Loading...
Docoh

Loomis Sayles Funds Ii

Filed: 4 Dec 17, 7:00pm
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-06241

 

 

Loomis Sayles Funds 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: September 30

Date of reporting period: September 30, 2017

 

 

 


Table of Contents
Item 1.Reports to Stockholders.

The Registrant’s annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:


Table of Contents

ANNUAL REPORT

September 30, 2017

LOGO

 

Loomis Sayles Global Equity and Income Fund

Loomis Sayles Growth Fund

Loomis Sayles Value Fund

 

LOGO

 

 

TABLE OF CONTENTS

Portfolio Review  page 1

Portfolio of Investments  page 26

Financial Statements  page  52

Notes to Financial Statements  page 70

Shareholder Supplement  enclosed

(previouslyposted to the Funds’ website)

 


Table of Contents

LOOMIS SAYLES GLOBAL EQUITY AND INCOME FUND

 

Managers Symbols
Daniel J. Fuss, CFA®, CIC Class A    LGMAX
Eileen N. Riley, CFA® Class C    LGMCX
David W. Rolley, CFA® Class N    LGMNX
Lee M. Rosenbaum Class Y    LSWWX
Loomis, Sayles & Company, L.P. 

 

 

Investment Goal

The Fund seeks high total investment return through a combination of capital appreciation and current income.

 

 

Market Conditions

The 12-month period ending September 30, 2017 was generally positive for global equity and fixed income assets. Despite a muted start, global equity markets posted robust performance for the full period, with all sectors registering positive returns. In general, the more cyclical sectors delivered the strongest returns. Financials, led by banks, were top performers, as investors anticipated pro-growth policies from the US administration, including an easing of financial sector regulations. Technology also performed well, particularly in the final three quarters of the period. Materials also posted strong returns, as did industrials (led by the aerospace and defense industry).

The more defensive telecommunication services and consumer staples sectors posted less robust returns. Energy also lagged the broader market and was one of the more volatile sectors. Initially, energy stocks were supported by an OPEC agreement to curb oil production, but the sector struggled as oil entered bear market territory in the second quarter of 2017 before rebounding in the final quarter of the period.

Corporate credit spreads (the yield difference between non-Treasury and Treasury securities of similar maturity) generally tightened during the period, handily outperforming duration-matched global treasuries (duration refers to a security’s price sensitivity to interest rate changes). Credit continued to perform well due to improving earnings and credit profiles, accommodative central banks and healthy demand, particularly for investment grade credit and emerging market debt.

The Federal Reserve (Fed) raised interest rates three times during the period. Despite these rate increases, the US dollar generally weakened throughout the second half of the period. Accelerating non-US growth, uncertainty about US fiscal policy and diminished prospects for significant monetary policy divergence in major developed markets contributed to the US dollar’s depreciation.

Emerging market (EM) assets posted solid returns, with both sovereign and local bonds outperforming. Investors’ thirst for yield, the weaker US dollar, relatively benign inflation and strong risk appetite boosted the demand for emerging market debt.

 

1  |


Table of Contents

Performance Results

For the 12 months ended September 30, 2017, Class Y shares of Loomis Sayles Global Equity and Income Fund returned 14.42% at net asset value. The Fund underperformed its primary benchmark, the MSCI All Country World Index (Net), which returned 18.65%. The Fund outperformed its secondary blended benchmark, 60% MSCI All Country World Index (Net) / 40% Bloomberg Barclays Global Aggregate Index, which returned 10.31%.

Explanation of Fund Performance

The Fund’s equity allocation contributed strongly to return. Fixed income assets also posted positive returns, albeit not as strong as equity returns, tempering the Fund’s overall results. The Fund’s target asset allocation at the end of the period was 67.5% equity, 22.4% US fixed income, and 10.1% non-US fixed income. The equity allocation rose 2% over the period. The majority equity exposure is in line with the long-term performance objective of the Fund.

Within the Fund’s equity allocation, the largest contributors were Alibaba, Marriott, and Facebook. Shares of the China-based e-commerce company Alibaba surged in the first three quarters of 2017, recovering from a weak end to 2016. The company announced positive results and 2018 revenue guidance that far exceeded consensus expectations. We believe Alibaba continues to be well positioned in a massive and rapidly growing market. The company’s platforms have become more valuable to sellers as the number of users grows and vice versa; this network effect solidifies Alibaba’s leadership position in the industry. The stock remains one of our largest positions. In the United States, technology company Facebook’s earnings results during the period exceeded investors’ expectations on a fairly consistent basis, with strong revenue growth and meaningful margin expansion. We expect Facebook to continue growing its top line, benefiting from significant demand for online advertising and continued monetization of its non-Facebook-branded assets, such as Instagram and WhatsApp. Marriott shares also outperformed as the company completed its acquisition of Starwood Hotels & Resorts Worldwide in September of 2016. Shares were also supported later in the period by better-than-expected lodging industry data. We believe Marriott is well positioned moving forward; it operates a more defensive business model with its managed and franchised hotels, and the Starwood transaction should generate meaningful revenue and cost synergies. The company has also earmarked significant assets for sale.

The Fund’s corporate credit exposure was a positive source of return. Allocations to the banking, communications, consumer cyclical, capital goods and energy sectors were particularly helpful to performance. An allocation to high yield credit contributed to return as the asset class benefited from the “risk-on” environment and the search for yield. Specifically, positioning within higher-quality high yield communications and basic industry issues was quite positive. In addition, euro- and Canadian dollar-denominated fixed income positions added value as those currencies appreciated versus the US dollar. Local currency-denominated EM bonds from Brazil, Mexico and Russia were also positive due to currency appreciation and high bond market returns. Security selection among EM hard-currency issuers from Latin America lifted results.

 

|  2


Table of Contents

TransDigm, Allergan and AutoZone were the largest detractors from performance within the Fund’s equity allocation. TransDigm, a supplier of critical components to the aerospace and defense industry, saw its shares weaken in early 2017. We eliminated the Fund’s position in January due to concerns about the potential slowing of organic growth and the impact on the company’s volumes from increased competition in the aftermarket parts and services business. In addition, we felt TransDigm’s high leverage levels could limit the company’s flexibility should fundamentals deteriorate. Global pharmaceutical company Allergan’s shares fell in the fourth quarter of 2016 after it reported earnings that were below expectations, posting disappointing numbers on both revenues and margins. We eliminated the position in November due to concerns that the difficult reimbursement environment in the United States posed a significant risk to our revenue forecasts. AutoZone, an automobile replacement parts retailer, declined after the company announced underwhelming results in both the first and second quarters of 2017 that were attributable, in part, to delayed IRS rebates to the US consumer. Shares were also pressured as fears about competition from Amazon resurfaced. We eliminated the stock from the Fund in May.

Within the Fund’s corporate credit allocation, selected issuers from the consumer (cyclical and non-cyclical) and communications sectors weighed on performance. Selected non-US-dollar-denominated positions within the Fund’s fixed income allocation also detracted from return. Allocations to the Japanese yen and the Argentine peso were the primary detractors as they depreciated versus the US dollar.

The Fund’s duration and yield curve positioning (the relationship among bond yields across the maturity spectrum) detracted from performance. The middle of the US Treasury yield curve (5- to 10-year maturities) rose higher than other maturities during the period. The Fund’s exposure to that part of the yield curve weighed on performance. In addition, currency forwards detracted from performance, largely due to hedging costs.

Outlook

Risk appetite has remained strong this year, and we expect the trend to continue into 2018. We expect the macroeconomic backdrop of stable growth and inflation to persist in the absence of a geopolitical shock. Despite improving growth, developed economy inflation remains below central banks’ targets; therefore, we believe monetary policymakers will shift gears slowly. We expect the Fed to raise interest rates in December 2017 with two additional hikes by the end of 2018. We do not anticipate a rate hike from the European Central Bank (ECB) within the next 12 months and expect the ECB to maintain ultra-accommodative policies, even if at a lower “dosage.” Japan’s struggle to increase inflation should keep the Bank of Japan accommodative for the foreseeable future.

Government bond yields are expected to rise, but not substantially. Although developed markets could see higher yields in the future, we think they will follow a low trajectory based on our benign view of inflation and monetary policy over the near-to-medium term. An inflation surprise could spur less positive outcomes for bonds, but we think medium- to long-term yields are likely to move only moderately higher over the next 12 months.

 

3  |


Table of Contents

We expect the US dollar to be range bound relative to global peers, particularly in EM, where aggregate economic growth has been outpacing the United States and attracting equity inflows. Strong earnings expectations outside the United States could lead to further US dollar outflows into other countries and markets. While firm global growth is not a bullish factor for US Treasury returns, it is a positive factor for most risk assets, including equities, EM bonds, currencies and global credit spreads broadly.

In equities, strong profit growth and low rates continue to support valuations. Corporate profits rebounded globally in the first half of 2017 and have since broadly exceeded market consensus expectations. This has propelled global equity markets higher and supports somewhat elevated valuation multiples. While these developments have been favorable for equities, we maintain our consistent and disciplined approach to equity investing regardless of benchmark valuations. We invest only in opportunities that meet our three alpha drivers: quality, intrinsic value growth and compelling valuation.

 

 

Growth of $100,000 Investment in Class Y Shares4

September 30, 2007 through September 30, 2017

 

LOGO

See notes to chart on page 6.

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.

 

|  4


Table of Contents

Top Ten Holdings as of September 30, 2017

 

    Security name  % of
net assets
 
1  Alibaba Group Holding Ltd., Sponsored ADR   4.20
2  Facebook, Inc., Class A   3.20
3  Sherwin-Williams Co. (The)   3.08
4  Roper Technologies, Inc.   3.00
5  Marriott International, Inc., Class A   2.69
6  AIA Group Ltd.   2.50
7  Nestle S.A., (Registered)   2.38
8  Alphabet, Inc., Class A   2.16
9  Northrop Grumman Corp.   2.12
10  UnitedHealth Group, Inc.   2.07

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.

 

5  |


Table of Contents

Average Annual Total Returns — September 30, 20174

 

                    Expense Ratios5 
   1 Year  5 Years  10 Years  Life of
Class N
  Gross  Net 
   
Class Y (Inception 5/1/96)       
NAV  14.42  8.76  6.72    0.92  0.92
   
Class A (Inception 2/1/06)       
NAV  14.10   8.48   6.45      1.17   1.17 
With 5.75% Maximum Sales Charge  7.54   7.20   5.82       
   
Class C (Inception 2/1/06)       
NAV  13.22   7.67   5.66      1.92   1.92 
With CDSC1  12.22   7.67   5.66       
   
Class N (Inception 2/1/17)       
NAV           13.18   0.84   0.84 
  
Comparative Performance       
MSCI ACWI (Net)2  18.65   10.20   3.88   14.02    
Blended Index3  10.31   6.33   3.95   10.54         

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 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.

 

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

 

2The MSCI All Country World Index (Net) represents the performance of 46 markets in both the developed and emerging markets in Africa, Europe, North America and South America.

 

3The Blended Index is an unmanaged, blended index composed of the following weights: 60% MSCI All Country World Index (Net) and 40% Bloomberg Barclays Global Aggregate Bond Index. The Bloomberg Barclays Global Aggregate Bond Index provides a broad-based measure of the global investment-grade fixed income markets. The three major components of this index are the U.S. Aggregate, the Pan-European Aggregate, and the Asian-Pacific Aggregate Indices. The index also includes Eurodollar and Euro-Yen corporate bonds, Canadian government, agency and corporate securities, and USD investment grade 144A securities.

 

4Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

5Expense 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 caps set to expire on 1/31/18. When a Fund’s expenses are below the cap, 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 caps.

 

|  6


Table of Contents

LOOMIS SAYLES GROWTH FUND

 

Manager Symbols
Aziz V. Hamzaogullari, CFA® Class A    LGRRX
Loomis, Sayles & Company, L.P. Class C    LGRCX
 Class N    LGRNX
 Class Y    LSGRX

 

 

Investment Goal

The Fund seeks long-term growth of capital.

 

 

Market Conditions

World equity markets staged a strong rally in the 12-month period, with the gains encompassing large- and small-cap stocks in the United States, as well as the developed and emerging markets worldwide. Investors responded favorably to signs of a continued improvement in global economic conditions, highlighted by rising growth in the previously stagnant European region and mounting evidence that China’s economy has begun to accelerate. The outcome of the November 2016 US election also played a key role in the robust returns for equities, as investors anticipated business-friendly policies from the new administration. The US dollar’s decline relative to non-US currencies since the beginning of 2017 was a further tailwind, bolstering performance of US multinational corporations and companies based in emerging markets. In addition, a resurgence in commodity prices provided a boost to export-dependent emerging market nations and stocks in the energy and materials sectors.

The pickup in global growth fed through to corporate results, with companies around the world reporting gains in both revenues and bottom-line profits. Corporate earnings experienced a synchronized, worldwide upturn for the first time since 2006, providing support for somewhat elevated stock market valuations. Growth stocks, particularly those in the technology sector, were key beneficiaries of this trend.

As the period drew to a close, the direction of US Federal Reserve policy remained a focus of investors against a backdrop of improved employment conditions and muted inflation. However, the markets continued to demonstrate confidence that policymakers will shift gears slowly, removing monetary accommodation over a period of years and at a pace commensurate with underlying economic fundamentals.

Performance Results

For the 12 months ended September 30, 2017, Class Y shares of Loomis Sayles Growth Fund returned 19.31% at net asset value. The Fund underperformed its benchmark, the Russell 1000® Growth Index, which returned 21.94%.

Explanation of Fund Performance

The Fund’s positions in Alibaba, Facebook and Autodesk contributed most to performance. Stock selection in the consumer staples, consumer discretionary and energy sectors, along

 

7  |


Table of Contents

with our allocations in the information technology, consumer discretionary, financials and healthcare sectors, contributed to relative performance. China-based Alibaba operates several increasingly connected businesses across commerce, technology, advertising, digital media and entertainment, logistics, payments, and local services. The company’s ecosystem facilitates commerce and enables merchants and brands to engage with customers across the entire consumer lifecycle. Alibaba reported fundamentally strong results during the period, with revenue growth consistently exceeding consensus expectations. China’s structural shift to e-commerce is the secular growth driver for Alibaba. With its strong brands and powerful network, Alibaba’s revenue growth accelerated to the fastest rate since the IPO for what is now a much larger company. Alibaba continued to gain market share as gross merchandise volume (GMV) increased at a higher rate than the growth in China’s retail sector. For fiscal year 2017, Alibaba’s GMV of $547 billion was greater than the $485 billion in global revenue generated by Walmart in its 2017 fiscal year. For fiscal year 2018, Alibaba issued revenue growth guidance of 45% to 49%, well above consensus expectations that were closer to 30%. Monetization improved to 273 renminbi per annual active buyer at period-end, compared with approximately 202 renminbi a year earlier. Alibaba ended the period with 466 million annual active buyers and 529 million active monthly mobile users, a 24% increase compared with last year. With the benefits of scale, Alibaba generated attractive operating margins, averaging approximately 60% during the period for the core commerce business. We believe the current market price embeds expectations for key revenue and cash flow growth drivers that are well below our long-term assumptions.

Social media company Facebook reported robust revenue growth throughout the period. Growing at more than twice the rate of its online competitors, by our estimates, and many multiples faster than traditional advertisers, Facebook continued to gain market share. Mobile advertising grew to 87% of advertising revenue during the period, up from 84% a year ago. With more than 2 billion users, up 17% year over year, and with 88% of users residing outside North America, Facebook is one of very few global platforms where advertisers can reach consumers at such scale. User data coupled with the scale and frequency of engagement allows Facebook an unprecedented ability to specifically target direct marketing. Demonstrating the strength of its platform, its network effect, and the virtuous cycle between users and advertising partners, Facebook’s advertising revenue per user rose to $4.65, up 25% year over year, and reflects improved monetization per user in all regions. Free cash flow remained robust during the period. The global structural shift from traditional advertising to online advertising is the secular growth driver for Facebook. With quality characteristics such as its brand, network, and targeting advantage, we believe Facebook is well positioned to grow revenue, free cash flow, and market share over our investment time horizon.

3D design software and services company Autodesk, whose name is synonymous with computer-aided design (CAD), provides state-of-the-art solutions to customers in the architecture, engineering, construction, manufacturing, digital media, consumer and entertainment industries. The company reported solid results during the period, with revenues, subscribers and earnings per share above consensus expectations. Importantly, Autodesk demonstrated progress in its transition to a cloud-computing model, reporting

 

|  8


Table of Contents

that annualized recurring revenue grew to 91% of the revenue mix compared with 69% a year earlier. After July 31, 2016, the company discontinued selling new perpetual licenses for its software products, making the purchase of new licenses available only by subscription – via cloud computing. In our view, growth in recurring revenue improves the overall quality of the business by providing better visibility of future revenue streams. Longer term, we believe the cloud-computing model will drive growth due to a higher lifetime customer value, expanding margins, and greater free cash flow. In February 2017, the company announced that Carl Bass would step down as CEO after ten years but remain on the Board of Directors. In June, interim co-CEO Andrew Anagnost was named to the CEO role. Andrew is a 20-year veteran of Autodesk and one of the chief architects of the business model transition. We have met Andrew several times over the past few years and think he is a strong candidate who is likely to preserve the company’s focus on increasing its competitive position and generating long-term revenue, profit and free cash flow growth. We believe that the market price embeds expectations for growth and profitability that are well below our long-term investment thesis for Autodesk, and that all three contributors sell at a meaningful discount to our estimate of intrinsic value and offer compelling reward-to-risk opportunities.

On the downside, the Fund’s positions in Qualcomm, Schlumberger and SABMiller detracted most from performance. Stock selection in the information technology, healthcare and industrials sectors, along with our allocations in the consumer staples, energy and industrials sectors, detracted from relative performance. Qualcomm, the pioneer developer of 3G and 4G technology, benefits from its difficult-to-replicate skill in designing and manufacturing the chipsets used in mobile devices for wireless communication. A lawsuit filed by Apple alleging unfair practices resulted in a substantial near-term decline in royalty revenues and associated segment margins, which led to a decline in share value. Additionally, after Apple directed its contract manufacturers to withhold payments, Qualcomm lowered its financial guidance. Challenges to Qualcomm’s business model and royalty rates are not new. Over the last two decades, Qualcomm has successfully defended its business model numerous times, establishing a body of legal precedence in a variety of jurisdictions around the world and most recently in China. In our view, Apple’s challenges to Qualcomm’s business model are no different from previous challenges, except for Apple’s aggressiveness in its pursuit. This is not necessarily indicative that Apple has a strong case. We believe the decades-long industry practice that has been repeatedly validated, and is backed by regulations around the world, is not likely to be overturned. We believe that Qualcomm is well positioned to benefit from long-term secular growth in mobile devices and that market expectations embed future growth well below our estimate.

