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Natixis Funds Trust II

Filed: 3 Feb 20, 3:45pm
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORMN-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number:811-00242

 

 

Natixis Funds Trust II

(Exact name of Registrant as specified in charter)

 

 

888 Boylston Street, Suite 800 Boston, Massachusetts 02199-8197

(Address of principal executive offices) (Zip code)

 

 

Russell L. Kane, Esq.

Natixis Distribution, L.P.

888 Boylston Street, Suite 800

Boston, Massachusetts 02199-8197

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: (617)449-2822

Date of fiscal year end: November 30

Date of reporting period: November 30, 2019

 

 

 


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Item 1.

Reports to Stockholders.

The Registrant’s annual report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940 is as follows:


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LOGO

 

LOGO

 

Annual Report

November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund

TABLE OF CONTENTS

Portfolio Review  1 
Portfolio of Investments  7 
Financial Statements  22 
Notes to Financial Statements  29 

 

IMPORTANT NOTICE TO SHAREHOLDERS

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you wish to continue receiving paper copies of your shareholder reports after January 1, 2021, you can inform the Fund at any time by calling 1-800-225-5478. If you hold your account with a financial intermediary and you wish to continue receiving paper copies after January 1, 2021, you should call your financial intermediary directly. Paper copies are provided free of charge, and your election to receive reports in paper will apply to all funds held with the Natixis Funds complex. If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You currently may elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically atwww.icsdelivery.com/natixisfunds.


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LOOMIS SAYLES SENIOR FLOATING RATE AND FIXED INCOME FUND

 

Managers: Symbols:
John R. Bell Class A    LSFAX
Michael L. Klawitter,CFA® Class C    LSFCX
Loomis, Sayles & Company, L.P. Class N    LSFNX
 Class Y    LSFYX

 

 

Investment Goal

The Fund seeks to provide a high level of current income.

 

 

Market Conditions

While many markets demonstratedrisk-on behavior during the period, the loan market was characterized by“liquidity-on” behavior. A strong preference for liquidity and quality resulted in unusual technical factors including quality-driven price bifurcation, a lack of retail buying and cautious collateralized loan obligation (CLO) behavior. Higher quality loans enjoyed a stronger bid based on liquidity and quality while the bid prices ofsingle-B rated loans were more reactive to company earnings than usual. At the end of the period,double-B rated loans had an average price of $99.14, whilesingle-B rated loans had an average price of $96.27.

Regarding supply and demand, loan issuance was relatively low at $483.4 billion, and CLO formation, though lighter than the prior12-month period, was relatively strong at $115.6 billion. Given persistent outflows from retail loan mutual funds, CLOs consumed the majority of primary issuance. The benchmark loan index grew in value to $1.19 trillion.

Performance Results

For the 12 months ended November 30, 2019, Class Y shares of the Loomis Sayles Senior Floating Rate and Fixed Income Fund returned 1.49% at net asset value. The Fund underperformed its benchmark, the S&P/LSTA Leveraged Loan Index, which returned 4.21% for the period.

Explanation of Fund Performance1

Given risks present in the market, we continued reducing exposure to loans with potentially higher market sensitivity, while adding a modest US Treasury position. Our aim is to balance risk and return in an uncertain environment by focusing on credit selection and generating a relatively high level of current income. We maintain a fundamentally positive intermediate view of the US loan market, and there were no significant shifts in our long-term macroeconomic views during the reporting period. We believe the Federal Reserve has completed its current easing campaign and are pricing in a period of steady interest rates in our return models. We target a yield advantage for the Fund versus the benchmark in most market conditions.

 

(1) 

Industry classifications mentioned in this commentary are based on Standard & Poor’s Global Ratings classifications, as this fund uses the S&P/LSTA Leveraged Loan Index as its benchmark. This differs from the classifications used in the portfolio of investments for this fund beginning on page 7.

 

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Security selection, particularly amongsingle-B loans, detracted from performance during the period, driven by a few names on which we remain generally more constructive than their current prices imply. The Fund’s best performing industries were equipment leasing, broadcast radio and television, and drugs, while the worst performing industries were oil and gas, home furnishings, and aerospace and defense. Our second lien loan positions, which are subordinate to more senior loans, underperformed the benchmark, detracting from overall performance. Our relatively small allocation to high yield corporate bonds detracted from performance over the period.

The Fund is currently positioned with about 89% bank loans, 4% bonds, 2% Treasuries and 5% held in short-term investments on a trade-date basis. We continue to believe high yield market yields in general look unattractive when compared to bank loans. The Fund’s exposure to second liens decreased during the period as the inventory available in the market has declined.

Outlook

Given our relatively constructive view of intermediate fundamentals, we do not expect to add much more Treasury exposure unless we receive a strongrisk-off signal from our models. As always, portfolio construction will reflect both ourbottom-up andtop-down views. We expect 2020 CLO formation to be moderately down from 2019 issuance. Retail demand tends to be correlated to interest rates; however, many loans are at a discount to par and offer compelling yields. This condition could increase interest in an asset class often thought of only as a bet on higher rates. The lack of demand for lower quality loans may continue to reduce primary issuance. Maturities remain years in the future with only 4.3% of the loan market maturing in the next two calendar years. We expect loan default rates to be lower than historical averages in 2020.

 

 

Hypothetical Growth of $100,000 Investment in Class Y Shares1,4

September 30, 2011 (inception) through November 30, 2019

 

LOGO

See notes to chart on page 3.

 

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LOOMIS SAYLES SENIOR FLOATING RATE AND FIXED INCOME FUND

 

Average Annual Total Returns — November 30, 20194

 

     
            Expense Ratios5 
   1 Year  5 Years  Life of Class  Gross  Net 
   
Class Y (Inception 9/30/11)1    Class Y/A/C   Class N    
NAV  1.49  3.51  5.37    0.80  0.80
   
Class A (Inception 9/30/11)       
NAV  1.23   3.25   5.10      1.05   1.05 
With 3.50% Maximum Sales Charge  -2.32   2.51   4.64       
   
Class C (Inception 9/30/11)       
NAV  0.36   2.44   4.31      1.80   1.80 
With CDSC2  -0.59   2.44   4.31       
   
Class N (Inception 3/31/2017)

 

      
NAV  1.54         2.96   0.95   0.74 
  
Comparative Performance       
S&P/LSTA Leveraged Loan Index3  4.21   3.85   4.89   3.84         

Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. Total return and value will vary, and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. For most recent month-end performance, visit im.natixis.com/performance.Performance for other share classes will be greater or less than shown based on differences in fees and sales charges. You may not invest directly in an index. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any. The table(s) do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares.

 

1

9/30/11 represents the date Class Y shares were first registered for public sale under the Securities Act of 1933. 9/16/11 represents commencement of operations for Class Y shares for accounting and financial reporting purposes only.

 

2

Performance for Class C shares assumes a 1% contingent deferred sales charge (“CDSC”) applied when you sell shares within one year of purchase.

 

3

The S&P/LSTA Leveraged Loan Index covers loan facilities and reflects the market-value-weighted performance of U.S. dollar-denominated institutional leveraged loans.

 

4

Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

5

Expense ratios are as shown in the Fund’s prospectus in effect as of the date of this report. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report under Ratios to Average Net Assets. Net expenses reflect contractual expense limitations set to expire on 3/31/20. When a Fund’s expenses are below the limitation, gross and net expense ratios will be the same. See Note 5 of the Notes to Financial Statements for more information about the Fund’s expense limitations.

 

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ADDITIONAL INFORMATION

All investing involves risk, including the risk of loss. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

The views expressed in this report reflect those of the portfolio managers as of the dates indicated. The managers’ views are subject to change at any time without notice based on changes in market or other conditions. References to specific securities or industries should not be regarded as investment advice. Because the Fund is actively managed, there is no assurance that it will continue to invest in the securities or industries mentioned.

ADDITIONAL INDEX INFORMATION

This document may contain references to third party copyrights, indexes, and trademarks, each of which is the property of its respective owner. Such owner is not affiliated with Natixis Investment Managers or any of its related or affiliated companies (collectively “Natixis Affiliates”) and does not sponsor, endorse or participate in the provision of any Natixis Affiliates services, funds or other financial products.

The index information contained herein is derived from third parties and is provided on an “as is” basis. The user of this information assumes the entire risk of use of this information. Each of the third party entities involved in compiling, computing or creating index information, disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to such information.

PROXY VOTING INFORMATION

A description of the Natixis Funds’ proxy voting policies and procedures is available without charge, upon request, by calling Natixis Funds at 800-225-5478; on Natixis Funds’ website at im.natixis.com; and on the Securities and Exchange Commission’s (SEC) website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available from Natixis Funds’ website and the SEC’s website.

QUARTERLY PORTFOLIO SCHEDULES

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year onForm N-PORT. The Fund’s Form N-PORT reports are available on the SEC’s website at www.sec.gov.

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

 

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UNDERSTANDING FUND EXPENSES

As a mutual fund shareholder, you incur different costs: transaction costs, including sales charges (loads) on purchases and contingent deferred sales charges on redemptions and ongoing costs, including management fees, distribution and/or service fees (12b-1 fees), and other fund expenses. Certain exemptions may apply. These costs are described in more detail in the Fund’s prospectus. The following examples are intended to help you understand the ongoing costs of investing in the Fund and help you compare these with the ongoing costs of investing in other mutual funds.

The first line in the table of each class of Fund shares shows the actual account values and actual Fund expenses you would have paid on a $1,000 investment in the Fund from June 1, 2019 through November 30, 2019. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example $8,600 account value divided by $1,000 = 8.60) and multiply the result by the number in the Expenses Paid During Period column as shown below for your class.

The second line in the table of each class of Fund shares provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid on your investment for the period. You may use this information to compare the ongoing costs of investing in the Fund to other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown reflect ongoing costs only, and do not include any transaction costs, such as sales charges. Therefore, the second line in the table of each Fund is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. If transaction costs were included, total costs would be higher.

 

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LOOMIS SAYLES SENIOR FLOATING
RATE AND FIXED INCOME FUND
 BEGINNING
ACCOUNT VALUE
6/1/2019
  ENDING
ACCOUNT VALUE
11/30/2019
  EXPENSES PAID
DURING PERIOD*
6/1/2019 – 11/30/2019
 
Class A    
Actual  $1,000.00   $996.20   $5.25 
Hypothetical (5% return before expenses)  $1,000.00   $1,019.80   $5.32 
Class C    
Actual  $1,000.00   $991.30   $8.99 
Hypothetical (5% return before expenses)  $1,000.00   $1,016.04   $9.10 
Class N    
Actual  $1,000.00   $997.80   $3.76 
Hypothetical (5% return before expenses)  $1,000.00   $1,021.31   $3.80 
Class Y    
Actual  $1,000.00   $997.50   $4.01 
Hypothetical (5% return before expenses)  $1,000.00   $1,021.06   $4.05 

 

*

Expenses are equal to the Fund’s annualized expense ratio after waiver/reimbursement: 1.05%, 1.80%, 0.75% and 0.80% for Class A, C, N and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (183), divided by 365 (to reflect the half-year period).

 

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Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund

 

Principal
Amount
   Description  Value (†) 
 Senior Loans — 88.6% of Net Assets  
    Aerospace & Defense — 2.0%    
$11,519,760   Advanced Integration Technology LP, 2017 Term Loan B,1-month LIBOR + 4.750%, 6.452%, 4/03/2023(a)  $11,174,168 
 15,861,197   Constellis Holdings LLC, 2017 1st Lien Term Loan, LIBOR + 5.000%, 6.927%, 4/21/2024(b)(c)(d)   7,811,639 
 9,700,000   DynCorp International, Inc., 2019 Term Loan B,1-month LIBOR + 6.000%, 7.765%, 8/18/2025(a)   9,603,000 
 10,060,817   MHVC Acquisition Corp., 2017 Term Loan,1-month LIBOR + 5.250%, 6.960%, 4/29/2024(a)   10,010,513 
 9,708,692   TransDigm, Inc., 2018 Term Loan E,1-month LIBOR + 2.500%, 4.202%, 5/30/2025(a)   9,695,877 
    

 

 

 
     48,295,197 
    

 

 

 
    Airlines — 0.3%    
 7,953,336   Allegiant Travel Co., Term Loan B,3-month LIBOR + 4.500%, 6.394%, 2/05/2024(a)   7,978,230 
    

 

 

 
    Automotive — 5.4%    
 2,414,063   American Axle & Manufacturing, Inc., Term Loan B, LIBOR + 2.250%, 4.006%, 4/06/2024(b)   2,368,364 
 14,511,889   BBB Industries U.S. Holdings, Inc., 2018 1st Lien Term Loan,1-month LIBOR + 4.500%, 6.202%, 8/01/2025(a)   14,031,256 
 5,709,000   Belron Finance US LLC, 2019 USD Term Loan B,3-month LIBOR + 2.500%, 4.436%, 10/30/2026(a)   5,721,503 
 13,434,085   Capital Automotive LP, 2017 2nd Lien Term Loan,1-month LIBOR + 6.000%, 7.710%, 3/24/2025(a)   13,442,549 
 15,757,838   Dayco Products LLC, 2017 Term Loan B,3-month LIBOR + 4.250%, 6.159%, 5/19/2023(a)   13,709,319 
 1,324   DexKo Global, Inc., 2018 USD Term Loan,1-month LIBOR + 3.500%, 5.202%, 7/24/2024(a)   1,304 
 4,854,872   Gates Global LLC, 2017 USD Repriced Term Loan B,1-month LIBOR + 2.750%, 4.452%, 4/01/2024(a)   4,838,414 
 12,502,837   Holley Purchaser, Inc., Term Loan B,3-month LIBOR + 5.000%, 6.927%, 10/24/2025(a)   11,815,181 
 14,038,936   K&N Engineering, Inc., 1st Lien Term Loan,1-month LIBOR + 4.750%, 6.452%, 10/20/2023(a)   12,354,263 
 2,836,000   KAR Auction Services, Inc., 2019 Term Loan B6,1-month LIBOR + 2.250%, 4.000%, 9/19/2026(a)   2,850,180 
 12,176,382   L&W, Inc., 2018 Term Loan B,1-month LIBOR + 6.375%, 8.077%, 5/22/2025(a)   11,628,445 
 12,050,000   Panther BF Aggregator 2 LP, USD Term Loan B,1-month LIBOR + 3.500%, 5.202%, 4/30/2026(a)   12,042,529 
 11,278,546   Trico Group LLC, 2019 Incremental Term Loan,3-month LIBOR + 7.000%, 9.104%, 2/02/2024(a)   10,968,386 
 10,375,677   Truck Hero, Inc., 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.452%, 4/21/2024(a)   9,692,646 
 8,285,097   U.S. Farathane LLC, 2017 Term Loan B4,1-month LIBOR + 3.500%, 5.202%, 12/23/2021(a)   7,042,332 
    

 

 

 
     132,506,671 
    

 

 

 

 

See accompanying notes to financial statements.

 

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Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Brokerage — 0.5%    
$8,084,375   Citadel Securities LP, Term Loan B,1-month LIBOR + 3.500%, 5.202%, 2/27/2026(a)  $8,084,375 
 3,852,045   Edelman Financial Center LLC, 2018 2nd Lien Term Loan,1-month LIBOR + 6.750%, 8.472%, 7/20/2026(a)   3,742,916 
    

 

 

 
     11,827,291 
    

 

 

 
    Building Materials — 4.4%    
 1,431,857   Advanced Drainage Systems, Inc., Term Loan B,3-month LIBOR + 2.250%, 4.000%, 7/31/2026(a)   1,439,918 
 1,302,928   American Builders & Contractors Supply Co., Inc., 2019 Term Loan,1-month LIBOR + 2.000%,
3.702%, 1/15/2027(a)
   1,300,283 
 7,870,274   Big Ass Fans LLC, 2018 Term Loan,3-month LIBOR + 3.750%, 5.854%, 5/21/2024(a)   7,875,232 
 16,022,083   CPG International, Inc., 2017 Term Loan,3-month LIBOR + 3.750%, 5.933%, 5/05/2024(a)   15,811,873 
 16,886,331   Interior Logic Group Holdings IV LLC, 2018 Term Loan B,3-month LIBOR + 4.000%, 6.104%, 5/30/2025(a)   15,408,777 
 13,567,206   Janus International Group LLC, 2018 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.452%, 2/12/2025(a)   13,295,862 
 9,205,058   Jeld-Wen, Inc., 2017 1st Lien Term Loan,3-month LIBOR + 2.000%, 4.104%, 12/14/2024(a)   9,202,665 
 10,655,025   Mannington Mills, Inc., 2019 Term Loan B,3-month LIBOR + 4.000%, 5.837%, 8/06/2026(a)   10,623,060 
 12,224,837   NCI Building Systems, Inc., 2018 Term Loan,1-month LIBOR + 3.750%, 5.509%, 4/12/2025(a)   12,056,746 
 14,594,630   Quikrete Holdings, Inc., 2016 1st Lien Term Loan,1-month LIBOR + 2.750%, 4.452%, 11/15/2023(a)   14,585,581 
 6,922,799   Wilsonart LLC, 2017 Term Loan B,3-month LIBOR + 3.250%, 5.360%, 12/19/2023(a)   6,842,010 
    

 

 

 
     108,442,007 
    

 

 

 
    Cable Satellite — 1.0%    
 950,047   CSC Holdings LLC, 2019 Delayed Draw Term Loan,2-month LIBOR + 2.500%, 4.327%, 4/15/2027(a)   950,284 
 4,750,235   CSC Holdings LLC, 2019 Term Loan B5,2-month LIBOR + 2.500%, 4.327%, 4/15/2027(a)   4,751,422 
 4,091,000   Iridium Satellite LLC, Term Loan,1-month LIBOR + 3.750%, 5.452%, 11/04/2026(a)   4,129,374 
 8,398,831   Telenet Financing USD LLC, USD Term Loan AN,1-month LIBOR + 2.250%, 4.015%, 8/15/2026(a)   8,390,264 
 6,345,584   Virgin Media Bristol LLC, USD Term Loan N,1-month LIBOR + 2.500%, 4.265%, 1/31/2028(a)   6,346,473 
    

 

 

 
     24,567,817 
    

 

 

 
    Chemicals — 2.2%    
 12,378,975   Hexion, Inc., USD Exit Term Loan,3-month LIBOR + 3.500%, 5.600%, 7/01/2026(a)   12,371,300 
 9,708,939   Messer Industries GmbH, 2018 USD Term Loan,3-month LIBOR + 2.500%, 4.604%, 3/01/2026(a)   9,727,775 

 

See accompanying notes to financial statements.

 

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Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Chemicals — continued    
$3,632,655   Momentive Performance Materials, Inc., Term Loan B,1-month LIBOR + 3.250%, 4.960%, 5/15/2024(a)  $3,584,994 
 7,189,670   Natgasoline LLC, Term Loan B,6-month LIBOR + 3.500%, 5.438%, 11/14/2025(a)   7,225,618 
 9,723,140   Perstorp Holding AB, USD Term Loan B,3-month LIBOR + 4.750%, 6.854%, 2/27/2026(a)   9,121,569 
 12,505,500   Polymer Additives, Inc., 2018 1st Lien Term Loan,1-month LIBOR + 6.000%, 7.702%, 7/31/2025(a)   8,878,905 
 2,289,000   Univar, Inc., 2019 USD Term Loan B5, 7/01/2026(e)   2,289,664 
    

 

 

 
     53,199,825 
    

 

 

 
    Construction Machinery — 0.5%    
 2,389,195   Onsite Rental Group Pty Ltd., Term Loan B,1-month LIBOR + 4.500%, 6.208%, 10/26/2022(a)(c)(d)   2,335,438 
 3,266,549   Onsite Rental Group Pty Ltd., Note, 6.100%, 10/26/2023(c)(d)(f)   3,168,553 
 6,439,312   Utility One Source LP, Term Loan B,1-month LIBOR + 5.500%, 7.202%, 4/18/2023(a)   6,447,362 
    

 

 

 
     11,951,353 
    

 

 

 
    Consumer Cyclical Services — 6.8%    
 16,271,214   Access CIG LLC, 2018 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.536%, 2/27/2025(a)   15,884,773 
 9,475,000   Access CIG LLC, 2018 2nd Lien Term Loan,1-month LIBOR + 7.750%, 9.536%, 2/27/2026(a)   9,372,386 
 16,466,902   ASP MCS Acquisition Corp., Term Loan B,1-month LIBOR + 4.750%, 6.452%, 5/18/2024(a)   7,389,522 
 6,722,140   BIFM CA Buyer, Inc., Term Loan B,1-month LIBOR + 3.750%, 5.452%, 6/01/2026(a)   6,713,737 
 1,958,665   Boing U.S. Holdco, Inc., 2017 1st Lien Term Loan,1-month LIBOR + 3.250%, 5.008%, 10/03/2024(a)   1,870,525 
 7,920,667   Boing U.S. Holdco, Inc., 2017 2nd Lien Term Loan,1-month LIBOR + 7.500%, 9.258%, 10/03/2025(a)   7,524,633 
 15,250,000   Creative Artists Agency LLC, 2019 Term Loan B, 11/27/2026(e)   15,243,595 
 16,271,351   Cushman & Wakefield U.S. Borrower LLC, 2018 Add On Term Loan B,1-month LIBOR + 3.250%, 4.952%, 8/21/2025(a)   16,291,690 
 1,890,000   DG Investment Intermediate Holdings 2, Inc., 2018 2nd Lien Term Loan,1-month LIBOR + 6.750%, 8.452%, 2/02/2026(a)   1,795,500 
 9,495,000   Garda World Security Corp., 2019 1st Lien Term Loan B,3-month LIBOR + 4.750%, 6.660%, 10/30/2026(a)   9,457,020 
 13,495,556   Imagine! Print Solutions, Inc., 2017 Term Loan,1-month LIBOR + 4.750%, 6.460%, 6/21/2022(a)(c)(d)   5,375,685 
 699,932   Mister Car Wash Holdings, Inc., 2019 Delayed Draw Term Loan, 3.500%, 5/14/2026(g)   697,601 
 13,963,643   Mister Car Wash Holdings, Inc., 2019 Term Loan B,3-month LIBOR + 3.500%, 5.410%, 5/14/2026(a)   13,917,144 
 10,559,427   National Intergovernmental Purchasing Alliance Co., 1st Lien Term Loan,3-month LIBOR + 3.750%, 5.854%, 5/23/2025(a)   10,401,036 

 

See accompanying notes to financial statements.

 

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Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Consumer Cyclical Services — continued    
$3,975,000   ServiceMaster Co., 2019 Term Loan D,1-month LIBOR + 1.750%, 3.500%, 11/05/2026(a)  $3,979,969 
 14,567,068   Southern Graphics, Inc., 2018 Term Loan B,1-month LIBOR + 3.250%, 4.952%, 12/31/2022(a)   8,813,076 
 5,185,637   Sterling Midco Holdings, Inc., 1st Lien Term Loan,1-month LIBOR + 3.500%, 5.202%, 6/19/2024(a)   5,086,228 
 4,565,076   STG-Fairway Acquisitions, Inc., 2015 1st Lien Term Loan,1-month LIBOR + 5.250%, 6.952%, 6/30/2022(a)   4,555,580 
 2,366,931   Vestcom Parent Holdings, Inc., 2016 1st Lien Term Loan,1-month LIBOR + 4.000%, 5.702%, 12/19/2023(a)   2,213,080 
 407   Vestcom Parent Holdings, Inc., 2016 1st Lien Term Loan, Prime + 3.000%, 7.750%, 12/19/2023(a)   380 
 20,363,319   Xerox Business Services LLC, USD Term Loan B,1-month LIBOR + 2.500%, 4.202%, 12/07/2023(a)   19,854,236 
    

 

 

 
     166,437,396 
    

 

 

 
    Consumer Products — 8.5%    
 35,996,740   Advantage Sales & Marketing, Inc., 2014 2nd Lien Term Loan,1-month LIBOR + 6.500%, 8.202%, 7/25/2022(a)   30,844,887 
 14,265,611   Anastasia Parent LLC, 2018 Term Loan B,3-month LIBOR + 3.750%, 5.677%, 8/11/2025(a)   11,849,444 
 9,068,361   Augusta Sportswear Group, Inc., Term Loan B,1-month LIBOR + 4.500%, 6.202%, 10/26/2023(a)   8,796,310 
 6,106,010   Callaway Golf Co., Term Loan B,1-month LIBOR + 4.500%, 6.258%, 1/02/2026(a)   6,159,438 
 9,898,676   CWGS Group LLC, 2016 Term Loan,1-month LIBOR + 2.750%, 4.534%, 11/08/2023(h)   8,851,099 
 9,072,190   Global Appliance, Inc., Term Loan B,1-month LIBOR + 4.000%, 5.710%, 9/29/2024(a)   8,845,385 
 8,312,171   Highline Aftermarket Acquisition LLC, 2018 Term Loan B,1-month LIBOR + 3.500%, 5.250%, 4/26/2025(a)   7,470,564 
 13,343,931   Inmar Holdings, Inc., 2017 1st Lien Term Loan,3-month LIBOR + 4.000%, 6.104%, 5/01/2024(a)   12,626,695 
 9,473,839   Ozark Holdings LLC, Term Loan B,1-month LIBOR + 3.250%, 4.952%, 7/03/2023(a)   9,355,416 
 10,061,038   Pelican Products, Inc., 2018 1st Lien Term Loan,1-month LIBOR + 3.500%, 5.265%, 5/01/2025(a)   9,180,697 
 16,187,215   Polyconcept Investments BV, USD 2016 Term Loan B,1-month LIBOR + 3.750%, 5.452%, 8/16/2023(a)   16,065,810 
 6,571,740   Rodan & Fields LLC, 2018 Term Loan B,1-month LIBOR + 4.000%, 5.765%, 6/16/2025(a)   4,293,515 
 4,246,032   Serta Simmons Bedding LLC, 1st Lien Term Loan,1-month LIBOR + 3.500%, 5.256%, 11/08/2023(h)   2,475,097 
 16,335,507   Serta Simmons Bedding LLC, 2nd Lien Term Loan,1-month LIBOR + 8.000%, 9.722%, 11/08/2024(a)(c)(d)   4,655,619 
 14,295,755   SIWF Holdings, Inc., 1st Lien Term Loan,1-month LIBOR + 4.250%, 5.952%, 6/15/2025(a)   14,063,449 

 

See accompanying notes to financial statements.

 

|  10


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Consumer Products — continued    
$13,733,430   Strategic Partners Acquisition Corp., 2016 Term Loan,1-month LIBOR + 3.750%, 5.452%, 6/30/2023(a)  $13,699,096 
 14,460,083   Thor Industries, Inc., USD Term Loan B,1-month LIBOR + 3.750%, 5.563%, 2/01/2026(a)   14,369,708 
 12,786,592   Weight Watchers International, Inc., 2017 Term Loan B,3-month LIBOR + 4.750%, 6.860%, 11/29/2024(a)   12,779,559 
 12,608,868   Wellness Merger Sub, Inc., 1st Lien Term Loan,3-month LIBOR + 4.250%, 6.159%, 6/30/2024(a)   12,446,718 
    

 

 

 
     208,828,506 
    

 

 

 
    Diversified Manufacturing — 0.9%    
 9,211,650   Engineered Machinery Holdings, Inc., USD 1st Lien Term Loan,3-month LIBOR + 3.000%, 5.104%, 7/19/2024(a)   9,027,417 
 13,898,000   Granite Holdings US Acquisition Co., Term Loan B,3-month LIBOR + 5.250%, 7.354%, 9/30/2026(a)   13,515,805 
    

 

 

 
     22,543,222 
    

 

 

 
    Electric — 2.6%    
 3,840,191   Carroll County Energy LLC, Term Loan B,3-month LIBOR + 3.500%, 5.604%, 2/15/2026(a)   3,840,191 
 10,121,221   CRCI Longhorn Holdings, Inc., 2018 1st Lien Term Loan,1-month LIBOR + 3.500%, 5.281%, 8/08/2025(a)   9,577,205 
 9,349,583   Edgewater Generation LLC, Term Loan,1-month LIBOR + 3.750%, 5.452%, 12/13/2025(a)   8,849,380 
 5,632,000   KAMC Holdings, Inc., 2019 Term Loan,3-month LIBOR + 4.000%, 5.909%, 8/14/2026(h)   5,617,920 
 10,480,884   Mirion Technologies, Inc., 2019 Term Loan B,3-month LIBOR + 4.000%, 6.104%, 3/06/2026(a)   10,508,973 
 7,456,445   Oregon Clean Energy LLC, Term Loan,1-month LIBOR + 3.750%, 5.452%, 3/01/2026(a)   7,447,125 
 10,356,523   Revere Power LLC, Term Loan B,3-month LIBOR + 4.250%, 6.354%, 3/29/2026(a)   10,114,905 
 1,076,459   Revere Power LLC, Term Loan C,3-month LIBOR + 4.250%, 6.354%, 3/29/2026(a)   1,051,346 
 7,511,000   West Deptford Energy Holdings LLC, Term Loan B,1-month LIBOR + 3.750%, 5.452%, 7/29/2026(a)   7,379,557 
    

 

 

 
     64,386,602 
    

 

 

 
    Environmental — 0.9%    
 8,752,413   EnergySolutions LLC, 2018 Term Loan B,3-month LIBOR + 3.750%, 5.854%, 5/09/2025(a)   8,212,652 
 5,633,000   Terrapure Environmental Ltd., 1st Lien Term Loan, 11/25/2026(e)   5,604,835 
 9,649,224   Zep, Inc., 2017 1st Lien Term Loan,3-month LIBOR + 4.000%, 6.104%, 8/12/2024(a)   7,429,902 
    

 

 

 
     21,247,389 
    

 

 

 
    Financial Other — 2.2%    
 17,642,449   Amynta Agency Borrower, Inc., 2018 1st Lien Term Loan,1-month LIBOR + 4.500%, 6.202%, 2/28/2025(a)   16,407,478 

 

See accompanying notes to financial statements.

