 ........... 150,000 166,743 Illinois State Sales Tax Revenue, (FGIC Insured), 5.000%, 6/15/16 ................................................... 300,000 295,797 --------------- 1,372,911 --------------- Louisiana - 2.2% Regional Transportation Authority, (FGIC Insured), 8.000%, 12/01/08 .................................................. 200,000 207,486 --------------- Maryland - 2.3% Baltimore, Maryland Pollution Control, 5.350%, 4/01/08 ...... 200,000 212,474 --------------- Massachusetts - 4.9% Commonwealth of Massachusetts Water Pollution Control, 5.000%, 8/01/14 250,000 248,622 Plymouth County Certificates of Participation, 6.500%, 4/01/01 200,000 211,772 --------------- 460,394 --------------- Michigan - 2.7% Detroit, Michigan, (MBIA Insured), 5.000%, 4/01/06 .......... 250,000 259,065 --------------- New Jersey - 5.3% New Jersey Building Authority State Building, 5.750%, 6/15/09. 250,000 274,622 New Jersey State Turnpike Authority, 6.500%, 1/01/08 ........ 200,000 227,338 --------------- 501,960 --------------- New York - 22.6% Long Island Power Authority New York, (FSA Insured), 5.000%, 12/01/18 .................................................. $250,000 $ 244,667 New York City Housing Development Corp., 5.625%, 5/01/12 .... 150,000 155,433 New York City Transitional Finance Authority, 5.000%, 8/15/13. 200,000 199,568 New York City, General Obligation, 7.000%, 8/01/98 .......... 5,000 5,014 New York State Certificates of Participation, 5.650%, 8/01/02. 160,000 167,826 New York State Dormitory Authority, 5.100%, 2/15/12 ......... 250,000 250,115 New York State Dormitory Authority, 6.375%, 7/01/08 ......... 85,000 92,169 New York State Dormitory Authority, 6.500%, 5/15/05 ......... 250,000 279,425 New York State Dormitory Authority Prerefunded, 6.375%, 7/01/08 .................................................... 115,000 126,433 New York State Environmental Pollution Control, 5.150%, 6/15/13 .................................................... 125,000 127,328 New York State Environmental Pollution Control, 5.750%, 6/15/10 .................................................... 250,000 275,002 New York State, General Obligation, 5.250%, 7/15/10 ......... 200,000 208,232 --------------- 2,131,212 --------------- Pennsylvania - 1.5% Pennsylvania Finance Authority Revenue Bond, 6.600%, 11/01/09. 125,000 138,474 --------------- Puerto Rico - 2.7% Puerto Rico Electric Power Authority, 6.125%, 7/01/09 ....... 225,000 251,071 --------------- Rhode Island - 2.7% Rhode Island Convention Center Authority, (MBIA Insured), 5.000%, 5/15/10 ............................................ 250,000 258,133 --------------- Tennessee - 0.3% Metropolitan Nashville Airport, (FGIC Insured), 6.600%, 7/01/15 .................................................... 30,000 32,488 --------------- Virginia - 3.1% Pocahontas Parkway Association Virginia Toll, 5.000%, 8/15/11. 300,000 292,932 --------------- Washington - 2.6% Tacoma, Washington Electric Systems Revenue, (FGIC Insured), 6.100%, 1/01/07 ........................................... 225,000 247,057 --------------- Wyoming - 2.8% Platte County Pollution Control, (MBIA Insured), 5.100%, 1/01/08 .................................................... 250,000 260,120 --------------- TOTAL MUNICIPAL BONDS AND NOTES (Identified Cost $8,506,642)................................ 8,934,569 --------------- U.S. GOVERNMENT - 2.2% OF NET ASSETS U.S. Government - 2.2% U.S. Treasury Notes, 5.625%, 12/31/02 ....................... 200,000 200,874 --------------- TOTAL U.S. GOVERNMENT (Identified Cost $201,766).................................. 200,874 --------------- SHORT-TERM INVESTMENTS - 4.8% OF NET ASSETS Repurchase Agreement with State Street Bank and Trust Co., dated 6/29/98 at 5.000% to be repurchased at $336,093 on 7/ 01/98 collateralized by $335,000 U.S. Treasury Notes, 6.125%, due 7/31/00 with a value of $347,214 .............. 336,000 336,000 Repurchase Agreement with State Street Bank and Trust Co., dated 6/30/98 at 5.000% to be repurchased at $117,016 on 7/ 01/98 collateralized by $120,000 U.S. Treasury Notes 6.250% due 6/30/02 with a value of $122,642 ...................... 117,000 117,000 --------------- TOTAL SHORT-TERM INVESTMENTS (Identified Cost $453,000).................................. 453,000 --------------- TOTAL INVESTMENTS - 101.7% (IDENTIFIED COST $9,161,408) (b) ............................. 9,588,443 Liabilities, Less Cash and Other Assets -- (1.7%)............... (156,287) --------------- NET ASSETS - 100% .............................................. 9,432,156 =============== (a) See Note 1. (b) At June 30, 1998, the net unrealized appreciation on investments based on cost of $9,161,408 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 $447,787 and $20,752, respectively, resulting in net unrealized appreciation of $427,035. Key to Abbreviations: AMBAC: American Municipal Bond Assurance Corporation FGIC: Federal Guaranty Insurance Corporation FSA: Financial Security Assurance MBIA: Municipal Bond Insurance Association
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- LOOMIS SAYLES SHORT-TERM BOND FUND - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED)
FACE AMOUNT VALUE (A) - ------------------------------------------------------------------------------------------------------- BONDS AND NOTES -- 91.6% OF NET ASSETS Aerospace -- 2.1% Lockheed Martin Corp., 6.550%, 5/15/99 ................... $ 570,000 $ 572,713 ---------------- Airlines -- 4.5% Delta Air Lines, Inc., 7.790%, 12/01/98 .................. 800,000 806,184 Northwest Airlines Corp., 8.375%, 3/15/04 ................ 400,000 412,464 ---------------- 1,218,648 ---------------- Banks/Savings & Loans -- 4.4% Capital One Bank, 6.830%, 5/17/99 ........................ 560,000 562,492 Household Bank FSB, 6.250%, 4/01/99 ...................... 625,000 626,612 ---------------- 1,189,104 ---------------- Computers -- 2.4% Comdisco, Inc., 5.760%, 1/19/99 .......................... 670,000 669,169 ---------------- Consumer Services -- 2.1% Loewen Group International, Inc., 7.750%, 10/15/01 ....... 560,000 583,442 ---------------- Diversified Operations -- 2.9% Williams Companies, Inc., 5.950%, 2/15/00 ................ 800,000 797,272 ---------------- Electronics -- 1.0% Tektronix, Inc., 7.625%, 8/15/02 ......................... 250,000 260,337 ---------------- Entertainment -- 0.8% Time Warner, Inc., 7.950%, 2/01/00 ....................... 200,000 205,512 ---------------- Financial Services -- 5.3% Fleetwood Credit Grantor Trust, 6.900%, 3/15/12 .......... 372,011 377,286 Ford Motor Credit Co., 6.125%, 4/28/03 ................... 710,000 710,050 Sears Roebuck Acceptance Corp., 6.950%, 5/15/02 .......... 340,000 349,462 ---------------- 1,436,798 ---------------- Foreign Issuer -- 2.3% PDVSA Finance Ltd., 6.650%, 2/15/06 ...................... 645,000 634,648 ---------------- Government Agencies -- 10.5% Federal Home Loan Mortgage Corp., 6.000%, 2/01/13 ........ 483,449 478,765 Federal Home Loan Mortgage Corp., 6.500%, 5/15/08 ........ 520,000 523,411 Federal National Mortgage Association, 6.000%, 3/01/13 ... 1,095,010 1,083,030 Federal National Mortgage Association, 6.000%, 4/01/13 ... 796,429 787,716 ---------------- 2,872,922 ---------------- Oil & Gas -- 1.8% Occidental Petroleum Corp., 5.850%, 11/09/98 ............. 500,000 499,555 ---------------- Paper Products -- 1.3% Fort James Corp., 6.625%, 9/15/04 ........................ 360,000 365,393 ---------------- Real Estate Investment Trusts -- 0.7% Oasis Residential, Inc., 7.000%, 11/15/03 ................ 200,000 203,538 ---------------- Securities -- 4.0% Salomon Brothers, Inc., 5.500%, 1/15/99 .................. 640,000 639,501 Salomon Brothers, Inc., 7.125%, 8/01/99 .................. 450,000 455,346 ---------------- 1,094,847 ---------------- Telecommunications -- 1.8% Sprint Spectrum L.P., Zero Coupon Bond, 8/15/06 (step to 12.500% on 8/15/01) (b) ....................... 560,000 478,800 ---------------- Textile & Apparel -- 1.1% Tommy Hilfiger Corp., 6.500%, 6/01/03 .................... 300,000 299,736 ---------------- Trucking & Leasing -- 1.6% Amerco, 7.850%, 5/15/03 .................................. 420,000 436,510 ---------------- U.S. Government -- 36.6% U.S. Treasury Notes, 6.125%, 7/31/00 ..................... 1,495,000 1,512,745 U.S. Treasury Notes, 6.250%, 10/31/01 .................... 1,000,000 1,020,780 U.S. Treasury Notes, 6.250%, 1/31/02 ..................... 2,995,000 3,061,908 U.S. Treasury Notes, 6.250%, 2/15/03 ..................... 1,090,000 1,121,676 U.S. Treasury Notes, 6.375%, 4/30/99 ..................... 300,000 302,109 U.S. Treasury Notes, 6.625%, 7/31/01 ..................... 1,500,000 1,545,465 U.S. Treasury Notes, 6.875%, 8/31/99 ..................... 800,000 812,000 U.S. Treasury Strips, Zero Coupon Bond, 2/15/04 .......... 860,000 633,476 ---------------- 10,010,159 ---------------- Utilities -- 4.4% Detroit Edison Co., 6.340%, 3/15/00 ...................... 670,000 674,060 El Paso Electric Co., 7.250%, 2/01/99 .................... 520,000 521,815 ---------------- 1,195,875 ---------------- TOTAL BONDS AND NOTES (Identified Cost $24,858,826)............................ 25,024,978 ---------------- SHORT-TERM INVESTMENTS -- 6.8% OF NET ASSETS Financial Services -- 6.8% American Express Co., 5.950%, 7/01/98 .................... 900,000 900,000 Associates Corp. of North America, 5.950%, 7/01/98 ....... 960,000 960,000 ---------------- 1,860,000 ---------------- TOTAL SHORT-TERM INVESTMENTS (Identified Cost $1,860,000)............................. 1,860,000 ---------------- TOTAL INVESTMENTS -- 98.4% (IDENTIFIED COST $26,718,826) (c) ......................... 26,884,978 Cash and Other Assets, Less Liabilities -- 1.6%.............. 435,182 ---------------- TOTAL NET ASSETS -- 100% .................................... $ 27,320,160 ================ (a) See Note 1. (b) Step Bond: Coupon is zero or below market rate for an initial period and then increases at a specified date and rate. (c) At June 30, 1998, the net unrealized appreciation on investments based on cost of $26,718,826 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 $196,440 and $30,288, respectively, resulting in net unrealized appreciation of $166,152.