Schlumberger is the world’s leading supplier of technology, equipment, integrated project management, and information solutions to the international oil and gas exploration and production industry. The company reported global sales that were lower compared with the year-ago period. In markets outside of North America, which accounted for approximately 75% of revenue, the company continued to experience low demand for its oilfield services given the oil price environment. However, Schlumberger reported improved results in

 

9  |


Table of Contents

North America during the period, with strong growth in regional rig-count as well as in hydraulic fracturing revenue where the company redeployed idle capacity to accommodate growing well completion activity. While the company’s margins were down meaningfully compared to the year-ago period, Schlumberger has maintained exemplary margins and cash flow for this point in the cycle, and continued to invest to strengthen its ability to offer integrated solutions to clients. Schlumberger generated $1.9 billion of free cash flow over the past 12 months and ended the period with $12.6 billion in net debt, and cash and investments of $7.6 billion. We believe these results highlight the company’s high-quality characteristics, its strong execution, and its proactive management of costs and resources. Increasing consumption in emerging markets and 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 accessing difficult-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 the market supply-demand normalizes. We believe the shares of both Schlumberger and Qualcomm are selling below our estimate of intrinsic value and offer compelling reward-to-risk opportunities.

SABMiller, a Fund holding since the second quarter of 2012, was the world’s second largest brewer. Following its acquisition by Anheuser Busch Inbev, SA (ABI), the company was delisted and sold from the portfolio in October 2016. Despite the cash consideration for the acquisition being fixed, the appreciation of the US dollar versus the British pound during this period resulted in a decline in the price of the US dollar-denominated American depositary receipts (ADRs, which are certificates issued by US banks in US dollars that represent shares of foreign companies).

Outlook

Our investment process is characterized by bottom-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 period with overweight positions in the consumer staples, information technology, financials, healthcare and energy sectors and underweight positions in the consumer discretionary and industrials sectors. We did not own positions in the materials, real estate, telecommunication services and utilities sectors.

 

|  10


Table of Contents

Growth of $100,000 Investment in Class Y Shares3

September 30, 2007 through September 30, 2017

 

LOGO

See notes to chart on page 12.

Top Ten Holdings as of September 30, 2017

 

    Security name  % of
net assets
 
1  Alibaba Group Holding Ltd., Sponsored ADR   6.35
2  Facebook, Inc., Class A   6.28
3  Amazon.com, Inc.   5.92
4  Visa, Inc., Class A   5.13
5  Cisco Systems, Inc.   4.51
6  Oracle Corp.   4.23
7  Monster Beverage Corp.   3.92
8  Autodesk, Inc.   3.82
9  Danone S.A., Sponsored ADR   3.32
10  Novo Nordisk AS, Sponsored ADR   3.31

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.

 

11  |


Table of Contents

Average Annual Total Returns — September 30, 20173

 

                   Expense Ratios4 
   1 Year  5 Years  10 Years  Life of
Class N
  Gross  Net 
   
Class Y (Inception 5/16/91)       
NAV  19.31  17.69  7.89    0.66  0.66
   
Class A (Inception 12/31/96)       
NAV  18.99   17.42   7.56      0.92   0.92 
With 5.75% Maximum Sales Charge  12.14   16.02   6.92       
   
Class C (Inception 9/12/03)       
NAV  18.03   16.52   6.76      1.66   1.66 
With CDSC1  17.03   16.52   6.76       
   
Class N (Inception 2/1/13)       
NAV  19.39         16.44   0.58   0.58 
  
Comparative Performance       
Russell 1000® Growth Index2  21.94   15.26   9.08   15.50         

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 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.

 

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

 

2

Russell 1000® Growth Index is an unmanaged index that measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000® companies with higher price-to-book ratios and higher forecasted growth values.

 

3Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

4Expense 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 caps set to expire on 1/31/18. When a Fund’s expenses are below the cap, 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 caps.

 

|  12


Table of Contents

LOOMIS SAYLES VALUE FUND

 

Manager Symbols  
Arthur J. Barry, CFA® Class A  LSVRX
Loomis, Sayles & Company, L.P. Class C  LSCVX
 Class N  LSVNX
 Class Y  LSGIX
 Admin Class  LSAVX

 

 

Investment Goal

The Fund seeks long-term growth of capital and income.

 

 

Market Conditions

Despite some concerning headlines recently, domestic equity markets remained fairly calm during the period as they shrugged off a variety of geopolitical, weather and domestic events. Investors’ risk appetite remained strong, given steady economic activity and increased visibility into the Federal Reserve’s (the Fed’s) conservative plan to reduce the size of its balance sheet. Given this muted volatility, markets have continued their march higher, as we have only had two 3% pullbacks for the one-year period ending September 30, 2017. This rather sanguine environment allowed investors to be more focused on the underlying and improving fundamentals of the broader economy and individual businesses instead of concentrating on known risks with unknown outcomes.

Performance Results

For the 12 months ended September 30, 2017, Class Y shares of Loomis Sayles Value Fund returned 16.63% at net asset value. The Fund outperformed its benchmark, the Russell 1000® Value Index, which returned 15.12%.

Explanation of Fund Performance

Strong stock selection was the primary contributor to the Fund’s performance. Selection was particularly noteworthy in the energy, real estate, financials, healthcare and industrial sectors. The Fund’s relative underweight position to the energy, real estate and consumer staples sectors compared to the benchmark also contributed to performance.

The individual stocks that contributed most were financial holdings Bank of America, JPMorgan Chase and PNC Financial. Despite suffering occasional setbacks, all three companies sustained the positive momentum from the rally in financials early in the period following the UK Brexit decision to leave the European Union and the 2016 US presidential election. They continued to outperform throughout the remainder of the period. Additionally, all three stocks have exhibited stronger fundamentals and scored very well in the Fed’s latest supervisory stress tests released in June 2017, allowing them to return a greater-than-expected amount of additional capital to shareholders.

The main detractor from performance during the period was stock selection within the consumer discretionary sector. The individual stocks that had the greatest negative impact on the Fund’s performance were Teva Pharmaceutical Industries, Advance Auto Parts, Inc.

 

13  |


Table of Contents

and Qualcomm Incorporated. After a series of setbacks, shares of Teva Pharmaceutical declined substantially in the fourth quarter of 2016, when news surfaced that it was under Department of Justice investigation for alleged price collusion on several generic drugs. After initially trimming the position, the Fund eliminated the stock in February 2017.

The decline in Advance Auto shares was primarily due to a mismatch between investor expectations and company fundamentals. After the stock rose sharply following the company’s analyst day in November 2016, investors expected a rapid turnaround in the business. Although the company made progress on many fronts, the broader deceleration in growth of the auto parts industry forced Advance Auto to significantly reduce its guidance. This combination of elevated expectations and industry deceleration put pressure on the stock. Also during the period, digital communications equipment company Qualcomm faced multiple negative legal and regulatory setbacks, causing investors to question the size and sustainability of cash flows coming from its technology licensing business. Regulators in both Korea and the United States challenged some of Qualcomm’s go to market practices, and major customer Apple joined in, filing lawsuits in the United States and in the UK making similar arguments. While these events led the stock to underperform, we believe that these challenges are temporary and that Qualcomm’s licensing model will endure.

Outlook

A steady global economic backdrop has fostered an environment where equities should perform well into 2018 as risk appetite remains strong. Central bank transparency has contributed to low volatility in the markets. With another interest rate hike expected in December, investors are turning their attention to the Fed’s tapering of its balance sheet. The lack of any large pullback in the market this year has led to complacency among investors, and we believe the odds of a correction might be increasing. However, market pullbacks can be healthy, preventing stocks from overheating and allowing investors on the sidelines an opportunity to get in. Regardless of the direction of the markets, we continue to take a long term, security-specific approach and, as always, view opportunities as defined by their risk/reward potential.

 

|  14


Table of Contents

Growth of $100,000 Investment in Class Y Shares4

September 30, 2007 through September 30, 2017

 

LOGO

See notes to chart on page 16.

Top Ten Holdings as of September 30, 2017

 

    Security name  % of
net assets
 
1  JPMorgan Chase & Co.   3.26
2  Bank of America Corp.   2.87
3  Wells Fargo & Co.   2.67
4  Citigroup, Inc.   2.46
5  Comcast Corp., Class A   2.18
6  Pfizer, Inc.   2.17
7  Oracle Corp.   2.09
8  Chevron Corp.   2.06
9  PNC Financial Services Group, Inc. (The)   2.03
10  United Technologies Corp.   1.99

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.

 

15  |


Table of Contents

Average Annual Total Returns — September 30, 20174

 

                   Expense Ratios5 
   

1 Year

  

5 Years

  

10 Years

  

Life of
Class N

  Gross  Net 
   

Class Y (Inception 5/13/91)

       

NAV

  16.63  12.33  6.03    0.69  0.69
   

Class A (Inception 6/30/06)

       

NAV

  16.33   12.05   5.74      0.94   0.94 

With 5.75% Maximum Sales Charge

  9.67   10.74   5.11       
   

Class C (Inception 6/1/07)

       

NAV

  15.46   11.21   4.95      1.69   1.69 

With CDSC2

  14.46   11.21   4.95       
   

Class N (Inception 2/1/13)

       

NAV

  16.80         11.18   0.57   0.57 
   

Admin Class (Inception 2/1/10)1

       

NAV

  16.06   11.73   5.45      1.19   1.19 
  

Comparative Performance

       

Russell 1000® Value Index3

  15.12   13.20   5.92   12.12         

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 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.

 

1Prior to the inception of Admin Class shares (2/1/10), performance is that of Class A shares, restated to reflect the higher net expenses of Admin Class shares.

 

2Performance for Class C shares assumes a 1% contingent deferred sales charge (“CDSC”) applied when you sell shares within one year of purchase.

 

3

Russell 1000® Value Index is an unmanaged index that measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000® companies with lower price-to-book ratios and lower expected growth values.

 

4Fund performance has been increased by fee waivers and/or expense reimbursements, if any, without which performance would have been lower.

 

5Expense 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 caps set to expire on 1/31/18. When a Fund’s expenses are below the cap, 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 caps.

 

|  16


Table of Contents

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 Funds are 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 the Natixis Funds’ website at im.natixis.com; and on the Securities and Exchange Commission’s (“SEC’s”) website at www.sec.gov. Information regarding how the Natixis Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available from the 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 on Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at www.sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.

 

17  |


Table of Contents

UNDERSTANDING FUND EXPENSES

As a mutual fund shareholder, you incur different types of 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’ prospectuses. 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 for 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 April 1, 2017 through September 30, 2017. 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 = 8.6) and multiply the result by the number in the Expenses Paid During Period row 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 the Funds 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.

 

|  18


Table of Contents
LOOMIS SAYLES GLOBAL EQUITY AND
INCOME FUND
 BEGINNING
ACCOUNT VALUE
4/1/2017
  ENDING
ACCOUNT VALUE
9/30/2017
  EXPENSES PAID
DURING PERIOD*
4/1/2017 – 9/30/2017
 
Class A    
Actual  $1,000.00   $1,100.40   $6.16 
Hypothetical (5% return before expenses)  $1,000.00   $1,019.20   $5.92 
Class C    
Actual  $1,000.00   $1,096.30   $10.04 
Hypothetical (5% return before expenses)  $1,000.00   $1,015.49   $9.65 
Class N    
Actual  $1,000.00   $1,101.40   $4.58 
Hypothetical (5% return before expenses)  $1,000.00   $1,020.71   $4.41 
Class Y    
Actual  $1,000.00   $1,101.90   $4.85 
Hypothetical (5% return before expenses)  $1,000.00   $1,020.46   $4.66 

 

*Hypothetical expenses are equal to the Fund’s annualized expense ratio: 1.17%, 1.91%, 0.87% and 0.92% 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).

 

LOOMIS SAYLES GROWTH FUND BEGINNING
ACCOUNT VALUE
4/1/2017
  ENDING
ACCOUNT VALUE
9/30/2017
  EXPENSES PAID
DURING PERIOD*
4/1/2017 – 9/30/2017
 
Class A    
Actual  $1,000.00   $1,149.90   $4.85 
Hypothetical (5% return before expenses)  $1,000.00   $1,020.56   $4.56 
Class C    
Actual  $1,000.00   $1,145.40   $8.87 
Hypothetical (5% return before expenses)  $1,000.00   $1,016.80   $8.34 
Class N    
Actual  $1,000.00   $1,151.50   $3.07 
Hypothetical (5% return before expenses)  $1,000.00   $1,022.21   $2.89 
Class Y    
Actual  $1,000.00   $1,151.50   $3.51 
Hypothetical (5% return before expenses)  $1,000.00   $1,021.81   $3.29 

 

*Hypothetical expenses are equal to the Fund’s annualized expense ratio (after waiver/reimbursement): 0.90%, 1.65%, 0.57% and 0.65% 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).

 

19  |


Table of Contents
LOOMIS SAYLES VALUE FUND BEGINNING
ACCOUNT VALUE
4/1/2017
  ENDING
ACCOUNT VALUE
9/30/2017
  EXPENSES PAID
DURING PERIOD*
4/1/2017 – 9/30/2017
 
Class A    
Actual  $1,000.00   $1,051.90   $4.94 
Hypothetical (5% return before expenses)  $1,000.00   $1,020.26   $4.86 
Class C    
Actual  $1,000.00   $1,047.90   $8.78 
Hypothetical (5% return before expenses)  $1,000.00   $1,016.50   $8.64 
Class N    
Actual  $1,000.00   $1,054.10   $2.99 
Hypothetical (5% return before expenses)  $1,000.00   $1,022.16   $2.94 
Class Y    
Actual  $1,000.00   $1,053.60   $3.66 
Hypothetical (5% return before expenses)  $1,000.00   $1,021.51   $3.60 
Admin Class    
Actual  $1,000.00   $1,050.60   $6.22 
Hypothetical (5% return before expenses)  $1,000.00   $1,019.00   $6.12 

 

*Expenses are equal to the Fund’s annualized expense ratio: 0.96%, 1.71%, 0.58%, 0.71% and 1.21% for Class A, C, N, Y and Admin Class, 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).

 

|  20


Table of Contents

BOARD APPROVAL OF THE EXISTING ADVISORY AGREEMENTS

The Board of Trustees of the Trust (the “Board”), including the Independent Trustees, considers matters bearing on each Fund’s advisory agreement (collectively, the “Agreements”) at most of its meetings throughout the year. Each year, usually in the spring, the Contract Review Committee of the Board meets to review the Agreements to determine whether to recommend that the full Board approve the continuation of the Agreements, typically for an additional one-year period. After the Contract Review Committee has made its recommendation, the full Board, including the Independent Trustees, determines whether to approve the continuation of the Agreements.

In connection with these meetings, the Trustees receive materials that the Funds’ investment adviser (the “Adviser”) believes to be reasonably necessary for the Trustees to evaluate the Agreements. These materials generally include, among other items, (i) information on the investment performance of the Funds and the performance of peer groups of funds and the Funds’ performance benchmarks, (ii) information on the Funds’ advisory fees and other expenses, including information comparing the Funds’ expenses to the fees charged to institutional accounts with similar strategies managed by the Adviser, if any, and to those of peer groups of funds and information about any applicable expense caps and/or fee “breakpoints,” (iii) sales and redemption data in respect of the Funds, (iv) information about the profitability of the Agreements to the Adviser and (v) information obtained through the completion by the Adviser of a questionnaire distributed on behalf of the Trustees. The Board, including the Independent Trustees, also considers other matters such as (i) the Adviser’s financial results and financial condition, (ii) each Fund’s investment objective and strategies and the size, education and experience of the Adviser’s investment staff and its use of technology, external research and trading cost measurement tools, (iii) arrangements in respect of the distribution of the Funds’ shares and the related costs, (iv) the allocation of the Funds’ brokerage, if any, including, if applicable, allocations to brokers affiliated with the Adviser and the use of “soft” commission dollars to pay Fund expenses and to pay for research and other similar services, (v) the resources devoted to, and the record of compliance with, the Funds’ investment policies and restrictions, policies on personal securities transactions and other compliance policies, (vi) each Adviser’s policies and procedures relating to, among other things, compliance, trading and best execution, proxy voting and valuation, (vii) information about amounts invested by the Funds’ portfolio managers in the Funds or in similar accounts that they manage and (viii) the general economic outlook with particular emphasis on the mutual fund industry. Throughout the process, the Trustees are afforded the opportunity to ask questions of and request additional materials from the Adviser.

In addition to the materials requested by the Trustees in connection with their annual consideration of the continuation of the Agreements, the Trustees receive materials in advance of each regular quarterly meeting of the Board that provide detailed information about the Funds’ investment performance and the fees charged to the Funds for advisory and other services. This information generally includes, among other things, an internal performance rating for each Fund based on agreed-upon criteria, graphs showing each Fund’s performance and fee differentials against each Fund’s peer group/category, performance

 

21  |


Table of Contents

ratings provided by a third-party, total return information for various periods, and third-party performance rankings for various periods comparing a Fund against similarly categorized funds. The portfolio management team for each Fund or other representatives of the Adviser make periodic presentations to the Contract Review Committee and/or the full Board, and Funds identified as presenting possible performance concerns may be subject to more frequent board presentations and reviews. In addition, each quarter the Trustees are provided with detailed statistical information about each Fund’s portfolio. The Trustees also receive periodic updates between meetings.

The Board most recently approved the continuation of the Agreements at its meeting held in June 2017. The Agreements were continued for a one-year period for the Funds. In considering whether to approve the continuation of the Agreements, the Board, including the Independent Trustees, did not identify any single factor as determinative. Individual Trustees may have evaluated the information presented differently from one another, giving different weights to various factors. Matters considered by the Trustees, including the Independent Trustees, in connection with their approval of the Agreements included, but were not limited to, the factors listed below.

The nature, extent and quality of the services provided to the Funds under the Agreements. The Trustees considered the nature, extent and quality of the services provided by the Adviser and its affiliates to the Funds and the resources dedicated to the Funds by the Adviser and its affiliates.