 

11  |


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Financial Other — continued    
$13,125,038   AqGen Ascensus, Inc., 2017 Repriced Term Loan,6-month LIBOR + 4.000%, 6.200%, 12/03/2022(a)  $13,116,900 
 10,084,987   LifeMiles Ltd., Term Loan B,1-month LIBOR + 5.500%, 7.202%, 8/18/2022(a)   9,908,500 
 10,779,000   Teneo Holdings LLC, Term Loan,1-month LIBOR + 5.250%, 7.015%, 7/11/2025(a)   10,024,470 
 3,462,322   Victory Capital Holdings, Inc., 2019 Term Loan B,3-month LIBOR + 3.250%, 5.349%, 7/01/2026(a)   3,476,760 
    

 

 

 
     52,934,108 
    

 

 

 
    Food & Beverage — 1.4%    
 5,326,000   Atkins Nutritionals Holdings II, Inc., 2017 Term Loan B, 7/07/2024(e)   5,352,630 
 1,557,000   B&G Foods, Inc., 2019 Term Loan B4,1-month LIBOR + 2.500%, 4.202%, 10/10/2026(a)   1,566,077 
 17,404,151   Hearthside Food Solutions LLC, 2018 Term Loan B,1-month LIBOR + 3.688%, 5.389%, 5/23/2025(a)   16,120,595 
 2,190,000   Nomad Foods Europe Midco Ltd., 2017 USD Term Loan B4,1-month LIBOR + 2.250%, 4.015%, 5/15/2024(a)   2,190,000 
 10,341,083   Sage BorrowCo LLC, Term Loan B,1-month LIBOR + 4.750%, 6.441%, 6/20/2026(a)   10,379,862 
    

 

 

 
     35,609,164 
    

 

 

 
    Health Insurance — 0.6%    
 7,716,913   Sedgwick Claims Management Services, Inc., 2018 Term Loan B,1-month LIBOR + 3.250%, 4.952%, 12/31/2025(a)   7,573,610 
 8,421,893   Sedgwick Claims Management Services, Inc., 2019 Term Loan B,1-month LIBOR + 4.000%, 5.702%, 9/03/2026(a)   8,400,838 
    

 

 

 
     15,974,448 
    

 

 

 
    Healthcare — 3.1%    
 9,189,591   Aveanna Healthcare LLC, 2017 1st Lien Term Loan,1-month LIBOR + 4.250%, 5.952%, 3/18/2024(a)   8,638,215 
 7,798,330   Carestream Dental Equipment, Inc, 2017 1st Lien Term Loan,1-month LIBOR + 3.250%, 4.952%, 9/01/2024(a)   7,193,960 
 2,350,000   DuPage Medical Group Ltd., 2nd Lien Term Loan,1-month LIBOR + 7.000%, 8.702%, 8/15/2025(a)   2,273,625 
 3,401,000   Ensemble RCM LLC, Term Loan,3-month LIBOR + 3.750%, 5.659%, 8/03/2026(a)   3,403,143 
 6,512,555   Envision Healthcare Corp., 2018 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.452%, 10/10/2025(a)   5,104,215 
 3,723,597   Gentiva Health Services, Inc., 2018 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.500%, 7/02/2025(a)   3,735,252 
 1,339,759   GHX Ultimate Parent Corp., 2017 1st Lien Term Loan,3-month LIBOR + 3.250%, 5.354%, 6/28/2024(a)   1,321,337 
 9,851,557   Global Education Management Systems Establishment, Term Loan,3-month LIBOR + 5.000%, 6.909%, 7/31/2026(a)   9,802,299 
 2,912,570   Life Time Fitness, Inc., 2017 Term Loan B, LIBOR + 2.750%, 4.658%, 6/10/2022(b)   2,912,046 
 8,174,000   Medical Solutions LLC, 2017 Term Loan,1-month LIBOR + 4.500%, 6.202%, 6/14/2024(a)   8,133,130 

 

See accompanying notes to financial statements.

 

|  12


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Healthcare — continued    
$5,458,685   National Mentor Holdings, Inc., 2019 Term Loan B,1-month LIBOR + 4.250%, 5.960%, 3/09/2026(a)  $5,467,801 
 315,221   National Mentor Holdings, Inc., 2019 Term Loan C,1-month LIBOR + 4.250%, 5.960%, 3/09/2026(a)   315,747 
 6,230,815   Onex TSG Intermediate Corp., 1st Lien Term Loan,1-month LIBOR + 4.000%, 5.702%, 7/31/2022(a)   5,763,504 
 13,388,460   Verscend Holding Corp., 2018 Term Loan B,1-month LIBOR + 4.500%, 6.202%, 8/27/2025(a)   13,398,501 
    

 

 

 
     77,462,775 
    

 

 

 
    Home Construction — 0.5%    
 5,171,721   Hayward Industries, Inc., 1st Lien Term Loan,1-month LIBOR + 3.500%, 5.202%, 8/05/2024(a)   5,074,751 
 6,192,889   LBM Borrower LLC, 2018 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.452%, 8/20/2022(a)   6,202,550 
    

 

 

 
     11,277,301 
    

 

 

 
    Independent Energy — 0.5%    
 6,160,000   California Resources Corp., Second Out Term Loan,1-month LIBOR + 10.375%, 12.077%, 12/31/2021(a)   3,560,480 
 23,593,712   Gavilan Resources LLC, 2nd Lien Term Loan,1-month LIBOR + 6.000%, 7.702%, 3/01/2024(a)(c)(d)   8,257,799 
    

 

 

 
     11,818,279 
    

 

 

 
    Industrial Other — 4.1%    
 7,480,000   APi Group DE, Inc., Term Loan B,1-month LIBOR + 2.500%, 4.202%, 10/01/2026(a)   7,512,762 
 10,832,733   ASP Unifrax Holdings, Inc., Term Loan B,1-month LIBOR + 3.750%, 5.854%, 12/12/2025(a)   8,991,168 
 7,513,631   CIBT Global, Inc., 2017 1st Lien Term Loan,3-month LIBOR + 3.750%, 5.854%, 6/03/2024(a)   7,062,813 
 12,648,095   GI Revelation Acquisition LLC, 2018 1st Lien Term Loan,1-month LIBOR + 5.000%, 6.702%, 4/16/2025(a)   11,762,729 
 16,833,199   Harland Clarke Holdings Corp., Term Loan B7,3-month LIBOR + 4.750%, 6.854%, 11/03/2023(a)   12,777,408 
 15,438,000   International Textile Group, Inc., 1st Lien Term Loan,1-month LIBOR + 5.000%, 6.781%, 5/01/2024(a)   12,093,049 
 7,828,000   International Textile Group, Inc., 2nd Lien Term Loan,1-month LIBOR + 9.000%, 10.781%, 5/01/2025(a)(c)(d)   5,244,760 
 10,680,435   NES Global Talent Finance U.S. LLC, 2018 1st Lien Term Loan B,3-month LIBOR + 5.500%, 7.427%, 5/11/2023(a)   10,627,033 
 11,383,953   Savage Enterprises LLC, 2018 1st Lien Term Loan B,1-month LIBOR + 4.000%, 5.770%, 8/01/2025(a)   11,489,710 
 4,946,603   Sotera Health Holdings LLC, 2019 Incremental Term Loan,3-month LIBOR + 3.500%, 5.427%, 5/15/2022(a)   4,925,975 
 9,008,826   WireCo WorldGroup, Inc., 1st Lien Term Loan,1-month LIBOR + 5.000%, 6.702%, 9/30/2023(a)   8,535,862 
    

 

 

 
     101,023,269 
    

 

 

 

 

See accompanying notes to financial statements.

 

13  |


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Integrated Energy — 0.4%    
$3,781,000   Matador Bidco S.a.r.l., Term Loan, 6/12/2026(e)  $3,790,452 
 5,132,000   Matador Bidco S.a.r.l., Term Loan,1-month LIBOR + 4.750%, 6.452%, 6/12/2026(a)   5,144,830 
    

 

 

 
     8,935,282 
    

 

 

 
    Internet & Data — 3.7%    
 6,731,905   CareerBuilder LLC, Term Loan,3-month LIBOR + 6.750%, 8.854%, 7/31/2023(a)   6,673,001 
 19,490,968   EIG Investors Corp., 2018 1st Lien Term Loan,3-month LIBOR + 3.750%, 5.667%, 2/09/2023(h)   18,321,510 
 16,593,356   MH Sub I LLC, 2017 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.452%, 9/13/2024(a)   16,531,131 
 8,830,000   MH Sub I LLC, 2017 2nd Lien Term Loan,1-month LIBOR + 7.500%, 9.202%, 9/15/2025(a)   8,830,000 
 6,908,609   NeuStar, Inc., 2018 Term Loan B4,1-month LIBOR + 3.500%, 5.202%, 8/08/2024(a)   6,452,641 
 10,484,568   NeuStar, Inc., 2nd Lien Term Loan,1-month LIBOR + 8.000%, 9.702%, 8/08/2025(a)(i)   8,911,883 
 11,859,382   WeddingWire, Inc., 1st Lien Term Loan,1-month LIBOR + 4.500%, 6.202%, 12/19/2025(a)   11,859,382 
 13,570,870   Zacapa LLC, 2018 1st Lien Term Loan B,3-month LIBOR + 5.000%, 7.104%, 7/02/2025(a)   13,587,834 
    

 

 

 
     91,167,382 
    

 

 

 
    Leisure — 2.8%    
 12,156,699   CDS U.S. Intermediate Holdings, Inc., 2017 1st Lien Term Loan,3-month LIBOR + 3.750%, 5.854%, 7/08/2022(a)   11,141,615 
 7,850,316   CDS U.S. Intermediate Holdings, Inc., 2nd Lien Term Loan,3-month LIBOR + 8.250%,
10.354%, 7/10/2023(a)(c)(d)(i)
   6,672,769 
 9,703,734   Crown Finance U.S., Inc., 2018 USD Term Loan,1-month LIBOR + 2.250%, 3.952%, 2/28/2025(a)   9,664,919 
 4,040,000   Crown Finance US, Inc., 2019 Incremental Term Loan,1-month LIBOR + 2.500%, 4.202%, 9/30/2026(a)   4,032,768 
 4,897,000   Kingpin Intermediate Holdings LLC, 2018 Term Loan B,1-month LIBOR + 3.500%, 5.200%, 7/03/2024(a)   4,890,879 
 14,074,764   Leslie’s Poolmart, Inc., 2016 Term Loan,1-month LIBOR + 3.500%, 5.344%, 8/16/2023(a)   13,159,905 
 3,874,290   Playpower, Inc., 2019 Term Loan,3-month LIBOR + 5.500%, 7.604%, 5/08/2026(a)   3,816,175 
 9,010,038   Recess Holdings, Inc., 2017 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.452%, 9/30/2024(a)   8,874,887 
 7,620,000   Thunder Finco Pty Ltd., Term Loan B, 11/20/2026(e)   7,562,850 
    

 

 

 
     69,816,767 
    

 

 

 
    Lodging — 0.6%    
 1,180,485   Aimbridge Acquisition Co., Inc., 2019 Term Loan B,1-month LIBOR + 3.750%, 5.458%, 2/02/2026(a)   1,186,387 

 

See accompanying notes to financial statements.

 

|  14


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Lodging — continued    
$13,256,941   Golden Nugget, Inc., 2017 Incremental Term Loan B, LIBOR + 2.750%, 4.683%, 10/04/2023(b)  $13,247,264 
    

 

 

 
     14,433,651 
    

 

 

 
    Media Entertainment — 3.2%    
 2,624,559   Alpha Media LLC, 2016 Term Loan,1-month LIBOR + 6.000%, 7.702%, 2/25/2022(a)   2,565,506 
 10,278,199   Cengage Learning, Inc., 2016 Term Loan B,1-month LIBOR + 4.250%, 5.952%, 6/07/2023(a)   9,385,949 
 4,918,000   Diamond Sports Group LLC, Term Loan,1-month LIBOR + 3.250%, 4.960%, 8/24/2026(a)   4,901,082 
 12,393,000   ION Media Networks, Inc., 2019 Term Loan B,1-month LIBOR + 3.000%, 4.750%, 12/18/2024(a)   12,381,350 
 13,341,324   LSC Communications, Inc., 2017 Term Loan B,1-week LIBOR + 5.500%, 7.090%, 9/30/2022(a)   8,098,184 
 18,318,657   McGraw-Hill Global Education Holdings LLC, 2016 Term Loan B,1-month LIBOR + 4.000%, 5.702%, 5/04/2022(a)   16,687,747 
 12,195,285   Meredith Corp., 2018 Term Loan B,1-month LIBOR + 2.750%, 4.452%, 1/31/2025(a)   12,249,676 
 9,700,000   Metro-Goldwyn-Mayer, Inc., 2018 2nd Lien Term Loan,1-month LIBOR + 4.500%, 6.210%, 7/03/2026(a)   9,384,750 
 3,286,586   Project Sunshine IV PTY Ltd., 2017 Term Loan B,1-month LIBOR + 7.000%, 8.702%, 8/21/2022(a)   3,270,153 
    

 

 

 
     78,924,397 
    

 

 

 
    Metals & Mining — 1.7%    
 10,841,117   American Rock Salt Co. LLC, 2018 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.452%, 3/21/2025(a)   10,854,668 
 15,764,586   GrafTech Finance, Inc., 2018 Term Loan B,1-month LIBOR + 3.500%, 5.202%, 2/12/2025(a)   15,370,471 
 17,974,926   U.S. Silica Co., 2018 Term Loan B,1-month LIBOR + 4.000%, 5.750%, 5/01/2025(a)   15,267,543 
    

 

 

 
     41,492,682 
    

 

 

 
    Midstream — 1.0%    
 12,398,925   Lower Cadence Holdings LLC, Term Loan B,1-month LIBOR + 4.000%, 5.702%, 5/22/2026(a)   11,685,987 
 12,818,995   Prairie ECI Acquiror LP, Term Loan B,3-month LIBOR + 4.750%, 6.854%, 3/11/2026(a)   12,274,187 
    

 

 

 
     23,960,174 
    

 

 

 
    Oil Field Services — 0.8%    
 28,774,882   Covia Holdings Corp., Term Loan,3-month LIBOR + 4.000%, 6.043%, 6/01/2025(a)   20,136,375 
    

 

 

 
    Packaging — 0.3%    
 7,251,557   Flex Acquisition Co., Inc., 2018 Incremental Term Loan,3-month LIBOR + 3.250%, 5.349%, 6/29/2025(a)   7,026,759 
    

 

 

 

 

See accompanying notes to financial statements.

 

15  |


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Pharmaceuticals — 0.6%    
$9,705,529   Akorn, Inc., Term Loan B,1-month LIBOR + 7.000%, 8.750%, (0.750% PIK, 8.000% Cash), 4/16/2021(a)(j)  $9,175,219 
 1,035,811   Bausch Health Cos., Inc., Term Loan B, 11/27/2025(e)   1,039,436 
 5,184,000   Grifols Worldwide Operations USA, Inc., USD 2019 Term Loan B, 11/15/2027(e)   5,211,890 
    

 

 

 
     15,426,545 
    

 

 

 
    Property & Casualty Insurance — 2.0%    
 19,157,387   Confie Seguros Holding II Co., 2016 Term Loan B,3-month LIBOR + 4.750%, 6.659%, 4/19/2022(a)   18,031,891 
 2,375,000   Cypress Intermediate Holdings III, Inc., 2017 2nd Lien Term Loan,1-month LIBOR + 6.750%, 8.452%, 4/27/2025(a)   2,370,844 
 15,428,649   Hyperion Insurance Group Ltd., 2017 Repriced Term Loan,1-month LIBOR + 3.500%, 5.250%, 12/20/2024(a)   15,428,649 
 10,740,005   Mitchell International, Inc., 2017 1st Lien Term Loan,1-month LIBOR + 3.250%, 4.952%, 11/29/2024(a)   10,270,130 
 2,591,000   USI, Inc., 2019 Incremental Term Loan B, 12/02/2026(e)   2,586,673 
    

 

 

 
     48,688,187 
    

 

 

 
    Railroads — 0.2%    
 4,374,000   Genesee & Wyoming, Inc., Term Loan, 11/06/2026(e)   4,402,912 
    

 

 

 
    Refining — 0.6%    
 14,578,098   Delek U.S. Holdings, Inc., 2018 Term Loan B,1-month LIBOR + 2.250%, 3.952%, 3/31/2025(a)   14,374,005 
 1,496,212   HFOTCO LLC, 2018 Term Loan B, Prime + 1.750%, 6.500%, 6/26/2025(a)   1,494,342 
    

 

 

 
     15,868,347 
    

 

 

 
    REITs – Retail — 1.5%    
 23,297,834   Brookfield Property REIT, Inc., 1st Lien Term Loan B,3-month LIBOR + 2.500%, 4.200%, 8/27/2025(a)   22,980,750 
 14,084,996   Forest City Enterprises LP, 2019 Term Loan B, 12/08/2025(e)   14,111,476 
    

 

 

 
     37,092,226 
    

 

 

 
    Restaurants — 3.3%    
 7,707,299   Bojangles’ Restaurants, Inc., Term Loan,1-month LIBOR + 4.750%, 6.452%, 1/28/2026(a)   7,723,330 
 11,787,882   Flynn Restaurant Group LP, 1st Lien Term Loan,1-month LIBOR + 3.500%, 5.202%, 6/27/2025(a)   11,115,973 
 12,437,871   Portillo Restaurant Group (The), Term Loan, 8/02/2024(e)   12,354,911 
 12,933,333   Portillo’s Holdings LLC, 1st Lien Term Loan,3-month LIBOR + 4.500%, 6.604%, 8/02/2021(a)   12,847,068 
 12,504,000   Portillo’s Holdings LLC, 2nd Lien Term Loan,3-month LIBOR + 8.000%, 10.104%, 8/01/2022(a)   12,389,338 
 20,928,046   Red Lobster Management LLC, Term Loan B,1-month LIBOR + 5.250%, 6.952%, 7/28/2021(a)   20,090,924 
 6,125,756   TMK Hawk Parent Corp., 2017 1st Lien Term Loan, LIBOR + 3.500%, 5.273%, 8/28/2024(b)   4,882,227 
    

 

 

 
     81,403,771 
    

 

 

 

 

See accompanying notes to financial statements.

 

|  16


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Retailers — 3.6%    
$16,727,380   Array Canada, Inc., Term Loan B,3-month LIBOR + 5.000%, 7.104%, 2/10/2023(a)  $13,423,722 
 17,078,042   At Home Holding III, Inc., Term Loan,3-month LIBOR + 3.500%, 5.427%, 6/03/2022(a)   15,370,238 
 10,870,867   Bass Pro Group LLC, Term Loan B,1-month LIBOR + 5.000%, 6.702%, 9/25/2024(a)   10,670,408 
 16,131,011   BDF Acquisition Corp., 1st Lien Term Loan,1-month LIBOR + 5.250%, 6.952%, 8/14/2023(a)   15,324,460 
 10,565,975   EG Group Ltd., 2018 USD Term Loan B,3-month LIBOR + 4.000%, 6.104%, 2/07/2025(a)   10,273,192 
 5,259,980   Kontoor Brands, Inc., Term Loan B, LIBOR + 4.250%, 5.995%, 5/15/2026(b)   5,246,830 
 10,755,875   Staples, Inc., 7 Year Term Loan,1-month LIBOR + 5.000%, 6.781%, 4/16/2026(a)   10,611,639 
 7,899,469   The Talbots, Inc., 2018 Term Loan B,1-month LIBOR + 7.000%, 8.702%, 11/28/2022(a)   7,622,988 
    

 

 

 
     88,543,477 
    

 

 

 
    Supermarkets — 0.6%    
 16,086,191   BI-LO Holding LLC, Exit Term Loan B,3-month LIBOR + 8.000%, 10.033%, 5/31/2024(h)   14,855,598 
    

 

 

 
    Technology — 10.4%    
 12,845,086   Almonde, Inc., USD 1st Lien Term Loan, LIBOR + 3.500%, 5.696%, 6/13/2024(b)   12,548,108 
 13,760,000   Almonde, Inc., USD 2nd Lien Term Loan,6-month LIBOR + 7.250%, 9.446%, 6/13/2025(a)   13,278,400 
 8,278,400   Aptean, Inc., 2019 Term Loan,3-month LIBOR + 4.250%, 6.351%, 4/23/2026(h)   8,181,791 
 23,857,742   CommScope, Inc., 2019 Term Loan B,1-month LIBOR + 3.250%, 4.952%, 4/06/2026(a)   23,673,799 
 10,337,000   Corel Corp., 2019 Term Loan,2-month LIBOR + 5.000%, 6.909%, 7/02/2026(a)   9,936,441 
 7,680,000   DCert Buyer, Inc., 2019 Term Loan B,1-month LIBOR + 4.000%, 5.702%, 10/16/2026(a)   7,617,638 
 8,360,713   Greeneden U.S. Holdings II LLC, 2018 USD Term Loan B,1-month LIBOR + 3.250%, 4.952%, 12/01/2023(a)   8,320,415 
 10,220,000   Helios Software Holdings, Inc., USD Term Loan,3-month LIBOR + 4.250%, 6.183%, 10/24/2025(a)   10,096,542 
 16,773,669   Hyland Software, Inc., 2017 2nd Lien Term Loan,1-month LIBOR + 7.000%, 8.702%, 7/07/2025(a)   16,969,418 
 8,474,347   IQOR U.S., Inc., 2nd Lien Term Loan,3-month LIBOR + 8.750%, 10.849%, 4/01/2022(a)(c)(d)   5,508,326 
 11,053,320   IQOR U.S., Inc., Term Loan B,3-month LIBOR + 5.000%, 7.099%, 4/01/2021(a)   9,554,932 
 10,755,500   McAfee LLC, 2017 2nd Lien Term Loan,1-month LIBOR + 8.500%, 10.202%, 9/29/2025(a)   10,790,563 
 8,463,668   McAfee LLC, 2018 USD Term Loan B,1-month LIBOR + 3.750%, 5.452%, 9/30/2024(a)   8,470,016 
 4,801,142   NAVEX TopCo, Inc., 2018 1st Lien Term Loan,1-month LIBOR + 3.250%, 4.960%, 9/05/2025(a)   4,706,847 
 4,570,000   ON Semiconductor Corp., 2019 Term Loan B,1-month LIBOR + 2.000%, 3.702%, 9/19/2026(a)   4,586,680 

 

See accompanying notes to financial statements.

 

17  |


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Technology — continued    
$6,699,210   Project Alpha Intermediate Holding, Inc., 2019 Incremental Term Loan B,3-month LIBOR + 4.250%, 6.240%, 4/26/2024(a)  $6,693,650 
 6,527,327   Quest Software U.S. Holdings, Inc., 2018 1st Lien Term Loan,3-month LIBOR + 4.250%,
6.177%, 5/16/2025(a)(c)(d)
   6,490,644 
 15,452,350   Rocket Software, Inc., 2018 Term Loan,1-month LIBOR + 4.250%, 5.952%, 11/28/2025(a)   13,918,086 
 10,365,000   S2P Acquisition Borrower, Inc., Term Loan,1-month LIBOR + 4.000%, 5.702%, 8/14/2026(a)   10,316,388 
 10,650,308   Sirius Computer Solutions, Inc., 2019 Term Loan B,3-month LIBOR + 4.250%, 6.354%, 7/01/2026(a)   10,640,722 
 13,395,039   SurveyMonkey, Inc., 2018 Term Loan B,1-week LIBOR + 3.750%, 5.340%, 10/10/2025(a)   13,361,551 
 3,633,552   Thoughtworks, Inc., 2018 1st Lien Term Loan,1-month LIBOR + 4.000%, 5.702%, 10/11/2024(a)   3,633,552 
 13,582,368   Ultimate Software Group, Inc. (The), Term Loan B,1-month LIBOR + 3.750%, 5.452%, 5/04/2026(a)   13,642,674 
 14,214,058   Verifone Systems, Inc., 2018 1st Lien Term Loan,3-month LIBOR + 4.000%, 5.899%, 8/20/2025(a)   13,696,524 
 10,425,389   Web.com Group, Inc., 2018 Term Loan B,1-month LIBOR + 3.750%, 5.513%, 10/10/2025(a)   10,238,775 
    

 

 

 
     256,872,482 
    

 

 

 
    Transportation Services — 2.3%    
 12,490,725   AI Mistral Holdco Ltd., 2017 Term Loan B,1-month LIBOR + 3.000%, 4.702%, 3/11/2024(a)   9,688,181 
 9,416,788   Deliver Buyer, Inc., Term Loan B,3-month LIBOR + 5.000%, 7.104%, 5/01/2024(a)   9,399,179 
 26,246,944   Uber Technologies, Inc., 2018 Term Loan,1-month LIBOR + 4.000%, 5.763%, 4/04/2025(a)   25,459,536 
 12,826,307   Verra Mobility Corp., 2018 1st Lien Term Loan,1-month LIBOR + 3.750%, 5.452%, 2/28/2025(a)   12,858,373 
    

 

 

 
     57,405,269 
    

 

 

 
    Wireless — 0.3%    
 7,137,391   Asurion LLC, 2017 2nd Lien Term Loan,1-month LIBOR + 6.500%, 8.202%, 8/04/2025(a)   7,188,709 
    

 

 

 
    Wirelines — 0.3%    
 7,729,590   Avaya, Inc., 2018 Term Loan B,1-month LIBOR + 4.250%, 6.015%, 12/15/2024(a)   7,358,570 
    

 

 

 
  Total Senior Loans
(Identified Cost $2,338,755,332)
   2,179,310,412 
    

 

 

 
    
 Bonds and Notes — 6.2% 
    Automotive — 0.8%    
 24,071,000   Midas Intermediate Holdco II LLC/Midas Intermediate Holdco II Finance, Inc., 7.875%, 10/01/2022, 144A   20,580,705 
    

 

 

 

 

See accompanying notes to financial statements.

 

|  18


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
    Chemicals — 0.4%    
$10,455,000   Atotech Alpha 2 BV, 9.500% PIK or 8.750% Cash, 6/01/2023, 144A(k)  $10,324,312 
    

 

 

 
    Financial Other — 0.4%    
 9,190,000   Nationstar Mortgage Holdings, Inc., 8.125%, 7/15/2023, 144A   9,833,300 
    

 

 

 
    Independent Energy — 0.1%    
 3,679,000   Bellatrix Exploration Ltd., 8.500%, 9/11/2023(c)(f)(i)(l)(n)   2,207,400 
 4,009,000   Bellatrix Exploration Ltd.,
12.500%, (9.500% PIK, 3.000% Cash), 12/15/2023(c)(f)(i)(l)(m)(n)
    
    

 

 

 
     2,207,400 
    

 

 

 
    Metals & Mining — 0.5%    
 5,000,000   Petra Diamonds U.S. Treasury PLC, 7.250%, 5/01/2022   3,331,250 
 13,095,000   Petra Diamonds U.S. Treasury PLC, 7.250%, 5/01/2022, 144A   8,724,544 
    

 

 

 
     12,055,794 
    

 

 

 
    Non-Agency Commercial Mortgage-Backed Securities — 0.3%    
 7,877,070   Motel 6 Trust, Series 2017-M6MZ, Class M,1-month LIBOR + 6.927%, 8.692%, 8/15/2024, 144A(a)   7,957,130 
    

 

 

 
    Oil Field Services — 0.1%    
 2,315,000   PGS ASA, 7.375%, 12/15/2020, 144A   2,210,825 
    

 

 

 
    Property & Casualty Insurance — 0.9%    
 21,285,000   Ardonagh Midco 3 PLC, 8.625%, 7/15/2023, 144A   21,082,792 
    

 

 

 
    Treasuries — 2.6%    
 50,000,000   U.S. Treasury Note, 1.625%, 6/30/2021   49,966,797 
 15,000,000   U.S. Treasury Note, 1.625%, 8/15/2029   14,777,344 
    

 

 

 
     64,744,141 
    

 

 

 
    Wirelines — 0.1%    
 5,000,000   Windstream Services LLC/Windstream Finance Corp., 9.000%, 6/30/2025, 144A(n)   1,900,000 
    

 

 

 
  Total Bonds and Notes
(Identified Cost $166,516,300)
   152,896,399 
    

 

 

 
    
Shares          
 Common Stocks — 0.2% 
    Chemicals — 0.1%    
 193,746   Hexion Holdings Corp., Class B(c)(d)(o)   2,324,952 
    

 

 

 
    Energy Equipment & Services — 0.1%    
 61,854   Ameriforge Group, Inc.(c)(d)(o)   3,340,116 
    

 

 

 
    Oil, Gas & Consumable Fuels — 0.0%    
 1,474,879   Bellatrix Exploration Ltd.(c)(f)(i)(l)(o)    
    

 

 

 
    Specialty Retail — 0.0%    
 1,790,513   Onsite Rental Group Pty Ltd.(c)(f)(i)(l)(o)    
    

 

 

 
  Total Common Stocks
(Identified Cost $9,434,417)
   5,665,068 
    

 

 

 
    

 

See accompanying notes to financial statements.

 

19  |


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
 Short-Term Investments — 4.5% 
$111,820,516   Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 11/29/2019 at 0.900% to be repurchased at $111,828,902 on 12/02/2019 collateralized by $102,270,000 U.S. Treasury Note, 1.875% due 3/31/2022 valued at $103,146,352; $10,645,000 U.S. Treasury Note, 2.875% due 10/15/2021 valued at $10,917,193 including accrued interest (Note 2 of Notes to Financial Statements) (Identified Cost $111,820,516)  $111,820,516 
    

 

 

 
    
  Total Investments — 99.5%
(Identified Cost $2,626,526,565)
   2,449,692,395 
  Other assets less liabilities — 0.5%   11,439,573 
    

 

 

 
  Net Assets — 100.0%  $2,461,131,968 
    

 

 

 
    
 (†)   See Note 2 of Notes to Financial Statements.

 

 (a)   Variable rate security. Rate as of November 30, 2019 is disclosed.

 

 (b)   Variable rate security. Rate shown represents the weighted average rate of underlying contracts at November 30, 2019. Interest rates on contracts are primarily redetermined either weekly, monthly or quarterly by reference to the indicated base lending rate and spread and the reset period.

 

 (c)   Illiquid security. (Unaudited)

 

 (d)   Securities classified as fair valued pursuant to the Fund’s pricing policies and procedures. At November 30, 2019, the value of these securities amounted to $61,186,300 or 2.5% of net assets. See Note 2 of Notes to Financial Statements.

 

 (e)   Position is unsettled. Contract rate was not determined at November 30, 2019 and does not take effect until settlement date. Maturity date is not finalized until settlement date.