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- LOOMIS SAYLES U.S. GOVERNMENT SECURITIES FUND - ------------------------------------------------------------------------------- PORTFOLIO OF INVESTMENTS -- AS OF JUNE 30, 1998 (UNAUDITED)
FACE AMOUNT VALUE (A) - ------------------------------------------------------------------------------------------------------- BONDS AND NOTES -- 98.8% OF NET ASSETS Government Agencies -- 41.3% Federal Home Loan Bank, Zero Coupon Bond, 8/04/17 ........ $ 5,400,000 $ 1,188,000 Government National Mortgage Association, 6.500%, 5/15/28 3,328,685 3,322,361 Government National Mortgage Association, 7.000%, 1/15/28 995,533 1,011,392 Government National Mortgage Association, 7.500%, 8/15/26 561,405 577,017 Government National Mortgage Association, 7.500%, 9/15/27 2,083,961 2,141,916 Tennessee Valley Authority, 8.625%, 11/15/29 ............. 514,000 558,461 ---------------- 8,799,147 ---------------- U.S. Government -- 57.5% U.S. Treasury Bonds, 3.625%, 4/15/28 (b) ................. 2,786,813 2,752,842 U.S. Treasury Bonds, 7.250%, 5/15/16 ..................... 3,125,000 3,661,125 U.S. Treasury Bonds, 7.500%, 11/15/24 .................... 2,810,000 3,486,592 U.S. Treasury Notes, 3.375%, 1/15/07 (b) ................. 2,256,166 2,184,961 U.S. Treasury Notes, 5.750%, 11/15/00 .................... 140,000 140,700 ---------------- 12,226,220 ---------------- TOTAL BONDS AND NOTES (Identified Cost $20,499,041)............................ 21,025,367 ---------------- TOTAL INVESTMENTS -- 98.8% (IDENTIFIED COST $20,499,041) (c) ......................... 21,025,367 Cash and Other Assets, Less Liabilities -- 1.2%.............. 258,509 ---------------- NET ASSETS -- 100% .......................................... $ 21,283,876 ================ (a) See Note 1. (b) Treasury Inflation Protection Securities (TIPS): Face amount of these bonds and notes will be adjusted for changes in the level of inflation as indexed to the non-seasonally adjusted consumer price index (CPI). (c) At June 30, 1998, the net unrealized appreciation on investments based on cost of $20,499,041 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 $566,578 and $40,252, respectively, resulting in net unrealized appreciation of $526,326.
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES - ------------------------------------------------------------------------------------------------------ June 30, 1998 (unaudited) Global Bond Bond Fund Fund ------------------ --------------- ASSETS Investments at value .................................... $ 1,648,861,700 $ 35,713,577 Cash .................................................... 312 121 Foreign currency at value ............................... 18 24,534 Receivable for: Fund Shares sold ...................................... 8,419,485 57,726 Securities sold ....................................... 572,832 0 Forward foreign currency exchange contracts (Note 1D) . 0 32,296 Dividends and interest -- net ......................... 28,370,657 589,349 Due from the adviser (Note 3) ........................... 1,470 20,621 Other assets ............................................ 0 0 --------------- --------------- 1,686,226,474 36,438,224 --------------- --------------- LIABILITIES Payable for: Securities purchased .................................. 767,498 0 Fund Shares redeemed .................................. 1,897,467 56,315 Dividends declared .................................... 0 0 Accrued expenses: Management fees (Note 3) .............................. 813,039 18,092 Trustees' fees (Note 3A) .............................. 1,571 1,555 Administrative fees ................................... 69,439 2,010 Other expenses ........................................ 67,011 23,157 --------------- --------------- 3,616,025 101,129 --------------- --------------- NET ASSETS ................................................ $ 1,682,610,449 $ 36,337,095 =============== =============== Net Assets consist of: Capital paid in ....................................... $ 1,607,789,251 $ 37,081,228 Undistributed (or Distribution in excess of) net investment income ................................... 28,960,384 836,162 Accumulated net realized gain (loss) .................. 22,844,872 911,417 Unrealized appreciation (depreciation) on: Investments ......................................... 23,082,598 (2,518,305) Foreign currency translations ....................... (66,656) 26,593 --------------- --------------- NET ASSETS ................................................ $ 1,682,610,449 $ 36,337,095 =============== =============== INSTITUTIONAL CLASS: Net assets .............................................. $ 1,626,806,086 $ 30,692,268 Shares of beneficial interest outstanding, no par value . 123,534,539 2,546,266 Net asset value and redemption price per Institutional share* ................................................ $ 13.17 $ 12.05 RETAIL CLASS: Net assets .............................................. $ 55,478,149 $ 5,644,827 Shares of beneficial interest outstanding, no par value . 4,217,286 468,822 Net asset value and redemption price per Retail share* .. $ 13.15 $ 12.04 ADMIN CLASS: Net assets .............................................. $ 326,214 -- Shares of beneficial interest outstanding, no par value . 24,811 -- Net asset value and redemption price per Admin share .... $ 13.15 $ -- Identified cost of investments ............................ $ 1,625,779,102 $ 38,231,882 =============== =============== *The redemption price per share for the Institutional and Retail Classes, of the High Yield Fund for shares held less than one year is equal to net asset value less 2% of the amount redeemed. (See Note 1I)
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------- HIGH INTERMEDIATE INVESTMENT MUNICIPAL SHORT-TERM U.S. GOVERNMENT YIELD MATURITY BOND GRADE BOND BOND SECURITIES FUND FUND BOND FUND FUND FUND FUND - ------------ ------------ ------------ ------------ ------------ ------------ $ 12,752,386 $ 9,166,228 $ 4,593,866 $ 9,588,443 $ 26,884,978 $ 21,025,367 555 67 107 724 127 78,699 0 0 0 0 0 0 80,148 0 49,990 11,657 59,316 70,120 0 0 0 0 0 0 0 0 0 0 0 0 225,179 137,511 62,742 134,657 417,197 159,297 40,807 39,015 35,578 23,496 14,281 17,492 5,587 0 0 0 0 0 - ------------ ------------ ------------ ------------ ------------ ------------ 13,104,662 9,342,821 4,742,283 9,758,977 27,375,899 21,350,975 - ------------ ------------ ------------ ------------ ------------ ------------ 53,570 301,280 301,616 293,277 0 0 2,373 0 0 0 0 33,177 0 0 0 11,757 15,583 0 19,108 8,578 4,051 9,104 15,881 20,998 1,555 1,555 1,575 1,555 1,555 1,555 1,671 893 656 383 1,768 903 21,621 18,290 16,468 10,745 20,952 10,466 - ------------ ------------ ------------ ------------ ------------ ------------ 99,898 330,596 324,366 326,821 55,739 67,099 - ------------ ------------ ------------ ------------ ------------ ------------ $ 13,004,764 $ 9,012,225 $ 4,417,917 $ 9,432,156 $ 27,320,160 $ 21,283,876 ============ ============ ============ ============ ============ ============ $ 13,410,494 $ 8,869,051 $ 4,239,414 $ 8,894,726 $ 27,555,416 $ 20,961,896 302,255 143,398 67,740 0 (3,124) 305,014 261,696 59,181 46,062 110,395 (398,284) (509,360) (969,619) (59,405) 65,072 427,035 166,152 526,326 (62) 0 (371) 0 0 0 - ------------ ------------ ------------ ------------ ------------ ------------ $ 13,004,764 $ 9,012,225 $ 4,417,917 $ 9,432,156 $ 27,320,160 $ 21,283,876 ============ ============ ============ ============ ============ ============ $ 6,190,499 $ 8,477,938 $ 2,940,333 $ 9,432,156 $ 27,065,423 $ 21,283,876 615,029 827,645 272,328 807,532 2,770,217 1,928,955 $ 10.07 $ 10.24 $ 10.80 $ 11.68 $ 9.77 $ 11.03 $ 6,814,265 $ 534,287 $ 1,477,584 -- $ 254,737 -- 677,317 52,201 137,015 -- 26,075 -- $ 10.06 $ 10.24 $ 10.78 -- $ 9.77 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- $ 13,722,005 $ 9,225,633 $ 4,528,794 $ 9,161,408 $ 26,718,826 $ 20,499,041 ============ ============ ============ ============ ============ ============
LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF OPERATIONS - ------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
GLOBAL BOND BOND FUND FUND --------------- --------------- INVESTMENT INCOME Dividends* .............................................. $ 771,927 $ 0 Interest ................................................ 58,413,825 1,150,045 --------------- --------------- 59,185,752 1,150,045 --------------- --------------- Expenses Management fees (Note 3) .............................. 4,486,732 101,422 12b-1 fees (Retail Class) ............................. 55,931 5,726 12b-1 fees (Admin Class) .............................. 26 0 Trustees' fees and expenses (Note 3A) ................. 2,791 2,815 Administrative fees ................................... 363,260 9,356 Custodian and accounting fees ......................... 206,355 39,490 Transfer agent fees (Institutional Class) ............. 143,813 9,140 Transfer agent fees (Retail Class) .................... 15,224 10,138 Transfer agent fees (Admin Class) ..................... 1,500 0 Audit and tax services fees ........................... 6,338 6,347 Legal fees ............................................ 1,674 2,125 Printing fees ......................................... 56,098 1,303 Registration fees ..................................... 224,301 11,724 Amortization of organization expenses (Note 1J): Institutional Class ................................. 0 0 Amortization of deferred registration costs (Note 1J): Institutional Class ................................. 0 0 Retail Class ........................................ 574 485 Miscellaneous expenses ................................ 1,671 2,499 --------------- --------------- Total expenses ........................................ 5,566,288 202,570 Less expenses waived and reimbursed by the investment adviser (Note 3) .................................... (8,871) (44,710) --------------- --------------- Net expenses .......................................... 5,557,417 157,860 --------------- --------------- Net investment income (loss) ............................ 53,628,335 992,185 --------------- --------------- NET REALIZED GAIN (LOSS) ON: Investments ............................................. 14,530,104 592,319 Foreign currency transactions ........................... (203,007) 204,817 --------------- --------------- Total net realized gain (loss) .......................... 14,327,097 797,136 --------------- --------------- CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments ............................................. (7,793,848) (1,176,237) Foreign currency translations ........................... 892 (120,663) --------------- --------------- Total net change in unrealized appreciation (depreciation) (7,792,956) (1,296,900) --------------- --------------- Total net realized gain (loss) and change in unrealized appreciation (depreciation) ........................... 6,534,141 (499,764) --------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ..... $ 60,162,476 $ 492,421 =============== =============== *Net of foreign withholding taxes of $309 for the High Yield Fund.