The Trustees considered not only the advisory services provided by the Adviser to the Funds, but also the monitoring and oversight services provided by Natixis Advisors, L.P. (“Natixis Advisors”). They also considered the administrative services provided by Natixis Advisors and its affiliates to the Funds. For each Fund, the Trustees also considered the benefits to shareholders of investing in a mutual fund that is part of a family of funds that offers shareholders the right to exchange shares of one type of fund for shares of another type of fund, and provides a variety of fund and shareholder services.

After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the nature, extent and quality of services provided supported the renewal of the Agreements.

Investment performance of the Funds and the Adviser. As noted above, the Trustees received information about the performance of the Funds over various time periods, including information that compared the performance of the Funds to the performance of peer groups and categories of funds and the Funds’ respective performance benchmarks. In addition, the Trustees also reviewed data prepared by an independent third party that analyzed the performance of the Funds using a variety of performance metrics, including metrics that also measured the performance of the Funds on a risk adjusted basis.

 

|  22


Table of Contents

The Board noted that, through December 31, 2016, each Fund’s one- and three-year performance, as applicable, stated as percentile rankings within categories selected by the independent third-party data provider was as follows (where the best performance would be in the first percentile of its category):

 

   

One-Year

  

Three-Year

 

Loomis Sayles Global Equity and Income Fund

   68  17

Loomis Sayles Growth Fund

   28  6

Loomis Sayles Value Fund

   82  84

In the case of each Fund that had performance that lagged that of a relevant peer group median and/or category median for certain (although not all) periods, the Board concluded that other factors relevant to performance supported renewal of the Agreements. These factors included one or more of the following: (1) that the underperformance was attributable, to a significant extent, to investment decisions (such as security selection or sector allocation) by the Adviser that were reasonable and consistent with the Fund’s investment objective and policies; (2) that the Fund’s more recent performance, although lagging in certain periods, had shown improvement relative to its category and (3) that the Fund’s performance, although lagging in certain periods, was stronger over the long term.

The Trustees also considered the Adviser’s performance and reputation generally, the performance of the fund family generally, and the historical responsiveness of the Adviser to Trustee concerns about performance and the willingness of the Adviser to take steps intended to improve performance.

After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the performance of the Funds and the Adviser supported the renewal of the Agreements.

The costs of the services to be provided and profits to be realized by the Adviser and its affiliates from their respective relationships with the Funds. The Trustees considered the fees charged to the Funds for advisory services as well as the total expense levels of the Funds. This information included comparisons (provided both by management and also by an independent third party) of the Funds’ advisory fees and total expense levels to those of their peer groups and information about the advisory fees charged by the Adviser to comparable accounts (such as institutional separate accounts), as well as information about differences in such fees and the reasons for any such differences. In considering the fees charged to comparable accounts, the Trustees considered, among other things, management’s representations about the differences between managing mutual funds as compared to other types of accounts, including the additional resources required to effectively manage mutual fund assets and the greater regulatory costs associated with the management of such assets. In evaluating each Fund’s advisory fee, the Trustees also took into account the demands, complexity and quality of the investment management of such Fund and the need for the Adviser to offer competitive compensation and the potential need to expend additional resources to the extent the Fund grows in size. The Trustees considered that over the past several years, management had made recommendations regarding reductions in advisory fee rates, implementation of advisory fee breakpoints and the institution of advisory fee waivers and expense caps for various funds in the fund family.

 

23  |


Table of Contents

They noted that all three of the Funds included in this report have expense caps in place, and the Trustees considered that the current expenses of each Fund are below the cap.

The Trustees also considered the compensation directly or indirectly received by the Adviser and its affiliates from their relationships with the Funds. The Trustees reviewed information provided by management as to the profitability of the Adviser’s and its affiliates’ relationships with the Funds, and information about the allocation of expenses used to calculate profitability. They also reviewed information provided by management about the effect of distribution costs and changes in asset levels on Adviser profitability, including information regarding resources spent on distribution activities. When reviewing profitability, the Trustees also considered information about court cases in which adviser compensation or profitability were issues, the performance of the relevant Funds, the expense levels of the Funds, and whether the Adviser had implemented breakpoints and/or expense caps with respect to such Funds.

After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the advisory fee charged to each of the Funds was fair and reasonable, and that the costs of these services generally and the related profitability of the Adviser and its affiliates in respect of their relationships with the Funds supported the renewal of the Agreements.

Economies of Scale. The Trustees considered the existence of any economies of scale in the provision of services by the Adviser and whether those economies are shared with the Funds through breakpoints in their investment advisory fees or other means, such as expense waivers or caps. The Trustees also discussed with management the factors considered with respect to the implementation of breakpoints in investment advisory fees or expense waivers or caps for certain funds. Management explained that a number of factors are taken into account in considering the possible implementation of breakpoints or an expense cap for a fund, including, among other things, factors such as a fund’s assets, the projected growth of a fund, projected profitability and a fund’s fees and performance. With respect to economies of scale, the Trustees noted that each Fund’s management fee and overall net expense ratio was at or below median compared to a peer group of funds and that each of the Funds was subject to an expense cap or waiver. In considering these issues, the Trustees also took note of the costs of the services provided (both on an absolute and on a relative basis) and the profitability to the Adviser and its affiliates of their relationships with the Funds, as discussed above.

After reviewing these and related factors, the Trustees concluded, within the context of their overall conclusions regarding each of the Agreements, that the extent to which economies of scale were shared with the Funds supported the renewal of the Agreements.

The Trustees also considered other factors, which included but were not limited to the following:

 

· 

The effect of recent market and economic events on the performance, asset levels and expense ratios of each Fund.

 

· 

Whether each Fund has operated in accordance with its investment objective and the Fund’s record of compliance with its investment restrictions, and the compliance programs of the Funds and the Adviser. They also considered the compliance-related resources the Adviser and its affiliates were providing to the Funds.

 

|  24


Table of Contents
· 

The nature, quality, cost and extent of administrative and shareholder services performed by the Adviser and its affiliates, both under the Agreements and under separate agreements covering administrative services.

 

· 

So-called “fallout benefits” to the Adviser, such as the engagement of affiliates of the Adviser to provide distribution, administrative and brokerage services to the Funds, and the benefits of research made available to the Adviser by reason of brokerage commissions (if any) generated by the Funds’ securities transactions. The Trustees also considered the benefits to the parent company of Natixis Advisors from the retention of the Adviser. The Trustees considered the possible conflicts of interest associated with these fallout and other benefits, and the reporting, disclosure and other processes in place to disclose and monitor such possible conflicts of interest.

 

· 

The Trustees’ review and discussion of the Funds’ advisory arrangements in prior years, and management’s record of responding to Trustee concerns raised during the year and in prior years.

Based on their evaluation of all factors that they deemed to be material, including those factors described above, and assisted by the advice of independent counsel, the Trustees, including the Independent Trustees, concluded that each of the existing Agreements should be continued through June 30, 2018.

 

25  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund

 

    
Shares
   Description  Value (†) 
 Common Stocks — 67.4% of Net Assets 
  Belgium — 0.9% 
 131,523   Anheuser-Busch InBev S.A.  $15,721,894 
    

 

 

 
  Canada — 1.4% 
 476,500   CGI Group, Inc., Class A(a)   24,708,115 
    

 

 

 
  China — 4.2% 
 434,539   Alibaba Group Holding Ltd., Sponsored ADR(a)   75,049,231 
    

 

 

 
  France — 1.9% 
 296,121   Thales S.A.   33,535,826 
    

 

 

 
  Hong Kong — 2.5% 
 6,039,000   AIA Group Ltd.   44,708,521 
    

 

 

 
  India — 0.9% 
 583,538   HDFC Bank Ltd.   16,249,812 
    

 

 

 
  Japan — 0.8% 
 356,687   Nomura Research Institute Ltd.   13,929,710 
    

 

 

 
  Sweden — 2.8% 
 998,613   Assa Abloy AB   22,863,629 
 645,604   Atlas Copco AB, A Shares   27,388,027 
    

 

 

 
     50,251,656 
    

 

 

 
  Switzerland — 4.3% 
 139,662   Dufry AG, (Registered)(a)   22,199,779 
 24,342   Geberit AG, (Registered)   11,523,886 
 507,118   Nestle S.A., (Registered)   42,568,115 
    

 

 

 
     76,291,780 
    

 

 

 
  United Kingdom — 3.9% 
 832,130   Halma PLC   12,485,891 
 9,994,804   Legal & General Group PLC   34,836,640 
 456,213   London Stock Exchange Group PLC   23,424,663 
    

 

 

 
     70,747,194 
    

 

 

 
  United States — 43.8% 
 199,747   Accenture PLC, Class A   26,979,827 
 23,332   Alphabet, Inc., Class C(a)   22,377,955 
 39,684   Alphabet, Inc., Class A(a)   38,641,105 
 29,065   Amazon.com, Inc.(a)   27,941,638 
 327,849   CBRE Group, Inc., Class A(a)   12,418,920 
 259,480   Colgate-Palmolive Co.   18,903,118 
 434,673   Comcast Corp., Class A   16,726,217 
 399,512   Danaher Corp.   34,270,139 
 670   Dex Media, Inc.(a)(b)(c)(d)(m)   3,886 
 154,045   EOG Resources, Inc.   14,902,313 
 334,014   Facebook, Inc., Class A(a)   57,072,972 
 84,104   FactSet Research Systems, Inc.   15,147,971 
 138,980   Goldman Sachs Group, Inc. (The)   32,964,666 
 783   Hawaiian Telcom Holdco, Inc.(a)   23,349 
 346,439   Intercontinental Exchange, Inc.   23,800,359 

 

See accompanying notes to financial statements.

 

|  26


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

    
Shares
   Description  Value (†) 
  United States — continued 
 217,695   LyondellBasell Industries NV, Class A  $21,562,690 
 165,696   M&T Bank Corp.   26,683,684 
 435,380   Marriott International, Inc., Class A   48,004,999 
 218,190   McCormick & Co., Inc.   22,395,022 
 30,912   Mettler-Toledo International, Inc.(a)   19,355,858 
 131,853   Northrop Grumman Corp.   37,936,745 
 15,332   Priceline Group, Inc. (The)(a)   28,070,132 
 220,371   Roper Technologies, Inc.   53,638,301 
 181,986   S&P Global, Inc.   28,446,232 
 92,305   Schlumberger Ltd.   6,439,197 
 153,618   Sherwin-Williams Co. (The)   55,001,389 
 280,969   Texas Instruments, Inc.   25,186,061 
 62,969   Travelers Cos., Inc. (The)   7,714,962 
 188,600   UnitedHealth Group, Inc.   36,937,310 
 417,053   Wells Fargo & Co.   23,000,473 
    

 

 

 
     782,547,490 
    

 

 

 
  Total Common Stocks
(Identified Cost $878,108,068)
   1,203,741,229 
    

 

 

 
Principal
Amount (‡)
          
 Bonds and Notes — 28.3% 
 Non-Convertible Bonds — 27.6% 
  Argentina — 0.5% 
 17,650,000   Argentine Bonos del Tesoro, 15.500%, 10/17/2026, (ARS)   1,084,258 
 17,825,000   Argentine Bonos del Tesoro, 18.200%, 10/03/2021, (ARS)   969,914 
 17,000,000   Argentine Bonos del Tesoro, 21.200%, 9/19/2018, (ARS)   977,654 
 775,000   Provincia de Buenos Aires, 9.125%, 3/16/2024, 144A   892,777 
 535,000   Republic of Argentina, 6.875%, 4/22/2021   583,150 
 1,390,000   Republic of Argentina, 7.625%, 4/22/2046   1,542,900 
 382,136   Transportadora de Gas del Sur S.A., 9.625%, 5/14/2020, 144A   413,487 
 1,270,000   YPF S.A., 8.750%, 4/04/2024, 144A   1,460,500 
 17,745,000   YPF S.A., 16.500%, 5/09/2022, 144A, (ARS)   964,848 
    

 

 

 
     8,889,488 
    

 

 

 
  Australia — 0.2% 
 970,000   Commonwealth Bank of Australia, 1.375%, 9/06/2018, 144A(e)   967,821 
 1,150,000   Commonwealth Bank of Australia, 2.250%, 3/10/2020, 144A(e)   1,155,741 
 670,000   GAIF Bond Issuer Pty Ltd., 3.400%, 9/30/2026, 144A(e)   658,926 
 110,000   Incitec Pivot Finance LLC, 6.000%, 12/10/2019, 144A   117,909 
 95,000   Sydney Airport Finance Co. Pty Ltd., 3.375%, 4/30/2025, 144A   94,759 
    

 

 

 
     2,995,156 
    

 

 

 
  Belgium — 0.1% 
 1,040,000   Anheuser-Busch InBev Finance, Inc., 3.650%, 2/01/2026   1,075,893 
 440,000   Solvay Finance (America) LLC, 3.400%, 12/03/2020, 144A   454,078 
    

 

 

 
     1,529,971 
    

 

 

 
  Brazil — 0.9% 
 800,000   Braskem Finance Ltd., 5.750%, 4/15/2021, 144A   861,000 
 8,500(††)   Brazil Notas do Tesouro Nacional, Series F, 10.000%, 1/01/2025, (BRL)   2,754,191 

 

See accompanying notes to financial statements.

 

27  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Brazil — continued 
 2,250(††)   Brazil Notas do Tesouro Nacional, Series F, 10.000%, 1/01/2019, (BRL)  $732,883 
 8,815(††)   Brazil Notas do Tesouro Nacional, Series F, 10.000%, 1/01/2021, (BRL)   2,885,091 
 2,300(††)   Brazil Notas do Tesouro Nacional, Series F, 10.000%, 1/01/2027, (BRL)   740,098 
 2,300,000   BRF S.A., 7.750%, 5/22/2018, 144A, (BRL)(e)   717,127 
 1,000,000   CIMPOR Financial Operations BV, 5.750%, 7/17/2024, 144A   941,250 
 400,000   Cosan Luxembourg S.A., 5.000%, 3/14/2023, 144A   405,000 
 1,180,000   Embraer Netherlands Finance BV, 5.050%, 6/15/2025(e)   1,252,275 
 285,000   Embraer Netherlands Finance BV, 5.400%, 2/01/2027   308,655 
 915,000   Itau Unibanco Holding S.A., 2.850%, 5/26/2018, 144A   916,830 
 1,825,000   Petrobras Global Finance BV, 4.375%, 5/20/2023   1,804,012 
 300,000   Petrobras Global Finance BV, 6.875%, 1/20/2040   303,750 
 575,000   Raizen Fuels Finance S.A., 5.300%, 1/20/2027, 144A   603,750 
 500,000   Tupy Overseas S.A., 6.625%, 7/17/2024, 144A   526,505 
 850,000   Vale S.A., 5.625%, 9/11/2042(e)   867,000 
    

 

 

 
     16,619,417 
    

 

 

 
  Canada — 2.2% 
 471,129   Air Canada Pass Through Trust, Series 2015-2, Class A,
4.125%, 6/15/2029, 144A(e)
   494,686 
 505,000   Alimentation Couche-Tard, Inc., 3.550%, 7/26/2027, 144A   509,256 
 815,000   Bank of Montreal, 1.750%, 6/15/2021, 144A(e)   801,634 
 3,000,000   BMW Canada Auto Trust, Series 2017-1A, Class A2,
1.677%, 5/20/2020, 144A, (CAD)(e)
   2,385,646 
 5,720,000   Canadian Government Bond, 0.500%, 3/01/2022, (CAD)(e)   4,345,641 
 14,920,000   Canadian Government International Bond, 1.750%, 9/01/2019, (CAD)(e)   12,005,234 
 970,000   Canadian Imperial Bank of Commerce, 1.600%, 9/06/2019(e)   964,444 
 800,000   CPPIB Capital, Inc., 0.375%, 6/20/2024, 144A, (EUR)(e)   937,776 
 430,000   Enbridge, Inc., 2.900%, 7/15/2022   432,517 
 905,000   Export Development Canada, 1.800%, 9/01/2022, (CAD)(e)   724,667 
 1,335,000   Institutional Mortgage Securities Canada, Inc., Series 2014-5A, Class A2, 2.616%, 7/12/2047, 144A, (CAD)(e)   1,065,796 
 6,165,000   Province of Ontario Canada, 1.250%, 6/17/2019(e)   6,112,054 
 7,200,000   Province of Ontario Canada, 1.875%, 5/21/2020(e)   7,191,018 
 600,000   Telus Corp., Series CG, 5.050%, 12/04/2019, (CAD)(e)   509,689 
    

 

 

 
     38,480,058 
    

 

 

 
  Chile — 0.5% 
 770,000,000   Bonos de la Tesoreria de la Republica de Chile,
4.500%, 3/01/2021, 144A, (CLP)(e)
   1,237,825 
 200,000   Celulosa Arauco y Constitucion S.A., 4.750%, 1/11/2022   211,470 
 600,000   Chile Government International Bond, 3.125%, 1/21/2026(e)   616,320 
 300,000,000   Chile Government International Bond, 5.500%, 8/05/2020, (CLP)(e)   497,324 
 1,160,000   CODELCO, Inc., 4.500%, 9/16/2025, 144A(e)   1,235,934 
 1,250,000   Corp. Nacional del Cobre de Chile, 3.625%, 8/01/2027, 144A(e)   1,245,425 
 250,000   Engie Energia Chile S.A., 5.625%, 1/15/2021, 144A   273,253 
 800,000   Inversiones CMPC S.A., 4.375%, 5/15/2023, 144A(e)   827,118 
 550,000   Itau CorpBanca, 3.125%, 1/15/2018(e)   550,771 
 240,000   Latam Airlines Group S.A., 7.250%, 6/09/2020, 144A   256,920 
 537,957   Latam Airlines Pass Through Trust, Series 2015-1, Class B,
4.500%, 8/15/2025
   540,109 

 

See accompanying notes to financial statements.