 

 (f)   Securities subject to restriction on resale. At November 30, 2019, the restricted securities held by the Fund are as follows:

 

        
   Acquisition
Date
   Acquisition
Cost
   Value   % of
Net Assets
 
Bellatrix Exploration Ltd., 8.500%   6/04/2019   $3,605,420   $2,207,400    0.1% 
Bellatrix Exploration Ltd., 12.500%, (9.500% PIK, 3.000% Cash)   6/04/2019    2,645,940         
Bellatrix Exploration Ltd.   6/04/2019    1,853,525         
Onsite Rental Group Pty Ltd.   11/03/2017             
Onsite Rental Group Pty Ltd., Note   11/03/2017    2,384,581    3,168,553    0.1% 
  
 (g)   Unfunded loan commitment. An unfunded loan commitment is a contractual obligation for future funding at the option of the Borrower. The Fund receives a stated coupon rate until the borrower draws on the loan commitment, at which time the rate will become the stated rate in the loan agreement. See Note 2 of Notes to Financial Statements.
 (h)   Variable rate security. Rate shown represents the weighted average rate of underlying contracts at November 30, 2019.
 (i)   Level 3 security. Value has been determined using significant unobservable inputs. See Note 3 of Notes to Financial Statements.
 (j)   Payment-in-kind security for which the issuer, at each interest payment date, may make interest payments in cash and/or additional principal. For the period ended November 30, 2019, interest payments were made in cash and principal.

 

See accompanying notes to financial statements.

 

|  20


Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Senior Floating Rate and Fixed Income Fund – (continued)

 

 (k)   Payment-in-kind security for which the issuer, at each interest payment date, may make interest payments in cash and/or additional principal. For the period ended November 30, 2019, interest payments were made in cash.

 

 (l)   Fair valued by the Fund’s adviser. At November 30, 2019, the value of these securities amounted to $2,207,400 or 0.1% of net assets. See Note 2 of Notes to Financial Statements.

 

 (m)   Payment-in-kind security for which the issuer, at each interest payment date, may make interest payments in cash and/or additional principal. No payments were made during the period.

 

 (n)   The issuer is in default with respect to interest and/or principal payments. Income is not being accrued.

 

 (o)   Non-income producing security.

 

    
 144A   All or a portion of these securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At November 30, 2019, the value of Rule 144A holdings amounted to $82,613,608 or 3.4% of net assets.

 

 LIBOR   London Interbank Offered Rate

 

 PIK   Payment-in-Kind

 

 REITs   Real Estate Investment Trusts

 

Industry Summary at November 30, 2019

 

Technology

   10.4

Consumer Products

   8.5 

Consumer Cyclical Services

   6.8 

Automotive

   6.2 

Building Materials

   4.4 

Industrial Other

   4.1 

Internet & Data

   3.7 

Retailers

   3.6 

Restaurants

   3.3 

Media Entertainment

   3.2 

Healthcare

   3.1 

Property & Casualty Insurance

   2.9 

Leisure

   2.8 

Chemicals

   2.7 

Treasuries

   2.6 

Electric

   2.6 

Financial Other

   2.6 

Transportation Services

   2.3 

Metals & Mining

   2.2 

Aerospace & Defense

   2.0 

Other Investments, less than 2% each

   15.0 

Short-Term Investments

   4.5 
  

 

 

 

Total Investments

   99.5 

Other assets less liabilities

   0.5 
  

 

 

 

Net Assets

   100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

21  |


Table of Contents

Statement of Assets and Liabilities

 

November 30, 2019

 

ASSETS

  

Investments at cost

  $2,626,526,565 

Net unrealized depreciation

   (176,834,170
  

 

 

 

Investments at value

   2,449,692,395 

Cash

   3,258,062 

Receivable for Fund shares sold

   5,305,038 

Receivable for securities sold

   84,144,515 

Receivable for unfunded loan commitments sold (Note 2)

   118,735 

Interest receivable

   11,730,412 

Prepaid expenses (Note 7)

   506,147 
  

 

 

 

TOTAL ASSETS

   2,554,755,304 
  

 

 

 

LIABILITIES

  

Payable for securities purchased

   83,249,617 

Unfunded loan commitments (Note 2)

   819,264 

Payable for Fund shares redeemed

   4,244,531 

Distributions payable

   3,181,218 

Management fees payable (Note 5)

   1,149,067 

Deferred Trustees’ fees (Note 5)

   216,697 

Administrative fees payable (Note 5)

   87,207 

Payable to distributor (Note 5d)

   35,895 

Other accounts payable and accrued expenses

   639,840 
  

 

 

 

TOTAL LIABILITIES

   93,623,336 
  

 

 

 

NET ASSETS

  $2,461,131,968 
  

 

 

 

NET ASSETS CONSIST OF:

  

Paid-in capital

  $2,876,402,585 

Accumulated loss

   (415,270,617
  

 

 

 

NET ASSETS

  $2,461,131,968 
  

 

 

 

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE:

  

Class A shares:

  

Net assets

  $297,634,399 
  

 

 

 

Shares of beneficial interest

   32,510,440 
  

 

 

 

Net asset value and redemption price per share

  $9.16 
  

 

 

 

Offering price per share (100/96.50 of net asset value) (Note 1)

  $9.49 
  

 

 

 

Class C shares:(redemption price per share is equal to net asset value less any applicable contingent deferred sales charge) (Note 1)

  

Net assets

  $233,386,865 
  

 

 

 

Shares of beneficial interest

   25,577,418 
  

 

 

 

Net asset value and offering price per share

  $9.12 
  

 

 

 

Class N shares:

  

Net assets

  $241,921 
  

 

 

 

Shares of beneficial interest

   26,393 
  

 

 

 

Net asset value, offering and redemption price per share

  $9.17 
  

 

 

 

Class Y shares:

  

Net assets

  $1,929,868,783 
  

 

 

 

Shares of beneficial interest

   210,560,607 
  

 

 

 

Net asset value, offering and redemption price per share

  $9.17 
  

 

 

 

 

 

See accompanying notes to financial statements.

 

|  22


Table of Contents

Statement of Operations

 

For the Year Ended November 30, 2019

 

INVESTMENT INCOME

  

Interest

  $229,303,631 
  

 

 

 

Expenses

  

Management fees (Note 5)

   19,402,434 

Service and distribution fees (Note 5)

   3,875,294 

Administrative fees (Note 5)

   1,423,321 

Trustees’ fees and expenses (Note 5)

   134,813 

Transfer agent fees and expenses (Notes 5 and 6)

   2,462,854 

Audit and tax services fees

   86,388 

Commitment fees (Note 7)

   1,981,295 

Custodian fees and expenses

   378,907 

Interest expense (Note 8)

   348,756 

Legal fees (Note 7)

   102,685 

Registration fees

   190,827 

Shareholder reporting expenses

   183,661 

Miscellaneous expenses (Note 7)

   604,250 
  

 

 

 

Total expenses

   31,175,485 

Less waiver and/or expense reimbursement (Note 5)

   (1,074,916
  

 

 

 

Net expenses

   30,100,569 
  

 

 

 

Net investment income

   199,203,062 
  

 

 

 

NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS

  

Net realized loss on:

  

Investments

   (100,995,097

Net change in unrealized appreciation (depreciation) on:

  

Investments

   (55,600,205
  

 

 

 

Net realized and unrealized loss on investments

   (156,595,302
  

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $42,607,760 
  

 

 

 

 

See accompanying notes to financial statements.

 

23  |


Table of Contents

Statement of Changes in Net Assets

 

   Year Ended
November 30,
2019
  Year Ended
November 30,
2018
 

FROM OPERATIONS:

   

Net investment income

  $199,203,062  $205,111,045 

Net realized loss on investments

   (100,995,097  (15,079,426

Net change in unrealized appreciation (depreciation) on investments

   (55,600,205  (95,731,738
  

 

 

  

 

 

 

Net increase in net assets resulting from operations

   42,607,760   94,299,881 
  

 

 

  

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

   

Class A

   (24,587,758  (30,019,384

Class C

   (15,323,348  (16,020,827

Class N

   (14,378  (7,205

Class Y

   (161,058,588  (163,640,047
  

 

 

  

 

 

 

Total distributions

   (200,984,072  (209,687,463
  

 

 

  

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 11)

   (1,351,606,447  1,137,846,584 
  

 

 

  

 

 

 

Net increase (decrease) in net assets

   (1,509,982,759  1,022,459,002 

NET ASSETS

   

Beginning of the year

   3,971,114,727   2,948,655,725 
  

 

 

  

 

 

 

End of the year

  $2,461,131,968  $3,971,114,727 
  

 

 

  

 

 

 

 

See accompanying notes to financial statements.

 

|  24


Table of Contents

Financial Highlights

 

For a share outstanding throughout each period.

 

  Class A 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,
2017
  Year Ended
November 30,
2016
  Year Ended
November 30,
2015
 

Net asset value, beginning of the period

 $9.62  $9.89  $9.88  $9.69  $10.40 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.57   0.53   0.51   0.56   0.55 

Net realized and unrealized gain (loss)

  (0.45  (0.26  0.03   0.21   (0.68
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  0.12   0.27   0.54   0.77   (0.13
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.58  (0.54  (0.53  (0.58  (0.58
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $9.16  $9.62  $9.89  $9.88  $9.69 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(b)

  1.23%(c)   2.78  5.53%(c)   8.31%(c)   (1.33)%(c) 

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $297,634  $532,551  $450,633  $367,850  $361,834 

Net expenses

  1.06%(d)(e)   1.05  1.05%(d)   1.05%(d)   1.07%(d)(f) 

Gross expenses

  1.09%(e)   1.05  1.08  1.13  1.08%(f) 

Net investment income

  6.03  5.42  5.14  5.84  5.45

Portfolio turnover rate

  52  65  87  75  67

 

(a)

Per share net investment income has been calculated using the average shares outstanding during the period.

(b)

A sales charge for Class A shares is not reflected in total return calculations.

(c)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(d)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(e)

Includes interest expense. Without this expense the ratio of net expenses would have been 1.05% and the ratio of gross expenses would have been 1.08%.

(f)

Includes interest expense. Without this expense the ratio of net expenses would have been 1.05% and the ratio of gross expenses would have been 1.06%.

 

See accompanying notes to financial statements.

 

25  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Class C 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,
2017
  Year Ended
November 30,
2016
  Year Ended
November 30,
2015
 

Net asset value, beginning of the period

 $9.59  $9.86  $9.85  $9.67  $10.38 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.50   0.46   0.43   0.49   0.48 

Net realized and unrealized gain (loss)

  (0.46  (0.26  0.03   0.20   (0.68
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  0.04   0.20   0.46   0.69   (0.20
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.51  (0.47  (0.45  (0.51  (0.51
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $9.12  $9.59  $9.86  $9.85  $9.67 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(b)

  0.36%(c)   2.02  4.76%(c)   7.41%(c)   (2.06)%(c) 

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $233,387  $337,088  $318,635  $300,811  $287,330 

Net expenses

  1.81%(d)(e)   1.80  1.80%(d)   1.80%(d)   1.82%(d)(f) 

Gross expenses

  1.84%(e)   1.80  1.83  1.88  1.83%(f) 

Net investment income

  5.28  4.66  4.38  5.10  4.71

Portfolio turnover rate

  52  65  87  75  67

 

(a)

Per share net investment income has been calculated using the average shares outstanding during the period.

(b)

A contingent deferred sales charge for Class C shares is not reflected in total return calculations.

(c)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(d)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(e)

Includes interest expense. Without this expense the ratio of net expenses would have been 1.80% and the ratio of gross expenses would have been 1.83%.

(f)

Includes interest expense. Without this expense the ratio of net expenses would have been 1.80% and the ratio of gross expenses would have been 1.81%.

 

See accompanying notes to financial statements.

 

|  26


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

   Class N 
   Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Period Ended
November 30,
2017*
 

Net asset value, beginning of the period

  $9.63  $9.90  $9.96 
  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

    

Net investment income(a)

   0.60   0.57   0.37 

Net realized and unrealized gain (loss)

   (0.45  (0.27  (0.05
  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

   0.15   0.30   0.32 
  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

    

Net investment income

   (0.61  (0.57  (0.38
  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

  $9.17  $9.63  $9.90 
  

 

 

  

 

 

  

 

 

 

Total return(b)

   1.54  3.08  3.28%(c) 

RATIOS TO AVERAGE NET ASSETS:

    

Net assets, end of the period (000’s)

  $242  $191  $104 

Net expenses(d)

   0.76%(e)   0.74  0.75%(f) 

Gross expenses

   1.11%(e)   0.95  0.92%(f) 

Net investment income

   6.33  5.77  5.63%(f) 

Portfolio turnover rate

   52  65  87%(g) 

 

*

From commencement of Class operations on March 31, 2017 through November 30, 2017.

(a)

Per share net investment income has been calculated using the average shares outstanding during the period.

(b)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(c)

Periods less than one year are not annualized.

(d)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(e)

Includes interest expense. Without this expense the ratio of net expenses would have been 0.75% and the ratio of gross expenses would have been 1.09%.

(f)

Computed on an annualized basis for periods less than one year.

(g)

Represents the Fund’s portfolio turnover rate for the year ended November 30, 2017.

 

See accompanying notes to financial statements.

 

27  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Class Y 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,
2017
  Year Ended
November 30,
2016
  Year Ended
November 30,
2015
 

Net asset value, beginning of the period

 $9.63  $9.90  $9.89  $9.70  $10.41 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.59   0.56   0.54   0.59   0.58 

Net realized and unrealized gain (loss)

  (0.45  (0.26  0.02   0.21   (0.68
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  0.14   0.30   0.56   0.80   (0.10
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.60  (0.57  (0.55  (0.61  (0.61
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $9.17  $9.63  $9.90  $9.89  $9.70 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  1.49%(b)   3.03  5.79%(b)   8.58%(b)   (1.08)%(b) 

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $1,929,869  $3,101,286  $2,179,284  $1,458,394  $1,293,175 

Net expenses

  0.81%(c)(d)   0.80  0.80%(c)   0.80%(c)   0.82%(c)(e) 

Gross expenses

  0.84%(d)   0.80  0.83  0.88  0.83%(e) 

Net investment income

  6.28  5.70  5.41  6.09  5.69

Portfolio turnover rate

  52  65  87  75  67

 

(a)

Per share net investment income has been calculated using the average shares outstanding during the period.

(b)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(c)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(d)

Includes interest expense. Without this expense the ratio of net expenses would have been 0.80% and the ratio of gross expenses would have been 0.83%.

(e)

Includes interest expense. Without this expense the ratio of net expenses would have been 0.80% and the ratio of gross expenses would have been 0.81%.

 

See accompanying notes to financial statements.

 

|  28


Table of Contents

Notes to Financial Statements

 

November 30, 2019

 

1.  Organization.  Natixis Funds Trust II (the “Trust”) is organized as a Massachusetts business trust. The Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company. The Declaration of Trust permits the Board of Trustees to authorize the issuance of an unlimited number of shares of the Trust in multiple series. The financial statements for certain funds of the Trust are presented in separate reports. Information presented in this report pertains to Loomis Sayles Senior Floating Rate and Fixed Income Fund (the “Fund”).

The Fund is anon-diversified investment company.

The Fund offers Class A, Class C, Class N and Class Y shares. Class A shares are sold with a maximumfront-end sales charge of 3.50%. Class C shares do not pay afront-end sales charge, pay higher Rule12b-1 fees than Class A shares for ten years (at which point they automatically convert to Class A shares) and may be subject to a contingent deferred sales charge (“CDSC”) of 1.00% if those shares are redeemed within one year of acquisition, except for reinvested distributions. Class N and Class Y shares do not pay afront-end sales charge, a CDSC or Rule12b-1 fees. Class N shares are offered with an initial minimum investment of $1,000,000. Class Y shares are offered with an initial minimum investment of $100,000. Certain categories of investors are exempted from the minimum investment amounts for Class N and Class Y as outlined in the Fund’s prospectus.

Most expenses can be directly attributed to a Fund. Expenses which cannot be directly attributed to a Fund are generally apportioned based on the relative net assets of each of the funds in Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds Trust IV and Gateway Trust (“Natixis Funds Trusts”), Loomis Sayles Funds I and Loomis Sayles Funds II (“Loomis Sayles Funds Trusts”) and Natixis ETF Trust. Expenses of the Fund are bornepro rata by the holders of each class of shares, except that each class bears expenses unique to that class (such as the Rule12b-1 fees applicable to Class A and Class C), and transfer agent fees are borne collectively for Class A, Class C and Class Y, and individually for Class N. In addition, each class votes as a class only with respect to its own Rule12b-1 Plan. Shares of each class would receive theirpro rata share of the net assets of the Fund if the Fund were liquidated. The Trustees approve separate distributions from net investment income on each class of shares.

2.  Significant Accounting Policies.  The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The Fund’s financial statements follow the accounting and reporting guidelines provided for investment companies and are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Management has evaluated the events and transactions subsequent to year-end through the date the financial statements were issued and has determined that there were no material events that would require disclosure in the Fund’s financial statements.

 

29  |


Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

a.  Valuation.  Fund securities and other investments are valued at market value based on market quotations obtained or determined by independent pricing services recommended by the adviser and approved by the Board of Trustees. Fund securities and other investments for which market quotations are not readily available are valued at fair value as determined in good faith by the adviser pursuant to procedures approved by the Board of Trustees, as described below. Market value is determined as follows:

Senior loans are valued at bid prices supplied by an independent pricing service, if available. Debt securities and unlisted preferred equity securities are valued based on evaluated bids furnished to the Fund by an independent pricing service or bid prices obtained from broker-dealers. Listed equity securities (including shares ofclosed-end investment companies and exchange-traded funds) are valued at the last sale price quoted on the exchange where they are traded most extensively or, if there is no reported sale during the day, the closing bid quotation as reported by an independent pricing service. Securities traded on the NASDAQ Global Select Market, NASDAQ Global Market and NASDAQ Capital Market are valued at the NASDAQ Official Closing Price (“NOCP”), or if lacking an NOCP, at the most recent bid quotations on the applicable NASDAQ Market. Unlisted equity securities (except unlisted preferred equity securities) are valued at the last sale price quoted in the market where they are traded most extensively or, if there is no reported sale during the day, the closing bid quotation as reported by an independent pricing service. If there is no last sale price or closing bid quotation available, unlisted equity securities will be valued using evaluated bids furnished by an independent pricing service, if available. In some foreign markets, an official close price and a last sale price may be available from the foreign exchange or market. In those cases, the official close price is used. Broker-dealer bid prices may be used to value debt and unlisted equity securities and senior loans where an independent pricing service is unable to price a security or where an independent pricing service does not provide a reliable price for the security.

Fund securities and other investments for which market quotations are not readily available are valued at fair value as determined in good faith by the adviser pursuant to procedures approved by the Board of Trustees. The Fund may also value securities and other investments at fair value in other circumstances such as when extraordinary events occur after the close of a foreign market but prior to the close of the New York Stock Exchange. This may include situations relating to a single issuer (such as a declaration of bankruptcy or a delisting of the issuer’s security from the primary market on which it has traded) as well as events affecting the securities markets in general (such as market disruptions or closings and significant fluctuations in U.S. and/or foreign markets). When fair valuing its securities or other investments, the Fund may, among other things, use modeling tools or other processes that may take into account factors such as securities or other market activity and/or significant events that occur after the close of the foreign market and before the time the Fund’s net asset value (“NAV”) is calculated. Fair value pricing may require subjective determinations about

 

|  30


Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

the value of a security, and fair values used to determine a Fund’s NAV may differ from quoted or published prices, or from prices that are used by others, for the same securities. In addition, the use of fair value pricing may not always result in adjustments to the prices of securities held by the Fund.

Illiquid securities for which market quotations are readily available and have been evaluated by the adviser are considered and classified as fair valued securities pursuant to the Fund’s pricing policies and procedures.

As of November 30, 2019, securities held by the Fund were fair valued as follows:

 

Securities
classified as
fair valued

  

Percentage of
Net Assets

  

Securities fair
valued by the
Fund’s adviser

  

Percentage of
Net Assets

 
 $61,186,300   2.5 $2,207,400   0.1

b.  Investment Transactions and Related Investment Income.  Investment transactions are accounted for on a trade date plus one day basis for daily NAV calculation. However, for financial reporting purposes, investment transactions are reported on trade date. Dividend income (including income reinvested) is recorded on theex-dividend date, or in the case of certain foreign securities, as soon as the Fund is notified, and interest income is recorded on an accrual basis. Interest income is increased by the accretion of discount and decreased by the amortization of premium, if applicable. For securities with paydown provisions, principal payments received are treated as a proportionate reduction to the cost basis of the securities, and excess or shortfall amounts are recorded as income. In determining net gain or loss on securities sold, the cost of securities has been determined on an identified cost basis. Investment income,non-class specific expenses and realized and unrealized gains and losses are allocated on apro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund.

c.  Federal and Foreign Income Taxes.  The Fund intends to meet the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually. Management has performed an analysis of the Fund’s tax positions for the open tax years as of November 30, 2019 and has concluded that no provisions for income tax are required. The Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Management is not aware of any events that are reasonably possible to occur in the next twelve months that would result in the amounts of any unrecognized tax benefits significantly increasing or decreasing for the Fund. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws and accounting regulations and interpretations thereof.

 

31  |


Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

The Fund may be subject to foreign withholding taxes on investment income and taxes on capital gains on investments that are accrued and paid based upon the Fund’s understanding of the tax rules and regulations that exist in the countries in which the Fund invests. Foreign withholding taxes on dividend and interest income are reflected on the Statement of Operations as a reduction of investment income, net of amounts eligible to be reclaimed. Dividends and interest receivable on the Statement of Assets and Liabilities are net of foreign withholding taxes. Foreign withholding taxes where reclaims have been or will be filed are reflected on the Statement of Assets and Liabilities as tax reclaims receivable. Capital gains taxes paid are included in net realized gain (loss) on investments in the Statement of Operations. Accrued but unpaid capital gains taxes are reflected as foreign taxes payable on the Statement of Assets and Liabilities, if applicable, and reduce unrealized gains on investments. In the event that realized gains on investments are subsequently offset by realized losses, taxes paid on realized gains may be returned to the Fund. Such amounts, if applicable, are reflected as foreign tax rebates receivable on the Statement of Assets and Liabilities and are recorded as a realized gain when received.

d.  Dividends and Distributions to Shareholders.  Dividends and distributions are recorded on the ex-dividend date. The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. Permanent differences are primarily due to differing treatments for book and tax purposes of items such as premium amortization and paydown gains and losses. Permanent book and tax basis differences relating to shareholder distributions, net investment income, and net realized gains will result in reclassifications to capital accounts reported on the Statement of Assets and Liabilities. Temporary differences between book and tax distributable earnings are primarily due to premium amortization, defaulted and/ornon-income producing securities, deferred Trustees’ fees and wash sales. Amounts of income and capital gain available to be distributed on a tax basis are determined annually, and at other times during the Fund’s fiscal year as may be necessary to avoid knowingly declaring and paying a return of capital distribution. Distributions from net investment income and net realized short-term capital gains are reported as distributed from ordinary income for tax purposes.

The tax characterization of distributions is determined on an annual basis. The tax character of distributions paid to shareholders during the years ended November 30, 2019 and 2018 were as follows:

 

2019 Distributions Paid From:

   

2018 Distributions Paid From:

 

Ordinary
Income

  

Long-Term
Capital Gains

   

Total

   

Ordinary
Income

   

Long-Term
Capital Gains

   

Total

 
$200,984,072  $  —   $200,984,072   $209,687,463   $  —   $209,687,463 

Distributions paid to shareholders from net investment income and net realized capital gains, based on accounting principles generally accepted in the United States of

 

|  32


Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

America, are consolidated and reported on the Statement of Changes in Net Assets as Distributions to Shareholders. Distributions paid to shareholders from net investment income and net realized capital gains expressed inper-share amounts, based on accounting principles generally accepted in the United States of America, are separately stated and reported within the Financial Highlights.

As of November 30, 2019, the components of distributable earnings on a tax basis were as follows:

 

Undistributed ordinary income

  $3,618,283 
  

 

 

 

Capital loss carryforward:

 

Short-term:

 

No expiration date

   (58,545,454

Long-term:

 

No expiration date

   (177,836,750
  

 

 

 

Total capital loss carryforward

   (236,382,204
  

 

 

 

Unrealized depreciation

   (178,857,677
  

 

 

 

Total accumulated losses

  $(411,621,598
  

 

 

 

As of November 30, 2019, the tax cost of investments and unrealized appreciation (depreciation) on a federal tax basis were as follows:

 

Federal tax cost

  $2,628,550,072 
  

 

 

 

Gross tax appreciation

  $9,777,408 

Gross tax depreciation

   (188,635,085
  

 

 

 

Net tax depreciation

  $(178,857,677
  

 

 

 

e.  Senior Loans.  The Fund may invest in senior loans to corporate, governmental or other borrowers. Senior loans, which include both secured and unsecured loans made by banks and other financial institutions to corporate customers, typically hold the most senior position in a borrower’s capital structure, may be secured by the borrower’s assets and have interest rates that reset frequently. Senior Loans can include term loans, revolving credit facility loans and second lien loans. A senior loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent administers the terms of the senior loan, as specified in the loan agreement. Large loans may be shared or syndicated among several lenders. The Fund may enter into the primary syndicate for a loan or it may also purchase all or a portion of loans from other lenders (sometimes referred to as loan assignments), in either case becoming a direct lender. Senior loans outstanding at the end of the period are listed in the Fund’s Portfolio of Investments.

f.  Repurchase Agreements.  The Fund may enter into repurchase agreements, under the terms of a Master Repurchase Agreement, under which the Fund acquires securities as

 

33  |


Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

collateral and agrees to resell the securities at an agreed upon time and at an agreed upon price. It is the Fund’s policy that the market value of the collateral for repurchase agreements be at least equal to 102% of the repurchase price, including interest. Certain repurchase agreements aretri-party arrangements whereby the collateral is held in a segregated account for the benefit of the Fund and on behalf of the counterparty. Repurchase agreements could involve certain risks in the event of default or insolvency of the counterparty, including possible delays or restrictions upon the Fund’s ability to dispose of the underlying securities. As of November 30, 2019, the Fund had investments in repurchase agreements for which the value of the related collateral exceeded the value of the repurchase agreement. The gross value of repurchase agreements is included in the Statement of Assets and Liabilities for financial reporting purposes.

g.  Unfunded Loan Commitments.  The Fund may enter into unfunded loan commitments, which are contractual obligations for future funding at the option of the borrower. Unfunded loan commitments represent a future obligation, in full, even though a percentage of the committed amount may not be utilized by the borrower. Unfunded loan commitments, and the obligation for future funding, are recorded as a liability on the Statement of Assets and Liabilities at par value at the time the commitment is entered into. Purchases of unfunded loan commitments may have a similar effect on the Fund’s NAV as if the Fund had created a degree of leverage in the portfolio. Market risk exists with these commitments to the same extent as if the securities were owned on a settled basis. Losses may arise due to changes in the value of the unfunded loan commitments.

As of November 30, 2019, the Fund had unfunded loan commitments reflected on the Statement of Assets and Liabilities, which could be extended at the option of the borrower, pursuant to loan agreements with the following borrowers:

 

Borrower

 

Type

  

Principal

Amount

 

Mister Car Wash Holdings

 2019 Delayed Draw Term Loan  $819,264 
   

 

 

 

Under the terms of the contract, the Fund has the option to assign (sell) all or a portion of the unfunded loan commitment. Upon the completion of such assignment, the Fund is released from its rights and obligations pertaining to the portion of the unfunded loan commitment assigned. When the Fund sells a portion of an unfunded loan commitment, the portion sold is removed from the Portfolio of Investments and the unsettled amount is reflected as unfunded loan commitments sold on the Statement of Assets and Liabilities until settlement date. Once settled, the portion of the unfunded loan commitment assigned is relieved from the Fund’s unfunded loan commitments liability.

As of November 30, 2019, an unsettled sale of $118,735 of the unfunded loan commitment, is reflected on the Statement of Assets and Liabilities, net of realized loss on the transaction.

 

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November 30, 2019

 

h.  Indemnifications.  Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.

i.  New Accounting Pronouncement.  In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update2017-08, Receivables — Nonrefundable Fees and Other Costs (Subtopic310-20): Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”). The amendments in the ASU 2017-08 shorten the amortization period for certain callable debt securities acquired at a premium, to be amortized to the earliest call date. ASU 2017-08 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Management has evaluated the application of this provision and has determined there will be no impact on the net asset value of the Fund.

In August 2018, the FASB issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The update introduces new fair value disclosure requirements, eliminates some prior fair value disclosure requirements, and modifies certain existing fair value disclosure requirements. ASU 2018-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Management is currently assessing the potential impact of these changes to future financial statements.

3.  Fair Value Measurements.  In accordance with accounting standards related to fair value measurements and disclosures, the Fund has categorized the inputs utilized in determining the value of the Fund’s assets or liabilities. These inputs are summarized in the three broad levels listed below:

 

  

Level 1 – quoted prices in active markets for identical assets or liabilities;

 

  

Level 2 – prices determined using other significant inputs that are observable either directly, or indirectly through corroboration with observable market data (which could include quoted prices for similar assets or liabilities, interest rates, credit risk, etc.); and

 

  

Level 3 – prices determined using significant unobservable inputs when quoted prices or observable inputs are unavailable such as when there is little or no market activity for an asset or liability (unobservable inputs reflect the Fund’s own assumptions in determining the fair value of assets or liabilities and would be based on the best information available).

 

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The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

The Fund’s pricing policies and procedures are recommended by the adviser and approved by the Board of Trustees. Debt securities are valued based on evaluated bids furnished to the Fund by an independent pricing service. Broker-dealer bid prices may be used if an independent pricing service either is unable to price a security or does not provide a reliable price for a security. Broker-dealer bid prices for which the Fund does not have knowledge of the inputs used by the broker-dealer are categorized in Level 3. All security prices, including those obtained from an independent pricing service and broker-dealer bid prices, are reviewed on a daily basis by the adviser, subject to oversight by Fund management and the Board of Trustees. If the adviser, in good faith, believes that the price provided by an independent pricing service is unreliable, broker-dealer bid prices may be used until the price provided by the independent pricing service is considered to be reliable. Reliability of all security prices, including those obtained from an independent pricing service and broker-dealer bid prices, is tested in a variety of ways, including comparison to recent transaction prices and daily fluctuations, amongst other validation procedures in place. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Fund’s adviser pursuant to procedures approved by the Board of Trustees. Fair valued securities may be categorized in Level 3.