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------- HIGH INTERMEDIATE INVESTMENT MUNICIPAL SHORT-TERM U.S. GOVERNMENT YIELD MATURITY BOND GRADE BOND BOND SECURITIES FUND FUND BOND FUND FUND FUND FUND - ------------ ------------ ------------ ------------ ------------ ------------ $ 29,827 $ 0 $ 6,626 $ 0 $ 0 $ 0 563,618 294,320 133,193 236,957 750,396 626,935 - ------------ ------------ ------------ ------------ ------------ ------------ 593,445 294,320 139,819 236,957 750,396 626,935 - ------------ ------------ ------------ ------------ ------------ ------------ 33,404 16,141 7,732 17,997 28,916 40,138 6,314 613 1,431 0 417 0 0 0 0 0 0 0 2,815 2,815 2,796 2,815 2,815 2,815 5,056 3,695 2,675 2,108 7,104 4,951 34,893 30,069 29,607 24,313 28,841 20,000 9,040 9,149 8,947 9,102 9,473 9,229 9,228 9,001 9,053 0 9,009 0 0 0 0 0 0 0 8,851 6,808 6,808 6,347 6,347 6,347 2,124 2,124 2,331 2,124 2,124 2,124 393 304 148 338 839 734 16,379 12,721 10,139 7,307 12,022 8,212 843 0 0 0 0 0 0 5,191 738 0 0 0 522 336 298 0 784 0 1,518 268 1,801 1,677 2,257 1,695 - ------------ ------------ ------------ ------------ ------------ ------------ 131,380 99,235 84,504 74,128 110,948 96,245 (83,297) (76,427) (72,441) (47,133) (52,699) (36,038) - ------------ ------------ ------------ ------------ ------------ ------------ 48,083 22,808 12,063 26,995 58,249 60,207 - ------------ ------------ ------------ ------------ ------------ ------------ 545,362 271,512 127,756 209,962 692,147 566,728 - ------------ ------------ ------------ ------------ ------------ ------------ 182,584 36,118 28,432 93,926 20,524 406,966 (1,244) 0 (778) 0 0 0 - ------------ ------------ ------------ ------------ ------------ ------------ 181,340 36,118 27,654 93,926 20,524 406,966 - ------------ ------------ ------------ ------------ ------------ ------------ (710,903) (22,932) (28,364) (108,196) 9,471 (91,984) (11) 0 (194) 0 0 0 - ------------ ------------ ------------ ------------ ------------ ------------ (710,914) (22,932) (28,558) (108,196) 9,471 (91,984) - ------------ ------------ ------------ ------------ ------------ ------------ (529,574) 13,186 (904) (14,270) 29,995 314,982 - ------------ ------------ ------------ ------------ ------------ ------------ $ 15,788 $ 284,698 $ 126,852 $ 195,692 $ 722,142 $ 881,710 ============ ============ ============ ============ ============ ============
LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
BOND FUND ------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 --------------- ---------------- (UNAUDITED) FROM OPERATIONS Net investment income (loss) ............................ $ 53,628,335 $ 66,908,609 Net realized gain (loss) ................................ 14,327,097 27,681,737 Change in unrealized appreciation (depreciation) ........ (7,792,956) 11,946,926 --------------- --------------- Increase (decrease) in net assets from operations .......................................... 60,162,476 106,537,272 --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ................................. (23,880,402) (65,355,045) Net realized gain on investments ...................... 0 (20,396,586) RETAIL CLASS Net investment income ................................. (715,274) (1,374,734) Net realized gain on investments ...................... 0 (518,253) ADMIN CLASS Net investment income ................................. 0 0 Net realized gain on investments ...................... 0 0 --------------- --------------- (24,595,676) (87,644,618) --------------- --------------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 5) Increase (decrease) in net assets derived from capital share transactions .......................... 351,893,815 735,013,367 --------------- --------------- Total increase (decrease) in net assets ................. 387,460,615 753,906,021 NET ASSETS Beginning of the period ................................. 1,295,149,834 541,243,813 --------------- --------------- End of the period ....................................... $ 1,682,610,449 $ 1,295,149,834 =============== =============== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ................................. $ (72,275) $ 537,972 =============== =============== End of the period ....................................... $ 28,960,384 $ (72,275) =============== ===============
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------
GLOBAL BOND FUND -------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 ---------------- --------------- (UNAUDITED) FROM OPERATIONS Net investment income (loss) ............................ $ 992,185 $ 1,741,065 Net realized gain (loss) ................................ 797,136 975,971 Change in unrealized appreciation (depreciation) ........................................ (1,296,900) (2,148,586) --------------- --------------- Increase (decrease) in net assets from operations .......................................... 492,421 568,450 --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ................................. 0 (1,536,299) In excess of net investment income .................... 0 (277,442) Net realized gain on investments ...................... 0 0 RETAIL CLASS Net investment income ................................. 0 (205,307) In excess of net investment income .................... 0 (34,122) Net realized gain on investments ...................... 0 0 --------------- --------------- 0 (2,053,170) --------------- --------------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 5) Increase (decrease) in net assets derived from capital share transactions ..................... 2,749,863 8,066,659 --------------- --------------- Total increase (decrease) in net assets ................. 3,242,284 6,581,939 NET ASSETS Beginning of the period ................................. 33,094,811 26,512,872 --------------- --------------- End of the period ....................................... $ 36,337,095 $ 33,094,811 =============== =============== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ................................. $ (156,023) $ (34,950) =============== =============== End of the period ....................................... $ 836,162 $ (156,023) =============== ===============
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------
HIGH YIELD FUND ------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997 --------------- --------------- (UNAUDITED) FROM OPERATIONS Net investment income (loss) ............................ $ 545,362 $ 504,906 Net realized gain (loss) ................................ 181,340 281,454 Change in unrealized appreciation (depreciation) ........................................ (710,914) (263,154) --------------- --------------- Increase in net assets from operations ................ 15,788 523,206 --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ................................. (137,577) (358,018) Net realized gain on investments ...................... 0 (122,085) RETAIL CLASS Net investment income ................................. (105,217) (165,367) Net realized gain on investments ...................... 0 (77,373) --------------- --------------- (242,794) (722,843) --------------- --------------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 5) Increase (decrease) in net assets derived from capital share transactions ..................... 4,820,071 6,653,668 --------------- --------------- Redemption Fees (Note 1I) ............................. 4,045 14,733 --------------- --------------- Total increase (decrease) in net assets ................. 4,597,110 6,468,764 NET ASSETS Beginning of period ..................................... 8,407,654 1,938,890 --------------- --------------- End of period ........................................... $ 13,004,764 $ 8,407,654 =============== =============== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of period ..................................... $ (313) $ 8,960 =============== =============== End of period ........................................... $ 302,255 $ (313) =============== ===============
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