 

|  28


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Chile — continued 
$950,000   Latam Finance Ltd., 6.875%, 4/11/2024, 144A  $1,004,625 
 1,120,000   Transelec S.A., 4.250%, 1/14/2025, 144A(e)   1,164,264 
    

 

 

 
     9,661,358 
    

 

 

 
  China — 0.2% 
 800,000   Baidu, Inc., 2.250%, 11/28/2017(e)   800,259 
 700,000   Baidu, Inc., 3.250%, 8/06/2018(e)   706,535 
 400,000   China Resources Gas Group Ltd., 4.500%, 4/05/2022, 144A(e)   424,529 
 985,000   Sinopec Group Overseas Development 2017 Ltd.,
2.375%, 4/12/2020, 144A(e)
   985,404 
    

 

 

 
     2,916,727 
    

 

 

 
  Colombia — 0.2% 
 1,265,000,000   Emgesa S.A. E.S.P., 8.750%, 1/25/2021, 144A, (COP)   449,601 
 2,140,000,000   Empresas Publicas de Medellin E.S.P., 8.375%, 2/01/2021, 144A, (COP)(e)   753,673 
 575,000   Republic of Colombia, 3.875%, 4/25/2027   584,200 
 200,000,000   Republic of Colombia, 7.750%, 4/14/2021, (COP)   72,541 
 6,150,000,000   Titulos De Tesoreria, Series B, 7.500%, 8/26/2026, (COP)(e)   2,227,226 
    

 

 

 
     4,087,241 
    

 

 

 
  Dominican Republic — 0.1% 
 1,410,000   Dominican Republic, 5.500%, 1/27/2025, 144A   1,491,075 
 590,000   Dominican Republic, 5.950%, 1/25/2027, 144A   632,692 
 425,000   Dominican Republic, 8.625%, 4/20/2027, 144A   517,438 
    

 

 

 
     2,641,205 
    

 

 

 
  France — 0.8% 
 970,000   Air Liquide Finance S.A., 1.375%, 9/27/2019, 144A(e)   960,038 
 200,000   AXA S.A., 7.125%, 12/15/2020, (GBP)(d)(f)   312,536 
 205,000   BNP Paribas S.A., 3.800%, 1/10/2024, 144A(e)   213,108 
 205,000   BNP Paribas S.A., 4.375%, 5/12/2026, 144A   214,059 
 390,000   Credit Agricole S.A., (fixed rate to 6/23/2026, variable rate thereafter), 7.500%, (GBP)(g)   597,070 
 735,000   Danone S.A., 1.691%, 10/30/2019, 144A(e)   730,144 
 500,000   Dexia Credit Local S.A., 2.250%, 2/18/2020, 144A(e)   500,944 
 1,100,000   Electricite de France SA, (fixed rate to 1/29/2026, variable rate thereafter), 6.000%, (GBP)(g)   1,566,242 
 4,830,000   French Republic Government Bond OAT, 4.250%, 10/25/2023, (EUR)(e)   7,166,550 
 1,015,000   Societe Generale S.A., 4.750%, 11/24/2025, 144A(e)   1,074,609 
 475,000   Societe Generale S.A., (fixed rate to 4/07/2021, variable rate thereafter), 6.750%, (EUR)(g)   618,946 
    

 

 

 
     13,954,246 
    

 

 

 
  Germany — 0.1% 
 500,000   Allianz SE, (fixed rate to 7/07/2025, variable rate thereafter),
2.241%, 7/07/2045, (EUR)
   605,072 
 470,000   Commerzbank AG, EMTN, 4.000%, 3/23/2026, (EUR)   620,457 
 675,000   Daimler Finance North America LLC, 1.750%, 10/30/2019, 144A(e)   669,346 
 380,000   Deutsche Telekom International Finance BV, 2.820%, 1/19/2022, 144A   382,071 
    

 

 

 
     2,276,946 
    

 

 

 

 

See accompanying notes to financial statements.

 

29  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Hong Kong — 0.0% 
$355,000   AIA Group Ltd., 3.200%, 3/11/2025, 144A(e)  $355,105 
    

 

 

 
  Hungary — 0.1% 
 1,330,000   Hungary Government International Bond, 5.375%, 3/25/2024   1,521,188 
 980,000   Hungary Government International Bond, 5.750%, 11/22/2023(e)   1,135,614 
    

 

 

 
     2,656,802 
    

 

 

 
  India — 0.1% 
 550,000   Axis Bank Ltd., 3.250%, 5/21/2020, 144A   557,393 
 650,000   Greenko Dutch BV, 5.250%, 7/24/2024, 144A   662,123 
    

 

 

 
     1,219,516 
    

 

 

 
  Indonesia — 0.5% 
 300,000   Indonesia Government International Bond, 4.125%, 1/15/2025, 144A   314,842 
 34,000,000,000   Indonesia Government International Bond, 7.000%, 5/15/2022, (IDR)   2,612,666 
 3,500,000,000   Indonesia Government International Bond, 9.500%, 7/15/2023, (IDR)   299,279 
 781,000,000   Indonesia Government International Bond, 11.500%, 9/15/2019, (IDR)   63,907 
 35,310,000,000   Indonesia Government International Bond, Series FR53,
8.250%, 7/15/2021, (IDR)
   2,805,086 
 14,000,000,000   Indonesia Treasury Bond, 8.375%, 3/15/2024, (IDR)(e)   1,145,518 
 795,000   Perusahaan Listrik Negara PT, 5.250%, 10/24/2042, 144A   828,080 
 545,000   Republic of Indonesia, 2.875%, 7/08/2021, 144A, (EUR)   693,703 
 525,000   Republic of Indonesia, 4.750%, 1/08/2026, 144A   572,759 
    

 

 

 
     9,335,840 
    

 

 

 
  Israel — 0.1% 
 510,000   Teva Pharmaceutical Finance Co. LLC, 6.150%, 2/01/2036   552,627 
 780,000   Teva Pharmaceutical Finance Netherlands II B.V.,
0.375%, 7/25/2020, (EUR)
   913,443 
    

 

 

 
     1,466,070 
    

 

 

 
  Italy — 0.1% 
 500,000   Assicurazioni Generali S.p.A., EMTN, 4.125%, 5/04/2026, (EUR)   663,148 
 530,000   Intesa Sanpaolo SpA, EMTN, 3.928%, 9/15/2026, (EUR)   674,365 
 855,000   UniCredit SpA, (fixed rate to 6/19/2027, variable rate thereafter),
5.861%, 6/19/2032, 144A
   897,519 
    

 

 

 
     2,235,032 
    

 

 

 
  Japan — 0.2% 
 900,000   Bank of Tokyo-Mitsubishi UFJ Ltd. (The), 1.700%, 3/05/2018, 144A(e)   900,193 
 940,000   Bank of Tokyo-Mitsubishi UFJ Ltd. (The), 2.150%, 9/14/2018, 144A(e)   942,440 
 1,165,000   Nomura Holdings, Inc., GMTN, 2.750%, 3/19/2019(e)   1,175,488 
 850,000   SoftBank Group Corp., 4.500%, 4/15/2020, 144A   876,919 
    

 

 

 
     3,895,040 
    

 

 

 
  Korea — 0.3% 
 3,700,000   Export-Import Bank of Korea, 3.000%, 5/22/2018, 144A, (NOK)(e)   469,267 
 630,000   Korea Development Bank (The), MTN, 4.500%, 11/22/2019, (AUD)(e)   507,503 
 910,000   Korea Gas Corp., 2.750%, 7/20/2022, 144A(e)   902,456 
 670,000   KT Corp., 2.500%, 7/18/2026, 144A(e)   625,754 
 1,125,000   Minera y Metalurgica del Boleo S.A. de CV, 2.875%, 5/07/2019, 144A(e)   1,131,101 

 

See accompanying notes to financial statements.

 

|  30


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Korea — continued 
$770,000   Shinhan Bank Co. Ltd., 3.875%, 3/24/2026, 144A(e)  $777,469 
 140,000   SK Telecom Co. Ltd., 6.625%, 7/20/2027, 144A(e)   176,288 
 200,000   Woori Bank, 5.875%, 4/13/2021, 144A(e)   219,163 
    

 

 

 
     4,809,001 
    

 

 

 
  Mexico — 1.1% 
 620,000   Alfa SAB de CV, 6.875%, 3/25/2044   699,050 
 770,000   America Movil SAB de CV, 2.125%, 3/10/2028, (EUR)(e)   953,164 
 10,000,000   America Movil SAB de CV, 6.450%, 12/05/2022, (MXN)(e)   522,345 
 675,000   Banco Nacional de Comercio Exterior SNC, (fixed rate to 8/11/2021, variable rate thereafter), 3.800%, 8/11/2026, 144A   675,844 
 300,000   Banco Santander Mexico S.A. Institucion de Banca Multiple Grupo Financiero Santander, 4.125%, 11/09/2022, 144A(e)   314,460 
 1,150,000   Cemex Finance LLC, 6.000%, 4/01/2024, 144A   1,221,886 
 300,000   Cemex SAB de CV, 4.375%, 3/05/2023, 144A, (EUR)   375,844 
 505,000   Cemex SAB de CV, 5.700%, 1/11/2025, 144A   538,330 
 800,000   Gruma SAB de CV, 4.875%, 12/01/2024(e)   869,000 
 680,000   Grupo Televisa SAB, 5.000%, 5/13/2045(e)   683,578 
 10,000,000   Grupo Televisa SAB, EMTN, 7.250%, 5/14/2043, (MXN)(e)   432,785 
 248,744(†††)   Mexican Fixed Rate Bonds, Series M, 6.500%, 6/10/2021, (MXN)(e)   1,357,492 
 899,680(†††)   Mexican Fixed Rate Bonds, Series M-20, 7.500%, 6/03/2027, (MXN)(e)   5,156,733 
 95,500(†††)   Mexican Fixed Rate Bonds, Series M-20, 8.000%, 12/07/2023, (MXN)   558,064 
 443,452(†††)   Mexican Fixed Rate Bonds, Series M-30, 10.000%, 11/20/2036, (MXN)(e)   3,144,296 
 196,000   Mexico Government International Bond, 4.000%, 3/15/2115, (EUR)(e)   215,668 
 1,020,000   Mexico Government International Bond, 4.125%, 1/21/2026(e)   1,074,570 
 625,000   Petroleos Mexicanos, 5.625%, 1/23/2046(e)   581,250 
 135,000(†††)   Petroleos Mexicanos, 7.470%, 11/12/2026, (MXN)(e)   671,768 
 100,000   Sigma Alimentos S.A. de CV, 2.625%, 2/07/2024, 144A, (EUR)   125,271 
    

 

 

 
     20,171,398 
    

 

 

 
  Netherlands — 0.2% 
 150,000   AerCap Ireland Capital DAC/AerCap Global Aviation Trust,
4.625%, 7/01/2022
   160,775 
 870,000   Cooperatieve Rabobank UA, 4.375%, 8/04/2025(e)   917,276 
 675,000   ING Bank NV, 1.650%, 8/15/2019, 144A(e)   669,469 
 580,000   Ziggo Bond Finance BV, 6.000%, 1/15/2027, 144A   600,300 
 525,000   Ziggo Secured Finance BV, 5.500%, 1/15/2027, 144A   537,962 
    

 

 

 
     2,885,782 
    

 

 

 
  New Zealand — 0.4% 
 2,340,000   New Zealand Government Bond, 5.000%, 3/15/2019, (NZD)(e)   1,763,883 
 2,939,846   New Zealand Government CPI Linked Bond, 2.000%, 9/20/2025, (NZD)(e)   2,152,318 
 2,956,080   New Zealand Government CPI Linked Bond, 3.000%, 9/20/2030, (NZD)(e)   2,382,033 
    

 

 

 
     6,298,234 
    

 

 

 
  Norway — 0.2% 
 550,000   Kommunalbanken AS, 1.750%, 9/15/2020, 144A(e)   548,598 
 3,815,000   Norway Government Bond, 2.000%, 5/24/2023, 144A, (NOK)(e)   500,471 
 13,760,000   Norway Government Bond, 4.500%, 5/22/2019, 144A, (NOK)(e)   1,838,064 
    

 

 

 
     2,887,133 
    

 

 

 

 

See accompanying notes to financial statements.

 

31  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Panama — 0.0% 
$680,000   Banco Latinoamericano de Comercio Exterior S.A.,
3.250%, 5/07/2020, 144A(e)
  $697,082 
    

 

 

 
  Paraguay — 0.1% 
 800,000   Republic of Paraguay, 5.000%, 4/15/2026, 144A   854,000 
 572,000   Telefonica Celular del Paraguay S.A., 6.750%, 12/13/2022   594,777 
    

 

 

 
     1,448,777 
    

 

 

 
  Peru — 0.2% 
 580,000   Southern Copper Corp., 3.875%, 4/23/2025(e)   599,068 
 1,050,000   Transportadora de Gas del Peru S.A., 4.250%, 4/30/2028, 144A(e)   1,086,750 
 1,050,000   Union Andina de Cementos SAA, 5.875%, 10/30/2021, 144A   1,106,700 
    

 

 

 
     2,792,518 
    

 

 

 
  Portugal — 0.0% 
 400,000   EDP Finance BV, 4.125%, 1/15/2020, 144A   414,848 
 225,000   EDP Finance BV, EMTN, 2.000%, 4/22/2025, (EUR)   278,517 
    

 

 

 
     693,365 
    

 

 

 
  Romania — 0.0% 
 410,000   Romanian Government International Bond,
2.875%, 5/26/2028, 144A, (EUR)
   504,011 
    

 

 

 
  Russia — 0.1% 
 80,525,000   Russian Federal Bond - OFZ, Series 6207, 8.150%, 2/03/2027, (RUB)   1,465,454 
 63,000,000   Russian Federal Bond - OFZ, Series 6208, 7.500%, 2/27/2019, (RUB)   1,095,342 
    

 

 

 
     2,560,796 
    

 

 

 
  Singapore — 0.0% 
 495,000   BOC Aviation Ltd., 3.000%, 3/30/2020(e)   499,784 
    

 

 

 
  South Africa — 0.2% 
 930,000   MTN (Mauritius) Investments Ltd., 4.755%, 11/11/2024, 144A   923,955 
 800,000   Myriad International Holdings BV, 4.850%, 7/06/2027, 144A   826,392 
 500,000   Myriad International Holdings BV, 6.000%, 7/18/2020, 144A   539,480 
 35,480,000   South Africa Government International Bond, Series R213,
7.000%, 2/28/2031, (ZAR)(e)
   2,183,102 
    

 

 

 
     4,472,929 
    

 

 

 
  Spain — 0.4% 
 725,000   Spain Government International Bond, 0.750%, 7/30/2021, (EUR)(e)   879,530 
 430,000   Spain Government International Bond, 1.600%, 4/30/2025, 144A, (EUR)(e)   528,682 
 1,335,000   Spain Government International Bond, 4.300%, 10/31/2019, 144A, (EUR)(e)   1,727,408 
 2,565,000   Spain Government International Bond, 4.400%, 10/31/2023, 144A, (EUR)(e)   3,705,803 
    

 

 

 
     6,841,423 
    

 

 

 
  Supranationals — 0.2% 
 1,115,000   Corporacion Andina de Fomento, 4.375%, 6/15/2022(e)   1,204,824 
 1,140,000   International Bank for Reconstruction & Development,
2.500%, 3/12/2020, (AUD)(e)
   899,501 
 70,000,000   International Finance Corp., 7.800%, 6/03/2019, (INR)(e)   1,105,844 
    

 

 

 
     3,210,169 
    

 

 

 

 

See accompanying notes to financial statements.

 

|  32


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Sweden — 0.1% 
 2,450,000   Sweden Government Bond, 5.000%, 12/01/2020, (SEK)(e)  $351,584 
 9,430,000   Sweden Government Bond, Series 1057, 1.500%, 11/13/2023, 144A, (SEK)(e)   1,244,226 
    

 

 

 
     1,595,810 
    

 

 

 
  Switzerland — 0.1% 
 1,075,000   Glencore Finance Canada Ltd., 5.550%, 10/25/2042, 144A(e)   1,189,050 
 200,000   LafargeHolcim Finance U.S. LLC, 3.500%, 9/22/2026, 144A   198,206 
    

 

 

 
     1,387,256 
    

 

 

 
  Thailand — 0.3% 
 1,010,000   Siam Commercial Bank PCL, 3.500%, 4/07/2019, 144A(e)   1,026,830 
 950,000   Thai Oil PCL, 3.625%, 1/23/2023, 144A(e)   974,480 
 85,000,000   Thailand Government Bond, 2.125%, 12/17/2026, (THB)   2,507,841 
    

 

 

 
     4,509,151 
    

 

 

 
  Trinidad — 0.0% 
 415,000   Trinidad Generation UnLtd., 5.250%, 11/04/2027, 144A   420,810 
    

 

 

 
  Turkey — 0.2% 
 800,000   Arcelik AS, 5.000%, 4/03/2023, 144A   823,307 
 765,000   TC Ziraat Bankasi, 5.125%, 9/29/2023, 144A   769,544 
 735,000   TC Ziraat Bankasi AS, 4.250%, 7/03/2019   740,145 
 4,125,000   Turkey Government Bond, 11.000%, 3/02/2022, (TRY)   1,164,695 
    

 

 

 
     3,497,691 
    

 

 

 
  United Arab Emirates — 0.1% 
 850,000   DP World Ltd., 3.250%, 5/18/2020, 144A(e)   863,600 
 200,000   DP World Ltd., EMTN, 3.250%, 5/18/2020   203,200 
 400,000   JAFZ Sukuk 2019 Ltd., 7.000%, 6/19/2019   430,800 
    

 

 

 
     1,497,600 
    

 

 

 
  United Kingdom — 0.5% 
 95,000   Avon Products, Inc., 8.950%, 3/15/2043   79,800 
 585,000   BP Capital Markets PLC, 3.216%, 11/28/2023(e)   599,277 
 545,000   FCE Bank PLC, EMTN, 0.869%, 9/13/2021, (EUR)   650,142 
 300,000   HSBC Holdings PLC, 4.375%, 11/23/2026(e)   312,742 
 565,000   HSBC Holdings PLC, (fixed rate to 6/01/2021, variable rate thereafter), 6.875% (g)   615,144 
 295,000   HSBC Holdings PLC, EMTN, 5.750%, 12/20/2027, (GBP)(e)   481,658 
 150,000   Imperial Brands Finance PLC, EMTN, 6.250%, 12/04/2018, (GBP)   212,688 
 400,000   Lloyds Banking Group PLC, 4.500%, 11/04/2024(e)   419,080 
 1,020,000   Lloyds Banking Group PLC, (fixed rate to 6/27/2024, variable rate thereafter), 7.500%(g)   1,143,675 
 400,000   Old Mutual PLC, EMTN, 8.000%, 6/03/2021, (GBP)   615,092 
 1,130,000   Royal Bank of Scotland Group PLC, 6.000%, 12/19/2023(e)   1,249,689 
 950,000   Royal Bank of Scotland Group PLC, (fixed rate to 8/10/2020, variable rate thereafter), 7.500%(g)   997,614 
 350,000   Santander UK Group Holdings PLC, 4.750%, 9/15/2025, 144A(e)   365,610 
 250,000   Standard Chartered PLC, EMTN, (fixed rate to 10/21/2020, variable rate thereafter), 4.000%, 10/21/2025,
(EUR)(e)
   322,111 

 

See accompanying notes to financial statements.