The following is a summary of the inputs used to value the Fund’s investments as of November 30, 2019, at value:

Asset Valuation Inputs

 

Description

  

Level 1

   

Level 2

   

Level 3

  

Total

 

Senior Loans

       

Internet & Data

  $  —   $82,255,499   $8,911,883(b)  $91,167,382 

Leisure

       63,143,998    6,672,769(b)   69,816,767 

All Other Senior Loans(a)

       2,018,326,263       2,018,326,263 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total Senior Loans

       2,163,725,760    15,584,652   2,179,310,412 
  

 

 

   

 

 

   

 

 

  

 

 

 

Bonds and Notes

       

Independent Energy

           2,207,400(c)(d)   2,207,400 

All Other Bonds and Notes(a)

       150,688,999       150,688,999 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total Bonds and Notes

       150,688,999    2,207,400   152,896,399 
  

 

 

   

 

 

   

 

 

  

 

 

 

 

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November 30, 2019

 

Description

  

Level 1

   

Level 2

   

Level 3

   

Total

 

Common Stocks

        

Oil, Gas & Consumable Fuels

  $  —   $   $(e)   $ 

Specialty Retail

           (e)     

All Other Common Stocks(a)

       5,665,068        5,665,068 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Common Stocks

       5,665,068        5,665,068 
  

 

 

   

 

 

   

 

 

   

 

 

 

Short-Term Investments

       111,820,516        111,820,516 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $   $2,431,900,343   $17,792,052   $2,449,692,395 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Details of the major categories of the Fund’s investments are reflected within the Portfolio of Investments.

(b)

Valued using broker-dealer bid prices.

(c)

Fair valued by the Fund’s adviser.

(d)

Includes a security fair valued at zero by the Fund’s adviser using Level 3 inputs.

(e)

Fair valued at zero by the Fund’s adviser using level 3 inputs.

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value as of November 30, 2018 and/or November 30, 2019:

Asset Valuation Inputs

 

Investments in Securities

 

Balance as of
November 30,
2018

  

Accrued
Discounts
(Premiums)

  

Realized
Gain
(Loss)

  

Change in
Unrealized
Appreciation
(Depreciation)

  

Purchases

 

Senior Loans

     

Internet & Data

 $  $10,244  $(333,613 $(1,217,197 $ 

Leisure

     27,365      (184,371   

Bonds and Notes

     

Independent Energy

     94,552      (4,138,512  6,251,360 

Common Stocks

     

Oil, Gas & Consumable Fuels

           (1,853,525  1,853,525 

Specialty Retail

  (a)             
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

 $  —  $132,161  $(333,613 $(7,393,605 $8,104,885 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

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Notes to Financial Statements (continued)

 

November 30, 2019

 

Investments in Securities

 

Sales

  

Transfers
into Level 3

  

Transfers
out of
Level 3

  

Balance as of
November 30,
2019

  

Change in
Unrealized
Appreciation
(Depreciation)
from
Investments
Still Held at
November 30,
2019

 

Senior Loans

     

Internet & Data

 $(2,000,458 $12,452,907  $  —  $8,911,883  $(1,217,197

Leisure

     6,829,775      6,672,769   (184,371

Bonds and Notes

     

Independent Energy

           2,207,400(b)   (4,138,512

Common Stocks

     

Oil, Gas & Consumable Fuels

           (a)   (1,853,525

Specialty Retail

           (a)    
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

 $(2,000,458 $19,282,682  $  $17,792,052  $(7,393,605
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

(a)

Fair valued at zero.

(b)

Includes a security fair valued at zero using Level 3 inputs.

Debt securities valued at $19,282,682 were transferred from Level 2 to Level 3 during the period ended November 30, 2019. At November 30, 2018, these securities were valued at a bid price furnished to the Fund by an independent pricing service in accordance with the Fund’s valuation policies. At November 30, 2019, these securities were valued using broker-dealer bid prices based on inputs unobservable to the Fund as an independent pricing service did not provide a reliable price for the securities.

All transfers are recognized as of the beginning of the reporting period.

4.  Purchases and Sales of Securities.  For the year ended November 30, 2019, purchases and sales of securities (excluding short-term investments and U.S. Government/Agency securities and including paydowns) were $1,451,429,276 and $2,774,962,384 respectively. Purchases and sales of U.S Government/Agency securities (excluding short-term investments and including paydowns) were $127,624,551 and $62,467,711 respectively.

5.  Management Fees and Other Transactions with Affiliates.

a.  Management Fees.  Loomis, Sayles & Company, L.P. (“Loomis Sayles”) serves as investment adviser to the Fund. Loomis Sayles is a limited partnership whose sole general partner, Loomis, Sayles & Company, Inc., is indirectly owned by Natixis Investment Managers, L.P. (“Natixis”), which is part of Natixis Investment Managers, an international asset management group based in Paris, France.

 

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November 30, 2019

 

Under the terms of the management agreement, the Fund pays a management fee at the annual rate of 0.60%, calculated daily and payable monthly, based on the Fund’s average daily managed assets, which include borrowings used for leverage.

Loomis Sayles has given a binding undertaking to the Fund to waive management fees and/or reimburse certain expenses to limit the Fund’s operating expenses, exclusive of acquired fund fees and expenses, brokerage expenses, interest expense, taxes, organizational and extraordinary expenses such as litigation and indemnification expenses. This undertaking is in effect until March 31, 2020, may be terminated before then only with the consent of the Fund’s Board of Trustees, and is reevaluated on an annual basis. Management fees payable, as reflected on the Statement of Assets and Liabilities, is net of waivers and/or expense reimbursements, if any, pursuant to this undertaking. Waivers/reimbursements that exceed management fees payable are reflected on the Statement of Assets and Liabilities as receivable from investment adviser.

For the year ended November 30, 2019, the expense limits as a percentage of average daily net assets under the expense limitation agreement were as follows:

 

Expense Limit as a Percentage of
Average Daily Net Assets

 

Class A

  

Class C

   

Class N

   

Class Y

 
1.05%   1.80%    0.75%    0.80% 

Loomis Sayles shall be permitted to recover expenses borne under the expense limitation agreement (whether through waiver of management fees or otherwise) on a class by class basis in later periods to the extent the annual operating expenses of a class fall below a class’ expense limits, provided, however, that a class is not obligated to pay such waived/reimbursed fees or expenses more than one year after the end of the fiscal year in which the fees or expenses were waived/reimbursed.

For the year ended November 30, 2019, the management fees and waiver of management fees for the Fund were as follows:

 

Gross
Management
Fees

  

Contractual
Waivers of
Management
Fees
1

  

Net
Management
Fees

  

Percentage of
Average Daily
Net Assets

 
 

Gross

  

Net

 
 $19,402,434  $1,052,887  $18,349,547   0.60  0.57

 

1

Management fee waiver is subject to possible recovery until November 30, 2020.

No expenses were recovered for the Fund during the year ended November 30, 2019 under the terms of the expense limitation agreements.

b.  Service and Distribution Fees.  Natixis Distribution, L.P. (“Natixis Distribution”), which is a wholly-owned subsidiary of Natixis, has entered into a distribution

 

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agreement with the Trust. Pursuant to this agreement, Natixis Distribution serves as principal underwriter of the Funds of the Trust.

Pursuant to Rule12b-1 under the 1940 Act, the Trust has adopted a Service Plan relating to the Fund’s Class A shares (the “Class A Plan”) and a Distribution and Service Plan relating to the Fund’s Class C shares (the “Class C Plan”).

Under the Class A Plan, the Fund pays Natixis Distribution a monthly service fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Fund’s Class A shares, as reimbursement for expenses incurred by Natixis Distribution in providing personal services to investors in Class A shares and/or the maintenance of shareholder accounts.

Under the Class C Plan, the Fund pays Natixis Distribution a monthly service fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Fund’s Class C shares, as compensation for services provided by Natixis Distribution in providing personal services to investors in Class C shares and/or the maintenance of shareholder accounts.

Also under the Class C Plan, the Fund pays Natixis Distribution a monthly distribution fee at an annual rate of 0.75% of the average daily net assets attributable to the Fund’s Class C shares, as compensation for services provided by Natixis Distribution in connection with the marketing or sale of Class C shares.

For the year ended November 30, 2019, the service and distribution fees for the Fund were as follows:

 

Service Fees

   Distribution Fees 

Class A

  

Class C

   

Class C

 

$1,012,778

   $715,629    $2,146,887 

c.  Administrative Fees.  Natixis Advisors, L.P. (“Natixis Advisors”) provides certain administrative services for the Fund and contracts with State Street Bank and Trust Company (“State Street Bank”) to serve assub-administrator. Natixis Advisors is a wholly-owned subsidiary of Natixis. Pursuant to an agreement among Natixis Funds Trusts, Loomis Sayles Funds Trusts, Natixis ETF Trust and Natixis Advisors, effective July 1, 2019, each Fund pays Natixis Advisors monthly itspro rata portion of fees equal to an annual rate of 0.0540% of the first $15 billion of the average daily net assets of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust, 0.0500% of the next $15 billion, 0.0400% of the next $30 billion, 0.0275% of the next $30 billion and 0.0225% of such assets in excess of $90 billion, subject to an annual aggregate minimum fee for the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust of $10 million, which is reevaluated on an annual basis.

Prior to July 1, 2019, the Fund paid Natixis Advisors monthly itspro rata portion of fees equal to an annual rate of 0.0575% of the first $15 billion of the average daily net assets

 

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November 30, 2019

 

of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust, 0.0500% of the next $15 billion, 0.0400% of the next $30 billion, 0.0275% of the next $30 billion and 0.0225% of such assets in excess of $90 billion, subject to an annual aggregate minimum fee for the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust of $10 million.

Effective October 1, 2018, State Street Bank agreed to reduce the fees it receives from Natixis Advisors for serving assub-administrator to the Fund. Also, effective October 1, 2018, Natixis Advisors agreed to voluntarily waive fees paid by the Fund in an amount equal to the reduction insub-administrative fees discussed above. The waiver was in effect through June 30, 2019.

For the year ended November 30, 2019, the administrative fees were as follows:

 

Gross
Administrative Fees

  

Waiver of
Administrative Fees

  

Net
Administrative Fees

 
$1,423,321  $21,271  $1,402,050 

d.  Sub-Transfer Agent Fees.  Natixis Distribution has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Fund and has agreed to compensate the intermediaries for providing those services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of their customers who hold positions in the Fund. These services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts were maintained directly at the Fund’s transfer agent. Accordingly, the Fund has agreed to reimburse Natixis Distribution for all or a portion of the servicing fees paid to these intermediaries. The reimbursement amounts(sub-transfer agent fees) paid to Natixis Distribution are subject to a currentper-account equivalent fee limit approved by the Fund’s Board of Trustees, which is based on fees for similar services paid to the Fund’s transfer agent and other service providers. Class N shares do not bear such expenses.

For the year ended November 30, 2019, thesub-transfer agent fees (which are reflected in transfer agent fees and expenses in the Statement of Operations) for the Fund were $2,220,316.

As of November 30, 2019, the Fund owes Natixis Distribution $35,895 in reimbursements forsub-transfer agent fees (which are reflected in the Statement of Assets and Liabilities as payable to distributor).

e.  Commissions.  Commissions (including CDSCs) on Fund shares retained by Natixis Distribution during the year ended November 30, 2019 amounted to $263,959.

 

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f.  Trustees Fees and Expenses.  The Trust does not pay any compensation directly to its officers or Trustees who are directors, officers or employees of Natixis Advisors, Natixis Distribution, Natixis or their affiliates. The Chairperson of the Board of Trustees receives a retainer fee at the annual rate of $360,000. The Chairperson does not receive any meeting attendance fees for Board of Trustees meetings or committee meetings that he attends. Each Independent Trustee (other than the Chairperson) receives, in the aggregate, a retainer fee at the annual rate of $190,000. Each Independent Trustee also receives a meeting attendance fee of $10,000 for each meeting of the Board of Trustees that he or she attends in person and $5,000 for each meeting of the Board of Trustees that he or she attends telephonically. In addition, the chairperson of the Contract Review Committee and the chairperson of the Audit Committee each receive an additional retainer fee at the annual rate of $20,000. The chairperson of the Governance Committee receives an additional retainer fee at the annual rate of $15,000. Each Contract Review Committee member is compensated $6,000 for each Committee meeting that he or she attends in person and $3,000 for each meeting that he or she attends telephonically. Each Audit Committee member is compensated $6,000 for each Committee meeting that he or she attends in person and $3,000 for each meeting that he or she attends telephonically. These fees are allocated among the funds in the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust based on a formula that takes into account, among other factors, the relative net assets of each fund. Trustees are reimbursed for travel expenses in connection with attendance at meetings.

Prior to January 1, 2019, the Chairperson of the Board received a retainer fee at the annual rate of $340,000 and each Independent Trustee (other than the Chairperson) received, in the aggregate, a retainer fee at the annual rate of $170,000, and the chairperson of the Governance Committee received an additional retainer fee at the annual rate of $12,000. All other Trustee fees remained unchanged.

Effective January 1, 2020, the Chairperson of the Board will receive a retainer fee at the annual rate of $369,000, each Independent Trustee (other than the Chairperson) will receive, in the aggregate, a retainer fee at the annual rate of $199,000, and the chairperson of the Governance Committee will receive an additional retainer fee at the annual rate of $20,000. All other Trustee fees will remain unchanged.

A deferred compensation plan (the “Plan”) is available to the Trustees on a voluntary basis. Deferred amounts remain in the Fund until distributed in accordance with the provisions of the Plan. The value of a participating Trustee’s deferral account is based on theoretical investments of deferred amounts, on the normal payment dates, in certain funds of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust as designated by the participating Trustees. Changes in the value of participants’ deferral accounts are allocatedpro rata among the funds in the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust, and are normally reflected as Trustees’ fees and expenses in the Statement of Operations. The portions of the

 

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November 30, 2019

 

accrued obligations allocated to the Fund under the Plan are reflected as Deferred Trustees’ fees in the Statement of Assets and Liabilities.

Certain officers and employees of Natixis Advisors and Loomis Sayles are also officers and/or Trustees of the Trust.

g.  Affiliated Ownership.  As of November 30, 2019, Loomis Sayles Employees’ Profit Sharing Retirement Plan (“Retirement Plan”) held shares of the Fund representing 0.45% of the Fund’s net assets.

Investment activities of affiliated shareholders could have material impacts on the Fund.

h.  Reimbursement of Transfer Agent Fees and Expenses.  Natixis Advisors has given a binding contractual undertaking to the Fund to reimburse any and all transfer agency expenses for the Funds’ Class N shares. This undertaking is in effect through March 31, 2020 and is not subject to recovery under the expense limitation agreement described above.

For the year ended November 30, 2019, Natixis Advisors reimbursed the Fund $758 for transfer agency expenses related to Class N shares.

6.  Class-Specific Transfer Agent Fees and Expenses.  Transfer agent fees and expenses attributable to Class A, Class C and Class Y are allocated on apro ratabasis to each class based on the relative net assets of each class to the total net assets of those classes. Transfer agent fees and expenses attributable to Class N are allocated to Class N.

For the year ended November 30, 2019, the Fund incurred the following class-specific transfer agent fees and expenses (includingsub-transfer agent fees, where applicable):

 

Transfer Agent Fees and Expenses

 

Class A

  

Class C

   

Class N

   

Class Y

 
$308,346  $218,029   $758   $1,935,721 

7.  Line of Credit.  The Fund has entered into a syndicated, committed, secured line of credit with Sumitomo Mitsui Banking Corporation (the “Administrative Agent”), the Bank of Nova Scotia, Houston Branch and National Australia Bank Limited (each a “Lender” and together with the Administrative Agent “Lenders”) under which it may borrow for investment or liquidity purposes. The commitment of the Lenders to make loans to the Fund shall not exceed $500,000,000 at any one time. Under the terms of the agreement, the Lenders are entitled to a security interest in the assets of the Fund as collateral. Interest is charged to the Fund based upon the terms set forth in the agreement. In addition, a commitment fee of 0.400% per annum payable to the Administrative Agent for the account of each Lender is accrued by the Fund based on the unused portion of the line of credit. The Fund paid the Administrative Agent an upfront fee of $500,000 and an administrative agent fee of $25,000, for a total of

 

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$525,000, which are being amortized over a period of 364 days and are reflected in legal fees and/or miscellaneous expenses on the Statement of Operations. The unamortized balance is reflected as prepaid expenses on the Statement of Assets and Liabilities.

For the year ended November 30, 2019, the Fund had an average daily balance on the line of credit (for those days on which there were borrowings) of $143,186,364 at a weighted average interest rate of 4.01%. Interest expense incurred was $348,756.

8.  Interest Expense.  The Fund may incur interest expense on cash overdrafts at the custodian or from use of the line of credit. Interest expense incurred for the year ended November 30, 2019 is reflected on the Statement of Operations.

9.  Concentration of Risk.  The Fund isnon-diversified, which means that it is not limited under the 1940 Act to a percentage of assets that it may invest in any one issuer. Because the Fund may invest in the securities of a limited number of issuers, an investment in the Fund may involve a higher degree of risk than would be present in a diversified portfolio.

The senior loans in which the Fund expects to invest will generally not be rated investment grade by the rating agencies. Economic downturns generally increasenon-payment rates and a senior loan could lose a substantial part of its value prior to default. Senior loans are subject to credit risk, and secured loans may not be adequately collateralized. The interest rates of senior loans reset frequently, and thus senior loans are subject to interest rate risk (including risks associated with the expected transition away from LIBOR at the end of 2021). There may also be less public information available about senior loans as compared to other debt securities.

Senior loans are generally less liquid than many other debt securities. Transactions in senior loans may settle on a delayed basis, such that the Fund may not receive the proceeds from the sale of a loan for a substantial period of time (greater than seven days) after the sale. As a result, the proceeds related to the sale of senior loans may not be available to make additional investments or to meet the Fund’s redemption obligations until substantial period (greater than seven days) after the sale of the loans.

10.  Concentration of Ownership.  From time to time, a Fund may have a concentration of one or more accounts constituting a significant percentage of shares outstanding. Investment activities by holders of such accounts could have material impacts on the Fund. As of November 30, 2019, based on management’s evaluation of the shareholder account base, the Fund had accounts (including accounts owned by affiliates) representing controlling ownership of more than 5% of the Fund’s total outstanding shares. The number of such accounts, based on accounts that represent more than 5% of an individual class of shares, and the aggregate percentage of net assets represented by such holdings were as follows:

 

Number of 5%
Account Holders

  

Percentage of
Ownership

1  8.05%

 

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November 30, 2019

 

Omnibus shareholder accounts for which Natixis Advisors understands that the intermediary has discretion over the underlying shareholder accounts or investment models where a shareholder account may be invested for anon-discretionary customer are included in the table above. For other omnibus accounts, the Fund does not have information on the individual shareholder accounts underlying the omnibus accounts; therefore, there could be other 5% shareholders in addition to those disclosed in the table above.

11.  Capital Shares.  The Fund may issue an unlimited number of shares of beneficial interest, without par value. Transactions in capital shares were as follows:

 

   Year Ended
November 30, 2019
  Year Ended
November 30, 2018
 
   Shares  Amount  Shares  Amount 
Class A     

Issued from the sale of shares

   11,352,519  $107,268,254   35,821,259  $353,866,364 

Issued in connection with the reinvestment of distributions

   2,072,528   19,516,280   2,339,574   22,987,952 

Redeemed

   (36,272,461  (342,204,148  (28,355,482  (278,909,553
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (22,847,414 $(215,419,614  9,805,351  $97,944,763 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class C     

Issued from the sale of shares

   3,446,000  $32,420,123   9,751,190  $95,970,749 

Issued in connection with the reinvestment of distributions

   1,147,744   10,768,750   1,132,297   11,094,152 

Redeemed

   (14,167,839  (132,923,527  (8,040,526  (79,002,100
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (9,574,095 $(89,734,654  2,842,961  $28,062,801 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class N     

Issued from the sale of shares

   34,709  $325,455   9,577  $93,624 

Issued in connection with the reinvestment of distributions

   1,523   14,350   734   7,205 

Redeemed

   (29,658  (281,223  (993  (9,639
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   6,574  $58,582   9,318  $91,190 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class Y     

Issued from the sale of shares

   112,517,435  $1,065,538,225   204,701,790  $2,021,786,916 

Issued in connection with the reinvestment of distributions

   12,351,005   116,400,274   12,085,982   118,800,414 

Redeemed

   (236,452,634  (2,228,449,260  (114,795,631  (1,128,839,500
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (111,584,194 $(1,046,510,761  101,992,141  $1,011,747,830 
  

 

 

  

 

 

  

 

 

  

 

 

 

Increase (decrease) from capital share transactions

   (143,999,129 $(1,351,606,447  114,649,771  $1,137,846,584 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

45  |


Table of Contents

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of Natixis Funds Trust II and Shareholders of Loomis Sayles Senior Floating Rate and Fixed Income Fund:

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of Loomis Sayles Senior Floating Rate and Fixed Income Fund (one of the funds constituting Natixis Funds Trust II, referred to hereafter as the “Fund”) as of November 30, 2019, the related statement of operations for the year ended November 30, 2019, the statement of changes in net assets for each of the two years in the period ended November 30, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of November 30, 2019, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended November 30, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of November 30, 2019 by correspondence with the custodian, brokers, and agent banks;

 

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Report of Independent Registered Public Accounting Firm

 

when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Boston, MA

January 22, 2020

We have served as the auditor of one or more investment companies in the Natixis Investment Company Complex since at least 1995. We have not been able to determine the specific year we began serving as auditor.

 

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Trustee and Officer Information

 

The tables below provide certain information regarding the trustees and officers of Natixis Funds Trust II (the “Trust”). Unless otherwise indicated, the address of all persons below is 888 Boylston Street, Suite 800, Boston, MA 02199-8197. The Fund’s Statement of Additional Information includes additional information about the trustees of the Trust and is available by calling Natixis Funds at800-225-5478.

 

Name and Year of

Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term

of Office1

 

Principal
Occupation(s)
During Past

5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past

5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board

Membership

INDEPENDENT TRUSTEES

Kenneth A. Drucker

(1945)

 

Chairperson of the Board of Trustees since January 2017

Trustee since 2008

Ex Officio member of Audit Committee, Contract Review Committee and Governance Committee

 Retired 

52

None

 Significant experience on the Board and on the boards of other business organizations (including at investment companies); executive experience (including as treasurer of an aerospace, automotive, and metal manufacturing corporation)

Edmond J. English

(1953)

 

Trustee since 2013

Chairperson of Governance Committee and Audit Committee Member

 Executive Chairman of Bob’s Discount Furniture (retail) 

52

Director, Burlington Stores, Inc. (retail)

 Significant experience on the Board and on the boards of other business organizations (including retail companies and a bank); executive experience (including at a retail company)

 

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Table of Contents

Trustee and Officer Information

 

Name and Year of

Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term

of Office1

 

Principal
Occupation(s)
During Past

5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past

5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board

Membership

INDEPENDENT TRUSTEES

continued

Richard A. Goglia

(1951)

 

Trustee since 2015

Contract Review Committee Member and Governance Committee Member

 Retired; formerly Vice President and Treasurer of Raytheon Company (defense) 

52

None

 Significant experience on the Board and executive experience (including his role as vice president and treasurer of a defense company and experience at a financial services company)

Wendell J. Knox

(1948)

 

Trustee since 2009

Chairperson of Contract Review Committee

 Director of Abt Associates Inc. (research and consulting) 

52

Director, The Hanover Insurance Group (property and casualty insurance); formerly, Director, Eastern Bank (bank)

 Significant experience on the Board and on the boards of other business organizations (including at a bank and at a property and casualty insurance firm); executive experience (including roles as president and chief executive officer of a research and consulting company)

 

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Trustee and Officer Information

 

Name and Year of

Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term

of Office1

 

Principal
Occupation(s)
During Past

5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past

5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board

Membership

INDEPENDENT TRUSTEES

continued

Martin T. Meehan(1956) 

Trustee since 2012

Audit Committee Member

 President, University of Massachusetts; formerly, Chancellor and faculty member, University of Massachusetts Lowell 

52

None

 Significant experience on the Board and on the boards of other business organizations; experience as President of the University of Massachusetts; government experience (including as a member of the U.S. House of Representatives); academic experience

Maureen B. Mitchell

(1951)

 

Trustee since 2017

Contract Review Committee Member and Governance Committee Member

 Retired; formerly President, Global Sales and Marketing, GE Asset Management, Inc. (financial services) 

52

Director, Sterling Bancorp (Bank)

 Experience on the Board ; financial services industry and executive experience (including role as president of global sales and marketing at a financial services company)

 

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Trustee and Officer Information

 

Name and Year of

Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term

of Office1

 

Principal
Occupation(s)
During Past

5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past

5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board

Membership

INDEPENDENT TRUSTEES

continued

James P. Palermo

(1955)

 

Trustee since 2016

Contract Review Committee Member

 Founding Partner, Breton Capital Management, LLC (private equity); Partner, STEP Partners, LLC (private equity) 

52

Director, FutureFuel.io (Chemicals and Biofuels)

 Experience on the Board ; financial services industry and executive experience (including roles as chief executive officer of client management and asset servicing for a banking and financial services company)

Erik R. Sirri

(1958)

 

Trustee since 2009

Chairperson of the Audit Committee

 Professor of Finance at Babson College 

52

None

 Significant experience on the Board; experience as Director of the Division of Trading and Markets at the Securities and Exchange Commission; academic experience; training as an economist

Peter J. Smail

(1952)

 

Trustee since 2009

Audit Committee Member

and Governance Committee Member

 Retired 

52

None

 Significant experience on the Board; mutual fund industry and executive experience (including roles as president and chief executive officer for an investment adviser)

 

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Trustee and Officer Information

 

Name and Year of

Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term

of Office1

 

Principal
Occupation(s)
During Past

5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past

5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board

Membership

INDEPENDENT TRUSTEES

continued

Kirk A. Sykes

(1958)

 

Trustee since 2019

Contract Review Committee Member

 Managing Director of Accordia Partners, LLC (real estate development); President of Primary Corporation (real estate development); Managing Principal of Merrick Capital Partners (infrastructure finance); formerly, President of Urban Strategy America Fund (real estate fund manager) 

52

Trustee, Eastern Bank (bank); formerly Director, Ares Commercial Real Estate Corporation (real estate investment trust)

 Experience on the Board and significant experience on the boards of other business organizations (including real estate companies and banks)

Cynthia L. Walker

(1956)

 

Trustee since 2005

Governance Committee Member and Audit Committee Member

 Deputy Dean for Finance and Administration, Yale University School of Medicine 

52

None

 Significant experience on the Board; executive experience in a variety of academic organizations (including roles as dean for finance and administration)

 

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Table of Contents

Trustee and Officer Information

 

Name and Year of

Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term

of Office1

 

Principal
Occupation(s)
During Past

5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past

5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board

Membership

INTERESTED TRUSTEES

Kevin P. Charleston3

(1965)

One Financial Center

Boston, MA 02111

 Trustee since 2015 President, Chief Executive Officer and Chairman of the Board of Directors; formerly, Chief Financial Officer, Loomis, Sayles & Company, L.P. 

52

None

 Experience on the Board; continuing service as President, Chief Executive Officer and Chairman of the Board of Directors of Loomis, Sayles & Company, L.P.

David L. Giunta4

(1965)

 

Trustee since 2011

President and Chief Executive Officer since 2008

 President and Chief Executive Officer, Natixis Advisors, L.P., Natixis Distribution, L.P., Natixis Distribution Corporation and Chairman of the Board of Natixis Distribution Corporation 

52

None

 Significant experience on the Board; experience as President and Chief Executive Officer, Natixis Advisors, L.P., Natixis Distribution, L.P., Natixis Distribution Corporation and Chairman of the Board of Natixis Distribution Corporation

 

1 

Each trustee serves until retirement, resignation or removal from the Board. The current retirement age is 75. The position of Chairperson of the Board is appointed for a three-year term. Mr. Drucker was appointed to serve an additional one year term as the Chairperson of the Board on June 12, 2019.

 

2 

The trustees of the Trust serve as trustees of a fund complex that includes all series of the Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds Trust IV, Gateway Trust, Loomis Sayles Funds I, Loomis Sayles Funds II and Natixis ETF Trust (collectively, the “Fund Complex”).

 

3 

Mr. Charleston is deemed an “interested person” of the Trust because he holds the following positions with an affiliated person of the Trust: President, Chief Executive Officer and Chairman of the Board of Directors of Loomis, Sayles & Company, L.P.

 

4 

Mr. Giunta is deemed an “interested person” of the Trust because he holds the following positions with an affiliated person of the Trust: President and Chief Executive Officer, Natixis Advisors, L.P., Natixis Distribution, L.P., Natixis Distribution Corporation and Chairman of the Board of Natixis Distribution Corporation.

 

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Trustee and Officer Information

 

Name and Year of Birth

 

Position(s) Held

with the Trust

 

Term of Office1 and

Length of Time Served

 

Principal Occupation(s)

During Past 5 Years2

OFFICERS OF THE TRUST

Russell L. Kane

(1969)

 Secretary, Clerk and Chief Legal Officer Since 2016 Executive Vice President, General Counsel, Secretary and Clerk, Natixis Distribution Corporation, Natixis Advisors, L.P. and Natixis Distribution, L.P.; formerly, Chief Compliance Officer for Mutual Funds, Senior Vice President, Deputy General Counsel, Assistant Secretary and Assistant Clerk, Natixis Distribution Corporation, Natixis Advisors, L.P. and Natixis Distribution, L.P.

Michael C. Kardok

(1959)

 Treasurer, Principal Financial and Accounting Officer Since 2004 Senior Vice President, Natixis Advisors, L.P. and Natixis Distribution, L.P.

Kirk D. Johnson

(1981)

 Chief Compliance Officer, Assistant Secretary and Anti-Money Laundering Officer Since 2018 Senior Vice President, Deputy General Counsel, Assistant Secretary and Assistant Clerk, Natixis Distribution Corporation, Natixis Advisors, L.P. and Natixis Distribution, L.P.; formerly, Associate General Counsel, Natixis Distribution, L.P.; Vice President and Counsel, Natixis Investment Managers, L.P.

 

1 

Each officer of the Trust serves for an indefinite term in accordance with the Trust’s currentby-laws until the date his or her successor is elected and qualified, or until he or she sooner dies, retires, is removed or becomes disqualified.

 

2 

Each person listed above, except as noted, holds the same position(s) with the Fund Complex. Previous positions during the past five years with Natixis Distribution, L.P., Natixis Advisors, L.P. or Loomis, Sayles & Company, L.P. are omitted, if not materially different from an officer’s current position with such entity.