INTERMEDIATE MATURITY BOND FUND ------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997* --------------- --------------- (UNAUDITED) FROM OPERATIONS Net investment income (loss) ............................ $ 271,512 $ 273,997 Net realized gain (loss) ................................ 36,118 34,360 Change in unrealized appreciation (depreciation) ........................................ (22,932) (36,473) --------------- --------------- Increase (decrease) in net assets from operations .......................................... 284,698 271,884 --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ................................. (120,073) (261,480) In excess of net investment income .................... 0 (21,107) Net realized gain on investments ...................... 0 (9,770) RETAIL CLASS Net investment income ................................. (7,273) (12,922) In excess of net investment income .................... 0 (1,154) Net realized gain on investments ...................... 0 (660) --------------- --------------- (127,346) (307,093) --------------- --------------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 5) Increase (decrease) in net assets derived from capital share transactions ........................................ 2,127,361 6,762,701 --------------- --------------- Total increase (decrease) in net assets ................. 2,284,713 6,727,492 NET ASSETS Beginning of the period ................................. 6,727,512 20 --------------- --------------- End of the period ....................................... $ 9,012,225 $ 6,727,512 =============== =============== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ................................. $ (768) $ 0 =============== =============== End of the period ....................................... $ 143,398 $ (768) =============== =============== * Commencement of operations, January 2, 1997.
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
INVESTMENT GRADE BOND FUND ------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997* --------------- --------------- (UNAUDITED) FROM OPERATIONS Net investment income (loss) ............................ $ 127,756 $ 144,252 Net realized gain (loss) ................................ 27,654 53,214 Change in unrealized appreciation (depreciation) ........................................ (28,558) 93,259 --------------- --------------- Increase (decrease) in net assets from operations .......................................... 126,852 290,725 --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ................................. (42,543) (116,549) In excess of net investment income .................... 0 (18,144) Net realized gain on investments ...................... 0 (26,811) RETAIL CLASS Net investment income ................................. (17,429) (27,969) In excess of net investment income .................... 0 (5,864) Net realized gain on investments ...................... 0 (9,286) --------------- --------------- (59,972) (204,623) --------------- --------------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 5) Increase (decrease) in net assets derived from capital share transactions ........................................ 1,044,062 3,220,853 --------------- --------------- Total increase (decrease) in net assets ................. 1,110,942 3,306,955 NET ASSETS Beginning of the period ................................. 3,306,975 20 --------------- --------------- End of the period ....................................... $ 4,417,917 $ 3,306,975 =============== =============== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ................................. $ (44) $ 0 =============== =============== End of the period ....................................... $ 67,740 $ (44) =============== =============== * Commencement of operations, January 2, 1997
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------
MUNICIPAL BOND FUND ------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997* --------------- --------------- (UNAUDITED) FROM OPERATIONS Net investment income (loss) ............................ $ 209,962 $ 417,885 Net realized gain (loss) ................................ 93,926 70,207 Change in unrealized appreciation (depreciation) ........................................ (108,196) 291,399 --------------- --------------- Increase (decrease) in net assets from operations .......................................... 195,692 779,491 --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ................................. (209,962) (421,574) Net realized gain on investments ...................... 0 (76,418) --------------- --------------- (209,962) (497,992) --------------- --------------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 5) Increase (decrease) in net assets derived from capital share transactions ..................... 694,482 (230,703) --------------- --------------- Total increase (decrease) in net assets ................. 680,212 50,796 NET ASSETS Beginning of the period ................................. 8,751,944 8,701,148 --------------- --------------- End of the period ....................................... $ 9,432,156 $ 8,751,944 =============== =============== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ................................. $ 0 $ 3,777 =============== =============== End of the period ....................................... $ 0 $ 0 =============== ===============
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------
SHORT-TERM BOND FUND ------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997* --------------- --------------- (UNAUDITED) FROM OPERATIONS Net investment income (loss) ............................ $ 692,147 $ 1,044,815 Net realized gain (loss) ................................ 20,524 4,131 Change in unrealized appreciation (depreciation) ........................................ 9,471 82,076 --------------- --------------- Increase (decrease) in net assets from operations ..... 722,142 1,131,022 --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ................................. (682,660) (1,046,180) Net realized gain on investments ...................... 0 0 RETAIL CLASS Net investment income ................................. (9,487) (10,909) Net realized gain on investments ...................... 0 0 --------------- --------------- (692,147) (1,057,089) --------------- --------------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 5) Increase (decrease) in net assets derived from capital share transactions ..................... 8,213,661 773,904 --------------- --------------- Total increase (decrease) in net assets ................. 8,243,656 847,837 NET ASSETS Beginning of the period ................................. 19,076,504 18,228,667 --------------- --------------- End of the period ....................................... $ 27,320,160 $ 19,076,504 =============== =============== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ................................. $ (3,124) $ 10,736 =============== =============== End of the period ....................................... $ (3,124) $ (3,124) =============== ===============
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES FUND ------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 1998 DECEMBER 31, 1997* --------------- --------------- (UNAUDITED) FROM OPERATIONS Net investment income (loss) ............................ $ 566,728 $ 865,819 Net realized gain (loss) ................................ 406,966 377,725 Change in unrealized appreciation (depreciation) ........................................ (91,984) 420,082 --------------- --------------- Increase (decrease) in net assets from operations .......................................... 881,710 1,663,626 --------------- --------------- FROM DISTRIBUTIONS TO SHAREHOLDERS INSTITUTIONAL CLASS Net investment income ................................. (264,930) (857,571) Net realized gain on investments ...................... 0 0 --------------- --------------- (264,930) (857,571) --------------- --------------- FROM CAPITAL SHARES TRANSACTIONS (NOTE 5) Increase (decrease) in net assets derived from capital share transactions ..................... 2,998,661 2,670,263 --------------- --------------- Total increase (decrease) in net assets ................. 3,615,441 3,476,318 NET ASSETS Beginning of the period ................................. 17,668,435 14,192,117 --------------- --------------- End of the period ....................................... $ 21,283,876 $ 17,668,435 =============== =============== UNDISTRIBUTED NET INVESTMENT INCOME Beginning of the period ................................. $ 3,216 $ (4,942) =============== =============== End of the period ....................................... $ 305,014 $ 3,216 =============== ===============
See accompanying notes to financial statements. LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31,
BOND FUND ------------------------------------ INSTITUTIONAL CLASS ------------------------------------ 1998* 1997 --------------- --------------- (UNAUDITED) Net asset value, beginning of period ...................... $ 12.83 $ 12.38 --------------- --------------- INCOME FROM INVESTMENT OPERATIONS -- Net investment income (loss) ............................ 0.44 0.86 Net realized and unrealized gain (loss) on investments .. 0.11 0.67 --------------- --------------- Total from investment operations ...................... 0.55 1.53 --------------- --------------- LESS DISTRIBUTIONS -- Dividends from net investment income .................... (0.21) (0.86) Distributions in excess of net investment income ........ 0.00 0.00 Distributions from net realized capital gains ........... 0.00 (0.22) --------------- --------------- Total distributions ................................... (0.21) (1.08) --------------- --------------- Net asset value, end of period ............................ $ 13.17 $ 12.83 =============== =============== Total return (%)(a) ....................................... 4.3 12.7 Net assets, end of period (000) ........................... $ 1,626,806 $ 1,261,910 Ratio of operating expenses to average net assets (%)(b)(c) 0.74 0.75 Ratio of net investment income to average net assets (%)(b) 7.18 7.36 Portfolio turnover rate (%) ............................... 9 41 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) 0.74 0.77 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ............ $ 0.44 $ 0.85 * For the six months ended June 30, 1998. ** From commencement of class operations on January 2, 1997. *** 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. (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 FIXED INCOME FUNDS - --------------------------------------------------------------------------------