 

33  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United Kingdom — continued 
 130,000   Virgin Media Finance PLC, 4.500%, 1/15/2025, 144A, (EUR)  $160,561 
 115,000   Virgin Media Secured Finance PLC, 4.875%, 1/15/2027, (GBP)   158,581 
    

 

 

 
     8,383,464 
    

 

 

 
  United States — 16.0% 
 15,000   21st Century Fox America, Inc., 6.400%, 12/15/2035   19,041 
 9,890,000   AbbVie, Inc., 2.500%, 5/14/2020   10,008,505 
 1,745,000   AES Corp. (The), 4.875%, 5/15/2023   1,797,350 
 8,000,000   Ally Financial, Inc., 4.125%, 2/13/2022   8,264,800 
 745,000   Ally Financial, Inc., 5.125%, 9/30/2024   806,835 
 129,000   Ally Financial, Inc., 8.000%, 12/31/2018   137,869 
 1,728,000   Ally Financial, Inc., 8.000%, 11/01/2031   2,228,947 
 2,395,463   American Airlines Pass Through Certificates, Series 2016-1, Class B, 5.250%, 7/15/2025   2,551,672 
 555,000   American Airlines Pass Through Certificates, Series 2017-1B, Class B, 4.950%, 8/15/2026   580,641 
 160,208   American Airlines Pass Through Trust, Series 2013-1, Class A,
4.000%, 1/15/2027
   167,035 
 6,190,000   Anadarko Petroleum Corp., 3.450%, 7/15/2024   6,143,023 
 300,000   Anadarko Petroleum Corp., 4.500%, 7/15/2044   285,520 
 400,000   Antero Resources Corp., 5.125%, 12/01/2022   409,000 
 175,000   Antero Resources Corp., 5.375%, 11/01/2021   179,594 
 3,060,000   Antero Resources Corp., 5.625%, 6/01/2023   3,190,050 
 1,510,000   AT&T, Inc., 3.400%, 5/15/2025   1,489,465 
 3,960,000   AT&T, Inc., 4.125%, 2/17/2026   4,063,305 
 370,000   Atrium Windows & Doors, Inc., 7.750%, 5/01/2019, 144A   375,254 
 925,000   Aviation Capital Group Corp., 6.750%, 4/06/2021, 144A   1,045,554 
 200,000   Bank of America Corp., 5.490%, 3/15/2019   208,980 
 2,700,000   Bank of America Corp., 6.110%, 1/29/2037   3,375,915 
 115,000   Bank of America Corp., MTN, 4.250%, 10/22/2026   120,311 
 50,000   Beazer Homes USA, Inc., 7.250%, 2/01/2023   52,000 
 71,000   California Resources Corp., 5.500%, 9/15/2021   37,808 
 10,000   California Resources Corp., 6.000%, 11/15/2024   4,550 
 1,870,000   California Resources Corp., 8.000%, 12/15/2022, 144A   1,215,500 
 450,000   CB Escrow Corp., 8.000%, 10/15/2025, 144A   452,250 
 60,000   CenturyLink, Inc., 5.625%, 4/01/2025   57,450 
 880,000   CenturyLink, Inc., 6.450%, 6/15/2021   915,666 
 570,000   CenturyLink, Inc., 7.650%, 3/15/2042   497,325 
 55,000   CenturyLink, Inc., Series G, 6.875%, 1/15/2028   53,140 
 605,000   CenturyLink, Inc., Series P, 7.600%, 9/15/2039   535,425 
 65,000   Chemours Co. (The), 6.625%, 5/15/2023   69,144 
 3,210,000   Chesapeake Energy Corp., 4.875%, 4/15/2022   2,985,300 
 315,000   Chesapeake Energy Corp., 5.750%, 3/15/2023   290,587 
 495,000   Chesapeake Energy Corp., 6.125%, 2/15/2021   498,712 
 190,000   Chesapeake Energy Corp., 6.625%, 8/15/2020   195,700 
 95,000   Chesapeake Energy Corp., 6.875%, 11/15/2020   97,850 
 4,274,000   Chesapeake Energy Corp., 8.000%, 12/15/2022, 144A   4,605,235 
 4,700,000   Chesapeake Energy Corp., 8.000%, 6/15/2027, 144A   4,653,000 

 

See accompanying notes to financial statements.

 

|  34


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued 
$780,000   Chevron Corp., 2.419%, 11/17/2020(e)  $791,399 
 1,635,000   Cimarex Energy Co., 4.375%, 6/01/2024   1,729,630 
 525,000   Cincinnati Bell, Inc., 7.000%, 7/15/2024, 144A   514,500 
 500,000   Citizens Financial Group, Inc., 4.300%, 12/03/2025   523,397 
 2,913,000   Clear Channel Worldwide Holdings, Inc., 7.625%, 3/15/2020   2,876,587 
 155,000   Cleaver-Brooks, Inc., 8.750%, 12/15/2019, 144A   158,875 
 435,000   Consolidated Communications, Inc., 6.500%, 10/01/2022   418,144 
 265,000   Constellation Brands, Inc., 4.750%, 11/15/2024   290,491 
 30,175   Continental Airlines Pass Through Certificates, Series 1999-1, Class B, 6.795%, 2/02/2020   31,081 
 1,005,000   Continental Airlines Pass Through Certificates, Series 2012-3, Class C, 6.125%, 4/29/2018   1,026,356 
 485,000   Continental Resources, Inc., 3.800%, 6/01/2024   468,025 
 640,000   Continental Resources, Inc., 4.500%, 4/15/2023   641,600 
 115,000   Continental Resources, Inc., 5.000%, 9/15/2022   116,869 
 375,000   Cox Communications, Inc., 4.800%, 2/01/2035, 144A   371,310 
 155,000   Cummins, Inc., 5.650%, 3/01/2098   174,538 
 475,000   Dell International LLC/EMC Corp., 6.020%, 6/15/2026, 144A   527,511 
 260,000   Delphi Automotive PLC, 1.600%, 9/15/2028, (EUR)   296,279 
 134,672   Delta Air Lines Pass Through Trust, Series 2007-1, Class B, 8.021%, 2/10/2024   153,526 
 1,200,000   Devon Energy Corp., 3.250%, 5/15/2022   1,214,197 
 42,000   Dillard’s, Inc., 6.625%, 1/15/2018   42,473 
 50,000   Dillard’s, Inc., 7.000%, 12/01/2028   55,186 
 8,000   Dillard’s, Inc., 7.750%, 7/15/2026   9,272 
 300,000   Discovery Communications LLC, 1.900%, 3/19/2027, (EUR)   345,120 
 395,000   DISH DBS Corp., 5.000%, 3/15/2023   403,641 
 1,495,000   DISH DBS Corp., 5.875%, 11/15/2024   1,566,947 
 100,000   DPL, Inc., 6.750%, 10/01/2019   104,500 
 310,000   DR Horton, Inc., 4.375%, 9/15/2022   330,694 
 315,000   Dynegy, Inc., 8.125%, 1/30/2026, 144A   324,450 
 575,000   Enbridge Energy Partners LP, 7.375%, 10/15/2045   740,721 
 1,075,000   Energy Transfer LP/Regency Energy Finance Corp., 5.000%, 10/01/2022   1,161,107 
 230,000   Energy Transfer LP/Regency Energy Finance Corp., 5.500%, 4/15/2023   236,670 
 600,000   EnLink Midstream Partners LP, 4.150%, 6/01/2025   604,842 
 410,000   FedEx Corp., 1.000%, 1/11/2023, (EUR)   492,715 
 140,000   Foot Locker, Inc., 8.500%, 1/15/2022   163,450 
 40,000   Ford Motor Co., 4.346%, 12/08/2026   41,583 
 685,000   Ford Motor Co., 5.291%, 12/08/2046   714,732 
 25,000   Ford Motor Co., 6.375%, 2/01/2029   29,276 
 50,000   Ford Motor Co., 6.625%, 2/15/2028   59,289 
 2,105,000   Ford Motor Co., 6.625%, 10/01/2028   2,511,590 
 5,000   Ford Motor Co., 7.500%, 8/01/2026   6,141 
 5,000,000   Ford Motor Credit Co. LLC, 2.459%, 3/27/2020   5,003,939 
 1,600,000   Ford Motor Credit Co. LLC, 3.588%, 6/02/2020, (AUD)(e)   1,266,310 
 1,000,000   Ford Motor Credit Co. LLC, 5.000%, 5/15/2018   1,019,889 
 905,000   Forethought Financial Group, Inc., 8.625%, 4/15/2021, 144A(d)(f)   1,033,966 

 

See accompanying notes to financial statements.

 

35  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued 
$2,370,000   Freeport-McMoRan, Inc., 3.875%, 3/15/2023  $2,334,450 
 210,000   Freeport-McMoRan, Inc., 5.400%, 11/14/2034   200,550 
 2,475,000   Freeport-McMoRan, Inc., 5.450%, 3/15/2043   2,312,578 
 865,000   Frontier Communications Corp., 6.875%, 1/15/2025   646,587 
 560,000   Frontier Communications Corp., 11.000%, 9/15/2025   474,600 
 155,000   FTS International, Inc., 6.250%, 5/01/2022   142,070 
 275,000   Gates Global LLC/Gates Global Co., 6.000%, 7/15/2022, 144A   282,562 
 50,000   General Electric Co., GMTN, 3.100%, 1/09/2023   52,152 
 740,000   General Electric Co., Series D, (fixed rate to 1/21/2021, variable rate thereafter), 5.000% (e)(g)   782,698 
 310,000   General Motors Co., 5.200%, 4/01/2045   312,071 
 5,000,000   General Motors Financial Co., Inc., 2.400%, 4/10/2018   5,015,929 
 240,000   General Motors Financial Co., Inc., 3.450%, 4/10/2022   243,943 
 925,000   General Motors Financial Co., Inc., 5.250%, 3/01/2026   1,004,140 
 3,435,000   Georgia-Pacific LLC, 7.250%, 6/01/2028   4,510,812 
 105,000   Georgia-Pacific LLC, 7.375%, 12/01/2025   133,427 
 180,000   Georgia-Pacific LLC, 7.750%, 11/15/2029   250,070 
 315,000   Georgia-Pacific LLC, 8.875%, 5/15/2031   484,693 
 800,000   Goldman Sachs Group, Inc. (The), 3.375%, 2/01/2018, (CAD)(e)   644,770 
 2,295,000   Goldman Sachs Group, Inc. (The), 6.750%, 10/01/2037   3,027,774 
 165,000   Goodyear Tire & Rubber Co. (The), 7.000%, 3/15/2028   184,388 
 22,966   GS Mortgage Securities Trust, Series 2007-GG10, Class AM, 5.780%, 8/10/2045(n)   23,456 
 1,000,000   HCA Healthcare, Inc., 6.250%, 2/15/2021   1,082,500 
 20,000   HCA, Inc., 4.750%, 5/01/2023   21,100 
 225,000   HCA, Inc., 7.050%, 12/01/2027   253,688 
 820,000   HCA, Inc., 7.500%, 11/06/2033   930,700 
 395,000   HCA, Inc., 8.360%, 4/15/2024   474,000 
 195,000   HCA, Inc., MTN, 7.580%, 9/15/2025   225,225 
 75,000   HCA, Inc., MTN, 7.750%, 7/15/2036   85,313 
 855,000   Hecla Mining Co., 6.875%, 5/01/2021   887,105 
 490,000   Hewlett Packard Enterprise Co., 6.350%, 10/15/2045   519,347 
 310,000   Hexion, Inc., 7.875%, 2/15/2023(b)(c)(d)   158,100 
 485,000   Huntington Ingalls Industries, Inc., 5.000%, 11/15/2025, 144A   523,800 
 1,585,000   Hyundai Capital America, 2.750%, 9/27/2026, 144A(e)   1,452,462 
 450,000   International Lease Finance Corp., 4.625%, 4/15/2021   478,131 
 640,000   International Lease Finance Corp., 5.875%, 8/15/2022   716,625 
 1,250,000   International Lease Finance Corp., 6.250%, 5/15/2019   1,328,607 
 745,000   INVISTA Finance LLC, 4.250%, 10/15/2019, 144A   767,350 
 145,000   iStar, Inc., 4.875%, 7/01/2018   146,827 
 3,460,000   iStar, Inc., 5.000%, 7/01/2019   3,505,412 
 200,000   iStar, Inc., 7.125%, 2/15/2018   203,760 
 48,000   J.C. Penney Corp., Inc., 6.375%, 10/15/2036   33,960 
 5,000   J.C. Penney Corp., Inc., 7.625%, 3/01/2097   3,438 
 1,070,000   Jefferies Group LLC, 6.250%, 1/15/2036   1,187,415 
 15,000   K. Hovnanian Enterprises, Inc., 5.000%, 11/01/2021(d)(f)   13,482 
 1,665,000   KB Home, 8.000%, 3/15/2020   1,872,759 

 

See accompanying notes to financial statements.

 

|  36


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued 
$45,000   Kindred Healthcare, Inc., 8.750%, 1/15/2023  $41,958 
 2,805,000   Kraton Polymers LLC/Kraton Polymers Capital Corp., 10.500%, 4/15/2023, 144A   3,204,712 
 140,000   Level 3 Communications, Inc., 5.750%, 12/01/2022   143,850 
 330,000   Level 3 Financing, Inc., 5.125%, 5/01/2023   335,569 
 760,000   Level 3 Financing, Inc., 5.375%, 5/01/2025   781,375 
 20,000   Macy’s Retail Holdings, Inc., 4.500%, 12/15/2034   17,211 
 44,000   Masco Corp., 6.500%, 8/15/2032   52,470 
 403,000   Masco Corp., 7.750%, 8/01/2029   530,668 
 410,000   Micron Technology, Inc., 5.250%, 8/01/2023, 144A   427,630 
 254,000   Micron Technology, Inc., 5.500%, 2/01/2025   270,828 
 1,430,000   Midas Intermediate Holdco II LLC/Midas Intermediate
Holdco II Finance, Inc., 7.875%, 10/01/2022, 144A
   1,447,875 
 825,000   Morgan Stanley, 2.125%, 4/25/2018   827,343 
 220,000   Morgan Stanley, 2.500%, 1/24/2019   221,838 
 450,000   Morgan Stanley, 3.950%, 4/23/2027   457,776 
 725,000   Morgan Stanley, 5.750%, 1/25/2021   800,520 
 3,150,000   Morgan Stanley, MTN, 4.100%, 5/22/2023   3,293,731 
 600,000   Morgan Stanley, MTN, 6.250%, 8/09/2026   719,186 
 25,000   MPLX LP, 4.500%, 7/15/2023   26,597 
 95,000   MPLX LP, 4.875%, 6/01/2025   101,812 
 3,000,000   Navient Corp., 5.000%, 10/26/2020   3,086,250 
 95,000   Navient Corp., 5.875%, 10/25/2024   96,425 
 1,600(††††)   Navient Corp., 6.000%, 12/15/2043   38,351 
 715,000   Navient Corp., MTN, 6.125%, 3/25/2024   737,165 
 915,000   Navient LLC, 5.500%, 1/25/2023   926,437 
 60,000   Navient LLC, MTN, 5.500%, 1/15/2019   62,003 
 415,000   Navient LLC, MTN, 7.250%, 1/25/2022   453,906 
 2,560,000   Navient LLC, Series A, MTN, 5.625%, 8/01/2033(d)(f)   2,210,048 
 310,000   Navient LLC, Series A, MTN, 8.450%, 6/15/2018   323,020 
 4,557,000   New Albertson’s, Inc., 7.450%, 8/01/2029   3,531,675 
 525,000   New Albertson’s, Inc., 7.750%, 6/15/2026   431,035 
 5,610,000   New Albertson’s, Inc., 8.000%, 5/01/2031   4,487,607 
 2,150,000   New Albertson’s, Inc., 8.700%, 5/01/2030   1,773,750 
 1,265,000   New Albertson’s, Inc., Series C, MTN, 6.625%, 6/01/2028   974,050 
 365,000   Newell Brands, Inc., 4.000%, 12/01/2024   381,255 
 65,000   Newfield Exploration Co., 5.625%, 7/01/2024   69,713 
 875,000   NGL Energy Partners LP/NGL Energy Finance Corp., 6.125%, 3/01/2025   813,750 
 55,000   NGL Energy Partners LP/NGL Energy Finance Corp., 6.875%, 10/15/2021   55,000 
 390,000   NGL Energy Partners LP/NGL Energy Finance Corp., 7.500%, 11/01/2023   388,050 
 20,000   NGPL PipeCo LLC, 7.768%, 12/15/2037, 144A   24,900 
 540,000   Nissan Motor Acceptance Corp., 2.000%, 3/08/2019, 144A(e)   540,470 
 1,019,000   Noble Energy, Inc., 5.625%, 5/01/2021   1,049,407 
 120,000   Oasis Petroleum, Inc., 6.875%, 1/15/2023   121,800 
 2,275,000   Oceaneering International, Inc., 4.650%, 11/15/2024   2,259,848 
 420,000   Old Republic International Corp., 4.875%, 10/01/2024   451,376 
 3,693,000   ONEOK Partners LP, 4.900%, 3/15/2025   3,949,537 

 

See accompanying notes to financial statements.