 

|  54


Table of Contents

LOGO

 

LOGO

 

Annual Report

November 30, 2019

Loomis Sayles Global Growth Fund

Vaughan Nelson Select Fund

 

TABLE OF CONTENTS

Portfolio Review  1 
Portfolio of Investments  16 
Financial Statements  22 
Notes to Financial Statements  33 

 

IMPORTANT NOTICE TO SHAREHOLDERS

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Funds’ website, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you wish to continue receiving paper copies of your shareholder reports after January 1, 2021, you can inform the Fund at any time by calling 1-800-225-5478. If you hold your account with a financial intermediary and you wish to continue receiving paper copies after January 1, 2021, you should call your financial intermediary directly. Paper copies are provided free of charge, and your election to receive reports in paper will apply to all funds held with the Natixis Funds complex. If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may currently elect to receive shareholder reports and other communications from the Fund or your financial intermediary electronically atwww.icsdelivery.com/natixisfunds.


Table of Contents

LOOMIS SAYLES GLOBAL GROWTH FUND

 

Manager:  Symbols:
Aziz V. Hamzaogullari, CFA®  Class A LSAGX
Loomis, Sayles & Company, L.P.  Class C LSCGX
  Class N LSNGX
  Class Y LSGGX

 

 

Investment Goal

The Fund’s investment goal is long-term growth of capital.

 

 

Market Conditions

Despite a sharpsell-off in December 2018, global equities recovered to post robust, double-digit gains in the12-month period. The initial downturn reflected mounting concerns about slowing economic growth and the escalating trade war between the United States and China. Equities began to recover with the start of the new year, as the US Federal Reserve (Fed) alleviated worries about the economy by communicating its intent to adopt a more accommodative interest rate policy. The Fed followed through on expectations with quarter-point rate cuts in each of its three meetings from August to October 2019. Other world central banks took the Fed’s cue and moved toward looser monetary policies, highlighted by the European Central Bank’s pledge to restart its stimulative quantitative easing program. Investors were also encouraged by the fact that both economic growth and corporate earnings stayed firmly in positive territory, allaying the fears of a possible recession that had weighed on market performance in late 2018.

Domestic equities outpaced the developed international markets, reflecting the relative strength of the US economy. Emerging market stocks, while posting a positive absolute return, lagged somewhat due in part to their higher sensitivity to the headlines surrounding trade.

In a continuation of a longstanding trend, the growth style outperformed value. At a time of slowing economic conditions across the globe, investors demonstrated a continued preference for companies with the ability to generate organic profit growth.Mega-cap technology stocks were prime beneficiaries of this trend, providing an added boost to the relative performance of the US market.

Performance Results

For the 12 months ended November 30, 2019, Class Y shares of the Loomis Sayles Global Growth Fund returned 16.65%. The Fund outperformed its benchmark, the MSCI All Country World Index (Net), which returned 13.68%.

Explanation of Fund Performance

We are an active manager with a long-term, private equity approach to investing. Through our proprietarybottom-up research framework, we look to invest in those few high-quality businesses with sustainable competitive advantages and profitable growth when they trade

 

1  |


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at a significant discount to intrinsic value. Given the rare confluence of quality, growth, and valuation, we may study dozens of companies but may only invest in a select few businesses each year. We believe identifying those few businesses with these characteristics is an art, not a science. As a result of this rigorous approach, ours is a selective, high-conviction portfolio of typically30-45 names.

The Fund’s positions in MercadoLibre, Facebook, and Visa were the top three contributors to performance. Stock selection in the consumer discretionary, healthcare, information technology, consumer staples, industrials, and financials sectors, along with our allocations in the energy, financials, consumer discretionary, information technology and healthcare sectors, contributed positively to relative performance.

MercadoLibre hosts the largest online commerce platform in Latin America. A Fund holding since inception, the company was the largest contributor to performance during the period. MercadoLibre delivered strong and above-expectations revenue growth, accelerating gross merchandise volume growth, and continued market share gains. The company has increased its investments to drive a more powerful ecosystem focused on greater product selection, easier payment options, wider credit availability, brand building in its largest markets, and lowering the cost and time of delivery. While these investments have impacted near-term profitability, we believe they have led to strong market share gains ine-commerce and payments, and a stronger competitive position. We believe MercadoLibre’s competitive advantages include its network and ecosystem, brand, and understanding of local markets. The company operates in 18 countries representing over 95% of Latin American GDP, and its 267 million registered buyers as of December 31, 2018 represented approximatelytwo-thirds of the region’s 400 million internet users. The company’s brand and understanding of local market challenges have contributed to its leadership position in each market it serves. We believe MercadoLibre is well-positioned for sustained growth over the next decade, driven by the secular growth ofe-commerce in Latin America. Over our forecast period, we believe the penetration ofe-commerce can more than double, which would bring the penetration level close to today’s global average of over 10%. We believe the current market price embeds expectations for key revenue and cash flow growth drivers that are well below our long-term assumptions. As a result, we believe the shares trade at a significant discount to our estimate of intrinsic value and offer a compelling long-termreward-to-risk opportunity.

A Fund holding since inception, social media company Facebook reported strong and above-expectations growth in revenue during the period that was approximately two times the rate of growth in online advertising, indicating the company grew its market share. Despite recently reporting that it had reached a $5 billion settlement with the US Federal Trade Commission (FTC) regarding its privacy practices and that the FTC has opened an antitrust investigation, Facebook continues to grow its global user base, and user engagement as measured by daily and monthly active users has remained solid. In addition, demand from advertisers remains robust, and the company grew its average revenue per user throughout the period. We believe Facebook is a high-quality company, benefiting from the secular shift from traditional advertising to online advertising and positioned for strong and sustainable growth over our investment horizon. We will continue to monitor

 

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LOOMIS SAYLES GLOBAL GROWTH FUND

 

ongoing regulatory actions, but we believe management’s decisions and actions illustrate their commitment to preserve platform integrity and to sustain the company’s leadership. With approximately 2.8 billion people worldwide using its apps and more than 90 million global businesses with Facebook pages, the scale and reach of Facebook’s network is unrivaled. We believe that corporations will continue to allocate an increasing proportion of their advertising spending online, and Facebook remains one of very few platforms where advertisers can reach consumers at such scale. We believe Facebook is selling at a significant discount to our estimate of intrinsic value and offers a compellingreward-to-risk opportunity.

Visa is the largest payments technology company in the world, with a comprehensive offering of digital payment products. Through its open-loop, multi-party system, Visa has built a massive global network, orchestrating transaction settlements between merchants and cardholders in more than 200 countries. A growing global network with over 3.3 billion Visa-branded cards outstanding that are accepted by 54 million merchants worldwide creates a powerful virtuous cycle, reinforcing Visa’sdifficult-to-replicate competitive advantages. During the period, Visa reported healthy revenue and earnings growth that was above market expectations. Payment volume growth of almost 10% in constant currency was well above the rate of growth in the approximately $47 trillion of global personal consumer expenditures, reflecting the ongoing, long-term secular shift from cash to electronic payments. We estimate Visa can generate double-digit revenue growth over our forecast period. As the company continues to scale its businesses in regions around the world, we expect it will be able to expand operating margins, improve its return on invested capital, and grow free cash flow faster than revenues. We believe the assumptions embedded in Visa’s share price underestimate the company’s significant long-term growth opportunities and the sustainability of its business model. We believe the company’s shares currently sell at a significant discount to our estimate of intrinsic value and thereby offer a compellingreward-to-risk opportunity.

The Fund’s positions in Baidu, Under Armour, and Schlumberger were the three largest detractors from performance. Stock selection in the communication services and energy sectors, along with our allocation to the consumer staples sector, detracted from relative performance.

Baidu is the leading online search and advertising provider in China. A holding in the portfolio since inception, Baidu was the leading detractor for the year. The company reported fundamentally solid results that were generally above consensus expectations for revenue and earnings per share (EPS), but reflected a weak advertising environment due to macroeconomic factors and government regulations that have impacted a number of the company’s industry verticals. More recently, ad spending has shown signs of stabilization and the company is benefiting from its mobile ecosystem and ability to monetize its large user base. The company also reported a more disciplined approach to its investments, which are likely to remain elevated as the company seeks to grow users of its family of apps and expand both its DuerOS voice interaction system and Apollo open-source autonomous driving platform — two of its key artificial intelligence products outside of search. We believe Baidu’s sustainable competitive advantages include its strong brand recognition,

 

3  |


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economies of scale, a powerful network and business ecosystem, and strong distribution. Serving over 800,000 advertisers and approximately 1.1 billion monthly internet users, Baidu dominates China’s internet search market, capturing about 80% share of search revenues. Reflecting this dominance, the company’sdifficult-to-replicate brand was rated the eighth most valuable brand in China in 2019 by MillwardBrown’s annual BrandZ study. Online advertising currently represents approximately 60% of the annual advertising market in China, and we believe it will increase to about 80% over our forecast period. We believe Baidu’s competitive advantages sustainably position the company to benefit from secular growth in China online advertising. We believe the shares sell at a significant discount to our estimate of intrinsic value and offer a compellingreward-to-risk opportunity.

Under Armour is a leading sports apparel, footwear, and accessories provider, primarily engaged in developing, marketing, and distributing performance-centric branded sportswear. In twenty years, Under Armour has accomplished what few have achieved by becoming a credible number three global sportswear brand behind Nike and Adidas. We believe the company’s strong and sustainable advantages include its brand, distribution, and the benefits of scale needed to compete globally. We believe Under Armour is well positioned to benefit from secular growth in global per capita consumption of sportswear and can realize market share gains in footwear and international markets. A portfolio holding since the fourth quarter of 2017, Under Armour was among the biggest detractors for the year. The company reported financial results that were generally in line with or better than consensus expectations, but reflected ongoing weakness in North America, its largest market. Further, the company acknowledged that in 2017 the Securities and Exchange Commission opened an inquiry into Under Armour’s accounting practices related to revenue recognition, and that it has been complying with related document requests since July 2017. The company maintains that there were no accounting irregularities. Under Armour has spent the past several quarters refocusing on its premium segment and resizing its operations and expense base to improve profitability. In particular, the company’s ability to reduce excess inventory, which declined by amid-twenties percentage year over year, while protecting gross margins, reflects the company’s improved positioning as its turnaround continues. Having focused on operational discipline, the company is now better positioned to execute on the next leg of its recovery, which we believe will include more granular customer segmentation in new product launches, greater innovation through technological differentiation, improved supply chain management, and better brand positioning. We believe this strategy will enable the company to achieve more full-price sales, lower its supply chain cost, and better manage inventory, all of which are important to margin recovery in the company’s North American business. We believe the current share price embeds growth and profitability assumptions for the business that are substantially below our estimates for the company’s long-term growth. As a result, we believe the company is trading at a significant discount to our estimate of intrinsic value and offers a compellingreward-to-risk opportunity.

Schlumberger is the world’s leading oil field services firm, with a90-year history of delivering consistent service and product excellence across the spectrum of exploration,

 

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LOOMIS SAYLES GLOBAL GROWTH FUND

 

drilling, and production. Only a few companies can compete with the scope of Schlumberger’s integrated suite of products and services, and even fewer can compete with the scale and depth of its technology and service execution. A Fund holding since inception, global sales for the trailing 12 months were flat compared with the prior-year period, while free cash flow increased 75% to $2.7 billion. However, stocks in the oil services sector came under pressure on concerns around slowing activity in North America, where record-setting production, coupled with insufficient takeaway capacity in the Permian basin, led operators to delay well completions and revise downward their 2019 spending outlooks. Further, trade war rhetoric and concerns over global demand growth have contributed to volatile oil prices, impacting expectations for global service activity. The need to replace naturally depleting reservoirs creates long-term secular growth in the demand for oil and the need to extract hydrocarbons from harsher environments. Oilfield services like those Schlumberger provides are key to accessingdifficult-to-reach resources. Thanks to its superior products and services and its competitive advantages, we believe Schlumberger is well positioned to weather the current environment and capitalize on the growth in oilfield services as market supply and demand normalizes. We believe the shares of Schlumberger are selling at a significant discount to our estimate of intrinsic value and offer a compellingreward-to-risk opportunity.

All aspects of our quality-growth-valuation investment thesis must be present simultaneously for us to make an investment. Often our research is completed well in advance of the opportunity to invest. We are patient investors and maintain coverage of high-quality businesses in order to take advantage of meaningful price dislocations if and when they occur. During the period we initiated a new position in Budweiser Brewing Company APAC Ltd, and received a small allocation in Alcon, Inc., which was a spinoff from existing portfolio holding Novartis. We added to our existing holdings in Ambev, Baidu, Schlumberger, Tencent, and Under Armour. We trimmed our existing positions in Diageo and MercadoLibre.

Outlook

Our investment process is characterized bybottom-up fundamental research and a long-term investment time horizon. The nature of the process leads to a lower-turnover portfolio in which sector positioning is the result of stock selection. The Fund ended the year with overweight positions in the consumer discretionary, consumer staples, communication services, and information technology sectors and underweight positions in the financials, energy, industrials, and healthcare sectors. We did not own positions in the materials, utilities or real estate sectors.

 

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Hypothetical Growth of $100,000 Investment in Class Y Shares3

March 31, 2016 (inception) through November 30, 2019

 

LOGO

See notes to chart on page 7.

Top Ten Holdings as of November 30, 2019

 

Security Name  % of
net assets
 
1  Amazon.com, Inc.   5.79
2  Alibaba Group Holding Ltd.   5.66 
3  Facebook, Inc.   5.07 
4  MercadoLibre, Inc.   5.06 
5  Visa, Inc.   4.90 
6  Oracle Corp.   4.50 
7  Alphabet, Inc.   4.34 
8  Roche Holding AG   4.28 
9  Yum China Holdings, Inc.   3.72 
10  Deere & Co.   3.59 

The portfolio is actively managed and holdings are subject to change. There is no guarantee the Fund continues to invest in the securities referenced. The holdings listed exclude any temporary cash investments.

 

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LOOMIS SAYLES GLOBAL GROWTH FUND

 

Average Annual Total Returns — November 30, 20193

 

                Expense Ratios4 
   1 Year  Life of Class  Gross  Net 
   
Class Y (Inception 3/31/2016)   Class Y/A/C   Class N    
NAV  16.65  14.59    1.32  1.00
   
Class A (Inception 3/31/2016)      
NAV  16.25   14.28      1.57   1.25 
With 5.75% Maximum Sales Charge  9.57   12.45       
   
Class C (Inception 3/31/2016)      
NAV  15.40   13.40      2.32   2.00 
With CDSC1  14.40   13.40       
   
Class N (Inception 3/31/2017)      
NAV  16.61      14.32   1.30   0.95 
  
Comparative Performance      
MSCI ACWI (Net)2  13.68   11.24   9.85         

Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. Total return and value will vary, and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. For most recent month-end performance, visit im.natixis.com/performance. Performance for other share classes will be greater or less than shown based on differences in fees and sales charges. You may not invest directly in an index. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any. The table(s) do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares.

 

1

Performance for Class C shares assumes a 1% contingent deferred sales charge (“CDSC”) applied when you sell shares within one year of purchase.

 

2

The MSCI ACWI (Net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.

 

3

Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

4

Expense ratios are as shown in the Fund’s prospectus in effect as of the date of this report. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report under Ratios to Average Net Assets. Net expenses reflect contractual expense limitations set to expire on 3/31/21. When a Fund’s expenses are below the limitation, gross and net expense ratios will be the same. See Note 6 of the Notes to Financial Statements for more information about the Fund’s expense limitations.

 

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VAUGHAN NELSON SELECT FUND

 

Managers: Symbols:
Chris D. Wallis, CFA® Class A    VNSAX
Scott J. Weber, CFA® Class C    VNSCX
Vaughan Nelson Investment Management, L.P. Class N    VNSNX
 Class Y    VNSYX

 

 

Investment Goal

The Fund seeks long-term capital appreciation.

 

 

Market Conditions

During 2019, the equity market continued to recover from the steepsell-off experienced in the fourth quarter of 2018. The powerful rally was triggered by global central banks’ acknowledgement of tightening liquidity conditions and an increase in monetary stimulus by China.

Global central banks are increasing monetary stimulus to reinvigorate global growth and the US Federal Reserve (Fed) began cutting rates during the third quarter. Unfortunately, given the prior reliance on monetary stimulus, the extended period ofultra-low rates, the rebalancing of the Chinese economy, and the secular shift in trade flows, central banks’ policies will have less of an impact on underlying economic growth.

There are many structural elements suppressing economic growth that cannot be addressed by simply lowering the federal funds rate. Global negative interest rates and inverted yield curves reflect a growing shortage of US dollar funding liquidity outside of the United States. In order to address this US dollar funding shortage, central banks will be forced to resume quantitative easing (QE) or a coordinated devaluing of the US dollar versus major trading currencies. QE will be necessary to boost dollar liquidity.

We expect only a modest resolution to US trade negotiations with China and other countries. It is important to note that the global slowdown began prior to the implementation of tariffs and trade negotiations and we do not expect a resolution to the trade discussions to result in a material or sustainable increase in economic growth.

Performance Results

For the 12 months ended November 30, 2019, Class Y shares of Vaughan Nelson Select Fund returned 13.94% at net asset value. The fund underperformed its benchmark, the S&P 500® Index, which returned 16.11%.

Explanation of Fund Performance

The Fund performed well during the year but underperformed the benchmark, primarily due to sector selection. The primary detractors from relative performance were stock selection within the financial sector and the Fund being underweight technology stocks, the best performing sector for the year. Within the financials, Berkshire Hathaway and Virtu Financial detracted the most from relative performance. Berkshire faced declining

 

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Table of Contents

VAUGHAN NELSON SELECT FUND

 

interest rates and failed to keep pace with the market appreciation. Virtu Financial performed poorly during the year due to sluggish volume and volatility trends, which drive revenue growth.

Even though stock selection within the information technology sector was positive for the year, the Fund was underweight technology stocks, which hurt relative performance since it was the best performing sector for the year. The Fund was underweight the technology sector primarily due to rich valuations, which challenged performance despite positive security selection. The Fund’s positions in Mastercard, Microsoft, and Texas Instruments performed well.

Stock selection within the consumer discretionary sector also hurt relative performance. Dollar Treedetracted the most from results. Dollar Tree continues to struggle with its acquired Family Dollar stores. However, Home Depot performed well for the year, which helped offset Dollar Tree’s decline.

The industrials sector also detracted from performance. General Dynamics and Snap-on detracted the most from results. General Dynamics weathered a sizable model transition in Gulfstream, its largest segment. The Fund exitedSnap-on in the first quarter due to sluggish growth trends in its tools business. Raytheon and Roper were two industrials that were notable contributors to Fund performance for the year.

The Fund was overweight the energy sector due to attractive valuations and improving fundamentals. While the Fund’s stock selection was positive for the year, the energy sector materially lagged the market. Cameco, a uranium miner, detracted the most from performance as policy and regulatory hurdles (Iran sanctions and Section 232 tariff) dragged on.

The materials sector performed well and was the top contributor to relative performance. Sherwin-Williams and Ecolab were the top contributors to performance. Sherwin-Williams benefited from lower mortgage rates, solid employment trends, declining raw materials costs, and ongoing synergies from the Valspar merger. Ecolab performed well during the year, benefiting from good organic growth and its cost savings program. The Fund exited Ecolab in the third quarter due to valuation.

The Fund benefited from stock selection in the communication services sector. Walt Disney and AT&T were the best performing names. Disney completed the acquisition of Fox entertainment assets and launched several direct-to-consumer video platforms to enthusiastic reception. AT&T overcame market concerns about its leverage with faster than anticipated debt reduction.

Stock selection and sector selection drove positive performance in the consumer staples sector. Consumer staples lagged the market over the trailing 12 months, so the Fund’s underweight to the sector added to relative returns. Further, stock selection was strong, with Estee Lauder materially outperforming the group. Estee Lauder is benefiting from a growing shift in consumer preference for skin care products and ample international growth.

 

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The Fund was underweight healthcare stocks during the year, which contributed to relative performance since healthcare lagged the market. Within the healthcare sector, the Fund’s stock selection was favorable. Thermo Fisher Scientific reported strong organic growth numbers across all end markets during the year, including life sciences, specialty diagnostics, and lab products.

Finally, the Fund was underweight real estate and utilities for the year, which marginally detracted from relative performance.

Outlook

The primary excess during the currentten-year bull market has been liquidity in the form of QE. The excess liquidity that wasn’t absorbed in the real economy found its way into risk asset prices. Liquidity began to retreat with the implementation of quantitative tightening by the Fed and with tightening capital controls by China. We have seen the declining liquidity conditions impact asset prices, as global equity index valuations, commodity prices, and global luxury real estate prices have declined. Most recently, the market has repriced the private equity “unicorns” and the IPO market has cooled with several high-profile offerings postponed.

Rising US deficits and slowing private sector fundamentals will further pressure liquidity — and ultimately risk assets — unless the Fed begins to materially and sustainably increase its balance sheet. While central banks globally are beginning to cut interest rates, this will have a minimal impact on liquidity. Low rates are not the problem; the issue is interbank lending and the availability of US dollar funding capacity. We suspect the Fed will slowly be forced to provide dollar liquidity on a sustainable basis. Should this occur, the Fed willfind itself at a familiar crossroad, where it can either choose to control the price of money (i.e. interest rates) or the quantity of money (i.e. US dollar exchange rate/inflation), but not both. We suspect they will choose the former over the latter.

US equity markets continue to price in a recovery in earnings growth. The leading economic indicators we track show economic activity stabilizing inEurope, but further weakness is expected in Japan, the United States, and China. The next few months will be critical in determining whether the increasing stability we are forecasting in Europe can spread to China and the United States, or whether the stability is a transitory improvement that presages further economic weakness. Valuations have risen materially in 2019 as markets recovered, and we expect markets to remain volatile until we are in an environment of sustained economic growth with adequate US dollar funding liquidity.

Our outlook remains balanced, stock-specific, and not reflective of opportunities in specific industries, regions of the world, or broader market indices.

 

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VAUGHAN NELSON SELECT FUND

 

Hypothetical Growth of $100,000 Investment in Class Y Shares3

June 29, 2012 (inception) through November 30, 2019

LOGO

Top Ten Holdings as of November 30, 2019

 

Security Name  % of
net assets
 
1  

Electronic Arts, Inc.

   5.32
2  Walt Disney Co. (The)   5.07 
3  Charles Schwab Corp. (The)   4.97 
4  AbbVie, Inc.   4.83 
5  Microsoft Corp.   4.76 
6  Sherwin-Williams Co. (The)   4.59 
7  General Dynamics Corp.   4.12 
8  Dollar Tree, Inc.   4.07 
9  Home Depot, Inc. (The)   4.05 
10  Berkshire Hathaway, Inc.   4.03 

The portfolio is actively managed and holdings are subject to change. There is no guarantee the Fund continues to invest in the securities referenced. The holdings listed exclude any temporary cash investments.

 

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Table of Contents

Average Annual Total Returns — November 30, 20193

 

     
             Expense Ratios4 
   1 Year  5 Years  Life of Class  Gross  Net 
   
Class Y (Inception 6/29/2012)    Class Y/A/C    Class N    

NAV

  13.94  10.32  14.64    1.05  0.99
   

Class A (Inception 6/29/2012)

       

NAV

  13.67   10.05   14.35      1.31   1.24 

With 5.75% Maximum Sales Charge

  7.11   8.75   13.44       
   

Class C (Inception 6/29/2012)

       

NAV

  12.86   9.22   13.51      2.05   1.99 

With CDSC1

  11.86   9.22   13.51       
   

Class N (Inception 3/31/2017)

       

NAV

  13.93         13.08   13.58   0.94 
  

Comparative Performance

       

S&P 500® Index2

  16.11   10.98   14.29   13.50         

Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. Total return and value will vary, and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. For most recent month-end performance, visit im.natixis.com/performance. Performance for other share classes will be greater or less than shown based on differences in fees and sales charges. You may not invest directly in an index. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of dividends and capital gains, if any. The table(s) do not reflect taxes shareholders might owe on any fund distributions or when they redeem their shares.

 

1

Performance for Class C shares assumes a 1% contingent deferred sales charge (“CDSC”) applied when you sell shares within one year of purchase.

 

2

S&P 500® Index is a widely recognized measure of U.S. stock market performance. It is an unmanaged index of 500 common stocks chosen for market size, liquidity, and industry group representation, among other factors. It also measures the performance of the large cap segment of the U.S. equities market.

 

3

Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

4

Expense ratios are as shown in the Fund’s prospectus in effect as of the date of this report. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report under Ratios to Average Net Assets. Net expenses reflect contractual expense limitations set to expire on 3/31/21. When a Fund’s expenses are below the limitation, gross and net expense ratios will be the same. See Note 6 of the Notes to Financial Statements for more information about the Fund’s expense limitations.

 

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ADDITIONAL INFORMATION

The views expressed in this report reflect those of the portfolio managers as of the dates indicated. The managers’ views are subject to change at any time without notice based on changes in market or other conditions. References to specific securities or industries should not be regarded as investment advice. Because the Fund is actively managed, there is no assurance that they will continue to invest in the securities or industries mentioned.

All investing involves risk, including the risk of loss. There is no assurance that any investment will meet its performance objectives or that losses will be avoided.

ADDITIONAL INDEX INFORMATION

This document may contain references to third party copyrights, indexes, and trademarks, each of which is the property of its respective owner. Such owner is not affiliated with Natixis Investment Managers or any of its related or affiliated companies (collectively “Natixis Affiliates”) and does not sponsor, endorse or participate in the provision of any Natixis Affiliates services, funds or other financial products.

The index information contained herein is derived from third parties and is provided on an “as is” basis. The user of this information assumes the entire risk of use of this information. Each of the third party entities involved in compiling, computing or creating index information, disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to such information.

PROXY VOTING INFORMATION

A description of the Natixis Funds’ proxy voting policies and procedures is available without charge, upon request, by calling Natixis Funds at 800-225-5478; on Natixis Funds’ website at im.natixis.com; and on the Securities and Exchange Commission’s (SEC) website at www.sec.gov. Information regarding how Natixis Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available from Natixis Funds’ website and the SEC’s website.

QUARTERLY PORTFOLIO SCHEDULES

The Natixis Funds file complete schedules of portfolio holdings with the SEC for the first and third quarters of each fiscal year onForm N-PORT. The Funds’ Form N-PORT reports are available on the SEC’s website at www.sec.gov.

CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.

 

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UNDERSTANDING FUND EXPENSES

As a mutual fund shareholder, you incur different costs: transaction costs, including sales charges (loads) on purchases and contingent deferred sales charges on redemptions and ongoing costs, including management fees, distribution and/or service fees (12b-1 fees), and other fund expenses. Certain exemptions may apply. These costs are described in more detail in the Funds’ prospectus. The following examples are intended to help you understand the ongoing costs of investing in the Funds and help you compare these with the ongoing costs of investing in other mutual funds.

The first line in the table of each class of Fund shares shows the actual account values and actual Fund expenses you would have paid on a $1,000 investment in the Fund from June 1, 2019 through November 30, 2019. To estimate the expenses you paid over the period, simply divide your account value by $1,000 (for example $8,600 account value divided by $1,000 = 8.60) and multiply the result by the number in the Expenses Paid During Period column as shown below for your class.

The second line in the table for each class of Fund shares provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid on your investment for the period. You may use this information to compare the ongoing costs of investing in each Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown reflect ongoing costs only, and do not include any transaction costs, such as sales charges. Therefore, the second line in the table of each Fund is useful in comparing ongoing costs only, and will not help you determine the relative costs of owning different funds. If transaction costs were included, total costs would be higher.

 

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Table of Contents
LOOMIS SAYLES GLOBAL GROWTH FUND BEGINNING
ACCOUNT VALUE
6/1/2019
  ENDING
ACCOUNT VALUE
11/30/2019
  EXPENSES PAID
DURING PERIOD*
6/1/2019 – 11/30/2019
 

Class A

    

Actual

  $1,000.00   $1,089.20   $6.49 

Hypothetical (5% return before expenses)

  $1,000.00   $1,018.85   $6.28 

Class C

    

Actual

  $1,000.00   $1,085.50   $10.40 

Hypothetical (5% return before expenses)

  $1,000.00   $1,015.09   $10.05 

Class N

    

Actual

  $1,000.00   $1,091.10   $5.03 

Hypothetical (5% return before expenses)

  $1,000.00   $1,020.26   $4.86 

Class Y

    

Actual

  $1,000.00   $1,091.10   $5.19 

Hypothetical (5% return before expenses)

  $1,000.00   $1,020.11   $5.01 

 

*

Expenses are equal to the Fund’s annualized expense ratio (after waiver/reimbursement): 1.24%, 1.99%, 0.96% and 0.99% for Class A, C, N and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (183), divided by 365 (to reflect the half-year period).

 

VAUGHAN NELSON SELECT FUND BEGINNING
ACCOUNT VALUE
6/1/2019
  ENDING
ACCOUNT VALUE
11/30/2019
  EXPENSES PAID
DURING PERIOD*
6/1/2019 – 11/30/2019
 

Class A

    

Actual

  $1,000.00   $1,129.80   $6.09 

Hypothetical (5% return before expenses)

  $1,000.00   $1,019.35   $5.77 

Class C

    

Actual

  $1,000.00   $1,125.60   $10.07 

Hypothetical (5% return before expenses)

  $1,000.00   $1,015.59   $9.55 

Class N

    

Actual

  $1,000.00   $1,131.50   $4.54 

Hypothetical (5% return before expenses)

  $1,000.00   $1,020.81   $4.31 

Class Y

    

Actual

  $1,000.00   $1,130.90   $4.75 

Hypothetical (5% return before expenses)

  $1,000.00   $1,020.61   $4.51 

 

*

Expenses are equal to the Fund’s annualized expense ratio (after waiver/reimbursement): 1.14%, 1.89%, 0.85% and 0.89% for Class A, C, N and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (183), divided by 365 (to reflect the half-year period).