BOND FUND - ------------------------------------------------------------------------------------------------------------------ RETAIL ADMIN INSTITUTIONAL CLASS CLASS CLASS ------------------------------------------------------------------ --------------------------- ------------ 1996 1995 1994 1993 1998* 1997** 1998*** - ------------ ------------ ------------ ------------ ------------ ------------ ------------ (UNAUDITED) (UNAUDITED) $ 12.29 $ 10.05 $ 11.37 $ 10.36 $ 12.82 $ 12.38 $ 12.83 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ 0.86 0.82 0.83 0.84 0.43 0.84(d) 0.23 0.35 2.32 (1.29) 1.43 0.10 0.65 0.29 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ 1.21 3.14 (0.46) 2.27 0.53 1.49 0.52 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ (0.86) (0.82) (0.84) (0.81) (0.20) (0.83) (0.20) 0.00 0.00 (0.02) 0.00 0.00 0.00 0.00 (0.26) (0.08) 0.00 (0.45) 0.00 (0.22) 0.00 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ (1.12) (0.90) (0.86) (1.26) (0.20) (1.05) (0.20) - ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 12.38 $ 12.29 $ 10.05 $ 11.37 $ 13.15 $ 12.82 $ 13.15 ============ ============ ============ ============ ============ ============ ============ 10.3 32.0 (4.1) 22.2 4.2 12.4 4.0 $ 541,244 $ 255,710 $ 82,985 $ 64,222 $ 55,478 $ 33,240 $ 326 0.75 0.79 0.84 0.94 1.00 1.00 1.25 7.93 8.34 7.92 8.26 6.93 7.09 7.64 42 35 87 170 9 41 9 0.75 0.79 0.84 0.94 1.03 1.20 15.51 $ 0.86 $ 0.82 $ 0.83 $ 0.84 $ 0.42 $ 0.82(d) $ (0.20)
LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31,
GLOBAL BOND FUND ------------------------------------ INSTITUTIONAL CLASS ------------------------------------ 1998* 1997 --------------- --------------- (UNAUDITED) Net asset value, beginning of period ...................... $ 11.83 $ 12.35 --------------- --------------- INCOME FROM INVESTMENT OPERATIONS -- Net investment income (loss) ............................ 0.34 0.71 Net realized and unrealized gain (loss) on investments .. (0.12) (0.42) --------------- --------------- Total from investment operations ...................... 0.22 0.29 --------------- --------------- LESS DISTRIBUTIONS -- Dividends from net investment income .................... 0.00 (0.69) Distributions in excess of net investment income ........ 0.00 (0.12) Distributions from capital .............................. 0.00 0.00 Distributions from net realized capital gains ........... 0.00 0.00 --------------- --------------- Total distributions ................................... 0.00 (0.81) --------------- --------------- Net asset value, end of period ............................ $ 12.05 $ 11.83 =============== =============== Total return (%)(a) ....................................... 1.9 2.3 Net assets, end of period (000) ........................... $ 30,692 $ 28,401 Ratio of operating expenses to average net assets (%)(b)(c) 0.90 0.90 Ratio of net investment income to average net assets (%)(b) 5.90 5.88 Portfolio turnover rate (%) ............................... 13 75 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) 1.11 1.22 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ............ $ 0.33 $ 0.67 * 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 FIXED INCOME FUNDS - --------------------------------------------------------------------------------
GLOBAL BOND FUND - -------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS - ------------------------------------------------------------------- --------------------------- 1996 1995 1994 1993 1998* 1997** - ------------ ------------ ------------ ------------ ------------ ------------ (UNAUDITED) $ 11.39 $ 9.82 $ 11.06 $ 10.32 $ 11.83 $ 12.35 - ------------ ------------ ------------ ------------ ------------ ------------ 0.44 1.04 0.67 0.54 0.29 0.63(d) 1.27 1.31 (1.63) 0.96 (0.08) (0.37) - ------------ ------------ ------------ ------------ ------------ ------------ 1.71 2.35 (0.96) 1.50 0.21 0.26 - ------------ ------------ ------------ ------------ ------------ ------------ (0.75) (0.78) (0.04) (0.49) 0.00 (0.69) 0.00 0.00 0.00 0.00 0.00 (0.09) 0.00 0.00 (0.24) 0.00 0.00 0.00 0.00 0.00 0.00 (0.27) 0.00 0.00 - ------------ ------------ ------------ ------------ ------------ ------------ (0.75) (0.78) (0.28) (0.76) 0.00 (0.78) - ------------ ------------ ------------ ------------ ------------ ------------ $ 12.35 $ 11.39 $ 9.82 $ 11.06 $ 12.04 $ 11.83 ============ ============ ============ ============ ============ ============ 15.0 23.9 (8.7) 14.6 1.8 2.0 $ 26,513 $ 10,304 $ 25,584 $ 21,378 $ 5,645 $ 4,694 1.50 1.50 1.30 1.50 1.15 1.15 6.37 8.17 7.02 5.54 5.65 5.60 131 148 153 150 13 75 1.77 1.69 1.30 1.51 1.74 2.44 $ 0.42 $ 1.02 $ 0.67 $ 0.54 $ 0.26 $ 0.49(d)
LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, HIGH YIELD FUND ------------- INSTITUTIONAL CLASS ------------- 1998* ------------- (UNAUDITED) Net asset value, beginning of period ......................... $ 10.12 --------- INCOME FROM INVESTMENT OPERATIONS -- Net investment income (loss) ............................... 0.49 Net realized and unrealized gain (loss) on investments ..... (0.32) --------- Total from investment operations ......................... 0.17 --------- LESS DISTRIBUTIONS -- Dividends from net investment income ....................... (0.22) Distributions from net realized capital gains .............. 0.00 --------- Total distributions ...................................... (0.22) --------- Redemption Fees ............................................ 0.00 --------- Net asset value, end of period ............................... $ 10.07 ========= Total return (%)(a) .......................................... 1.6 Net assets, end of period (000) .............................. $ 6,190 Ratio of operating expenses to average net assets (%)(b)(c) .. 0.75 Ratio of net investment income to average net assets (%)(b) .. 9.93 Portfolio turnover rate (%) .................................. 17 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) .. 2.23 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ............... $ 0.41 * For the six months ended June 30, 1998. ** Commencement of operations on September 11, 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 FIXED INCOME FUNDS - -------------------------------------------------------------------------------
HIGH YIELD FUND - ------------------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS RETAIL CLASS - ------------------------------------------------- ----------------------------------------------- 1997 1996** 1998* 1997** - ------------ ------------ ------------ ------------ (UNAUDITED) $ 10.11 $ 10.00 $ 10.12 $ 10.11 - ------------ ------------ ------------ ------------ 0.83 0.20 0.44 0.85(d) 0.27 0.11 (0.28) 0.23 - ------------ ------------ ------------ ------------ 1.10 0.31 0.16 1.08 - ------------ ------------ ------------ ------------ (0.86) (0.20) (0.22) (0.84) (0.26) 0.00 0.00 (0.26) - ------------ ------------ ------------ ------------ (1.12) (0.20) (0.22) (1.10) - ------------ ------------ ------------ ------------ 0.03 0.00 0.00 0.03 - ------------ ------------ ------------ ------------ $ 10.12 $ 10.11 $ 10.06 $ 10.12 ============ ============ ============ ============ 11.4 3.1 1.5 11.2 $ 5,266 $ 1,939 $ 6,814 $ 3,141 0.75 0.75 1.00 1.00 8.96 8.85 9.64 8.75 68 0 17 68 3.81 12.06 2.52 4.79 $ 0.54 $ (0.05) $ 0.37 $ 0.48(d)
LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31,
INTERMEDIATE MATURITY BOND FUND ---------------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS ---------------------- -------------------- 1998* 1997** 1998* 1997** --------- --------- --------- --------- (UNAUDITED) (UNAUDITED) Net asset value, beginning of period ............. $ 10.03 $ 10.00 $ 10.03 $ 10.00 --------- --------- --------- --------- INCOME FROM INVESTMENT OPERATIONS -- Net investment income (loss)(d) ................ 0.34 0.64 0.33 0.64 Net realized and unrealized gain (loss) on investments .................................. 0.03 0.00 0.03 (0.02) --------- --------- --------- --------- Total from investment operations ............. 0.37 0.64 0.36 0.62 --------- --------- --------- --------- LESS DISTRIBUTIONS -- Dividends from net investment income ........... (0.16) (0.56) (0.15) (0.54) Distributions in excess of net investment income 0.00 (0.03) 0.00 (0.03) Distributions from net realized capital gains .. 0.00 (0.02) 0.00 (0.02) --------- --------- --------- --------- Total distributions .......................... (0.16) (0.61) (0.15) (0.59) --------- --------- --------- --------- Net asset value, end of period ................... $ 10.24 $ 10.03 $ 10.24 $ 10.03 ========= ========= ========= ========= Total return (%)(a) .............................. 3.7 6.4 3.6 6.2 Net assets, end of period (000) .................. $ 8,478 $ 6,305 $ 534 $ 423 Ratio of operating expenses to average net assets (%)(b)(c) ...................................... 0.55 0.55 0.80 0.80 Ratio of net investment income to average net assets (%)(b) .................................. 6.74 6.38 6.49 6.13 Portfolio turnover rate (%) ...................... 24 119 24 119 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) .............. 2.24 3.66 5.91 14.56 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: (d) ................................. $ 0.26 $ 0.29 $ 0.07 $ (0.50) * 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.
LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31,
INVESTMENT GRADE BOND FUND ---------------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS ---------------------- -------------------- 1998* 1997** 1998* 1997** --------- --------- --------- --------- (UNAUDITED) (UNAUDITED) Net asset value, beginning of period ............. $ 10.59 $ 10.00 $ 10.59 $ 10.00 --------- --------- --------- --------- INCOME FROM INVESTMENT OPERATIONS -- Net investment income (loss) ................... 0.34 0.65 0.32 0.62(d) Net realized and unrealized gain (loss) on investments .................................. 0.03 0.77 0.02 0.78 --------- --------- --------- --------- Total from investment operations ............. 0.37 1.42 0.34 1.40 --------- --------- --------- --------- LESS DISTRIBUTIONS -- Dividends from net investment income ........... (0.16) (0.63) (0.15) (0.62) Distributions in excess of net investment income 0.00 (0.08) 0.00 (0.07) Distributions from net realized capital gains .. 0.00 (0.12) 0.00 (0.12) --------- --------- --------- --------- Total distributions .......................... (0.16) (0.83) (0.15) (0.81) --------- --------- --------- --------- Net asset value, end of period ................... $ 10.80 $ 10.59 $ 10.78 $ 10.59 ========= ========= ========= ========= Total return (%)(a) .............................. 3.5 14.5 3.2 14.3 Net assets, end of period (000) .................. $ 2,940 $ 2,445 $ 1,478 $ 862 Ratio of operating expenses to average net assets (%)(b)(c) ...................................... 0.55 0.55 0.80 0.80 Ratio of net investment income to average net assets (%)(b) .................................. 6.69 6.74 6.42 6.51 Portfolio turnover rate (%) ...................... 39 112 39 112 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) .............. 4.03 7.59 5.20 10.95 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 $ (0.03) $ 0.10 $ (0.31)(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.
LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, MUNICIPAL BOND FUND ------------------- INSTITUTIONAL CLASS ------------------- 1998* ------------------- (UNAUDITED) Net asset value, beginning of period ......................... $ 11.70 --------- INCOME FROM INVESTMENT OPERATIONS -- Net investment income (loss) ............................... 0.27 Net realized and unrealized gain (loss) on investments ..... (0.02) --------- Total from investment operations ......................... 0.25 --------- LESS DISTRIBUTIONS -- Dividends from net investment income ....................... (0.27) Distributions from net realized capital gains .............. 0.00 --------- Total distributions ...................................... (0.27) --------- Net asset value, end of period ............................... $ 11.68 ======== Total return (%)(a) .......................................... 2.2 Net assets, end of period (000) .............................. $ 9,432 Ratio of operating expenses to average net assets (%)(b)(c) .. 0.60 Ratio of net investment income to average net assets (%)(b) .. 4.67 Portfolio turnover rate (%) .................................. 14 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) .. 1.65 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ............... $ 0.21 * For the six months ended June 30, 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 FIXED INCOME FUNDS - --------------------------------------------------------------------------------
MUNICIPAL BOND FUND - ------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------------------------------------- 1997 1996 1995 1994 1993 -------- -------- -------- -------- -------- $ 11.29 $ 11.53 $ 10.41 $ 11.54 $ 10.95 -------- -------- -------- -------- -------- 0.56 0.52 0.52 0.52 0.51 0.51 (0.15) 1.16 (1.13) 0.74 -------- -------- -------- -------- -------- 1.07 0.37 1.68 (0.61) 1.25 -------- -------- -------- -------- -------- (0.56) (0.52) (0.52) (0.52) (0.51) (0.10) (0.09) (0.04) 0.00 (0.15) -------- -------- -------- -------- -------- (0.66) (0.61) (0.56) (0.52) (0.66) -------- -------- -------- -------- -------- $ 11.70 $ 11.29 $ 11.53 $ 10.41 $ 11.54 ======== ======== ======== ======== ======== 9.8 3.3 16.5 (5.4) 11.6 $ 8,752 $ 8,701 $ 7,961 $ 7,270 $ 5,160 0.60 1.00 1.00 1.00 1.00 4.90 4.61 4.72 4.79 4.50 50 38 41 28 36 1.80 2.31 2.02 2.37 3.22 $ 0.42 $ 0.37 $ 0.41 $ 0.37 $ 0.26
LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31,
SHORT-TERM BOND FUND ------------------------------------------- INSTITUTIONAL CLASS ------------------------------------------- 1998* 1997 ------- ------- (UNAUDITED) Net asset value, beginning of period .............................. $ 9.75 $ 9.70 ------- ------- INCOME FROM INVESTMENT OPERATIONS -- Net investment income (loss) .................................... 0.29 0.61 Net realized and unrealized gain (loss) on investments .......... 0.02 0.06 ------- ------- Total from investment operations .............................. 0.31 0.67 ------- ------- LESS DISTRIBUTIONS -- Dividends from net investment income ............................ (0.29) (0.62) Distributions from net realized capital gains ................... 0.00 0.00 ------- ------- Total distributions ........................................... (0.29) (0.62) ------- ------- Net asset value, end of period .................................... $ 9.77 $ 9.75 ======= ======= Total return (%)(a) ............................................... 3.2 7.1 Net assets, end of period (000) ................................... $27,065 $18,792 Ratio of operating expenses to average net assets (%)(b)(c) ....... 0.50 0.50 Ratio of net investment income to average net assets (%)(b) ....... 5.99 6.34 Portfolio turnover rate (%) ....................................... 40 91 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) ..................... 0.88 1.19 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ............................... $ 0.27 $ 0.55 * 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.