 

37  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued 
$25,000   ONEOK Partners LP, 6.200%, 9/15/2043  $28,491 
 55,000   Outfront Media Capital LLC/Outfront Media Capital Corp., 5.250%, 2/15/2022   56,856 
 140,000   Outfront Media Capital LLC/Outfront Media Capital Corp., 5.875%, 3/15/2025   146,650 
 310,000   Owens Corning, 7.000%, 12/01/2036   401,006 
 2,965,000   Owens-Brockway Glass Container, Inc., 5.375%, 1/15/2025, 144A   3,183,669 
 540,000   PulteGroup, Inc., 6.000%, 2/15/2035   562,950 
 785,000   PulteGroup, Inc., 6.375%, 5/15/2033   851,725 
 220,000   PulteGroup, Inc., 7.875%, 6/15/2032   269,566 
 285,000   QEP Resources, Inc., 5.250%, 5/01/2023   277,162 
 210,000   QEP Resources, Inc., 5.375%, 10/01/2022   206,325 
 255,000   Quicken Loans, Inc., 5.750%, 5/01/2025, 144A   267,750 
 1,335,000   Qwest Capital Funding, Inc., 6.500%, 11/15/2018   1,401,750 
 650,000   Qwest Capital Funding, Inc., 6.875%, 7/15/2028   621,127 
 400,000   Qwest Capital Funding, Inc., 7.625%, 8/03/2021   416,412 
 60,000   Qwest Capital Funding, Inc., 7.750%, 2/15/2031   55,725 
 476,000   Qwest Corp., 6.875%, 9/15/2033   465,817 
 115,000   Qwest Corp., 7.250%, 9/15/2025   127,248 
 37,000   R.R. Donnelley & Sons Co., 7.000%, 2/15/2022   38,110 
 230,000   Range Resources Corp., 4.875%, 5/15/2025   226,550 
 850,000   Range Resources Corp., 5.000%, 8/15/2022, 144A   848,937 
 220,000   Range Resources Corp., 5.000%, 3/15/2023, 144A   218,350 
 970,000   Santander Holdings USA, Inc., 2.650%, 4/17/2020(e)   974,442 
 25,000   Sealed Air Corp., 4.875%, 12/01/2022, 144A   26,594 
 640,000   Sealed Air Corp., 5.500%, 9/15/2025, 144A   704,000 
 420,000   ServiceMaster Co. LLC (The), 7.450%, 8/15/2027   458,850 
 760,000   Shearer’s Foods LLC/Chip Finance Corp., 9.000%, 11/01/2019, 144A   779,950 
 140,000   Silgan Holdings, Inc., 3.250%, 3/15/2025, 144A, (EUR)   169,810 
 2,495,000   Springleaf Finance Corp., 5.250%, 12/15/2019   2,597,295 
 330,000   Springleaf Finance Corp., 7.750%, 10/01/2021   372,801 
 130,000   Springleaf Finance Corp., 8.250%, 10/01/2023   147,550 
 2,349,000   Sprint Capital Corp., 6.875%, 11/15/2028   2,630,880 
 2,240,000   Sprint Capital Corp., 8.750%, 3/15/2032   2,864,400 
 1,720,000   Sprint Communications, Inc., 6.000%, 11/15/2022   1,841,294 
 120,000   Sprint Corp., 7.125%, 6/15/2024   135,000 
 2,840,000   Sprint Corp., 7.875%, 9/15/2023   3,294,400 
 2,910,000   SUPERVALU, Inc., 6.750%, 6/01/2021   2,757,225 
 1,365,000   Targa Resources Partners LP/Targa Resources Partners Finance Corp., 6.750%, 3/15/2024   1,481,025 
 510,000   Tenet Healthcare Corp., 5.125%, 5/01/2025, 144A   502,987 
 100,000   Tenet Healthcare Corp., 6.750%, 6/15/2023   96,000 
 1,360,000   Tenet Healthcare Corp., 6.875%, 11/15/2031   1,190,000 
 820,000   Textron, Inc., 5.950%, 9/21/2021   914,302 
 90,000   Time Warner Cable LLC, 4.500%, 9/15/2042   85,297 
 85,000   Time Warner Cable LLC, 5.500%, 9/01/2041   88,258 
 1,680,000   Transcontinental Gas Pipe Line Co. LLC, 7.850%, 2/01/2026   2,170,136 

 

See accompanying notes to financial statements.

 

|  38


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued 
$171,000   TransDigm, Inc., 6.500%, 7/15/2024  $176,558 
 185,000   TransDigm, Inc., 6.500%, 5/15/2025   190,550 
 6,665,000   TRI Pointe Group, Inc., 4.875%, 7/01/2021   6,964,925 
 90,000   TRI Pointe Group, Inc./TRI Pointe Homes, Inc., 4.375%, 6/15/2019   91,913 
 5,000   TRI Pointe Group, Inc./TRI Pointe Homes, Inc., 5.875%, 6/15/2024   5,350 
 895,000   TRU Taj LLC/TRU Taj Finance, Inc., 11.000%, 1/22/2019, 144A(b)   917,375 
 870,000   TRU Taj LLC/TRU Taj Finance, Inc., 12.000%, 8/15/2021, 144A   829,219 
 1,192,774   U.S. Treasury Inflation Indexed Note, 0.125%, 4/15/2022(e)(i)   1,192,693 
 5,975,000   U.S. Treasury Note, 0.750%, 1/31/2018   5,966,751 
 21,960,000   U.S. Treasury Note,0.750%, 9/30/2018   21,827,039 
 7,160,000   U.S. Treasury Note,0.875%, 6/15/2019(e)   7,090,917 
 5,130,000   U.S. Treasury Note,1.375%, 5/31/2020   5,102,546 
 3,460,000   U.S. Treasury Note,1.750%, 11/30/2021(e)   3,448,241 
 630,000   United Continental Holdings, Inc.,6.375%, 6/01/2018   645,435 
 2,940,000   United Rentals North America, Inc.,5.500%, 7/15/2025   3,149,475 
 2,635,000   United Rentals North America, Inc.,5.750%, 11/15/2024   2,796,394 
 50,000   United Rentals North America, Inc.,7.625%, 4/15/2022   52,040 
 1,940,000   United States Steel Corp.,6.650%, 6/01/2037   1,862,400 
 690,000   United States Steel Corp.,7.375%, 4/01/2020   752,100 
 105,078   US Airways Pass Through Trust, Series 2012-1A, Class A,
5.900%, 4/01/2026
   118,739 
 53,765   US Airways Pass Through Trust, Series 2012-1B, Class B,
8.000%, 4/01/2021
   58,335 
 391,280   US Airways Pass Through Trust, Series 2012-2A, Class A,
4.625%, 12/03/2026
   418,670 
 25,000   Viacom, Inc.,4.375%, 3/15/2043   21,537 
 176,000   Viacom, Inc.,4.850%, 12/15/2034   165,856 
 395,000   Viacom, Inc.,5.250%, 4/01/2044   378,298 
 145,000   Viacom, Inc.,5.850%, 9/01/2043   149,013 
 1,380,000   Western Digital Corp.,7.375%, 4/01/2023, 144A   1,511,790 
 60,000   Weyerhaeuser Co.,6.950%, 10/01/2027   74,985 
 315,000   Weyerhaeuser Co.,7.375%, 3/15/2032   436,982 
 1,060,000   Whiting Petroleum Corp.,5.000%, 3/15/2019   1,060,318 
 590,000   Whiting Petroleum Corp.,5.750%, 3/15/2021   579,675 
 130,000   Whiting Petroleum Corp.,6.250%, 4/01/2023   127,791 
 55,000   Windstream Services LLC,7.500%, 6/01/2022   39,566 
 1,955,000   Windstream Services LLC,7.500%, 4/01/2023   1,392,937 
 1,105,000   Windstream Services LLC,7.750%, 10/01/2021   817,700 
    

 

 

 
     285,501,514 
    

 

 

 
  Uruguay — 0.0%  
 17,410,000   Republic of Uruguay,9.875%, 6/20/2022, 144A, (UYU)   648,519 
    

 

 

 
  Total Non-Convertible Bonds
(Identified Cost $467,716,503)
   493,429,435 
    

 

 

 
 Convertible Bonds — 0.7% 
  United States — 0.7%  
 105,000   CalAmp Corp., 1.625%, 5/15/2020   111,956 
 190,000   CalAtlantic Group, Inc., 0.250%, 6/01/2019   181,925 

 

See accompanying notes to financial statements.

 

39  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued 
$60,000   Chesapeake Energy Corp., 5.500%, 9/15/2026, 144A  $55,050 
 2,290,000   DISH Network Corp., 3.375%, 8/15/2026   2,561,938 
 530,000   Hologic, Inc., (accretes to principal after 3/01/2018), 2.000%, 3/01/2042(j)   645,275 
 275,000   Iconix Brand Group, Inc., 1.500%, 3/15/2018   272,250 
 1,000,000   KB Home, 1.375%, 2/01/2019   1,049,375 
 1,690,000   Nuance Communications, Inc., 1.000%, 12/15/2035   1,585,068 
 2,095,000   Old Republic International Corp., 3.750%, 3/15/2018   2,678,981 
 1,450,000   Priceline Group, Inc. (The), 0.900%, 9/15/2021   1,663,875 
 1,660,000   Rovi Corp., 0.500%, 3/01/2020   1,679,821 
 40,000   RPM International, Inc., 2.250%, 12/15/2020   46,100 
 90,000   Trinity Industries, Inc., 3.875%, 6/01/2036   120,656 
    

 

 

 
  Total Convertible Bonds
(Identified Cost $11,069,269)
   12,652,270 
    

 

 

 
 Municipals — 0.0% 
  United States — 0.0%  
 155,000   State of Illinois, 5.100%, 6/01/2033   156,751 
 130,000   Virginia Tobacco Settlement Financing Corp., Series A-1,
6.706%, 6/01/2046
   118,923 
    

 

 

 
  Total Municipals
(Identified Cost $252,751)
   275,674 
    

 

 

 
  Total Bonds and Notes
(Identified Cost $479,038,523)
   506,357,379 
    

 

 

 
 Senior Loans — 0.0% 
  United States — 0.0%  
 120,000   PowerTeam Services LLC, 2nd Lien Term Loan, 3-month LIBOR + 7.250%, 8.583%, 11/06/2020(h)   119,250 
    

 

 

 
  Total Senior Loans
(Identified Cost $119,490)
   119,250 
    

 

 

 
    
Shares          
 Preferred Stocks — 0.1%  
 Convertible Preferred Stocks — 0.1%  
  United States — 0.1%  
 460   Chesapeake Energy Corp., 5.000%   26,623 
 40   Chesapeake Energy Corp., 5.750%   22,875 
 736   Chesapeake Energy Corp., 5.750%   448,960 
 84   Chesapeake Energy Corp., Series A, 5.750% 144A   48,037 
 10,373   El Paso Energy Capital Trust I, 4.750%   508,277 
    

 

 

 
  Total Convertible Preferred Stocks
(Identified Cost $953,299)
   1,054,772 
    

 

 

 
 Non-Convertible Preferred Stock — 0.0%  
  United States — 0.0%  
 2,585   Arconic, Inc., 5.375% (Identified Cost $125,174)   100,556 
    

 

 

 
  Total Preferred Stocks
(Identified Cost $1,078,473)
   1,155,328 
    

 

 

 

 

See accompanying notes to financial statements.

 

|  40


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
 Short-Term Investments — 5.7%  
$2,190,000   Federal National Mortgage Association Discount Notes,
1.040%, 10/30/2017(k)
  $2,188,314 
 6,000,000   Federal National Mortgage Association Discount Notes,
1.040%, 11/08/2017(k)
   5,993,832 
 69,519,314   Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 9/29/2017 at 0.340% to be repurchased at $69,521,284 on 10/02/2017 collateralized by $56,320,000 Federal Home Loan Mortgage Corp., 1.625% due 10/25/2019 valued at $56,726,180; $14,175,000 U.S. Treasury Note, 1.250% due 10/31/2019 valued at $14,187,247 including accrued interest (Note 2 of Notes to Financial Statements)   69,519,314 
 11,590,000   U.S. Treasury Bills, 0.995%, 10/05/2017(k)   11,589,299 
 2,810,000   U.S. Treasury Bills, 1.020%, 10/12/2017(k)   2,809,278 
 8,985,000   U.S. Treasury Bills, 1.041%-1.066%, 02/01/2018(k)(l)   8,952,572 
    

 

 

 
  Total Short-Term Investments
(Identified Cost $101,052,039)
   101,052,609 
    

 

 

 
    
  Total Investments — 101.5%
(Identified Cost $1,459,396,593)
   1,812,425,795 
  Other assets less liabilities — (1.5)%   (26,560,477
    

 

 

 
  Net Assets — 100.0%  $1,785,865,318 
    

 

 

 
    
 (‡)   Principal Amount stated in U.S. dollars unless otherwise noted.  
 (†)   See Note 2 of Notes to Financial Statements.  
 (††)   Amount shown represents units. One unit represents a principal amount of 1,000. 
 (†††)   Amount shown represents units. One unit represents a principal amount of 100. 
 (††††)   Amount shown represents units. One unit represents a principal amount of 25. 
 (a)   Non-income producing security. 
 (b)   Level 3 security. Value has been determined using significant unobservable inputs. See Note 3 of Notes to Financial Statements. 
 (c)   Fair valued by the Fund’s adviser. At September 30, 2017, the value of these securities amounted to $161,986 or less than 0.1% of net assets. See Note 2 of Notes to Financial Statements. 
 (d)   Illiquid security. (Unaudited) 
 (e)   Security (or a portion thereof) has been designated to cover the Fund’s obligations under open derivative contracts. 
 (f)   Securities classified as fair valued pursuant to the Fund’s pricing policies and procedures. At September 30, 2017, the value of these securities amounted to $3,570,032 or 0.2% of net assets. See Note 2 of Notes to Financial Statements. 
 (g)   Perpetual bond with no specified maturity date. 
 (h)   Variable rate security. Rate as of September 30, 2017 is disclosed. 
 (i)   Treasury Inflation Protected Security (TIPS). 
 (j)   Coupon rate is a fixed rate for an initial period then resets at a specified date and rate. 
 (k)   Interest rate represents discount rate at time of purchase; not a coupon rate. 
 (l)   The Fund’s investment in U.S. Treasury Bills is comprised of various lots with differing discount rates. These separate investments, which have the same maturity date, have been aggregated for the purpose of presentation in the Portfolio of Investments. 

 

See accompanying notes to financial statements.

 

41  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

    
 (m)   Security subject to restrictions on resale. This security was acquired on August 12, 2016 at a cost of $3,266. At September 30, 2017, the value of this security amounted to $3,886 or less than 0.1% of net assets. 
 (n)   Variable rate security. The interest rate adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. Rate as of September 30, 2017 is disclosed. 
    
 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 September 30, 2017, the value of Rule 144A holdings amounted to $111,052,808 or 6.2% 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. 
 CPI   Consumer Price Index 
 EMTN   Euro Medium Term Note 
 GMTN   Global Medium Term Note 
 LIBOR   London Interbank Offered Rate 
 MTN   Medium Term Note 
    
 ARS   Argentine Peso 
 AUD   Australian Dollar 
 BRL   Brazilian Real 
 CAD   Canadian Dollar 
 CLP   Chilean Peso 
 COP   Colombian Peso 
 EUR   Euro 
 GBP   British Pound 
 IDR   Indonesian Rupiah 
 INR   Indian Rupee 
 MXN   Mexican Peso 
 NOK   Norwegian Krone 
 NZD   New Zealand Dollar 
 RUB   New Russian Ruble 
 SEK   Swedish Krona 
 THB   Thai Baht 
 TRY   Turkish Lira 
 UYU   Uruguayan Peso 
 ZAR   South African Rand 

 

See accompanying notes to financial statements.

 

|  42


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

At September 30, 2017, the Fund had the following open forward foreign currency contracts:

 

Counterparty Delivery
Date
  Currency
Bought/
Sold (B/S)
 Units
of
Currency
  In Exchange for  Notional
Value
  Unrealized
Appreciation
(Depreciation)
 
Bank of America, N.A.  12/20/2017  BRL  S   20,235,000  $6,480,177  $6,322,779  $157,398 
Credit Suisse International  12/20/2017  AUD  S   3,428,000   2,751,974   2,686,492   65,482 
Credit Suisse International  12/20/2017  CAD  S   21,060,000   17,369,044   16,886,819   482,225 
Credit Suisse International  12/20/2017  GBP  B   3,580,000   4,739,637   4,808,702   69,065 
Credit Suisse International  12/20/2017  GBP  S   400,000   539,024   537,285   1,739 
Credit Suisse International  12/20/2017  IDR  S   39,600,000,000   2,950,160   2,920,088   30,072 
Credit Suisse International  12/20/2017  JPY  B   4,016,500,000   37,047,627   35,830,188   (1,217,439
Credit Suisse International  12/20/2017  NZD  S   8,162,000   5,907,247   5,886,495   20,752 
Morgan Stanley & Co.  12/20/2017  EUR  B   31,800,000   37,975,401   37,747,974   (227,427
UBS AG  12/20/2017  MXN  S   189,000,000   10,519,107   10,251,050   268,057 
UBS AG  12/20/2017  NOK  S   4,200,000   540,721   528,275   12,446 
UBS AG  12/20/2017  ZAR  S   29,520,000   2,256,277   2,153,480   102,797 
UBS AG  12/20/2017  SEK  B   3,100,000   382,403   382,355   (48
UBS AG  12/21/2017  SEK  B   7,350,000   906,721   906,620   (101
UBS AG  12/20/2017  SEK  S   3,100,000   392,333   382,355   9,978 
       

 

 

 
Total  $(225,004
       

 

 

 

At September 30, 2017, the Fund had the following open forward cross currency contracts:

 

Counterparty Settlement
Date
  Deliver/Units of Currency  Receive/Units of Currency  Notional
Value
  Unrealized
Appreciation
(Depreciation)
 
Credit Suisse International  12/20/2017  NOK  14,180,000   EUR   1,521,654  $1,806,268  $22,711 
       

 

 

 

 

See accompanying notes to financial statements.