 

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Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Global Growth Fund

 

Shares   Description  Value (†) 
 Common Stocks — 98.1% of Net Assets 
    Argentina — 5.1% 
 6,151   MercadoLibre, Inc.(a)  $3,571,148 
    

 

 

 
    Brazil — 1.9% 
 318,021   Ambev S.A., ADR   1,338,868 
    

 

 

 
    China — 15.0% 
 19,952   Alibaba Group Holding Ltd., Sponsored ADR(a)   3,990,400 
 12,127   Baidu, Inc., Sponsored ADR(a)   1,437,413 
 148,832   Budweiser Brewing Co. APAC Ltd., 144A(a)   530,453 
 47,000   Tencent Holdings Ltd.   1,983,209 
 58,931   Yum China Holdings, Inc.   2,623,608 
    

 

 

 
   10,565,083 
    

 

 

 
    Denmark — 3.4% 
 42,884   Novo Nordisk AS, Class B   2,410,371 
    

 

 

 
    France — 4.1% 
 22,145   Danone S.A.   1,821,976 
 9,407   Sodexo S.A.   1,096,375 
    

 

 

 
   2,918,351 
    

 

 

 
    Italy — 0.8% 
 156,300   Prada SpA   567,916 
    

 

 

 
    Netherlands — 2.0% 
 1,818   Adyen NV, 144A(a)   1,394,024 
    

 

 

 
    Switzerland — 8.6% 
 2,987   Alcon, Inc.(a)   164,956 
 14,515   Nestle S.A., (Registered)   1,506,929 
 14,956   Novartis AG, (Registered)   1,378,387 
 9,789   Roche Holding AG   3,017,124 
    

 

 

 
   6,067,396 
    

 

 

 
    United Kingdom — 6.9% 
 13,416   Diageo PLC   548,156 
 60,607   Experian PLC   2,010,481 
 10,198   Reckitt Benckiser Group PLC   800,566 
 25,743   Unilever NV   1,531,389 
    

 

 

 
   4,890,592 
    

 

 

 
    United States — 50.3% 
 2,348   Alphabet, Inc., Class A(a)   3,062,003 
 2,266   Amazon.com, Inc.(a)   4,080,613 
 5,934   American Express Co.   712,792 
 25,752   Coca-Cola Co. (The)   1,375,157 
 16,370   Colgate-Palmolive Co.   1,110,213 
 3,094   Core Laboratories NV   135,517 
 15,061   Deere & Co.   2,531,001 
 13,629   Expeditors International of Washington, Inc.   1,018,904 
 17,741   Facebook, Inc., Class A(a)   3,577,295 
 15,125   Microsoft Corp.   2,289,623 

 

See accompanying notes to financial statements.

 

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Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Global Growth Fund – (continued)

 

Shares   Description  Value (†) 
    United States — continued 
 56,578   Oracle Corp.  $3,176,289 
 15,198   Procter & Gamble Co. (The)   1,855,068 
 23,520   QUALCOMM, Inc.   1,965,096 
 28,654   Schlumberger Ltd.   1,037,275 
 17,095   SEI Investments Co.   1,103,140 
 90,335   Under Armour, Inc., Class A(a)   1,706,428 
 18,740   Visa, Inc., Class A   3,457,718 
 12,887   Yum! Brands, Inc.   1,297,334 
    

 

 

 
   35,491,466 
    

 

 

 
  Total Common Stocks
(Identified Cost $62,309,291)
   69,215,215 
    

 

 

 
    
Principal
Amount
          
 Short-Term Investments — 1.8% 
$1,250,945   Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 11/29/2019 at 0.900% to be repurchased at $1,251,039 on 12/02/2019 collateralized by $1,265,000 U.S. Treasury Note, 1.750% due 5/31/2022 valued at $1,280,008 including accrued interest (Note 2 of Notes to Financial Statements) (Identified Cost $1,250,945)   1,250,945 
    

 

 

 
    
  Total Investments — 99.9%
(Identified Cost $63,560,236)
   70,466,160 
  Other assets less liabilities — 0.1%   71,843 
    

 

 

 
  Net Assets — 100.0%  $70,538,003 
    

 

 

 
    
 (†)   See Note 2 of Notes to Financial Statements.

 

 (a)   Non-income producing security.

 

    
 144A   All or a portion of these securities are exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At November 30, 2019, the value of Rule 144A holdings amounted to $1,924,477 or 2.7% of net assets.

 

 ADR   An American Depositary Receipt is a certificate issued by a custodian bank representing the right to receive securities of the foreign issuer described. The values of ADRs may be significantly influenced by trading on exchanges not located in the United States.

 

 

See accompanying notes to financial statements.

 

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Table of Contents

Portfolio of Investments – as of November 30, 2019

Loomis Sayles Global Growth Fund – (continued)

 

Industry Summary at November 30, 2019

 

Internet & Direct Marketing Retail

   16.6

Interactive Media & Services

   14.2 

Pharmaceuticals

   9.7 

Software

   7.7 

Hotels, Restaurants & Leisure

   7.0 

IT Services

   6.9 

Beverages

   5.5 

Household Products

   5.3 

Food Products

   4.7 

Machinery

   3.6 

Textiles, Apparel & Luxury Goods

   3.2 

Professional Services

   2.8 

Semiconductors & Semiconductor Equipment

   2.8 

Personal Products

   2.2 

Other Investments, less than 2% each

   5.9 

Short-Term Investments

   1.8 
  

 

 

 

Total Investments

   99.9 

Other assets less liabilities

   0.1 
  

 

 

 

Net Assets

   100.0
  

 

 

 

Currency Exposure Summary at November 30, 2019

 

United States Dollar

   70.5

Swiss Franc

   8.6 

Euro

   8.3 

British Pound

   4.7 

Hong Kong Dollar

   4.4 

Danish Krone

   3.4 
  

 

 

 

Total Investments

   99.9 

Other assets less liabilities

   0.1 
  

 

 

 

Net Assets

   100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

|  18


Table of Contents

Portfolio of Investments – as of November 30, 2019

Vaughan Nelson Select Fund

 

Shares   Description  Value (†) 
 Common Stocks — 97.6% of Net Assets 
    Aerospace & Defense — 6.7% 
 51,365   General Dynamics Corp.  $9,335,075 
 26,390   Raytheon Co.   5,737,714 
    

 

 

 
   15,072,789 
  

 

 

 
    Air Freight & Logistics — 2.1% 
 29,925   FedEx Corp.   4,789,496 
    

 

 

 
    Banks — 2.2% 
 67,075   Citigroup, Inc.   5,038,674 
    

 

 

 
    Biotechnology — 4.8% 
 124,875   AbbVie, Inc.   10,955,284 
    

 

 

 
    Capital Markets — 8.3% 
 227,700   Charles Schwab Corp. (The)   11,271,150 
 12,120   Moody’s Corp.   2,747,240 
 294,550   Virtu Financial, Inc., Class A   4,889,530 
    

 

 

 
   18,907,920 
  

 

 

 
    Chemicals — 4.6% 
 17,850   Sherwin-Williams Co. (The)   10,408,870 
    

 

 

 
    Diversified Financial Services — 4.0% 
 41,445   Berkshire Hathaway, Inc., Class B(a)   9,130,334 
    

 

 

 
    Diversified Telecommunication Services — 3.3% 
 200,539   AT&T, Inc.   7,496,148 
    

 

 

 
    Entertainment — 10.4% 
 119,275   Electronic Arts, Inc.(a)   12,047,968 
 75,825   Walt Disney Co. (The)   11,493,553 
    

 

 

 
   23,541,521 
  

 

 

 
    Health Care Providers & Services — 3.8% 
 31,155   UnitedHealth Group, Inc.   8,719,350 
    

 

 

 
    Industrial Conglomerates — 1.9% 
 11,685   Roper Technologies, Inc.   4,210,923 
    

 

 

 
    Interactive Media & Services — 3.2% 
 35,625   Facebook, Inc., Class A(a)   7,183,425 
    

 

 

 
    IT Services — 3.1% 
 24,065   MasterCard, Inc., Class A   7,032,515 
    

 

 

 
    Life Sciences Tools & Services — 3.4% 
 24,855   Thermo Fisher Scientific, Inc.   7,803,227 
    

 

 

 
    Metals & Mining — 1.9% 
 159,075   Wheaton Precious Metals Corp.   4,396,833 
    

 

 

 
    Multiline Retail — 4.1% 
 100,850   Dollar Tree, Inc.(a)   9,223,741 
    

 

 

 
    Oil, Gas & Consumable Fuels — 10.8% 
 483,650   Cameco Corp.   4,473,762 
 256,325   Enterprise Products Partners LP   6,746,474 

 

See accompanying notes to financial statements.

 

19  |


Table of Contents

Portfolio of Investments – as of November 30, 2019

Vaughan Nelson Select Fund – (continued)

 

Shares   Description  Value (†) 
    Oil, Gas & Consumable Fuels — continued 
 1,487,775   Kosmos Energy Ltd.  $8,882,017 
 34,500   Pioneer Natural Resources Co.   4,410,480 
    

 

 

 
   24,512,733 
  

 

 

 
    Pharmaceuticals — 2.1% 
 34,150   Johnson & Johnson   4,695,284 
    

 

 

 
    Road & Rail — 3.0% 
 182,850   Knight-Swift Transportation Holdings, Inc.   6,763,622 
    

 

 

 
    Semiconductors & Semiconductor Equipment — 5.0% 
 56,075   QUALCOMM, Inc.   4,685,066 
 54,975   Texas Instruments, Inc.   6,608,545 
    

 

 

 
   11,293,611 
  

 

 

 
    Software — 4.8% 
 71,200   Microsoft Corp.   10,778,256 
    

 

 

 
    Specialty Retail — 4.1% 
 41,640   Home Depot, Inc. (The)   9,182,036 
    

 

 

 
  Total Common Stocks
(Identified Cost $189,454,822)
   221,136,592 
    

 

 

 
    
Principal
Amount
          
 Short-Term Investments — 2.4% 
$5,384,681   Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 11/29/2019 at 0.900% to be repurchased at $5,385,085 on 12/02/2019 collateralized by $5,450,000 U.S. Treasury Note, 1.875% due 3/31/2022 valued at $5,496,701 including accrued interest (Note 2 of Notes to Financial Statements) (Identified Cost $5,384,681)   5,384,681 
    

 

 

 
    
  Total Investments — 100.0%
(Identified Cost $194,839,503)
   226,521,273 
  Other assets less liabilities — 0.0%   83,727 
    

 

 

 
  Net Assets — 100.0%  $226,605,000 
    

 

 

 
    
 (†)   See Note 2 of Notes to Financial Statements.  
 (a)   Non-income producing security.  

 

See accompanying notes to financial statements.

 

|  20


Table of Contents

Portfolio of Investments – as of November 30, 2019

Vaughan Nelson Select Fund – (continued)

 

Industry Summary at November 30, 2019

 

Oil, Gas & Consumable Fuels

   10.8

Entertainment

   10.4 

Capital Markets

   8.3 

Aerospace & Defense

   6.7 

Semiconductors & Semiconductor Equipment

   5.0 

Biotechnology

   4.8 

Software

   4.8 

Chemicals

   4.6 

Multiline Retail

   4.1 

Specialty Retail

   4.1 

Diversified Financial Services

   4.0 

Health Care Providers & Services

   3.8 

Life Sciences Tools & Services

   3.4 

Diversified Telecommunication Services

   3.3 

Interactive Media & Services

   3.2 

IT Services

   3.1 

Road & Rail

   3.0 

Banks

   2.2 

Air Freight & Logistics

   2.1 

Pharmaceuticals

   2.1 

Other Investments, less than 2% each

   3.8 

Short-Term Investments

   2.4 
  

 

 

 

Total Investments

   100.0 

Other assets less liabilities

   0.0
  

 

 

 

Net Assets

   100.0
  

 

 

 

 

*

Less than 0.1%

 

See accompanying notes to financial statements.

 

21  |


Table of Contents

Statements of Assets and Liabilities

 

November 30, 2019

 

   Loomis Sayles
Global
Growth Fund
   Vaughan
Nelson
Select Fund
 

ASSETS

 

Investments at cost

  $63,560,236   $194,839,503 

Net unrealized appreciation

   6,905,924    31,681,770 
  

 

 

   

 

 

 

Investments at value

   70,466,160    226,521,273 

Receivable for Fund shares sold

   75,525    203,647 

Dividends and interest receivable

   53,260    260,465 

Tax reclaims receivable

   66,383    2,412 

Prepaid expenses (Note 8)

   4    11 
  

 

 

   

 

 

 

TOTAL ASSETS

   70,661,332    226,987,808 
  

 

 

   

 

 

 

LIABILITIES

 

Payable for Fund shares redeemed

   4,288    108,429 

Management fees payable (Note 6)

   24,494    126,105 

Deferred Trustees’ fees (Note 6)

   20,817    63,602 

Administrative fees payable (Note 6)

   2,510    7,935 

Payable to distributor (Note 6d)

   161    1,213 

Other accounts payable and accrued expenses

   71,059    75,524 
  

 

 

   

 

 

 

TOTAL LIABILITIES

   123,329    382,808 
  

 

 

   

 

 

 

NET ASSETS

  $70,538,003   $226,605,000 
  

 

 

   

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

  $60,258,546   $177,247,651 

Accumulated earnings

   10,279,457    49,357,349 
  

 

 

   

 

 

 

NET ASSETS

  $70,538,003   $226,605,000 
  

 

 

   

 

 

 

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE:

 

Class A shares:

 

Net assets

  $2,831,851   $15,434,401 
  

 

 

   

 

 

 

Shares of beneficial interest

   191,565    828,386 
  

 

 

   

 

 

 

Net asset value and redemption price per share

  $14.78   $18.63 
  

 

 

   

 

 

 

Offering price per share (100/94.25 of net asset value) (Note 1)

  $15.68   $19.77 
  

 

 

   

 

 

 

Class C shares:(redemption price per share is equal to net asset value less any applicable contingent deferred sales charge) (Note 1)

    

Net assets

  $1,079,123   $6,313,433 
  

 

 

   

 

 

 

Shares of beneficial interest

   74,496    359,561 
  

 

 

   

 

 

 

Net asset value and offering price per share

  $14.49   $17.56 
  

 

 

   

 

 

 

Class N shares:

 

Net assets

  $3,319,311   $1,389 
  

 

 

   

 

 

 

Shares of beneficial interest

   223,520    74 
  

 

 

   

 

 

 

Net asset value, offering and redemption price per share

  $14.85   $18.76
  

 

 

   

 

 

 

Class Y shares:

 

Net assets

  $63,307,718   $204,855,777 
  

 

 

   

 

 

 

Shares of beneficial interest

   4,264,116    10,923,064 
  

 

 

   

 

 

 

Net asset value, offering and redemption price per share

  $14.85   $18.75 
  

 

 

   

 

 

 

 

*

Net asset value calculations have been determined utilizing fractional share and penny amounts.

 

See accompanying notes to financial statements.

 

|  22


Table of Contents

Statements of Operations

 

For the Year Ended November 30, 2019

 

   Loomis Sayles
Global
Growth Fund
  Vaughan
Nelson
Select Fund
 

INVESTMENT INCOME

 

Dividends

  $881,533  $4,145,716 

Interest

   16,075   148,492 

Less net foreign taxes withheld

   (56,269  (5,396
  

 

 

  

 

 

 
   841,339   4,288,812 
  

 

 

  

 

 

 

Expenses

 

Management fees (Note 6)

   512,107   1,667,188 

Service and distribution fees (Note 6)

   15,811   103,969 

Administrative fees (Note 6)

   28,208   94,172 

Trustees’ fees and expenses (Note 6)

   18,713   27,024 

Transfer agent fees and expenses (Notes 6 and 7)

   23,410   71,619 

Audit and tax services fees

   41,957   41,597 

Custodian fees and expenses

   24,256   8,320 

Legal fees (Note 8)

   1,746   5,985 

Registration fees

   99,028   78,409 

Shareholder reporting expenses

   10,255   27,088 

Miscellaneous expenses (Note 8)

   29,619   28,035 
  

 

 

  

 

 

 

Total expenses

   805,110   2,153,406 

Less waiver and/or expense reimbursement (Note 6)

   (143,832  (95,907
  

 

 

  

 

 

 

Net expenses

   661,278   2,057,499 
  

 

 

  

 

 

 

Net investment income

   180,061   2,231,313 
  

 

 

  

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS WRITTEN AND FOREIGN CURRENCY TRANSACTIONS

   

Net realized gain (loss) on:

   

Investments

   3,571,561   13,533,959 

Options written

      1,622,247 

Foreign currency transactions (Note 2c)

   (824  (258

Net change in unrealized appreciation (depreciation) on:

 

Investments

   5,528,918   12,947,904 

Options written

      (1,056,589

Foreign currency translations (Note 2c)

   (483  28 
  

 

 

  

 

 

 

Net realized and unrealized gain on investments, options written and foreign currency transactions

   9,099,172   27,047,291 
  

 

 

  

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $9,279,233  $29,278,604 
  

 

 

  

 

 

 

 

See accompanying notes to financial statements.

 

23  |


Table of Contents

Statements of Changes in Net Assets

 

   Loomis Sayles Global
Growth Fund
  Vaughan Nelson
Select Fund
 
   Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
 

FROM OPERATIONS:

 

Net investment income

  $180,061  $137,138  $2,231,313  $1,171,915 

Net realized gain on investments, options written and foreign currency transactions

   3,570,737   1,808,626   15,155,948   16,924,872 

Net change in unrealized appreciation (depreciation) on investments, options written and foreign currency translations

   5,528,435   (1,909,801  11,891,343   (8,480,613
  

 

 

  

 

 

  

 

 

  

 

 

 

Net increase in net assets resulting from operations

   9,279,233   35,963   29,278,604   9,616,174 
  

 

 

  

 

 

  

 

 

  

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

     

Class A

   (75,698  (47,880  (1,495,814  (1,715,872

Class C

   (22,333  (4,651  (612,885  (530,390

Class N

   (121,236  (41  (107  (92

Class Y

   (2,042,734  (540,538  (15,234,859  (11,877,364
  

 

 

  

 

 

  

 

 

  

 

 

 

Total distributions

   (2,262,001  (593,110  (17,343,665  (14,123,718
  

 

 

  

 

 

  

 

 

  

 

 

 

NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 11)

   6,072,679   40,276,521   15,032,522   50,701,439 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net increase in net assets

   13,089,911   39,719,374   26,967,461   46,193,895 

NET ASSETS

 

Beginning of the year

   57,448,092   17,728,718   199,637,539   153,443,644 
  

 

 

  

 

 

  

 

 

  

 

 

 

End of the year

  $70,538,003  $57,448,092  $226,605,000  $199,637,539 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

See accompanying notes to financial statements.

 

|  24


Table of Contents

Financial Highlights

 

For a share outstanding throughout each period.

 

  Loomis Sayles Global Growth Fund—Class A 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,

2017
  Period Ended
November 30,
2016*
 

Net asset value, beginning of the period

 $13.28  $13.44  $10.53  $10.00 
 

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

    

Net investment income (loss)(a)

  0.00(b)   0.02   (0.00)(b)   0.00(b) 

Net realized and unrealized gain (loss)

  2.03   0.26(c)   3.15   0.53 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.03   0.28   3.15   0.53 
 

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

    

Net investment income

  (0.05  (0.03  (0.03   

Net realized capital gains

  (0.48  (0.41  (0.21   
 

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.53  (0.44  (0.24   
 

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $14.78  $13.28  $13.44  $10.53 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total return(d)(e)

  16.25  2.05  30.63  5.30%(f) 

RATIOS TO AVERAGE NET ASSETS:

    

Net assets, end of the period (000’s)

 $2,832  $1,851  $1,541  $195 

Net expenses(g)

  1.26%(h)   1.27  1.29  1.30%(i) 

Gross expenses

  1.49  1.62  2.56  2.74%(i) 

Net investment income (loss)

  0.03  0.16  (0.00)%(j)   0.00%(i)(j) 

Portfolio turnover rate

  37  24  17  12

 

*

From commencement of Class operations on March 31, 2016 through November 30, 2016.

(a)

Per share net investment income (loss) has been calculated using the average shares outstanding during the period.

(b)

Amount rounds to less than $0.01 per share.

(c)

The amount shown for a share outstanding does not correspond with the aggregate realized and unrealized gain (loss) on investments for the period due to the timing of sales and redemptions of fund shares in relation to fluctuating market values of investments of the Fund.

(d)

A sales charge for Class A shares is not reflected in total return calculations.

(e)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(f)

Periods less than one year are not annualized.

(g)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(h)

Effective July 1, 2019, the expense limit decreased from 1.30% to 1.25%. See Note 6 of Notes to Financial Statements.

(i)

Computed on an annualized basis for periods less than one year.

(j)

Amount rounds to less than 0.01%.

 

See accompanying notes to financial statements.

 

25  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Loomis Sayles Global Growth Fund—Class C 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,
2017
  Period Ended
November 30,
2016*
 

Net asset value, beginning of the period

 $13.06  $13.30  $10.47  $10.00 
 

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

    

Net investment loss(a)

  (0.09  (0.09  (0.09  (0.08

Net realized and unrealized gain (loss)

  2.00   0.26(b)   3.13   0.55 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  1.91   0.17   3.04   0.47 
 

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

    

Net investment income

  (0.00)(c)      (0.00)(c)    

Net realized capital gains

  (0.48  (0.41  (0.21   
 

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.48  (0.41  (0.21   
 

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $14.49  $13.06  $13.30  $10.47 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total return(d)(e)

  15.40  1.25  29.67  4.70%(f) 

RATIOS TO AVERAGE NET ASSETS:

    

Net assets, end of the period (000’s)

 $1,079  $606  $134  $25 

Net expenses(g)

  2.01%(h)   2.03  2.04  2.05%(i) 

Gross expenses

  2.23  2.37  3.31  3.18%(i) 

Net investment loss

  (0.69)%   (0.71)%   (0.73)%   (1.09)%(i) 

Portfolio turnover rate

  37  24  17  12

 

*

From commencement of Class operations on March 31, 2016 through November 30, 2016.

(a)

Per share net investment loss has been calculated using the average shares outstanding during the period.

(b)

The amount shown for a share outstanding does not correspond with the aggregate realized and unrealized gain (loss) on investments for the period due to the timing of sales and redemptions of fund shares in relation to fluctuating market values of investments of the Fund.

(c)

Amount rounds to less than $0.01 per share.

(d)

A contingent deferred sales charge for Class C shares is not reflected in total return calculations.

(e)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(f)

Periods less than one year are not annualized.

(g)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(h)

Effective July 1, 2019, the expense limit decreased from 2.05% to 2.00%. See Note 6 of Notes to Financial Statements.

(i)

Computed on an annualized basis for periods less than one year.

 

See accompanying notes to financial statements.

 

|  26


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Loomis Sayles Global Growth Fund—Class N 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Period Ended
November 30,
2017*
 

Net asset value, beginning of the period

 $13.34  $13.49  $11.26 
 

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

   

Net investment income(a)

  0.05   0.05   0.03 

Net realized and unrealized gain (loss)

  2.03   0.26(b)   2.20 
 

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.08   0.31   2.23 
 

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

   

Net investment income

  (0.09  (0.05   

Net realized capital gains

  (0.48  (0.41   
 

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.57  (0.46   
 

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $14.85  $13.34  $13.49 
 

 

 

  

 

 

  

 

 

 

Total return(c)

  16.61  2.31  19.80%(d) 

RATIOS TO AVERAGE NET ASSETS:

   

Net assets, end of the period (000’s)

 $3,319  $2,843  $1 

Net expenses(e)

  0.98%(f)   1.00  1.00%(g) 

Gross expenses

  1.22  1.35  15.78%(g) 

Net investment income

  0.35  0.38  0.30%(g) 

Portfolio turnover rate

  37  24  17%(h) 

 

*

From commencement of Class operations on March 31, 2017 through November 30, 2017.

(a)

Per share net investment income has been calculated using the average shares outstanding during the period.

(b)

The amount shown for a share outstanding does not correspond with the aggregate realized and unrealized gain (loss) on investments for the period due to the timing of sales and redemptions of fund shares in relation to fluctuating market values of investments of the Fund.

(c)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(d)

Periods less than one year are not annualized.

(e)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(f)

Effective July 1, 2019, the expense limit decreased from 1.00% to 0.95%. See Note 6 of Notes to Financial Statements.

(g)

Computed on an annualized basis for periods less than one year.

(h)

Represents the Fund’s portfolio turnover rate for the year ended November 30, 2017.

 

See accompanying notes to financial statements.

 

27  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Loomis Sayles Global Growth Fund—Class Y 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,
2017
  Period Ended
November 30,
2016*
 

Net asset value, beginning of the period

 $13.33  $13.48  $10.55  $10.00 
 

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

    

Net investment income(a)

  0.04   0.04   0.05   0.03 

Net realized and unrealized gain (loss)

  2.04   0.27(b)   3.14   0.52 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.08   0.31   3.19   0.55 
 

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

    

Net investment income

  (0.08  (0.05  (0.05   

Net realized capital gains

  (0.48  (0.41  (0.21   
 

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.56  (0.46  (0.26   
 

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $14.85  $13.33  $13.48  $10.55 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total return(c)

  16.65  2.27  30.96  5.50%(d) 

RATIOS TO AVERAGE NET ASSETS:

    

Net assets, end of the period (000’s)

 $63,308  $52,147  $16,053  $9,793 

Net expenses(e)

  1.01%(f)   1.02  1.04  1.05%(g) 

Gross expenses

  1.23  1.37  2.31  2.55%(g) 

Net investment income

  0.30  0.33  0.40  0.45%(g) 

Portfolio turnover rate

  37  24  17  12

 

*

From commencement of Class operations on March 31, 2016 through November 30, 2016.

(a)

Per share net investment income has been calculated using the average shares outstanding during the period.

(b)

The amount shown for a share outstanding does not correspond with the aggregate realized and unrealized gain (loss) on investments for the period due to the timing of sales and redemptions of fund shares in relation to fluctuating market values of investments of the Fund.

(c)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(d)

Periods less than one year are not annualized.

(e)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(f)

Effective July 1, 2019, the expense limit decreased from 1.05% to 1.00%. See Note 6 of Notes to Financial Statements.

(g)

Computed on an annualized basis for periods less than one year.

 

See accompanying notes to financial statements.

 

|  28


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Vaughan Nelson Select Fund—Class A 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,
2017
  Year Ended
November 30,
2016
  Year Ended
November 30,
2015
 

Net asset value, beginning of the period

 $18.13  $18.59  $15.38  $14.82  $14.78 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.14   0.07   0.06   0.03   0.01 

Net realized and unrealized gain (loss)

  1.90   0.91   3.41   0.83   0.47 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.04   0.98   3.47   0.86   0.48 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

     (0.10  (0.01  (0.00)(b)    

Net realized capital gains

  (1.54  (1.34  (0.25  (0.30  (0.44
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (1.54  (1.44  (0.26  (0.30  (0.44
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $18.63  $18.13  $18.59  $15.38  $14.82 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(c)

  13.67%(d)   5.62%(d)   22.86%(d)   5.91%(d)   3.31

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $15,434  $17,703  $22,268  $20,502  $15,794 

Net expenses

  1.16%(e)(f)   1.22%(e)(g)   1.28%(e)(h)   1.34%(e)(i)   1.40

Gross expenses

  1.21  1.27  1.33  1.37  1.40

Net investment income

  0.84  0.41  0.39  0.18  0.05

Portfolio turnover rate

  51  54  66  64  35

 

(a)

Per share net investment income has been calculated using the average shares outstanding during the period.

(b)

Amount rounds to less than $0.01 per share.

(c)

A sales charge for Class A shares is not reflected in total return calculations.

(d)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(e)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(f)

Effective July 1, 2019, the expense limit decreased from 1.20% to 1.15%. See Note 6 of Notes to Financial Statements.

(g)

Effective July 1, 2018, the expense limit decreased from 1.25% to 1.20%.

(h)

Effective July 1, 2017, the expense limit decreased from 1.30% to 1.25%.

(i)

Effective July 1, 2016, the expense limit decreased from 1.40% to 1.30%.

 

See accompanying notes to financial statements.

 

29  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Vaughan Nelson Select Fund—Class C 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,
2017
  Year Ended
November 30,
2016
  Year Ended
November  30,

2015
 

Net asset value, beginning of the period

 $17.31  $17.84  $14.87  $14.44  $14.52 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income (loss)(a)

  0.02   (0.06  (0.06  (0.08  (0.10

Net realized and unrealized gain (loss)

  1.77   0.87   3.28   0.81   0.46 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  1.79   0.81   3.22   0.73   0.36 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net realized capital gains

  (1.54  (1.34  (0.25  (0.30  (0.44
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $17.56  $17.31  $17.84  $14.87  $14.44 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(b)

  12.86%(c)   4.77%(c)   21.96%(c)   5.14%(c)   2.52

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $6,313  $6,917  $7,429  $7,693  $5,607 

Net expenses

  1.91%(d)(e)   1.96%(d)(f)   2.03%(d)(g)   2.09%(d)(h)   2.15

Gross expenses

  1.96  2.01  2.08  2.12  2.15

Net investment income (loss)

  0.09  (0.32)%   (0.37)%   (0.58)%   (0.69)% 

Portfolio turnover rate

  51  54  66  64  35

 

(a)

Per share net investment income (loss) has been calculated using the average shares outstanding during the period.

(b)

A contingent deferred sales charge for Class C shares is not reflected in total return calculations.

(c)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(d)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(e)

Effective July 1, 2019, the expense limit decreased from 1.95% to 1.90%. See Note 6 of Notes to Financial Statements.

(f)

Effective July 1, 2018, the expense limit decreased from 2.00% to 1.95%.

(g)

Effective July 1, 2017, the expense limit decreased from 2.05% to 2.00%.

(h)

Effective July 1, 2016, the expense limit decreased from 2.15% to 2.05%.

 

See accompanying notes to financial statements.

 

|  30


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Vaughan Nelson Select Fund—Class N 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Period Ended
November 30,
2017*
 

Net asset value, beginning of the period

 $18.26  $18.73  $16.28 
 

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

   

Net investment income(a)

  0.19   0.13   0.09 

Net realized and unrealized gain (loss)

  1.91   0.89   2.36 
 

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.10   1.02   2.45 
 

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

   

Net investment income

  (0.06  (0.15   

Net realized capital gains

  (1.54  (1.34   
 

 

 

  

 

 

  

 

 

 

Total Distributions

  (1.60  (1.49   
 

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $18.76  $18.26  $18.73 
 

 

 

  

 

 

  

 

 

 

Total return(b)

  13.93  5.90  15.05%(c) 

RATIOS TO AVERAGE NET ASSETS:

   

Net assets, end of the period (000’s)

 $1  $1  $1 

Net expenses(d)

  0.87%(e)   0.93%(f)   0.97%(g)(h) 

Gross expenses

  63.51  13.54  14.62%(g) 

Net investment income

  1.10  0.68  0.80%(g) 

Portfolio turnover rate

  51  54  66%(i) 

 

*

From commencement of Class operations on March 31, 2017 through November 30, 2017.