LOOMIS SAYLES FIXED INCOME FUNDS - --------------------------------------------------------------------------------
SHORT-TERM BOND FUND - --------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS RETAIL CLASS - ------------------------------------------------------------------- ----------------------------- 1996 1995 1994 1993 1998* 1997** - ---------- ---------- ---------- ---------- ---------- ---------- (UNAUDITED) $ 9.81 $ 9.46 $ 9.95 $ 9.87 $ 9.75 $ 9.70 - ---------- ---------- ---------- ---------- ---------- ---------- 0.55 0.63 0.66 0.59 0.28 0.59 (0.11) 0.35 (0.49) 0.08 0.02 0.06 - ---------- ---------- ---------- ---------- ---------- ---------- 0.44 0.98 0.17 0.67 0.30 0.65 - ---------- ---------- ---------- ---------- ---------- ---------- (0.55) (0.63) (0.66) (0.59) (0.28) (0.60) 0.00 0.00 0.00 0.00 0.00 0.00 - ---------- ---------- ---------- ---------- ---------- ---------- (0.55) (0.63) (0.66) (0.59) (0.28) (0.60) - ---------- ---------- ---------- ---------- ---------- ---------- $9.70 $ 9.81 $ 9.46 $ 9.95 $9.77 $9.75 ========== ========== ========== ========== ========== ========== 4.7 10.6 1.8 7.0 3.1 6.9 $ 18,229 $ 26,039 $ 19,440 $ 15,226 $ 255 $ 285 1.00 1.00 1.00 1.00 0.75 0.75 5.69 6.46 6.88 5.97 5.68 6.04 120 214 34 81 40 91 1.17 1.03 1.33 1.55 6.67 17.77 $ 0.53 $ 0.62 $ 0.63 $ 0.54 $ (0.01) $ (1.08)
LOOMIS SAYLES FIXED INCOME FUNDS - ------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, U.S. GOVERNMENT SECURITIES FUND ------------------- INSTITUTIONAL CLASS ------------------- 1998* ------------------- (UNAUDITED) Net asset value, beginning of period ......................... $ 10.70 ---------- INCOME FROM INVESTMENT OPERATIONS -- Net investment income (loss) ............................... 0.30 Net realized and unrealized gain (loss) on investments ..... 0.17 ---------- Total from investment operations ......................... 0.47 ---------- LESS DISTRIBUTIONS -- Dividends from net investment income ....................... (0.14) Distributions from net realized capital gains .............. 0.00 ---------- Total distributions ...................................... (0.14) ---------- +Net asset value, end of period ............................... $ 11.03 Total return (%)(a) .......................................... 4.4 Net assets, end of period (000) .............................. $ 21,284 Ratio of operating expenses to average net assets (%)(b)(c) .. 0.60 Ratio of net investment income to average net assets (%)(b) .. 5.65 Portfolio turnover rate (%) .................................. 79 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) .. 0.96 Without giving effect to the voluntary expense limitations described in Note 3 to the Financial Statements net investment income per share would have been: ............... $ 0.28 * For the six months ended June 30, 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 FIXED INCOME FUNDS - -------------------------------------------------------------------------------- U.S. GOVERNMENT SECURITIES FUND - -------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------- 1997 1996 1995 1994 1993 - ---------- ---------- ---------- ---------- ---------- $ 10.08 $ 10.64 $ 9.22 $ 10.53 $ 10.45 - ---------- ---------- ---------- ---------- ---------- 0.63 0.68 0.66 0.64 0.64 0.61 (0.57) 1.42 (1.30) 1.00 - ---------- ---------- ---------- ---------- ---------- 1.24 0.11 2.08 (0.66) 1.64 - ---------- ---------- ---------- ---------- ---------- (0.62) (0.67) (0.66) (0.65) (0.65) 0.00 0.00 0.00 0.00 (0.91) - ---------- ---------- ---------- ---------- ---------- (0.62) (0.67) (0.66) (0.65) (1.56) - ---------- ---------- ---------- ---------- ---------- $ 10.70 $ 10.08 $ 10.64 $ 9.22 $ 10.53 ========== ========== ========== ========== ========== 12.7 1.3 23.0 (6.3) 15.7 $ 17,668 $ 14,192 $ 19,499 $ 17,341 $ 18,317 0.60 1.00 1.00 1.00 1.00 6.29 6.23 6.47 6.60 5.95 156 137 169 242 277 1.23 1.19 1.22 1.22 1.29 $ 0.57 $ 0.66 $ 0.64 $ 0.62 $ 0.61 LOOMIS SAYLES FIXED INCOME FUNDS - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- JUNE 30, 1998 (UNAUDITED) 1. The 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 Loomis Sayles Intermediate Maturity Equity Fund 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 Loomis Sayles Strategic Value Fund Fund Loomis Sayles Worldwide Fund The Fixed Income Funds (excluding the Municipal Bond and U.S. Government Securities Funds which only offer Institutional shares) offer Institutional and Retail Class shares, each of which 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 Bond 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 Fixed Income Funds: A. SECURITY VALUATION -- Long-term debt securities for which quotations are readily available are valued by a pricing service, as approved by the Board of Trustees, which generally uses the most recent bid prices in the principal market in which such securities are normally traded. Municipal debt securities are valued by a pricing service, as approved by the Board of Trustees, which generally uses a computerized matrix system or dealer supplied quotations that consider market transactions for comparable securities. Equity securities for which quotations are readily available are valued at their last sale price on the exchange where primarily traded or, if there is no reported sale during the day, at the closing bid price. Short-term securities with a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. Other securities for which quotations are not readily available (including restricted securities, if any) are valued primarily using dealer supplied quotations or at their fair values as determined in good faith under the general supervision of the Board of Trustees. B. REPURCHASE AGREEMENTS -- The Funds may engage in repurchase agreement transactions. Under the terms of a typical repurchase agreement, the Funds take possession of an underlying debt obligation subject to an obligation of the seller to repurchase, and the Funds to resell, the obligation at an agreed-upon price and time. This arrangement results in a fixed rate of return that is not subject to market fluctuations during the Funds' holding period. The Funds, through their custodian, receive delivery of the underlying securities collateralizing repurchase agreements. It is the Funds' policy that the market value of the collateral be at least equal to 102% of the repurchase price. These securities are marked-to-market daily. Loomis Sayles is responsible for determining that the value of the collateral is at all times at least equal to 102% of the repurchase price. In connection with transactions in repurchase agreements, if the seller defaults and the value of the collateral declines or if the seller enters into insolvency proceedings, realization of the collateral by the Funds may be delayed or limited. C. FOREIGN CURRENCY TRANSLATION AND FOREIGN INVESTMENTS -- The books and records of each of the Funds (including those Funds that invest in foreign 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 exchange 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 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 (except the Municipal Bond and U.S. Government Securities Funds) 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 may be less liquid and the prices of such securities may be more volatile than those 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 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 the counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At June 30, 1998, the Global Bond Fund had the following open forward foreign currency exchange contracts:
Local Aggregate Unrealized Delivery Curreny Face Total Appreciation Date Amount Amount Value (Depreciation) ------- ----------- --------- --------- -------------- Japanese Yen (sell) 8/31/98 40,000,000 $ 307,811 $ 291,870 $15,941 Japanese Yen (buy) 8/31/98 16,000,000 113,993 116,748 2,755 Japanese Yen (sell) 8/31/98 180,000,000 1,327,013 1,313,413 13,600 ------- $32,296 =======
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. Interest income on the Municipal Bond Fund is decreased by the amortization of premium. Premiums are amortized using the yield to maturity method. In determining net gain or loss on securities sold, the cost of securities 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 on relative net assets. Investment income, realized and unrealized gains and losses, and the common expenses of the fund are allocated on a pro rata basis to each class based on the relative net assets of each class to the total net assets of the fund. 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 -- The Municipal Bond Fund and Short-Term Bond Fund declare dividends daily to shareholders of record at the time and pay dividends monthly. The Bond, High Yield, Intermediate Maturity Bond, Investment Grade Bond and U.S. Government Securities Funds declare and pay their net investment income quarterly. The Global Bond Fund declares and pays its net investment income to shareholders annually. Distributions from net realized capital gains are declared and paid on an annual basis by all of the Funds. Income and capital gain distributions are determined in accordance with Federal income tax regulations which may differ from 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, capital loss carryforwards, 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. REDEMPTION FEES -- Shares held in the High Yield Fund less than one year are subject to a redemption fee equal to 2% of the amount redeemed. For the period ended June 30, 1998, the redemption fees amounted to $1,939 and $2,106 for the Institutional and Retail Classes, respectively. J. 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 being amortized over 12 months. Organization costs incurred by the High Yield Fund are being amortized over 60 months. 2. PURCHASES AND SALES OF SECURITIES -- (excluding short-term investments) for each Fund for the period ended June 30, 1998 were as follows: Purchases ------------------------------- U.S. Government Other --------------- ------------ Bond Fund ............................. $118,472,922 $385,320,743 Global Bond Fund ...................... 0 8,341,061 High Yield Fund ....................... 696,047 6,033,975 Intermediate Maturity Bond Fund ....... 916,097 3,095,637 Investment Grade Bond Fund ............ 553,306 2,017,102 Municipal Bond Fund ................... 201,766 1,734,229 Short-Term Bond Fund .................. 12,676,883 2,884,320 U.S. Government Securities Fund ....... 19,183,250 0 Sales ------------------------------- U.S. Government Other --------------- ------------ Bond Fund ............................. $ 0 $130,309,729 Global Bond Fund ...................... 0 4,340,224 High Yield Fund ....................... 226,484 1,584,128 Intermediate Maturity Bond Fund ....... 921,734 877,464 Investment Grade Bond Fund ............ 652,533 797,341 Municipal Bond Fund ................... 0 1,222,511 Short-Term Bond Fund .................. 5,686,807 3,391,671 U.S. Government Securities Fund ....... 15,895,134 0 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 ---- --------- Bond Fund .......................................................... 