 

|  43


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Global Equity and Income Fund – (continued)

 

Industry Summary at September 30, 2017

 

Internet Software & Services

   10.8

Treasuries

   7.2 

Capital Markets

   6.8 

Insurance

   4.8 

Chemicals

   4.7 

Aerospace & Defense

   4.2 

Banks

   3.7 

IT Services

   3.7 

Food Products

   3.7 

Internet & Direct Marketing Retail

   3.2 

Banking

   3.2 

Industrial Conglomerates

   3.0 

Hotels, Restaurants & Leisure

   2.7 

Health Care Providers & Services

   2.1 

Building Products

   2.0 

Independent Energy

   2.0 

Other Investments, less than 2% each

   28.0 

Short-Term Investments

   5.7 
  

 

 

 

Total Investments

   101.5 

Other assets less liabilities (including forward foreign currency contracts)

   (1.5
  

 

 

 

Net Assets

   100.0
  

 

 

 

Currency Exposure Summary at September 30, 2017

 

United States Dollar

   76.4

Swiss Franc

   4.3 

British Pound

   4.0 

Euro

   4.0 

Swedish Krona

   2.8 

Canadian Dollar

   2.6 

Hong Kong Dollar

   2.5 

Other, less than 2% each

   4.9 
  

 

 

 

Total Investments

   101.5 

Other assets less liabilities (including forward foreign currency contracts)

   (1.5
  

 

 

 

Net Assets

   100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

|  44


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Growth Fund

 

Shares   Description  Value (†) 
 Common Stocks — 97.2% of Net Assets 
  Air Freight & Logistics — 5.3% 
 3,435,911   Expeditors International of Washington, Inc.  $205,673,633 
 1,466,681   United Parcel Service, Inc., Class B   176,133,721 
    

 

 

 
     381,807,354 
    

 

 

 
  Beverages — 6.8% 
 4,562,039   Coca-Cola Co. (The)   205,337,375 
 5,107,482   Monster Beverage Corp.(a)   282,188,381 
    

 

 

 
     487,525,756 
    

 

 

 
  Biotechnology — 4.7% 
 788,507   Amgen, Inc.   147,017,130 
 432,525   Regeneron Pharmaceuticals, Inc.(a)   193,390,578 
    

 

 

 
     340,407,708 
    

 

 

 
  Capital Markets — 4.7% 
 684,541   FactSet Research Systems, Inc.   123,292,680 
 3,563,534   SEI Investments Co.   217,589,386 
    

 

 

 
     340,882,066 
    

 

 

 
  Communications Equipment — 4.5% 
 9,660,607   Cisco Systems, Inc.   324,886,213 
    

 

 

 
  Consumer Finance — 1.5% 
 1,173,658   American Express Co.   106,169,103 
    

 

 

 
  Energy Equipment & Services — 3.0% 
 3,075,803   Schlumberger Ltd.   214,568,017 
    

 

 

 
  Food Products — 3.3% 
 15,183,151   Danone S.A., Sponsored ADR   239,134,628 
    

 

 

 
  Health Care Equipment & Supplies — 2.2% 
 1,555,038   Varian Medical Systems, Inc.(a)   155,597,102 
    

 

 

 
  Health Care Technology — 2.4% 
 2,450,299   Cerner Corp.(a)   174,755,325 
    

 

 

 
  Hotels, Restaurants & Leisure — 3.1% 
 2,511,475   Yum China Holdings, Inc.(a)   100,383,656 
 1,675,693   Yum! Brands, Inc.   123,347,761 
    

 

 

 
     223,731,417 
    

 

 

 
  Household Products — 2.9% 
 2,289,457   Procter & Gamble Co. (The)   208,294,798 
    

 

 

 
  Internet & Direct Marketing Retail — 5.9% 
 443,465   Amazon.com, Inc.(a)   426,325,078 
    

 

 

 
  Internet Software & Services — 17.8% 
 2,651,723   Alibaba Group Holding Ltd., Sponsored ADR(a)   457,979,079 
 194,559   Alphabet, Inc., Class A(a)   189,445,989 
 194,290   Alphabet, Inc., Class C(a)   186,345,482 
 2,648,309   Facebook, Inc., Class A(a)   452,516,559 
    

 

 

 
     1,286,287,109 
    

 

 

 

 

See accompanying notes to financial statements.

 

45  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Growth Fund – (continued)

 

Shares   Description  Value (†) 
  IT Services — 6.0% 
 576,292   Automatic Data Processing, Inc.  $63,000,241 
 3,514,774   Visa, Inc., Class A   369,894,816 
    

 

 

 
     432,895,057 
    

 

 

 
  Machinery — 2.6% 
 1,476,881   Deere & Co.   185,481,485 
    

 

 

 
  Pharmaceuticals — 6.5% 
 1,351,062   Merck & Co., Inc.   86,508,500 
 1,675,756   Novartis AG, Sponsored ADR   143,863,652 
 4,954,639   Novo Nordisk AS, Sponsored ADR   238,565,868 
    

 

 

 
     468,938,020 
    

 

 

 
  Semiconductors & Semiconductor Equipment — 3.3% 
 392,465   Analog Devices, Inc.   33,818,709 
 3,872,996   QUALCOMM, Inc.   200,776,113 
    

 

 

 
     234,594,822 
    

 

 

 
  Software — 10.7% 
 2,450,235   Autodesk, Inc.(a)   275,063,381 
 2,615,070   Microsoft Corp.   194,796,564 
 6,312,290   Oracle Corp.   305,199,222 
    

 

 

 
     775,059,167 
    

 

 

 
  Total Common Stocks
(Identified Cost $5,521,817,481)
   7,007,340,225 
    

 

 

 
Principal
Amount
          
 Short-Term Investments — 1.9% 
$138,504,239   Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 9/29/2017 at 0.340% to be repurchased at $138,508,163 on 10/02/2017 collateralized by $141,190,000 Federal Home Loan Mortgage Corp., 1.250% due 10/02/2019 valued at $141,276,126 including accrued interest (Note 2 of Notes to Financial Statements) (Identified Cost $138,504,239)   138,504,239 
    

 

 

 
    
  Total Investments — 99.1%
(Identified Cost $5,660,321,720)
   7,145,844,464 
  Other assets less liabilities — 0.9%   61,267,430 
    

 

 

 
  Net Assets — 100.0%  $7,207,111,894 
    

 

 

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

 

|  46


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Growth Fund – (continued)

 

Industry Summary at September 30, 2017

 

Internet Software & Services

   17.8

Software

   10.7 

Beverages

   6.8 

Pharmaceuticals

   6.5 

IT Services

   6.0 

Internet & Direct Marketing Retail

   5.9 

Air Freight & Logistics

   5.3 

Capital Markets

   4.7 

Biotechnology

   4.7 

Communications Equipment

   4.5 

Food Products

   3.3 

Semiconductors & Semiconductor Equipment

   3.3 

Hotels, Restaurants & Leisure

   3.1 

Energy Equipment & Services

   3.0 

Household Products

   2.9 

Machinery

   2.6 

Health Care Technology

   2.4 

Health Care Equipment & Supplies

   2.2 

Consumer Finance

   1.5 

Short-Term Investments

   1.9 
  

 

 

 

Total Investments

   99.1 

Other assets less liabilities

   0.9 
  

 

 

 

Net Assets

   100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

47  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Value Fund

 

    
Shares
   Description  Value (†) 
 Common Stocks — 98.9% of Net Assets 
  Aerospace & Defense — 3.5% 
 62,517   Northrop Grumman Corp.  $17,987,391 
 200,538   United Technologies Corp.   23,278,451 
    

 

 

 
     41,265,842 
    

 

 

 
  Automobiles — 0.8% 
 190,085   Harley-Davidson, Inc.   9,163,998 
    

 

 

 
  Banks — 14.5% 
 1,322,263   Bank of America Corp.   33,506,144 
 394,763   Citigroup, Inc.   28,715,061 
 496,922   Fifth Third Bancorp   13,903,877 
 399,162   JPMorgan Chase & Co.   38,123,963 
 175,905   PNC Financial Services Group, Inc. (The)   23,706,717 
 564,613   Wells Fargo & Co.   31,138,407 
    

 

 

 
     169,094,169 
    

 

 

 
  Beverages — 1.4% 
 143,404   PepsiCo, Inc.   15,979,508 
    

 

 

 
  Building Products — 1.8% 
 523,419   Johnson Controls International PLC   21,088,552 
    

 

 

 
  Capital Markets — 2.9% 
 121,565   Ameriprise Financial, Inc.   18,053,618 
 167,469   State Street Corp.   15,999,988 
    

 

 

 
     34,053,606 
    

 

 

 
  Chemicals — 1.7% 
 285,615   DowDuPont, Inc.   19,773,127 
    

 

 

 
  Communications Equipment — 3.4% 
 588,212   Cisco Systems, Inc.   19,781,570 
 154,912   Harris Corp.   20,398,812 
    

 

 

 
     40,180,382 
    

 

 

 
  Construction Materials — 1.0% 
 94,136   Vulcan Materials Co.   11,258,666 
    

 

 

 
  Consumer Finance — 2.3% 
 148,580   American Express Co.   13,440,547 
 214,305   Discover Financial Services   13,818,386 
    

 

 

 
     27,258,933 
    

 

 

 
  Containers & Packaging — 1.4% 
 388,191   Sealed Air Corp.   16,583,520 
    

 

 

 
  Diversified Telecommunication Services — 1.4% 
 340,579   Verizon Communications, Inc.   16,855,255 
    

 

 

 
  Electric Utilities — 4.1% 
 342,491   Exelon Corp.   12,901,636 
 116,572   NextEra Energy, Inc.   17,083,627 
 255,137   PG&E Corp.   17,372,278 
    

 

 

 
     47,357,541 
    

 

 

 

 

See accompanying notes to financial statements.

 

|  48


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Value Fund – (continued)

 

    
Shares
   Description  Value (†) 
  Electrical Equipment — 1.1% 
 165,761   Eaton Corp. PLC  $12,728,787 
    

 

 

 
  Energy Equipment & Services — 2.2% 
 323,287   Baker Hughes, a GE Co.   11,838,770 
 313,875   Halliburton Co.   14,447,666 
    

 

 

 
     26,286,436 
    

 

 

 
  Food & Staples Retailing — 0.8% 
 120,220   CVS Health Corp.   9,776,290 
    

 

 

 
  Food Products — 1.6% 
 450,718   Mondelez International, Inc., Class A   18,326,194 
    

 

 

 
  Health Care Equipment & Supplies — 3.7% 
 403,458   Abbott Laboratories   21,528,519 
 272,629   Medtronic PLC   21,202,357 
    

 

 

 
     42,730,876 
    

 

 

 
  Health Care Providers & Services — 5.1% 
 83,476   Aetna, Inc.   13,273,519 
 46,939   Humana, Inc.   11,435,748 
 108,908   Laboratory Corp. of America Holdings(a)   16,441,841 
 92,636   UnitedHealth Group, Inc.   18,142,761 
    

 

 

 
     59,293,869 
    

 

 

 
  Household Durables — 1.1% 
 291,494   Newell Brands, Inc.   12,438,049 
    

 

 

 
  Industrial Conglomerates — 1.6% 
 135,176   Honeywell International, Inc.   19,159,846 
    

 

 

 
  Insurance — 6.3% 
 317,912   American International Group, Inc.   19,516,618 
 347,048   FNF Group   16,470,898 
 382,653   MetLife, Inc.   19,878,823 
 141,179   Travelers Cos., Inc. (The)   17,297,251 
    

 

 

 
     73,163,590 
    

 

 

 
  Internet & Direct Marketing Retail — 1.2% 
 601,048   Liberty Interactive Corp./QVC Group, Class A(a)   14,166,701 
    

 

 

 
  IT Services — 1.4% 
 72,733   Alliance Data Systems Corp.   16,113,996 
    

 

 

 
  Machinery — 1.3% 
 231,797   Pentair PLC   15,752,924 
    

 

 

 
  Media — 2.2% 
 662,011   Comcast Corp., Class A   25,474,183 
    

 

 

 
  Midstream — 1.1% 
 209,336   Royal Dutch Shell PLC, Sponsored ADR   12,681,575 
    

 

 

 
  Oil, Gas & Consumable Fuels — 5.6% 
 337,681   Anadarko Petroleum Corp.   16,495,717 
 204,834   Chevron Corp.   24,067,995 
 186,720   Hess Corp.   8,755,301 
 281,840   Marathon Petroleum Corp.   15,805,587 
    

 

 

 
     65,124,600 
    

 

 

 

 

See accompanying notes to financial statements.

 

49  |


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Value Fund – (continued)

 

    
Shares
   Description  Value (†) 
  Pharmaceuticals — 6.5% 
 73,280   Allergan PLC  $15,018,736 
 165,709   Bristol-Myers Squibb Co.   10,562,292 
 121,151   Eli Lilly & Co.   10,363,256 
 226,104   Merck & Co., Inc.   14,477,439 
 709,623   Pfizer, Inc.   25,333,541 
    

 

 

 
     75,755,264 
    

 

 

 
  Professional Services — 1.0% 
 268,695   Nielsen Holdings PLC   11,137,408 
    

 

 

 
  Real Estate Management & Development — 1.1% 
 330,074   CBRE Group, Inc., Class A(a)   12,503,203 
    

 

 

 
  REITs – Diversified — 1.9% 
 278,081   Outfront Media, Inc.   7,002,079 
 449,258   Weyerhaeuser Co.   15,288,250 
    

 

 

 
     22,290,329 
    

 

 

 
  Road & Rail — 1.5% 
 137,194   Norfolk Southern Corp.   18,142,535 
    

 

 

 
  Semiconductors & Semiconductor Equipment — 1.2% 
 263,314   QUALCOMM, Inc.   13,650,198 
    

 

 

 
  Software — 4.8% 
 284,739   Microsoft Corp.   21,210,208 
 504,112   Oracle Corp.   24,373,815 
 328,063   Symantec Corp.   10,763,747 
    

 

 

 
     56,347,770 
    

 

 

 
  Specialty Retail — 0.9% 
 107,592   Advance Auto Parts, Inc.   10,673,126 
    

 

 

 
  Technology Hardware, Storage & Peripherals — 2.0% 
 90,605   Apple, Inc.   13,964,042 
 424,336   Diebold Nixdorf, Inc.   9,696,078 
    

 

 

 
     23,660,120 
    

 

 

 
  Tobacco — 1.5% 
 161,776   Philip Morris International, Inc.   17,958,754 
    

 

 

 
  Total Common Stocks
(Identified Cost $859,868,369)
   1,155,249,722 
    

 

 

 

 

See accompanying notes to financial statements.

 

|  50


Table of Contents

Portfolio of Investments – as of September 30, 2017

Loomis Sayles Value Fund – (continued)

 

Principal
Amount
   Description  Value (†) 
 Short-Term Investments – 1.1% 
$13,575,209   Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 9/29/2017 at 0.340% to be repurchased at $13,575,593 on 10/02/2017 collateralized by $13,840,000 Federal Home Loan Mortgage Corp., 1.250% due 10/02/2019 valued at $13,848,442 including accrued interest (Note 2 of Notes to Financial Statements) (Identified Cost $13,575,209)  $13,575,209 
    

 

 

 
    
  Total Investments — 100.0%
(Identified Cost $873,443,578)
   1,168,824,931 
  Other assets less liabilities – (0.0)%   (556,342
    

 

 

 
  Net Assets — 100.0%  $1,168,268,589 
    

 

 

 
    
 (†)   See Note 2 of Notes to Financial Statements.  
 (a)   Non-income producing security.  
    
 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.  
 REITs   Real Estate Investment Trusts  

Industry Summary at September 30, 2017

 

Banks

   14.5

Pharmaceuticals

   6.5 

Insurance

   6.3 

Oil, Gas & Consumable Fuels

   5.6 

Health Care Providers & Services

   5.1 

Software

   4.8 

Electric Utilities

   4.1 

Health Care Equipment & Supplies

   3.7 

Aerospace & Defense

   3.5 

Communications Equipment

   3.4 

Capital Markets

   2.9 

Consumer Finance

   2.3 

Energy Equipment & Services

   2.2 

Media

   2.2 

Technology Hardware, Storage & Peripherals

   2.0 

Other Investments, less than 2% each

   29.8 

Short-Term Investments

   1.1 
  

 

 

 

Total Investments

   100.0 

Other assets less liabilities

   (0.0
  

 

 

 

Net Assets

   100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

51  |


Table of Contents

Statements of Assets and Liabilities

 

September 30, 2017

 

   Global Equity
and Income
Fund
   Growth
Fund
   Value
Fund
 

ASSETS

 

Investments at cost

  $1,459,396,593   $5,660,321,720   $873,443,578 

Net unrealized appreciation

   353,029,202    1,485,522,744    295,381,353 
  

 

 

   

 

 

   

 

 

 

Investments at value

   1,812,425,795    7,145,844,464    1,168,824,931 

Cash

   211,000         

Due from brokers (Note 2)

   996,404         

Foreign currency at value (identified cost $5,140,171, $0 and $0, respectively)

   5,076,021         

Receivable for Fund shares sold

   5,248,174    96,421,599    454,626 

Receivable for securities sold

   5,131,688         

Collateral received for open forward foreign currency contracts (Note 4)

   360,000         

Dividends and interest receivable

   6,996,700    5,078,086    949,460 

Unrealized appreciation on forward foreign currency contracts (Note 2)

   1,242,722         

Tax reclaims receivable

   551,992    2,056,535     

Prepaid expenses (Note 8)

   1,944    9,864    1,246 
  

 

 

   

 

 

   

 

 

 

TOTAL ASSETS

   1,838,242,440    7,249,410,548    1,170,230,263 
  

 

 

   

 

 

   

 

 

 

LIABILITIES

 

Payable for securities purchased

   47,319,598         

Payable for Fund shares redeemed

   1,710,037    38,561,819    961,280 

Unrealized depreciation on forward foreign currency contracts (Note 2)

   1,445,015         

Foreign taxes payable (Note 2)

   36,347         

Due to brokers (Note 2)

   360,000         

Management fees payable (Note 6)

   1,075,660    2,916,555    480,183 

Deferred Trustees’ fees (Note 6)

   162,425    221,002    363,027 

Administrative fees payable (Note 6)

   64,124    260,633    43,012 

Payable to distributor (Note 6d)

   17,238    66,374    9,424 

Other accounts payable and accrued expenses

   186,678    272,271    104,748 
  

 

 

   

 

 

   

 

 

 

TOTAL LIABILITIES

   52,377,122    42,298,654    1,961,674 
  

 

 

   

 

 

   

 

 

 

NET ASSETS

  $1,785,865,318   $7,207,111,894   $1,168,268,589 
  

 

 

   

 

 

   

 

 

 

NET ASSETS CONSIST OF:

 

Paid-in capital

  $1,406,773,408   $5,581,935,269   $746,148,979 

Undistributed net investment income

   10,545,895    28,890,806    16,512,018 

Accumulated net realized gain on investments, short sales, forward foreign currency contracts and foreign currency transactions

   15,785,877    110,763,075    110,226,239 

Net unrealized appreciation on investments and foreign currency translations

   352,760,138    1,485,522,744    295,381,353 
  

 

 

   

 

 

   

 

 

 

NET ASSETS

  $1,785,865,318   $7,207,111,894   $1,168,268,589 
  

 

 

   

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

|  52


Table of Contents

Statements of Assets and Liabilities (continued)

 

September 30, 2017

 

   Global Equity
and Income
Fund
   Growth
Fund
   Value
Fund
 

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE:

 

Class A shares:

 

Net assets

  $305,275,012   $983,046,747   $185,152,562 
  

 

 

   

 

 

   

 

 

 

Shares of beneficial interest

   14,132,792    69,996,342    8,015,256 
  

 

 

   

 

 

   

 

 

 