(a)

Per share net investment income has been calculated using the average shares outstanding during the period.

(b)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(c)

Periods less than one year are not annualized.

(d)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(e)

Effective July 1, 2019, the expense limit decreased from 0.90% to 0.85%. See Note 6 of Notes to Financial Statements.

(f)

Effective July 1, 2018, the expense limit decreased from 0.95% to 0.90%.

(g)

Computed on an annualized basis for periods less than one year.

(h)

Effective July 1, 2017, the expense limit decreased from 1.00% to 0.95%.

(i)

Represents the Fund’s portfolio turnover rate for the year ended November 30, 2017.

 

See accompanying notes to financial statements.

 

31  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Vaughan Nelson Select Fund—Class Y 
  Year Ended
November 30,
2019
  Year Ended
November 30,
2018
  Year Ended
November 30,
2017
  Year Ended
November 30,
2016
  Year Ended
November 30,
2015
 

Net asset value, beginning of the period

 $18.25  $18.71  $15.48  $14.90  $14.83 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.19   0.13   0.11   0.06   0.05 

Net realized and unrealized gain (loss)

  1.90   0.90   3.41   0.85   0.47 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.09   1.03   3.52   0.91   0.52 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.05  (0.15  (0.04  (0.03  (0.01

Net realized capital gains

  (1.54  (1.34  (0.25  (0.30  (0.44
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (1.59  (1.49  (0.29  (0.33  (0.45
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $18.75  $18.25  $18.71  $15.48  $14.90 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  13.94%(b)   5.86%(b)   23.13%(b)   6.22%(b)   3.56

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $204,856  $175,017  $123,746  $104,324  $78,483 

Net expenses

  0.91%(c)(d)   0.96%(c)(e)   1.03%(c)(f)   1.09%(c)(g)   1.15

Gross expenses

  0.96  1.01  1.08  1.12  1.15

Net investment income

  1.09  0.68  0.64  0.43  0.31

Portfolio turnover rate

  51  54  66  64  35

 

(a)

Per share net investment income has been calculated using the average shares outstanding during the period.

(b)

Had certain expenses not been waived/reimbursed during the period, total returns would have been lower.

(c)

The investment adviser agreed to waive its fees and/or reimburse a portion of the Fund’s expenses during the period. Without this waiver/reimbursement, expenses would have been higher.

(d)

Effective July 1, 2019, the expense limit decreased from 0.95% to 0.90%. See Note 6 of Notes to Financial Statements.

(e)

Effective July 1, 2018, the expense limit decreased from 1.00% to 0.95%.

(f)

Effective July 1, 2017, the expense limit decreased from 1.05% to 1.00%.

(g)

Effective July 1, 2016, the expense limit decreased from 1.15% to 1.05%.

 

See accompanying notes to financial statements.

 

|  32


Table of Contents

Notes to Financial Statements

 

November 30, 2019

 

1.  Organization.  Natixis Funds Trust II (the “Trust”) is organized as a Massachusetts business trust. The Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company. The Declaration of Trust permits the Board of Trustees to authorize the issuance of an unlimited number of shares of the Trust in multiple series. The financial statements for certain funds of the Trust are presented in separate reports. The following funds (individually, a “Fund” and collectively, the “Funds”) are included in this report:

Loomis Sayles Global Growth Fund (the “Global Growth Fund”)

Vaughan Nelson Select Fund (the “Select Fund”)

Global Growth Fund is a diversified investment company. Select Fund is anon-diversified investment company.

Each Fund offers Class A, Class C, Class N and Class Y shares. Class A shares are sold with a maximumfront-end sales charge of 5.75%. Class C shares do not pay afront-end sales charge, pay higher Rule12b-1 fees than Class A shares for ten years (at which point they automatically convert to Class A shares) and may be subject to a contingent deferred sales charge (“CDSC”) of 1.00% if those shares are redeemed within one year of acquisition, except for reinvested distributions. Class N and Class Y shares do not pay afront-end sales charge, a CDSC or Rule12b-1 fees. Class N shares are offered with an initial minimum investment of $1,000,000. Class Y shares are offered with an initial minimum investment of $100,000. Certain categories of investors are exempted from the minimum investment amounts for Class N and Class Y as outlined in the relevant Fund’s prospectus.

Most expenses can be directly attributed to a Fund. Expenses which cannot be directly attributed to a Fund are generally apportioned based on the relative net assets of each of the funds in Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds Trust IV and Gateway Trust (“Natixis Funds Trusts”), Loomis Sayles Funds I and Loomis Sayles Funds II (“Loomis Sayles Funds Trusts”) and Natixis ETF Trust. Expenses of a Fund are bornepro rata by the holders of each class of shares, except that each class bears expenses unique to that class (such as the Rule12b-1 fees applicable to Class A and Class C), and transfer agent fees are borne collectively for Class A, Class C and Class Y, and individually for Class N. In addition, each class votes as a class only with respect to its own Rule12b-1 Plan. Shares of each class would receive theirpro rata share of the net assets of a Fund if the Fund were liquidated. The Trustees approve separate distributions from net investment income on each class of shares.

2.  Significant Accounting Policies.  The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements. The Funds’ financial statements follow the accounting and reporting guidelines provided for investment companies and are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates that affect the reported

 

33  |


Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

amounts and disclosures in the financial statements. Actual results could differ from those estimates. Management has evaluated the events and transactions subsequent toyear-end through the date the financial statements were issued and has determined that there were no material events that would require disclosure in the Funds’ financial statements.

a.  Valuation.  Fund securities and other investments are valued at market value based on market quotations obtained or determined by independent pricing services recommended by the adviser orsub-adviser and approved by the Board of Trustees. Fund securities and other investments for which market quotations are not readily available are valued at fair value as determined in good faith by the adviser orsub-adviser pursuant to procedures approved by the Board of Trustees, as described below. Market value is determined as follows:

Listed equity securities (including shares ofclosed-end investment companies and exchange-traded funds) are valued at the last sale price quoted on the exchange where they are traded most extensively or, if there is no reported sale during the day, the closing bid quotation as reported by an independent pricing service. Securities traded on the NASDAQ Global Select Market, NASDAQ Global Market and NASDAQ Capital Market are valued at the NASDAQ Official Closing Price (“NOCP”), or if lacking an NOCP, at the most recent bid quotations on the applicable NASDAQ Market. Unlisted equity securities (except unlisted preferred equity securities) are valued at the last sale price quoted in the market where they are traded most extensively or, if there is no reported sale during the day, the closing bid quotation as reported by an independent pricing service. If there is no last sale price or closing bid quotation available, unlisted equity securities will be valued using evaluated bids furnished by an independent pricing service, if available. In some foreign markets, an official close price and a last sale price may be available from the foreign exchange or market. In those cases, the official close price is used. Debt securities and unlisted preferred equity securities are valued based on evaluated bids furnished to the Funds by an independent pricing service or bid prices obtained from broker-dealers. Broker-dealer bid prices may be used to value debt and unlisted equity securities where an independent pricing service is unable to price a security or where an independent pricing service does not provide a reliable price for the security. Domestic exchange-traded single name equity option contracts (including options on exchange-traded funds) are valued at the mean of the National Best Bid and Offer quotations. Option contracts on domestic indices are valued at the average of the closing bid and ask quotations as of the close of trading on the Chicago Board Options Exchange (“Cboe®”).

Fund securities and other investments for which market quotations are not readily available are valued at fair value as determined in good faith by the adviser or subadviser pursuant to procedures approved by the Board of Trustees. On the last

 

|  34


Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

business day of the month, the Funds will fair value S&P 500® Index options using the closing rotation values published by the Cboe®. The Funds may also value securities and other investments at fair value in other circumstances such as when extraordinary events occur after the close of a foreign market but prior to the close of the New York Stock Exchange. This may include situations relating to a single issuer (such as a declaration of bankruptcy or a delisting of the issuer’s security from the primary market on which it has traded) as well as events affecting the securities markets in general (such as market disruptions or closings and significant fluctuations in U.S. and/or foreign markets). When fair valuing its securities or other investments, the Funds may, among other things, use modeling tools or other processes that may take into account factors such as securities or other market activity and/or significant events that occur after the close of the foreign market and before the time the Fund’s Net Asset Value (“NAV”) is calculated. Fair value pricing may require subjective determinations about the value of a security, and fair values used to determine a Fund’s NAV may differ from quoted or published prices, or from prices that are used by others, for the same securities. In addition, the use of fair value pricing may not always result in adjustments to the prices of securities held by a Fund.

Illiquid securities for which market quotations are readily available and have been evaluated by the adviser are considered and classified as fair valued securities pursuant to the Funds’ pricing policies and procedures.

As of November 30, 2019, securities held by Global Growth Fund were fair valued as follows:

 

Equity

Securities1

  

Percentage of
Net Assets

 
$20,231,859   28.7

 

1 

Certain foreign equity securities were fair valued pursuant to procedures approved by the Board of Trustees as events occurring after the close of the foreign market were believed to materially affect the value of those securities.

b.  Investment Transactions and Related Investment Income.  Investment transactions are accounted for on a trade date plus one day basis for daily NAV calculation. However, for financial reporting purposes, investment transactions are reported on trade date. Dividend income (including income reinvested) and foreign withholding tax, if applicable, is recorded on theex-dividend date, or in the case of certain foreign securities, as soon as a Fund is notified, and interest income is recorded on an accrual basis. Interest income is increased by the accretion of discount and decreased by the amortization of premium, if applicable. In determining net gain or loss on securities sold, the cost of securities has been determined on an identified cost basis. Investment income,non-class specific expenses and realized and unrealized gains and losses are allocated on apro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund.

 

35  |


Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

c.  Foreign Currency Translation.  The books and records of the Funds are maintained in U.S. dollars. The values of securities, currencies and other assets and liabilities denominated in currencies other than U.S. dollars, if any, are translated into U.S. dollars based upon foreign exchange rates prevailing at the end of the period. Purchases and sales of investment securities, income and expenses are translated into U.S. dollars on the respective dates of such transactions.

Net realized foreign exchange gains or losses arise from sales of foreign currency, changes in exchange rates between the trade and settlement dates on securities transactions and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Funds’ books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains or losses arise from changes in the value of assets and liabilities, other than investment securities, as of the end of the fiscal period, resulting from changes in exchange rates. Net realized foreign exchange gains or losses and the net change in unrealized foreign exchange gains or losses are disclosed in the Statements of Operations. For federal income tax purposes, net realized foreign exchange gains or losses are characterized as ordinary income, and may, if the Funds have net losses, reduce or eliminate the amount of income available to be distributed by the Funds.

The values of investment securities are presented at the foreign exchange rates prevailing at the end of the period for financial reporting purposes. Net realized and unrealized gains or losses on investments reported in the Statements of Operations reflect gains or losses resulting from changes in exchange rates and fluctuations which arise due to changes in market prices of investment securities. For federal income tax purposes, a portion of the net realized gain or loss on investments arising from changes in exchange rates, which is reflected in the Statements of Operations, may be characterized as ordinary income and may, if the Funds have net losses, reduce the amount of income available to be distributed by the Funds.

The Funds may use foreign currency exchange contracts to facilitate transactions in foreign-denominated investments. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts’ terms.

d.  Option Contracts.  Select Fund may enter into option contracts. When a Fund purchases an option, it pays a premium and the option is subsequently marked-to-market to reflect current value. Premiums paid for purchasing options which expire are treated as realized losses. Premiums paid for purchasing options which are exercised are added to the cost or deducted from the proceeds on the underlying instrument or index to determine the realized gain or loss. If the Fund enters into a closing sale transaction, the difference between the premium paid and the proceeds of the closing sale transaction is treated as a realized gain or loss. The risk associated with purchasing options is limited to the premium paid.

 

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November 30, 2019

 

When a Fund writes an option, an amount equal to the net premium received (the premium less commission) is recorded as a liability and is subsequently adjusted to the

current value. Net premiums received for written options which expire are treated as realized gains. Net premiums received for written options which are exercised are deducted from the cost or added to the proceeds on the underlying instrument or index to determine the realized gain or loss. If the Fund enters into a closing purchase transaction, the difference between the net premium received and any amount paid on effecting a closing purchase transaction, including commissions, is treated as a realized gain or, if the net premium received is less than the amount paid, as a realized loss. The Fund, as writer of a written option, bears the risk of an unfavorable change in the market value of the instrument underlying the written option.

Exchange-traded option contracts are standardized and are settled through a clearing house with fulfillment supported by the credit of the exchange. Therefore, counterparty credit risks to the Funds are reduced.

e.  Federal and Foreign Income Taxes.  The Trust treats each Fund as a separate entity for federal income tax purposes. Each Fund intends to meet the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute to its shareholders substantially all of its net investment income and any net realized capital gains at least annually. Management has performed an analysis of each Fund’s tax positions for the open tax years as of November 30, 2019 and has concluded that no provisions for income tax are required. The Funds’ federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service. Management is not aware of any events that are reasonably possible to occur in the next twelve months that would result in the amounts of any unrecognized tax benefits significantly increasing or decreasing for the Funds. However, management’s conclusions regarding tax positions taken may be subject to review and adjustment at a later date based on factors including, but not limited to, new tax laws and accounting regulations and interpretations thereof.

A Fund may be subject to foreign withholding taxes on investment income and taxes on capital gains on investments that are accrued and paid based upon the Fund’s understanding of the tax rules and regulations that exist in the countries in which the Fund invests. Foreign withholding taxes on dividend and interest income are reflected on the Statements of Operations as a reduction of investment income, net of amounts eligible to be reclaimed. Dividends and interest receivable on the Statements of Assets and Liabilities are net of foreign withholding taxes. Foreign withholding taxes where reclaims have been or will be filed are reflected on the Statements of Assets and Liabilities as tax reclaims receivable. Capital gains taxes paid are included in net realized gain (loss) on investments in the Statements of Operations. Accrued but unpaid capital gains taxes are reflected as foreign taxes payable on the Statements of Assets and Liabilities, if applicable, and reduce unrealized gains on investments. In the

 

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event that realized gains on investments are subsequently offset by realized losses, taxes paid on realized gains may be returned to a Fund. Such amounts, if applicable, are reflected as foreign tax rebates receivable on the Statements of Assets and Liabilities and are recorded as a realized gain when received.

f.  Dividends and Distributions to Shareholders.  Dividends and distributions are recorded on the ex-dividend date. The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations, which may differ from accounting principles generally accepted in the United States of America. Permanent differences are primarily due to differing treatments for book and tax purposes of items such as foreign currency gains and losses, distribution redesignations and partnership basis adjustments. Permanent book and tax basis differences relating to shareholder distributions, net investment income, and net realized gains will result in reclassifications to capital accounts reported on the Statements of Assets and Liabilities. Temporary differences between book and tax distributable earnings are primarily due to deferred Trustees’ fees, wash sales and partnership basis adjustments. Amounts of income and capital gain available to be distributed on a tax basis are determined annually, and at other times during the Funds’ fiscal year as may be necessary to avoid knowingly declaring and paying a return of capital distribution. Distributions from net investment income and net realizedshort-term capital gains are reported as distributed from ordinary income for tax purposes.

The tax characterization of distributions is determined on an annual basis. The tax character of distributions paid to shareholders during the years ended November 30, 2019 and 2018 were as follows:

 

  2019 Distributions Paid From:  2018 Distributions Paid From: 

Fund

 

Ordinary
Income

  

Long-Term
Capital Gains

  

Total

  

Ordinary
Income

  

Long-Term
Capital Gains

  

Total

 

Global Growth Fund

 $327,698  $1,934,303  $2,262,001  $186,759  $406,351  $593,110 

Select Fund

  450,291   16,893,374   17,343,665   1,293,964   12,829,754   14,123,718 

Distributions paid to shareholders from net investment income and net realized capital gains, based on accounting principles generally accepted in the United States of America, are consolidated and reported on the Statements of Changes in Net Assets as Distributions to Shareholders. Distributions paid to shareholders from net investment income and net realized capital gains expressed inper-share amounts, based on accounting principles generally accepted in the United States of America, are separately stated and reported within the Financial Highlights.

 

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November 30, 2019

 

As of November 30, 2019, the components of distributable earnings on a tax basis were as follows:

 

   

Global Growth
Fund

   

Select Fund

 

Undistributed ordinary income

  $129,396   $2,813,265 

Undistributed long-term capital gains

   3,807,876    15,248,550 
  

 

 

   

 

 

 

Total undistributed earnings

   3,937,272    18,061,815 
  

 

 

   

 

 

 

Unrealized appreciation

   6,363,003    31,359,136 
  

 

 

   

 

 

 

Total accumulated earnings

  $10,300,275   $49,420,951 
  

 

 

   

 

 

 

As of November 30, 2019, the tax cost of investments (including derivatives, if applicable) and unrealized appreciation (depreciation) on a federal tax basis were as follows:

 

   

Global Growth
Fund

  

Select Fund

 

Federal tax cost

  $64,101,759  $195,162,126 
  

 

 

  

 

 

 

Gross tax appreciation

  $8,309,776  $35,680,802 

Gross tax depreciation

   (1,945,375  (4,321,655
  

 

 

  

 

 

 

Net tax appreciation

  $6,364,401  $31,359,147 
  

 

 

  

 

 

 

The difference between these amounts and those reported in the components of distributable earnings are primarily attributable to foreign currencymark-to-market.

g.  Repurchase Agreements.  Each Fund may enter into repurchase agreements, under the terms of a Master Repurchase Agreement, under which each Fund acquires securities as collateral and agrees to resell the securities at an agreed upon time and at an agreed upon price. It is each Fund’s policy that the market value of the collateral for repurchase agreements be at least equal to 102% of the repurchase price, including interest. Certain repurchase agreements aretri-party arrangements whereby the collateral is held in a segregated account for the benefit of the Fund and on behalf of the counterparty. Repurchase agreements could involve certain risks in the event of default or insolvency of the counterparty, including possible delays or restrictions upon a Fund’s ability to dispose of the underlying securities. As of November 30, 2019, each Fund, as applicable, had investments in repurchase agreements for which the value of the related collateral exceeded the value of the repurchase agreement. The gross value of repurchase agreements is included in the Statements of Assets and Liabilities for financial reporting purposes.

h.  Indemnifications.  Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter

 

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November 30, 2019

 

into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.

i.  New Accounting Pronouncement.  In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU2018-13”). The update introduces new fair value disclosure requirements, eliminates some prior fair value disclosure requirements, and modifies certain existing fair value disclosure requirements. ASU 2018-13 will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Management is currently assessing the potential impact of these changes to future financial statements.

3.  Fair Value Measurements.  In accordance with accounting standards related to fair value measurements and disclosures, the Funds have categorized the inputs utilized in determining the value of each Fund’s assets or liabilities. These inputs are summarized in the three broad levels listed below:

 

  

Level 1 – quoted prices in active markets for identical assets or liabilities;

 

  

Level 2 – prices determined using other significant inputs that are observable either directly, or indirectly through corroboration with observable market data (which could include quoted prices for similar assets or liabilities, interest rates, credit risk, etc.); and

 

  

Level 3 – prices determined using significant unobservable inputs when quoted prices or observable inputs are unavailable such as when there is little or no market activity for an asset or liability (unobservable inputs reflect each Fund’s own assumptions in determining the fair value of assets or liabilities and would be based on the best information available).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

 

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November 30, 2019

 

The following is a summary of the inputs used to value the Funds’ investments as of November 30, 2019, at value:

Global Growth Fund

Asset Valuation Inputs

 

Description

  

Level 1

   

Level 2

   

Level 3

   

Total

 

Common Stocks

        

China

  $8,581,874   $1,983,209   $  —   $10,565,083 

Denmark

       2,410,371        2,410,371 

France

       2,918,351        2,918,351 

Italy

       567,916        567,916 

Netherlands

       1,394,024        1,394,024 

Switzerland

       6,067,396        6,067,396 

United Kingdom

       4,890,592        4,890,592 

All Other Common Stocks(a)

   40,401,482            40,401,482 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Common Stocks

   48,983,356    20,231,859        69,215,215 
  

 

 

   

 

 

   

 

 

   

 

 

 

Short-Term Investments

       1,250,945      —    1,250,945 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $48,983,356   $21,482,804   $   $70,466,160 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Details of the major categories of the Fund’s investments are reflected within the Portfolio of Investments.

A common stock valued at $920,502 was transferred from Level 1 to Level 2 during the period ended November 30, 2019. At November 30, 2018, this security was valued at the market price in the foreign market in accordance with the Fund’s valuation policies. At November 30, 2019, this security was fair valued pursuant to procedures approved by the Board of Trustees as events occurring after the close of the foreign market were believed to materially affect the value of the security.

All transfers are recognized as of the beginning of the reporting period.

Select Fund

Asset Valuation Inputs

 

Description

  

Level 1

   

Level 2

   

Level 3

   

Total

 

Common Stocks(a)

  $221,136,592   $   $  —   $221,136,592 

Short-Term Investments

       5,384,681        5,384,681 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $221,136,592   $5,384,681   $   $226,521,273 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Details of the major categories of the Fund’s investments are reflected within the Portfolio of Investments.

For the year ended November 30, 2019, there were no transfers among Levels 1, 2 and 3.

 

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4.  Derivatives.  Derivative instruments are defined as financial instruments whose value and performance are based on the value and performance of an underlying asset, reference rate or index. Derivative instruments that Select Fund used during the period include option contracts.

Select Fund is subject to the risk of unpredictable declines in the value of individual equity securities and periods of below average performance in individual securities or in the equity market as a whole. During the year ended November 30, 2019, the Fund engaged in purchased and written put options, in the form of put spreads, to hedge against a decline in equity market values.

Transactions in derivative instruments for Select Fund during the year ended November 30, 2019, as reflected within the Statements of Operations, were as follows:

 

Net Realized Gain (Loss) on:

  

Investments1

  

Options written

 

Equity contracts

  $(1,633,188 $1,622,247 

 

Net Change in Unrealized Appreciation
(Depreciation) on:

  

Investments1

   

Options written

 

Equity contracts

  $1,391,411   $(1,056,589

 

1 

Represents realized loss and change in unrealized appreciation (depreciation), respectively, for purchased options during the period.

As the Fund values its derivatives at fair value and recognizes changes in fair value through the Statement of Operations, it does not qualify for hedge accounting under authoritative guidance for derivative instruments. The Fund’s investments in derivatives may represent an economic hedge; however, they are considered to benon-hedge transactions for the purpose of these disclosures.

The volume of option contract activity, as a percentage of net assets, for Select Fund, based onmonth-end market values of underlying securities, at absolute value, was as follows for the year ended November 30, 2019:

 

Select Fund**

  

Put Options

Purchased

   

Put Options

Written

 

Average Market Value of Underlying Securities

   12.82   12.79

Highest Market Value of Underlying Securities

   45.43   45.43

Lowest Market Value of Underlying Securities

   0.00   0.00

Market Value of Underlying Securities as of November 30, 2019

   0.00   0.00

 

**

Market value of underlying instruments is determined as follows: for indices, by multiplying option contracts by the contract multiplier by the price of the option’s underlying index.

 

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November 30, 2019

 

Amounts outstanding at the end of the prior period are included in the average amount outstanding.

5.  Purchases and Sales of Securities.  For the year ended November 30, 2019, purchases and sales of securities (excluding short-term investments and option contracts) were as follows:

 

Fund

  

Purchases

   

Sales

 

Global Growth Fund

  $25,478,730   $22,913,824 

Select Fund

   108,150,897    104,034,640 

6.  Management Fees and Other Transactions with Affiliates.

a.  Management Fees.  Loomis, Sayles & Company, L.P. (“Loomis Sayles”) serves as investment adviser to the Global Growth Fund. Loomis Sayles is a limited partnership whose sole general partner, Loomis, Sayles & Company, Inc., is indirectly owned by Natixis Investment Managers, L.P. (“Natixis”), which is part of Natixis Investment Managers, an international asset management group based in Paris, France.

Under the terms of the management agreement, the Fund pays a management fee at the annual rate of 0.80%, calculated daily and payable monthly, based on the Fund’s average daily net assets.

Natixis Advisors, L.P. (“Natixis Advisors”), serves as investment adviser to the Select Fund. Natixis Advisors is a wholly-owned subsidiary of Natixis. Under the terms of the management agreement, the Fund pays a management fee at the annual rate of 0.75%, calculated daily and payable monthly, based on the Fund’s average daily net assets. Prior to July 1, 2019, the Fund paid a management fee at the annual rate of 0.80%, calculated daily and payable monthly, based on the Fund’s average daily net assets.

Natixis Advisors has entered into a subadvisory agreement with Vaughan Nelson Investment Management, L.P. (“Vaughan Nelson”). Under the terms of the subadvisory agreement, the Fund pays a subadvisory fee at the annual rate of 0.50%, calculated daily and payable monthly, based on the Fund’s average daily net assets. For the period from July 1, 2019 to September 12, 2019 Vaughan Nelson agreed to voluntarily waive fees paid by the Fund at the annual rate of 0.03%, calculated daily and payable monthly, based on the Fund’s average daily net assets. Prior to July 1, 2019, the Fund paid a subadvisory fee at the annual rate of 0.53%, calculated daily and payable monthly, based on the Fund’s average daily net assets. Payments to Natixis Advisors are reduced by the amount of payments to Vaughan Nelson.

Loomis Sayles and Natixis Advisors have given binding undertakings to the Funds to waive management fees and/or reimburse certain expenses to limit the Funds’ operating expenses, exclusive of acquired fund fees and expenses, brokerage expenses, interest expense, substitute dividend expenses on securities sold short, taxes, organizational and extraordinary expenses such as litigation and indemnification expenses. These undertakings are in effect until March 31, 2021, may be terminated

 

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before then only with the consent of the Funds’ Board of Trustees, and are reevaluated on an annual basis. Management fees payable, as reflected on the Statements of Assets and Liabilities, is net of waivers and/or expense reimbursements, if any, pursuant to these undertakings. Waivers/reimbursements that exceed management fees payable are reflected on the Statements of Assets and Liabilities as receivable from investment adviser.

For the year ended November 30, 2019, the expense limits as a percentage of average daily net assets under the expense limitation agreements were as follows:

 

   Expense Limit as a Percentage of
Average Daily Net Assets
 

Fund

  

Class A

  

Class C

  

Class N

  

Class Y

 

Global Growth Fund

   1.25  2.00  0.95  1.00

Select Fund

   1.15  1.90  0.85  0.90

Prior to July 1, 2019, the expense limits as a percentage of average daily net assets under the expense limitation agreements were as follows:

 

   Expense Limit as a Percentage of
Average Daily Net Assets
 

Fund

  

Class A

  

Class C

  

Class N

  

Class Y

 

Global Growth Fund

   1.30  2.05  1.00  1.05

Select Fund

   1.20  1.95  0.90  0.95

Loomis Sayles and Natixis Advisors shall be permitted to recover expenses borne under the expense limitation agreements (whether through waiver of management fees or otherwise) on a class by class basis in later periods to the extent the annual operating expenses of a class fall below a class’ expense limits, provided, however, that a class is not obligated to pay such waived/reimbursed fees or expenses more than one year after the end of the fiscal year in which the fees or expenses were waived/reimbursed.

For the year ended November 30, 2019, the management fees and waivers of management fees for each Fund were as follows:

 

Fund

 

Gross
Management
Fees

  

Contractual
Waivers of
Management
Fees
1

  

Voluntary
Waivers of
Management
Fees
2

  

Net
Management
Fees

  

Percentage
of Average
Daily Net
Assets

 
 

Gross

  

Net

 

Global Growth Fund

 $512,107  $132,323  $10,363  $369,421   0.80  0.58

Select Fund

  1,667,188   58,666   35,156   1,573,366   0.78  0.73

 

1 

Contractual management fee waivers are subject to possible recovery until November 30, 2020.

2 

Voluntary management fee waivers are not subject to recovery under the expense limitation agreement described above.

 

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November 30, 2019

 

No expenses were recovered for either Fund during the year ended November 30, 2019 under the terms of the expense limitation agreements.

b.  Service and Distribution Fees.  Natixis Distribution, L.P. (“Natixis Distribution”), which is a wholly-owned subsidiary of Natixis, has entered into a distribution agreement with the Trust. Pursuant to this agreement, Natixis Distribution serves as principal underwriter of the Funds of the Trust.

Pursuant to Rule12b-1 under the 1940 Act, the Trust has adopted a Service Plan relating to each Fund’s Class A shares (the “Class A Plans”) and a Distribution and Service Plan relating to each Fund’s Class C shares (the “Class C Plans”).

Under the Class A Plans, each Fund pays Natixis Distribution a monthly service fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Fund’s Class A shares, as reimbursement for expenses incurred by Natixis Distribution in providing personal services to investors in Class A shares and/or the maintenance of shareholder accounts.

Under the Class C Plans, each Fund pays Natixis Distribution a monthly service fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Fund’s Class C shares, as compensation for services provided by Natixis Distribution in providing personal services to investors in Class C shares and/or the maintenance of shareholder accounts.

Also under the Class C Plans, each Fund pays Natixis Distribution a monthly distribution fee at the annual rate of 0.75% of the average daily net assets attributable to the Fund’s Class C shares, as compensation for services provided by Natixis Distribution in connection with the marketing or sale of Class C shares.

For the year ended November 30, 2019, the service and distribution fees for each Fund were as follows:

 

   Service Fees   Distribution Fees 

Fund

  

Class A

   

Class C

   

Class C

 

Global Growth Fund

  $5,918   $2,473   $7,420 

Select Fund

   38,783    16,296    48,890 

c.  Administrative Fees.  Natixis Advisors provides certain administrative services for the Funds and contracts with State Street Bank and Trust Company (“State Street Bank”) to serve assub-administrator. Pursuant to an agreement among Natixis Funds Trusts, Loomis Sayles Funds Trusts, Natixis ETF Trust and Natixis Advisors, effective July 1, 2019, each Fund pays Natixis Advisors monthly itspro rata portion of fees equal to an annual rate of 0.0540% of the first $15 billion of the average daily net assets of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust, 0.0500% of the next $15 billion, 0.0400% of the next $30 billion, 0.0275% of the next $30 billion and 0.0225% of such assets in excess of $90 billion, subject to an annual aggregate

 

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minimum fee for the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust of $10 million, which is reevaluated on an annual basis.