0.60% Global Bond Fund ................................................... 0.60% High Yield Fund .................................................... 0.60% Intermediate Maturity Bond Fund .................................... 0.40% Investment Grade Bond Fund ......................................... 0.40% Municipal Bond Fund ................................................ 0.40% Short-Term Bond Fund ............................................... 0.25% U.S. Government Securities Fund .................................... 0.40% 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 ---- ------------- ------ ----- Bond Fund ......................... 0.75% 1.00% 1.25% Global Bond Fund .................. 0.90% 1.15% -- High Yield Fund ................... 0.75% 1.00% -- Intermediate Maturity Fund ........ 0.55% 0.80% -- Investment Grade Bond Fund ........ 0.55% 0.80% -- Municipal Bond Fund ............... 0.60% -- -- Short-Term Bond Fund .............. 0.50% 0.75% -- U.S. Government Securities Fund ... 0.60% -- -- 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, The New England 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 held 109,732 shares of the Investment Grade Bond Fund. In addition, Loomis Sayles Funded Pension Plan and Trust and the Loomis Sayles & Company Incorporated, Employees Profit Sharing Retirement Plan held shares of beneficial interest in the Funds as follows: Profit Pension Sharing Plan Plan ------- --------- Bond Fund ............................... 671,767 1,167,488 Global Bond Fund ........................ 641,305 228,753 High Yield Fund ......................... -- 157,215 Intermediate Maturity Bond Fund ......... 308,517 150,112 Investment Grade Bond Fund .............. -- 66,934 Short-Term Bond Fund .................... 3,017 239,642 U.S. Government Securities Fund ......... 732,263 288,042 4. CREDIT RISK -- The Bond Fund may invest up to 35%, the Global Bond and Short-Term Bond Funds each may invest up to 20%, the Intermediate Maturity Bond and the Investment Grade Bond Funds each may invest up to 10%, and the High Yield Fund will normally invest at least 65% of its assets in securities offering high current income, which generally will be in the lower rating categories of recognized rating agencies. These securities are regarded as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligations and will generally involve more credit risk than securities in the higher rating categories. In addition, the trading market for high yield securities may be relatively less liquid than the market for higher-rated securities. 5. CAPITAL STOCK TRANSACTIONS -- The tables below summarize the transactions in Fund shares for the period ended June 30, 1998:
Loomis Sayles Bond Fund ------------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ----------------------------------- ----------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 37,137,029 $486,841,122 63,069,086 $809,023,819 Issued in connection with the reinvestment of distributions .. 1,475,711 19,567,923 5,492,835 70,465,752 Redeemed ......................... (13,445,673) (176,142,981) (13,902,007) (177,561,664) ---------- ------------ ---------- ------------ Net change ....................... 25,167,067 $330,266,064 54,659,914 $701,927,907 ========== ============ ========== ============ Retail Class Shares Shares Amount Shares* Amount* - ------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 2,156,122 $ 28,273,924 2,944,758 $ 37,693,272 Issued in connection with the reinvestment of distributions .. 47,683 631,801 124,248 1,597,794 Redeemed ......................... (578,722) (7,602,395) (476,803) (6,205,606) ---------- ------------ ---------- ------------ Net change ....................... 1,625,083 $ 21,303,330 2,592,203 $ 33,085,460 ========== ============ ========== ============ Admin Class Shares** Shares Amount - -------------------- ---------- ------------ Issued from the sale of shares ... 25,180 $ 329,255 Issued in connection with the reinvestment of distributions .. 0 0 Redeemed ......................... (369) (4,834) ---------- ------------ Net change ....................... 24,811 $ 324,421 ========== ============ *From January 2, 1997 (commencement of class operations). **From January 2, 1998 (commencement of class operations).
Loomis Sayles Global Bond Fund ------------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ----------------------------------- ----------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 295,457 $ 3,659,164 450,349 $ 5,703,587 Issued in connection with the reinvestment of distributions .. 0 0 141,324 1,676,109 Redeemed ......................... (149,712) (1,823,185) (338,278) (4,226,586) ---------- ------------ ---------- ------------ Net change ....................... 145,745 $ 1,835,979 253,395 $ 3,153,110 ========== ============ ========== ============ Retail Class Shares Shares Amount Shares* Amount* - ------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 247,222 $ 3,024,837 568,889 $ 7,115,633 Issued in connection with the reinvestment of distributions .. 0 0 18,404 218,453 Redeemed ......................... (175,165) (2,110,953) (190,528) (2,420,537) ---------- ------------ ---------- ------------ Net change ....................... 72,057 $ 913,884 396,765 $ 4,913,549 ========== ============ ========== ============ *From January 2, 1997 (commencement of class operations).
Loomis Sayles High Yield Fund ------------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ----------------------------------- ----------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 164,087 $ 1,710,475 345,923 $ 3,577,772 Issued in connection with the reinvestment of distributions .. 11,670 122,654 41,158 424,573 Redeemed ......................... (81,063) (835,702) (58,540) (600,500) ---------- ------------ ---------- ------------ Net change ....................... 94,694 $ 997,427 328,541 $ 3,401,845 ========== ============ ========== ============ Retail Class Shares Shares Amount Shares* Amount* - ------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 435,585 $ 4,525,968 343,422 $ 3,602,850 Issued in connection with the reinvestment of distributions .. 7,651 80,409 20,171 207,933 Redeemed ......................... (76,349) (783,733) (53,163) (558,960) ---------- ------------ ---------- ------------ Net change ....................... 366,887 $ 3,822,644 310,430 $ 3,251,823 ========== ============ ========== ============ *From January 2, 1997 (commencement of class operations).
Loomis Sayles Intermediate Maturity Fund ------------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997* ----------------------------------- ----------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 189,686 $ 1,928,814 713,449 $ 7,196,630 Issued in connection with the reinvestment of distributions .. 10,650 108,631 26,496 269,072 Redeemed ......................... (1,235) (12,640) (111,401) (1,136,539) ---------- ------------ ---------- ------------ Net change ....................... 199,101 $ 2,024,805 628,544 $ 6,329,163 ========== ============ ========== ============ Retail Class Shares Shares Amount Shares Amount - ------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 9,391 $ 95,547 40,713 $ 419,211 Issued in connection with the reinvestment of distributions .. 688 7,020 1,410 14,327 Redeemed ......................... (1) (11) 0 0 ---------- ------------ ---------- ------------ Net change ....................... 10,078 $ 102,556 42,123 $ 433,538 ========== ============ ========== ============ *From January 2, 1997 (commencement of operations).
Loomis Sayles Investment Grade Bond Fund ------------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997* ----------------------------------- ----------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 72,180 $ 774,182 217,283 $ 2,218,354 Issued in connection with the reinvestment of distributions .. 3,273 35,516 14,216 150,066 Redeemed ......................... (33,935) (366,341) (689) (7,042) ---------- ------------ ---------- ------------ Net change ....................... 41,518 $ 443,357 230,810 $ 2,361,378 ========== ============ ========== ============ Retail Class Shares Shares Amount Shares Amount - ------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 121,109 $ 1,303,162 80,460 $ 849,980 Issued in connection with the reinvestment of distributions .. 1,545 16,764 3,968 42,198 Redeemed ......................... (66,982) (719,221) (3,085) (32,703) ---------- ------------ ---------- ------------ Net change ....................... 55,672 $ 600,705 81,343 $ 859,475 ========== ============ ========== ============ *From January 2, 1997 (commencement of operations).
Loomis Sayles Municipal Bond Fund ------------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ----------------------------------- ----------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 74,302 $ 870,757 146,945 $ 1,692,152 Issued in connection with the reinvestment of distributions .. 12,083 140,998 29,000 331,863 Redeemed ......................... (27,160) (317,273) (198,471) (2,254,718) ---------- ------------ ---------- ------------ Net change ....................... 59,225 $ 694,482 (22,526) $ (230,703) ========== ============ ========== ============ Loomis Sayles Short-Term Bond Fund ------------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ----------------------------------- ----------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 1,097,366 $ 10,724,422 1,184,127 $ 11,497,925 Issued in connection with the reinvestment of distributions .. 60,892 594,920 94,766 918,722 Redeemed ......................... (314,655) (3,077,324) (1,232,069) (11,926,660) ---------- ------------ ---------- ------------ Net change ....................... 843,603 $ 8,242,018 46,824 $ 489,987 ========== ============ ========== ============ Retail Class Shares Shares Amount Shares* Amount* - ------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 25,620 $ 251,373 45,040 $ 436,711 Issued in connection with the reinvestment of distributions .. 784 7,662 1,073 10,404 Redeemed ......................... (29,512) (287,392) (16,930) (163,198) ---------- ------------ ---------- ------------ Net change ....................... (3,108) $ (28,357) 29,183 $ 283,917 ========== ============ ========== ============ *From January 2, 1997 (commencement of class operations).
Loomis Sayles U.S. Government Securities Fund ------------------------------------------------------------------------ Period Ended Period Ended June 30, 1998 December 31, 1997 ----------------------------------- ----------------------------------- Institutional Class Shares Shares Amount Shares Amount - -------------------------- ---------- ------------ ---------- ------------ Issued from the sale of shares ... 340,439 $ 3,688,197 444,723 $ 4,676,742 Issued in connection with the reinvestment of distributions .. 22,291 240,963 77,074 792,744 Redeemed ......................... (85,334) (930,499) (277,818) (2,799,223) ---------- ------------ ---------- ------------ Net change ....................... 277,396 $ 2,998,661 243,979 $ 2,670,263 ========== ============ ========== ============
[THIS PAGE INTENTIONALLY LEFT BLANK] [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-----