Prior to July 1, 2019, each Fund paid Natixis Advisors monthly itspro rata portion of fees equal to an annual rate of 0.0575% of the first $15 billion of the average daily net assets of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust, 0.0500% of the next $15 billion, 0.0400% of the next $30 billion, 0.0275% of the next $30 billion and 0.0225% of such assets in excess of $90 billion, subject to an annual aggregate minimum fee for the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust of $10 million.

Effective October 1, 2018, State Street Bank agreed to reduce the fees it receives from Natixis Advisors for serving assub-administrator to the Funds. Also, effective October 1, 2018, Natixis Advisors agreed to voluntarily waive fees paid by the Funds in an amount equal to the reduction insub-administrative fees discussed above. The waiver was in effect through June 30, 2019.

For the year ended November 30, 2019, the administrative fees for each Fund were as follows:

 

Fund

  

Gross
Administrative
Fees

   

Waiver of
Administrative
Fees

   

Net
Administrative
Fees

 

Global Growth Fund

  $28,208   $359   $27,849 

Select Fund

   94,172    1,293    92,879 

d.  Sub-Transfer Agent Fees.  Natixis Distribution has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Funds and has agreed to compensate the intermediaries for providing those services. Intermediaries transact with the Funds primarily through the use of omnibus accounts on behalf of their customers who hold positions in the Funds. These services would have been provided by the Funds’ transfer agent and other service providers if the shareholders’ accounts were maintained directly at the Funds’ transfer agent. Accordingly, the Funds have agreed to reimburse Natixis Distribution for all or a portion of the servicing fees paid to these intermediaries. The reimbursement amounts(sub-transfer agent fees) paid to Natixis Distribution are subject to a currentper-account equivalent fee limit approved by the Funds’ Board of Trustees, which is based on fees for similar services paid to the Funds’ transfer agent and other service providers. Class N shares do not bear such expenses.

 

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November 30, 2019

 

For the year ended November 30, 2019, thesub-transfer agent fees (which are reflected in transfer agent fees and expenses in the Statements of Operations) for each Fund were as follows:

 

Fund

  

Sub-Transfer Agent
Fees

 

Global Growth Fund

  $16,696 

Select Fund

   59,486 

As of November 30, 2019, the Funds owe Natixis Distribution the following reimbursements forsub-transfer agent fees (which are reflected in the Statements of Assets and Liabilities as payable to distributor):

 

Fund

  

Reimbursements of
Sub-Transfer Agent
Fees

 

Global Growth Fund

  $161 

Select Fund

   1,213 

Sub-transfer agent fees attributable to Class A, Class C and Class Y are allocated on apro rata basis to each class based on the relative net assets of each class to the total net assets of those classes.

e.  Commissions.  Commissions (including CDSCs) on Fund shares retained by Natixis Distribution during the year ended November 30, 2019 were as follows:

 

Fund

  

Commissions

 

Global Growth Fund

  $857 

Select Fund

   2,303 

f.  Trustees Fees and Expenses.  The Trust does not pay any compensation directly to its officers or Trustees who are directors, officers or employees of Natixis Advisors, Natixis Distribution, Natixis or their affiliates. The Chairperson of the Board of Trustees receives a retainer fee at the annual rate of $360,000. The Chairperson does not receive any meeting attendance fees for Board of Trustees meetings or committee meetings that he attends. Each Independent Trustee (other than the Chairperson) receives, in the aggregate, a retainer fee at the annual rate of $190,000. Each Independent Trustee also receives a meeting attendance fee of $10,000 for each meeting of the Board of Trustees that he or she attends in person and $5,000 for each meeting of the Board of Trustees that he or she attends telephonically. In addition, the chairperson of the Contract Review Committee and the chairperson of the Audit Committee each receive an additional retainer fee at the annual rate of $20,000. The chairperson of the Governance Committee receives an additional retainer fee at the annual rate of $15,000. Each Contract Review Committee member is compensated $6,000 for each Committee meeting that he or she attends in person and $3,000 for each meeting that he or she attends telephonically. Each Audit Committee member is compensated $6,000 for each

 

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November 30, 2019

 

Committee meeting that he or she attends in person and $3,000 for each meeting that he or she attends telephonically. These fees are allocated among the funds in the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust based on a formula that takes into account, among other factors, the relative net assets of each fund. Trustees are reimbursed for travel expenses in connection with attendance at meetings.

Prior to January 1, 2019, the Chairperson of the Board received a retainer fee at the annual rate of $340,000 and each Independent Trustee (other than the Chairperson) received, in the aggregate, a retainer fee at the annual rate of $170,000, and the chairperson of the Governance Committee received an additional retainer fee at the annual rate of $12,000. All other Trustee fees remained unchanged.

Effective January 1, 2020, the Chairperson of the Board will receive a retainer fee at the annual rate of $369,000, each Independent Trustee (other than the Chairperson) will receive, in the aggregate, a retainer fee at the annual rate of $199,000, and the chairperson of the Governance Committee will receive an additional retainer fee at the annual rate of $20,000. All other Trustee fees will remain unchanged.

A deferred compensation plan (the “Plan”) is available to the Trustees on a voluntary basis. Deferred amounts remain in the Funds until distributed in accordance with the provisions of the Plan. The value of a participating Trustee’s deferral account is based on theoretical investments of deferred amounts, on the normal payment dates, in certain funds of the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust as designated by the participating Trustees. Changes in the value of participants’ deferral accounts are allocatedpro rataamong the funds in the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust, and are normally reflected as Trustees’ fees and expenses in the Statements of Operations. The portions of the accrued obligations allocated to the Funds under the Plan are reflected as Deferred Trustees’ fees in the Statements of Assets and Liabilities.

Certain officers and employees of Natixis Advisors and Loomis Sayles are also officers and/or Trustees of the Trust.

g.  Affiliated Ownership.  As of November 30, 2019, Natixis and affiliates held shares of the Funds representing the following percentages of the Funds’ net assets:

 

Fund

    

Global Growth Fund

   7.38

Select Fund

   Less than 0.01

Investment activities of affiliated shareholders could have material impacts on the Funds.

h.  Reimbursement of Transfer Agent Fees and Expenses.  Natixis Advisors has given a binding contractual undertaking to the Funds to reimburse any and all transfer agency

 

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Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

expenses for the Funds’ Class N shares. This undertaking is in effect through March 31, 2020 and is not subject to recovery under the expense limitation agreement described above.

For the year ended November 30, 2019, Natixis Advisors reimbursed the Funds for transfer agency expenses as follows:

 

   Reimbursement
of Transfer
Agency Expenses
 

Fund

  

Class N

 

Global Growth Fund

  $787 

Select Fund

   792 

7.  Class-Specific Transfer Agent Fees and Expenses.  Transfer agent fees and expenses attributable to Class A, Class C and Class Y are allocated on apro ratabasis to each class based on the relative net assets of each class to the total net assets of those classes. Transfer agent fees and expenses attributable to Class N are allocated to Class N.

For the year ended November 30, 2019, the Funds incurred the following class-specific transfer agent fees and expenses (includingsub-transfer agent fees, where applicable):

 

   Transfer Agent Fees and Expenses 

Fund

  

Class A

   

Class C

   

Class N

   

Class Y

 

Global Growth Fund

  $881   $369   $787   $21,373 

Select Fund

   5,169    2,166    792    63,492 

8.  Line of Credit.  Each Fund, together with certain other funds of Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust, entered into a $400,000,000 committed unsecured line of credit provided by State Street Bank. Any one Fund may borrow up to $350,000,000 under the line of credit agreement (as long as all borrowings by all Funds in the aggregate do not exceed the $400,000,000 limit at any time), subject to each Fund’s investment restrictions and its contractual obligations under the line of credit. Interest is charged to the Funds based upon the terms set forth in the agreement. In addition, a commitment fee of 0.15% per annum, payable at the end of each calendar quarter, is accrued and apportioned among the participating funds based on their average daily unused portion of the line of credit. The Funds paid an arrangement fee, an upfront fee, and certain other legal fees in connection with the line of credit agreement, which are being amortized over a period of 364 days and are reflected in legal fees and/or miscellaneous expenses on the Statements of Operations. The unamortized balance is reflected as prepaid expenses on the Statements of Assets and Liabilities.

 

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Notes to Financial Statements (continued)

 

November 30, 2019

 

For the year ended November 30, 2019, neither Fund had borrowings under this agreement.

9.  Concentration of Risk.  The Funds’ investments in foreign securities may be subject to greater political, economic, environmental, credit/counterparty and information risks. The Fund’s investments in foreign securities also are subject to foreign currency fluctuations and other foreign currency-related risks. Foreign securities may be subject to higher volatility than U.S. securities, varying degrees of regulation and limited liquidity.

The Select Fund isnon-diversified, which means that it is not limited under the 1940 Act to a percentage of assets that it may invest in any one issuer. Because the Fund may invest in the securities of a limited number of issuers, an investment in the Fund may involve a higher degree of risk than would be present in a diversified portfolio.

10.  Concentration of Ownership.  From time to time, a Fund may have a concentration of one or more accounts constituting a significant percentage of shares outstanding. Investment activities by holders of such accounts could have material impacts on the Funds. As of November 30, 2019, based on management’s evaluation of the shareholder account base, the Funds had accounts representing controlling ownership of more than 5% of the Funds’ total outstanding shares. The number of such accounts, based on accounts that represent more than 5% of an individual class of shares, and the aggregate percentage of net assets represented by such holdings were as follows:

 

Fund

 

Number of 5%
Non-Affiliated
Account
Holders

  

Percentage of
Non-Affiliated
Ownership

  

Percentage
of Affiliated
Ownership
(Note 6g)

  

Total
Percentage of
Ownership

 

Global Growth Fund

  2   37.31  7.38%   44.69

Select Fund

  2   33.47  Less than 0.01  33.47

Omnibus shareholder accounts for which Natixis Advisors understands that the intermediary has discretion over the underlying shareholder accounts or investment models where a shareholder account may be invested for anon-discretionary customer are included in the table above. For other omnibus accounts, the Funds do not have information on the individual shareholder accounts underlying the omnibus accounts; therefore, there could be other 5% shareholders in addition to those disclosed in the table above.

 

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Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

11.  Capital Shares.  Each Fund may issue an unlimited number of shares of beneficial interest, without par value. Transactions in capital shares were as follows:

 

   
Year Ended
November 30, 2019

 
  
Year Ended
November 30, 2018

 

Global Growth Fund

   Shares   Amount   Shares   Amount 
Class A

 

Issued from the sale of shares

   101,439  $1,389,641   55,513  $750,169 

Issued in connection with the reinvestment of distributions

   6,102   72,794   3,442   45,503 

Redeemed

   (55,427  (758,099  (34,098  (459,170
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   52,114  $704,336   24,857  $336,502 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class C

 

Issued from the sale of shares

   42,335  $518,227   40,688  $552,191 

Issued in connection with the reinvestment of distributions

   1,896   22,333   355   4,651 

Redeemed

   (16,162  (217,094  (4,662  (62,814
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   28,069  $323,466   36,381  $494,028 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class N

 

Issued from the sale of shares

   651  $8,568   370,191  $5,037,806 

Issued in connection with the reinvestment of distributions

   10,137   121,236   3   41 

Redeemed

   (449  (6,324  (157,102  (2,192,826
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   10,339  $123,480   213,092  $2,845,021 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class Y

 

Issued from the sale of shares

   2,246,566  $31,316,800   3,420,773  $46,082,848 

Issued in connection with the reinvestment of distributions

   170,319   2,037,028   40,764   540,127 

Redeemed

   (2,063,704  (28,432,431  (741,128  (10,022,005
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   353,181  $4,921,397   2,720,409  $36,600,970 
  

 

 

  

 

 

  

 

 

  

 

 

 

Increase from capital share transactions

   443,703  $6,072,679   2,994,739  $40,276,521 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

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Table of Contents

Notes to Financial Statements (continued)

 

November 30, 2019

 

11.  Capital Shares (continued).

 

   
Year Ended
November 30, 2019

 
  
Year Ended
November 30, 2018

 

Select Fund

   Shares   Amount   Shares   Amount 
Class A

 

Issued from the sale of shares

   73,087  $1,224,673   287,426  $5,264,059 

Issued in connection with the reinvestment of distributions

   97,584   1,414,973   91,854   1,591,840 

Redeemed

   (318,610  (5,312,893  (600,541  (11,109,114
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (147,939 $(2,673,247  (221,261 $(4,253,215
  

 

 

  

 

 

  

 

 

  

 

 

 
Class C

 

Issued from the sale of shares

   39,205  $585,542   119,507  $2,095,201 

Issued in connection with the reinvestment of distributions

   39,080   537,740   27,460   457,492 

Redeemed

   (118,410  (1,903,688  (163,783  (2,883,432
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (40,125 $(780,406  (16,816 $(330,739
  

 

 

  

 

 

  

 

 

  

 

 

 
Class N

 

Issued from the sale of shares

   1  $17     $ 

Issued in connection with the reinvestment of distributions

   7   107   5   92 

Redeemed

   (a)   (17      
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   8  $107   5  $92 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class Y

 

Issued from the sale of shares

   2,740,064  $44,377,144   3,898,143  $72,584,750 

Issued in connection with the reinvestment of distributions

   911,924   13,277,611   649,091   11,300,753 

Redeemed

   (2,318,049  (39,168,687  (1,571,820  (28,600,202
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   1,333,939  $18,486,068   2,975,414  $55,285,301 
  

 

 

  

 

 

  

 

 

  

 

 

 

Increase from capital share transactions

   1,145,883  $15,032,522   2,737,342  $50,701,439 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

(a)

Amount rounds to less than one share.

 

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Table of Contents

Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of Natixis Funds Trust II and Shareholders of Loomis Sayles Global Growth Fund and Vaughan Nelson Select Fund:

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Loomis Sayles Global Growth Fund and Vaughan Nelson Select Fund (two of the funds constituting Natixis Funds Trust II, hereafter collectively referred to as the “Funds”) as of November 30, 2019, the related statements of operations for the year ended November 30, 2019, the statements of changes in net assets for each of the two years in the period ended November 30, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of November 30, 2019, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended November 30, 2019 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of November 30, 2019 by correspondence with the custodian and brokers; when replies

 

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Report of Independent Registered Public Accounting Firm

 

were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

Boston, MA

January 22, 2020

We have served as the auditor of one or more investment companies in the Natixis Investment Company Complex since at least 1995. We have not been able to determine the specific year we began serving as auditor.

 

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Table of Contents

2019 U.S. Tax Distribution Information to Shareholders (Unaudited)

 

Corporate Dividends Received Deduction.  For the fiscal year ended November 30, 2019, a percentage of dividends distributed by the Funds listed below qualifies for the dividends received deduction for corporate shareholders. These percentages are as follows:

 

Fund

  

Qualifying
Percentage

 

Global Growth Fund

   100.00

Select Fund

   100.00

Capital Gains Distributions.  Pursuant to Internal Revenue Section 852(b), the following Funds paid distributions, which have been designated as capital gains distributions for the fiscal year ended November 30, 2019, unless subsequently determined to be different.

 

Fund

  

Amount

 

Global Growth Fund

  $1,934,303 

Select Fund

   16,893,374 

Qualified Dividend Income.  For the fiscal year ended November 30, 2019, the Funds below will designate up to the maximum amount allowable pursuant to the Internal Revenue Code as qualified dividend income eligible for reduced tax rates. These lower rates range from 0% to 20% depending on an individual’s tax bracket. If the Funds pay a distribution during calendar year 2019, complete information will be reported in conjunction with Form1099-DIV.

 

Fund

    
Global Growth Fund  
Select Fund  

 

55  |


Table of Contents

Trustee and Officer Information

 

The tables below provide certain information regarding the trustees and officers of Natixis Funds Trust II (the “Trust”). Unless otherwise indicated, the address of all persons below is 888 Boylston Street, Suite 800, Boston, MA 02199-8197. The Funds’ Statement of Additional Information includes additional information about the trustees of the Trust and is available by calling Natixis Funds at800-225-5478.

 

Name and Year of
Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term
of Office1

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

INDEPENDENT TRUSTEES   

Kenneth A. Drucker

(1945)

 

Chairperson of the Board of Trustees since January 2017

Trustee since 2008

Ex Officio member of Audit Committee, Contract Review Committee and Governance Committee

 Retired 

52

None

 Significant experience on the Board and on the boards of other business organizations (including at investment companies); executive experience (including as treasurer of an aerospace, automotive, and metal manufacturing corporation)
Edmond J. English
(1953)
 

Trustee since 2013

Chairperson of Governance Committee and Audit Committee Member

 Executive Chairman of Bob’s Discount Furniture (retail) 

52

Director, Burlington Stores, Inc. (retail)

 Significant experience on the Board and on the boards of other business organizations (including retail companies and a bank); executive experience (including at a retail company)

 

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Table of Contents

Trustee and Officer Information

 

Name and Year of
Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term
of Office1

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

INDEPENDENT TRUSTEES

continued

   

Richard A. Goglia

(1951)

 

Trustee since 2015

Contract Review Committee Member and Governance Committee Member

 Retired; formerly Vice President and Treasurer of Raytheon Company (defense) 

52

None

 Significant experience on the Board and executive experience (including his role as vice president and treasurer of a defense company and experience at a financial services company)

Wendell J. Knox

(1948)

 

Trustee since 2009

Chairperson of Contract Review Committee

 Director of Abt Associates Inc. (research and consulting) 

52

Director, The Hanover Insurance Group (property and casualty insurance); formerly, Director, Eastern Bank (bank)

 Significant experience on the Board and on the boards of other business organizations (including at a bank and at a property and casualty insurance firm); executive experience (including roles as president and chief executive officer of a research and consulting company)

 

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Trustee and Officer Information

 

Name and Year of
Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term
of Office1

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

INDEPENDENT TRUSTEES

continued

   
Martin T. Meehan
(1956)
 

Trustee since 2012

Audit Committee Member

 President, University of Massachusetts; formerly, Chancellor and faculty member, University of Massachusetts Lowell 

52

None

 Significant experience on the Board and on the boards of other business organizations; experience as President of the University of Massachusetts; government experience (including as a member of the U.S. House of Representatives); academic experience

Maureen B. Mitchell

(1951)

 

Trustee since 2017

Contract Review Committee Member and Governance Committee Member

 Retired; formerly President, Global Sales and Marketing, GE Asset Management, Inc. (financial services) 

52

Director, Sterling Bancorp (Bank)

 Experience on the Board; financial services industry and executive experience (including role as president of global sales and marketing at a financial services company)

 

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Table of Contents

Trustee and Officer Information

 

Name and Year of
Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term
of Office1

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

INDEPENDENT TRUSTEES

continued

   

James P. Palermo

(1955)

 

Trustee since 2016

Contract Review Committee Member

 Founding Partner, Breton Capital Management, LLC (private equity); Partner, STEP Partners, LLC (private equity) 

52

Director, FutureFuel.io (Chemicals and Biofuels)

 Experience on the Board; financial services industry and executive experience (including roles as chief executive officer of client management and asset servicing for a banking and financial services company)

Erik R. Sirri

(1958)

 

Trustee since 2009

Chairperson of the Audit Committee

 Professor of Finance at Babson College 

52

None

 Significant experience on the Board; experience as Director of the Division of Trading and Markets at the Securities and Exchange Commission; academic experience; training as an economist

Peter J. Smail

(1952)

 

Trustee since 2009

Audit Committee Member and Governance Committee Member

 Retired 

52

None

 Significant experience on the Board; mutual fund industry and executive experience (including roles as president and chief executive officer for an investment adviser)

 

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Table of Contents

Trustee and Officer Information

 

Name and Year of
Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term
of Office1

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

INDEPENDENT TRUSTEES

continued

   

Kirk A. Sykes

(1958)

 

Trustee since 2019

Contract Review Committee Member

 Managing Director of Accordia Partners, LLC (real estate development); President of Primary Corporation (real estate development); Managing Principal of Merrick Capital Partners (infrastructure finance); formerly, President of Urban Strategy America Fund (real estate fund manager) 

52

Trustee, Eastern Bank (bank); formerly Director, Ares Commercial Real Estate Corporation (real estate investment trust)

 Experience on the Board and significant experience on the boards of other business organizations (including real estate companies and banks)

Cynthia L. Walker

(1956)

 

Trustee since 2005

Audit Committee Member and Governance Committee Member

 Deputy Dean for Finance and Administration, Yale University School of Medicine 

52

None

 Significant experience on the Board; executive experience in a variety of academic organizations (including roles as dean for finance and administration)

 

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Table of Contents

Trustee and Officer Information

 

Name and Year of
Birth

 

Position(s) Held
with the Trust,
Length of Time
Served and Term
of Office1

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2
and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

INTERESTED TRUSTEES   

Kevin P. Charleston3

(1965)

One Financial Center

Boston, MA 02111

 Trustee since 2015 President, Chief Executive Officer and Chairman of the Board of Directors; formerly, Chief Financial Officer, Loomis, Sayles & Company, L.P. 

52

None

 Experience on the Board; continuing service as President, Chief Executive Officer and Chairman of the Board of Directors of Loomis, Sayles & Company, L.P.
David L. Giunta4
(1965)
 

Trustee since 2011

President and Chief Executive Officer since 2008

 President and Chief Executive Officer, Natixis Advisors, L.P., Natixis Distribution, L.P., Natixis Distribution Corporation and Chairman of the Board of Natixis Distribution Corporation 

52

None

 Significant experience on the Board; experience as President and Chief Executive Officer, Natixis Advisors, L.P., Natixis Distribution, L.P., Natixis Distribution Corporation and Chairman of the Board of Natixis Distribution Corporation

 

1 

Each trustee serves until retirement, resignation or removal from the Board. The current retirement age is 75. The position of Chairperson of the Board is appointed for a three-year term. Mr. Drucker was appointed to serve an additional one year term as the Chairperson of the Board on June 12, 2019.

 

2 

The trustees of the Trust serve as trustees of a fund complex that includes all series of the Natixis Funds Trust I, Natixis Funds Trust II, Natixis Funds Trust IV, Gateway Trust, Loomis Sayles Funds I, Loomis Sayles Funds II and Natixis ETF Trust (collectively, the “Fund Complex”).

 

3 

Mr. Charleston is deemed an “interested person” of the Trust because he holds the following positions with an affiliated person of the Trust: President, Chief Executive Officer and Chairman of the Board of Directors of Loomis, Sayles & Company, L.P.

 

4 

Mr. Giunta is deemed an “interested person” of the Trust because he holds the following positions with an affiliated person of the Trust: President and Chief Executive Officer, Natixis Advisors, L.P., Natixis Distribution, L.P., Natixis Distribution Corporation and Chairman of the Board of Natixis Distribution Corporation.

 

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Trustee and Officer Information

 

Name and Year of Birth

 

Position(s) Held

with the Trust

 

Term of Office1 and
Length of Time Served

 

Principal Occupation(s)
During Past 5 Years2

OFFICERS OF THE TRUST  

Russell L. Kane

(1969)

 Secretary, Clerk and Chief Legal Officer Since 2016 Executive Vice President, General Counsel, Secretary and Clerk, Natixis Distribution Corporation, Natixis Advisors, L.P. and Natixis Distribution, L.P.; formerly, Chief Compliance Officer for Mutual Funds, Senior Vice President, Deputy General Counsel, Assistant Secretary and Assistant Clerk, Natixis Distribution Corporation, Natixis Advisors, L.P. and Natixis Distribution, L.P.

Michael C. Kardok

(1959)

 Treasurer, Principal Financial and Accounting Officer Since 2004 Senior Vice President, Natixis Advisors, L.P. and Natixis Distribution, L.P.

Kirk D. Johnson

(1981)

 Chief Compliance Officer, Assistant Secretary and Anti-Money Laundering Officer Since 2018 Senior Vice President, Deputy General Counsel, Assistant Secretary and Assistant Clerk, Natixis Distribution Corporation, Natixis Advisors, L.P. and Natixis Distribution, L.P.; formerly, Associate General Counsel, Natixis Distribution, L.P.; Vice President and Counsel, Natixis Investment Managers, L.P.

 

1 

Each officer of the Trust serves for an indefinite term in accordance with the Trust’s currentby-laws until the date his or her successor is elected and qualified, or until he or she sooner dies, retires, is removed or becomes disqualified.

 

2 

Each person listed above, except as noted, holds the same position(s) with the Fund Complex. Previous positions during the past five years with Natixis Distribution, L.P., Natixis Advisors, L.P. or Loomis, Sayles & Company, L.P. are omitted, if not materially different from an officer’s current position with such entity.

 

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Table of Contents
Item 2.

Code of Ethics.

The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer and persons performing similar functions. There have been no amendments or waivers of the Registrant’s code of ethics during the period.

 

Item 3.

Audit Committee Financial Expert.

The Board of Trustees of the Registrant has established an audit committee. Mr. Edmond J. English, Mr. Martin T. Meehan, Mr. Peter Smail, Mr. Erik R. Sirri and Ms. Cynthia L. Walker are members of the audit committee and have been designated as “audit committee financial experts” by the Board of Trustees. Each of these individuals is also an Independent Trustee of the Registrant.

 

Item 4.

Principal Accountant Fees and Services.

Fees billed by the Principal Accountant for services rendered to the Registrant.

The table below sets forth fees billed by the principal accountant, PricewaterhouseCoopers LLP, for the past two fiscal years for professional services rendered in connection with a) the audit of the Registrant’s annual financial statements and services provided in connection with regulatory filings; b) audit-related services (including services that are reasonably related to the performance of the audit of the Registrant’s financial statements but not reported under “Audit Fees”); c) tax compliance, tax advice and tax planning; and d) all other fees billed for professional services rendered by the principal accountant to the Registrant, other than the services provided reported as a part of (a) through (c) of this Item.

 

   Audit fees   Audit-related fees1   Tax fees2   All other fees 
   12/1/17-
11/30/18
   12/1/18-
11/30/19
   12/1/17-
11/30/18
   12/1/18-
11/30/19
   12/1/17-
11/30/18
   12/1/18-
11/30/19
   12/1/17-
11/30/18
   12/1/18-
11/30/19
 

Natixis Funds TrustII- Loomis Sayles Global Growth Fund, Loomis Sayles Senior Floating Rate and Fixed Income Fund and Vaughan Nelson Select Fund

  $143,479   $144,945   $654   $683   $31,639   $23,969   $—     $—   

 

1.

Audit-related fees consist of:

2018 & 2019– performance of agreed-upon procedures related to the Registrant’s deferred compensation plan.

 

2.

Tax fees consist of:

2018 & 2019 – review of Registrant’s tax returns

Aggregate fees billed to the Registrant fornon-audit services during 2018 and 2019 were $32,293 and $24,652 respectively.

The following table sets forth the fees billed by the Registrant’s principal accountant fornon-audit services rendered to Loomis, Sayles & Company, L.P. (“Loomis”), Natixis Advisors, L.P. (“Natixis”) and entities controlling, controlled by or under common control with Loomis and Natixis (“Control Affiliates”) that provide ongoing services to the Registrant, for engagements that related directly to the operations and financial reporting of the Registrant for the last two fiscal years.

 

   Audit-related fees   Tax fees   All other fees 
   12/1/17-
11/30/18
   12/1/18-
11/30/19
   12/1/17-
11/30/18
   12/1/18-
11/30/19
   12/1/17-
11/30/18
   12/1/18-
11/30/19
 

Control Affiliates

  $—     $—     $—     $—     $—     $—   


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The following table sets forth the aggregate fees billed by the Registrant’s principal accountant fornon-audit services rendered to Loomis, Natixis and Control Affiliates that provide ongoing services to the Registrant, for the last two fiscal years, including the fees disclosed in the table above.

 

   Aggregate Non-Audit Fees 
   12/1/17-
11/30/18
   12/1/18-
11/30/19
 

Control Affiliates

  $59,815   $32,252 

None of the services described above were approved pursuant to (c)(7)(i)(C) of RegulationS-X.

Audit CommitteePre-Approval Policies.

Annually, the Registrant’s Audit Committee reviews the audit, audit-related, tax and othernon-audit services together with the projected fees, for services proposed to be rendered to the Trust and/or other entities for whichpre-approval is required during the upcoming year. Any subsequent revisions to alreadypre-approved services or fees (including fee increases) and requests forpre-approval of new services would be presented for consideration quarterly as needed.

If, in the opinion of management, a proposed engagement by the Registrant’s independent accountants needs to commence before the next regularly scheduled Audit Committee meeting, any member of the Audit Committee who is an independent Board member is authorized topre-approve the engagement, but only for engagements to provide audit, audit-related and tax services. This approval is subject to review of the full Audit Committee at its next quarterly meeting. All other engagements require the approval of all the members of the audit committee.

 

Item 5.

Audit Committee of Listed Registrants.

Not applicable.

 

Item 6.

Schedule of Investments.

Included as part of the Report to Shareholders filed as Item 1 herewith.

 

Item 7.

Disclosure of Proxy Voting Policies and Procedures forClosed-End Management Investment Companies.

Not applicable.

 

Item 8.

Portfolio Managers ofClosed-End Management Investment Companies.

Not applicable.

 

Item 9.

Purchases of Equity Securities byClosed-End Management Investment Companies and Affiliated Purchasers.

Not applicable.

 

Item 10.

Submission of Matters to a Vote of Securities Holders.

There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees.


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Item 11.

Controls and Procedures.

The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Registrant in this FormN-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.

There were no changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 12.

Disclosure of Securities Lending Activities forClosed-End Management Investment Companies.

Not applicable.

 

Item 13.

Exhibits.

 

(a) (1) Code of Ethics required by Item 2 hereof, filed herewith as Exhibit (a)(1).
(a) (2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule30a-2(a) under the Investment Company Act of 1940 (17 CFR270.30a-2(a)), filed herewith as Exhibits (a)(2)(1) and (a)(2)(2), respectively.
(a) (3) Not applicable.
(b) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002 are filed herewith as Exhibit (b).


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Natixis Funds Trust II
By: 

/s/ David L. Giunta

Name: David L. Giunta
Title: President and Chief Executive Officer
Date: January 22, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

By: 

/s/ David L. Giunta

Name: David L. Giunta
Title: President and Chief Executive Officer
Date: January 22, 2020
By: 

/s/ Michael C. Kardok

Name: Michael C. Kardok
Title: Treasurer
Date: January 22, 2020