Net asset value and redemption price per share

  $21.60   $14.04   $23.10 
  

 

 

   

 

 

   

 

 

 

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

  $22.92   $14.90   $24.51 
  

 

 

   

 

 

   

 

 

 

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

      

Net assets

  $354,016,805   $133,328,516   $10,947,816 
  

 

 

   

 

 

   

 

 

 

Shares of beneficial interest

   16,627,576    10,316,516    480,738 
  

 

 

   

 

 

   

 

 

 

Net asset value and offering price per share

  $21.29   $12.92   $22.77 
  

 

 

   

 

 

   

 

 

 

Class N shares:

 

Net assets

  $59,511,731   $341,160,250   $594,165,194 
  

 

 

   

 

 

   

 

 

 

Shares of beneficial interest

   2,738,931    22,785,494    25,619,997 
  

 

 

   

 

 

   

 

 

 

Net asset value, offering and redemption price per share

  $21.73   $14.97   $23.19 
  

 

 

   

 

 

   

 

 

 

Class Y shares:

 

Net assets

  $1,067,061,770   $5,749,576,381   $377,161,899 
  

 

 

   

 

 

   

 

 

 

Shares of beneficial interest

   49,092,962    384,002,402    16,251,736 
  

 

 

   

 

 

   

 

 

 

Net asset value, offering and redemption price per share

  $21.74   $14.97   $23.21 
  

 

 

   

 

 

   

 

 

 

Admin Class shares:

 

Net assets

  $   $   $841,118 
  

 

 

   

 

 

   

 

 

 

Shares of beneficial interest

           36,507 
  

 

 

   

 

 

   

 

 

 

Net asset value, offering and redemption price per share

  $   $   $23.04 
  

 

 

   

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

53  |


Table of Contents

Statements of Operations

 

For the Year Ended September 30, 2017

 

   Global Equity
and Income
Fund
  Growth
Fund
  Value
Fund
 

INVESTMENT INCOME

 

Dividends

  $18,689,598  $74,011,021  $32,268,334 

Non-cash dividend income (Note 2b)

      4,174,098    

Interest

   25,187,537   203,235   38,038 

Less net foreign taxes withheld

   (622,521  (2,075,923  (159,959
  

 

 

  

 

 

  

 

 

 
   43,254,614   76,312,431   32,146,413 
  

 

 

  

 

 

  

 

 

 

Expenses

 

Management fees (Note 6)

   11,866,210   28,270,208   6,153,022 

Service and distribution fees (Note 6)

   4,456,882   3,412,749   588,662 

Administrative fees (Note 6)

   705,928   2,522,317   549,206 

Trustees’ fees and expenses (Note 6)

   72,132   177,047   86,181 

Transfer agent fees and expenses (Notes 6 and 7)

   1,361,257   4,987,239   867,615 

Audit and tax services fees

   139,007   43,047   41,013 

Custodian fees and expenses

   215,051   195,148   36,586 

Legal fees

   34,416   119,355   27,237 

Registration fees

   111,991   442,430   126,359 

Shareholder reporting expenses

   101,756   257,838   73,271 

Miscellaneous expenses (Note 8)

   80,930   155,722   56,814 
  

 

 

  

 

 

  

 

 

 

Total expenses

   19,145,560   40,583,100   8,605,966 

Less waiver and/or expense reimbursement (Note 6)

   (265  (1,348   
  

 

 

  

 

 

  

 

 

 

Net expenses

   19,145,295   40,581,752   8,605,966 
  

 

 

  

 

 

  

 

 

 

Net investment income

   24,109,319   35,730,679   23,540,447 
  

 

 

  

 

 

  

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, SHORT SALES, FORWARD FOREIGN CURRENCY CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS

    

Net realized gain (loss) on:

    

Investments

   17,044,626   111,820,263   125,807,423 

Short sales

         52,980 

Forward foreign currency contracts (Note 2e)

   (4,243,171      

Foreign currency transactions (Note 2d)

   11,871       

Net change in unrealized appreciation (depreciation) on:

 

Investments

   174,153,946   937,804,825   39,946,464 

Short sales

         (2,724

Forward foreign currency contracts (Note 2e)

   (519,161      

Foreign currency translations (Note 2d)

   (6,787      
  

 

 

  

 

 

  

 

 

 

Net realized and unrealized gain on investments, short sales, forward foreign currency contracts and foreign currency transactions

   186,441,324   1,049,625,088   165,804,143 
  

 

 

  

 

 

  

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $210,550,643  $1,085,355,767  $189,344,590 
  

 

 

  

 

 

  

 

 

 

 

See accompanying notes to financial statements.

 

|  54


Table of Contents

Statements of Changes in Net Assets

 

   Global Equity and Income Fund  Growth Fund 
   Year Ended
September 30,

2017
  Year Ended
September 30,

2016
  Year Ended
September 30,

2017
  Year Ended
September 30,

2016
 

FROM OPERATIONS:

 

Net investment income

  $24,109,319  $17,726,830  $35,730,679  $20,422,191 

Net realized gain (loss) on investments, short sales, forward foreign currency contracts and foreign currency transactions

   12,813,326   (11,136,128  111,820,263   61,467,333 

Net change in unrealized appreciation (depreciation) on investments, short sales, forward foreign currency contracts and foreign currency translations

   173,627,998   125,656,810   937,804,825   460,433,284 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net increase in net assets resulting from operations

   210,550,643   132,247,512   1,085,355,767   542,322,808 
  

 

 

  

 

 

  

 

 

  

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

 

Net investment income

     

Class A

   (3,289,853  (2,081,218  (2,941,318  (638,700

Class C

   (1,771,656  (533,445      

Class N

         (688,493  (27,613

Class Y

   (12,428,003  (7,355,165  (21,181,423  (7,860,674

Net realized capital gains

     

Class A

      (11,445,258  (7,024,882   

Class C

      (18,956,422  (1,227,895   

Class N

         (992,374   

Class Y

      (31,143,894  (34,329,937   
  

 

 

  

 

 

  

 

 

  

 

 

 

Total distributions

   (17,489,512  (71,515,402  (68,386,322  (8,526,987
  

 

 

  

 

 

  

 

 

  

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 12)

   53,800,129   233,875,615   1,795,629,622   2,522,919,151 
  

 

 

  

 

 

  

 

 

  

 

 

 

Net increase (decrease) in net assets

   246,861,260   294,607,725   2,812,599,067   3,056,714,972 

NET ASSETS

 

Beginning of the year

   1,539,004,058   1,244,396,333   4,394,512,827   1,337,797,855 
  

 

 

  

 

 

  

 

 

  

 

 

 

End of the year

  $1,785,865,318  $1,539,004,058  $7,207,111,894  $4,394,512,827 
  

 

 

  

 

 

  

 

 

  

 

 

 

UNDISTRIBUTED NET INVESTMENT INCOME

  $10,545,895  $10,444,127  $28,890,806  $17,971,361 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

See accompanying notes to financial statements.

 

55  |


Table of Contents

Statements of Changes in Net Assets (continued)

 

   Value Fund 
   Year Ended
September 30,

2017
  Year Ended
September 30,

2016
 

FROM OPERATIONS:

 

Net investment income

  $23,540,447  $27,575,585 

Net realized gain (loss) on investments and short sales

   125,860,403   20,497,235 

Net change in unrealized appreciation (depreciation) on investments and securities short sales

   39,943,740   85,543,390 
  

 

 

  

 

 

 

Net increase in net assets resulting from operations

   189,344,590   133,616,210 
  

 

 

  

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

 

Net investment income

   

Class A

   (3,300,870  (1,396,913

Class C

   (110,502  (62,920

Class N

   (10,337,308  (9,650,934

Class Y

   (10,883,174  (10,292,470

Admin Class

      (1,221,354

Net realized capital gains

   

Class A

   (4,790,308  (25,901,132

Class B(a)

      (7,739

Class C

   (300,799  (3,063,203

Class N

   (12,741,866  (118,136,122

Class Y

   (14,291,711  (138,382,558

Admin Class

   (20,087  (18,149,180
  

 

 

  

 

 

 

Total distributions

   (56,776,625  (326,264,525
  

 

 

  

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS (NOTE 12)

   (221,330,302  (11,555,512
  

 

 

  

 

 

 

Net increase (decrease) in net assets

   (88,762,337  (204,203,827

NET ASSETS

 

Beginning of the year

   1,257,030,926   1,461,234,753 
  

 

 

  

 

 

 

End of the year

  $1,168,268,589  $1,257,030,926 
  

 

 

  

 

 

 

UNDISTRIBUTED NET INVESTMENT INCOME

  $16,512,018  $19,352,403 
  

 

 

  

 

 

 

 

(a)On January 11, 2016, Class B shares were converted into Class A shares. See Note 1 of Notes to Financial Statements.

 

See accompanying notes to financial statements.

 

|  56


Table of Contents

Financial Highlights

 

For a share outstanding throughout each period.

 

  Global Equity and Income Fund—Class A 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $19.17  $18.45  $19.77  $18.57  $17.07 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.31   0.24   0.21   0.28   0.32(b) 

Net realized and unrealized gain (loss)

  2.36   1.47   (0.37  1.49   1.45 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.67   1.71   (0.16  1.77   1.77 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.24  (0.15  (0.20  (0.33  (0.27

Net realized capital gains

     (0.84  (0.96  (0.24   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.24  (0.99  (1.16  (0.57  (0.27
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $21.60  $19.17  $18.45  $19.77  $18.57 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(c)

  14.10  9.64  (0.91)%   9.62  10.54%(b) 

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $305,275  $280,263  $246,371  $237,167  $251,211 

Net expenses

  1.18  1.17  1.18  1.17  1.18

Gross expenses

  1.18  1.17  1.18  1.17  1.18

Net investment income

  1.57  1.32  1.06  1.46  1.82%(b) 

Portfolio turnover rate

  35  43  48  49  58

 

(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Includes non-recurring dividends. Without these dividends, net investment income per share would have been $0.27, total return would have been 10.25% and the ratio of net investment income to average net assets would have been 1.51%.
(c)A sales charge for Class A shares is not reflected in total return calculations.

 

See accompanying notes to financial statements.

 

57  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Global Equity and Income Fund—Class C 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $18.89  $18.19  $19.51  $18.36  $16.90 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.16   0.10   0.06   0.14   0.19(b) 

Net realized and unrealized gain (loss)

  2.33   1.46   (0.36  1.45   1.45 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.49   1.56   (0.30  1.59   1.64 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.09  (0.02  (0.06  (0.20  (0.18

Net realized capital gains

     (0.84  (0.96  (0.24   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.09  (0.86  (1.02  (0.44  (0.18
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $21.29  $18.89  $18.19  $19.51  $18.36 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(c)

  13.22  8.88  (1.66)%   8.72  9.77%(b) 

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $354,017  $423,350  $393,416  $377,001  $340,561 

Net expenses

  1.93  1.92  1.93  1.92  1.93

Gross expenses

  1.93  1.92  1.93  1.92  1.93

Net investment income

  0.84  0.57  0.31  0.71  1.07%(b) 

Portfolio turnover rate

  35  43  48  49  58

 

(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Includes non-recurring dividends. Without these dividends, net investment income per share would have been $0.13, total return would have been 9.41% and the ratio of net investment income to average net assets would have been 0.76%.
(c)A contingent deferred sales charge for Class C shares is not reflected in total return calculations.

 

See accompanying notes to financial statements.

 

|  58


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Global Equity
and Income
Fund—Class N
 
  Period Ended
September 30,
2017*
 

Net asset value, beginning of the period

 $19.20 
 

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

 

Net investment income(a)

  0.20 

Net realized and unrealized gain (loss)

  2.33 
 

 

 

 

Total from Investment Operations

  2.53 
 

 

 

 

Total Distributions

   
 

 

 

 

Net asset value, end of the period

 $21.73 
 

 

 

 

Total return(b)

  13.18

RATIOS TO AVERAGE NET ASSETS:

 

Net assets, end of the period (000’s)

 $59,512 

Net expenses(c)

  0.87

Gross expenses(c)

  0.87

Net investment income(c)

  1.48

Portfolio turnover rate(d)

  35

 

*From commencement of Class operations on February 1, 2017 through September 30, 2017.
(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Periods less than one year are not annualized.
(c)Computed on an annualized basis for periods less than one year.
(d)Represents the Fund’s portfolio turnover rate for the year ended September 30, 2017.

 

See accompanying notes to financial statements.

 

59  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Global Equity and Income Fund—Class Y 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $19.29  $18.55  $19.89  $18.68  $17.15 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.36   0.29   0.25   0.33   0.37(b) 

Net realized and unrealized gain (loss)

  2.37   1.49   (0.37  1.49   1.47 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.73   1.78   (0.12  1.82   1.84 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.28  (0.20  (0.26  (0.37  (0.31

Net realized capital gains

     (0.84  (0.96  (0.24   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.28  (1.04  (1.22  (0.61  (0.31
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $21.74  $19.29  $18.55  $19.89  $18.68 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  14.42  9.97  (0.72)%   9.87  10.90%(b) 

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $1,067,062  $835,391  $604,609  $633,057  $570,694 

Net expenses

  0.93  0.92  0.93  0.92  0.93

Gross expenses

  0.93  0.92  0.93  0.92  0.93

Net investment income

  1.79  1.58  1.30  1.69  2.07%(b) 

Portfolio turnover rate

  35  43  48  49  58

 

(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Includes non-recurring dividends. Without these dividends, net investment income per share would have been $0.31, total return would have been 10.60% and the ratio of net investment income to average net assets would have been 1.76%.

 

See accompanying notes to financial statements.

 

|  60


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Growth Fund—Class A 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $11.96  $9.90  $9.45  $8.07  $6.50 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.06   0.06   0.05   0.05   0.04 

Net realized and unrealized gain (loss)

  2.18   2.05   0.45   1.34   1.59 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.24   2.11   0.50   1.39   1.63 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.05  (0.05  (0.05  (0.01  (0.06

Net realized capital gains

  (0.11  —     —     —     —   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.16  (0.05  (0.05  (0.01  (0.06
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $14.04  $11.96  $9.90  $9.45  $8.07 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(b)

  18.99  21.32  5.30  17.23  25.23

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $983,047  $729,989  $122,203  $63,682  $50,248 

Net expenses

  0.91  0.92  0.92  0.94  1.03

Gross expenses

  0.91  0.92  0.92  0.94  1.03

Net investment income

  0.45  0.58  0.45  0.55  0.57

Portfolio turnover rate

  8  11  27%(c)   14  6

 

(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)Portfolio turnover would have been 6% if excluding the transfer in-kind amounts that occurred during the period.

 

See accompanying notes to financial statements.

 

61  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Growth Fund—Class C 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $11.06  $9.18  $8.79  $7.55  $6.09 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment loss(a)

  (0.03  (0.02  (0.03  (0.02  (0.01

Net realized and unrealized gain (loss)

  2.00   1.90   0.42   1.26   1.48 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  1.97   1.88   0.39   1.24   1.47 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

              (0.01

Net realized capital gains

  (0.11            
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.11           (0.01
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $12.92  $11.06  $9.18  $8.79  $7.55 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(b)

  18.03  20.48  4.44  16.42  24.21

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $133,329  $109,798  $41,421  $29,837  $20,798 

Net expenses

  1.66  1.66  1.67  1.69  1.78

Gross expenses

  1.66  1.66  1.67  1.69  1.78

Net investment loss

  (0.29)%   (0.16)%   (0.29)%   (0.20)%   (0.20)% 

Portfolio turnover rate

  8  11  27%(c)   14  6

 

(a)Per share net investment 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)Portfolio turnover would have been 6% if excluding the transfer in-kind amounts that occurred during the period.

 

See accompanying notes to financial statements.

 

|  62


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Growth Fund—Class N 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Period Ended
September 30,
2013*
 

Net asset value, beginning of the period

 $12.73  $10.52  $10.01  $8.56  $7.58 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.11   0.10   0.08   0.05   0.03 

Net realized and unrealized gain (loss)

  2.32   2.18   0.49   1.42   0.95 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.43   2.28   0.57   1.47   0.98 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.08  (0.07  (0.06  (0.02   

Net realized capital gains

  (0.11            
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.19  (0.07  (0.06  (0.02   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $14.97  $12.73  $10.52  $10.01  $8.56 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  19.39%(b)   21.75  5.65%(b)   17.21%(b)   12.93%(b)(c) 

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $341,160  $60,765  $1  $1  $1 

Net expenses

  0.57%(d)   0.58  0.55%(d)   0.95%(d)   0.95%(d)(e) 

Gross expenses

  0.58  0.58  9.82  3.45  3.50%(e) 

Net investment income

  0.80  0.82  0.71  0.52  0.60%(e) 

Portfolio turnover rate

  8  11  27%(f)   14  6

 

*From commencement of Class operations on February 1, 2013 through September 30, 2013.
(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)Computed on an annualized basis for periods less than one year.
(f)Portfolio turnover would have been 6% if excluding the transfer in-kind amounts that occurred during the period.

 

See accompanying notes to financial statements.

 

63  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Growth Fund—Class Y 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $12.73  $10.53  $10.04  $8.57  $6.90 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.09   0.10   0.07   0.08   0.05 

Net realized and unrealized gain (loss)

  2.33   2.16   0.49   1.42   1.69 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.42   2.26   0.56   1.50   1.74 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.07  (0.06  (0.07  (0.03  (0.07

Net realized capital gains

  (0.11            
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.18  (0.06  (0.07  (0.03  (0.07
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $14.97  $12.73  $10.53  $10.04  $8.57 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  19.31  21.55  5.59  17.51  25.49

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $5,749,576  $3,493,961  $1,174,150  $1,004,157  $541,245 

Net expenses

  0.66  0.66  0.67  0.69  0.77

Gross expenses

  0.66  0.66  0.67  0.69  0.77

Net investment income

  0.69  0.82  0.69  0.79  0.68

Portfolio turnover rate

  8  11  27%(b)   14  6

 

(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Portfolio turnover would have been 6% if excluding the transfer in-kind amounts that occurred during the period.

 

See accompanying notes to financial statements.

 

|  64


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Value Fund—Class A 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $20.73  $23.98  $28.47  $25.59  $20.86 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.36   0.34   0.29   0.45(b)   0.31 

Net realized and unrealized gain (loss)

  2.95   1.80   (1.58  4.00   4.70 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  3.31   2.14   (1.29  4.45   5.01 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.38  (0.28  (0.53  (0.27  (0.28

Net realized capital gains

  (0.56  (5.11  (2.67  (1.30   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.94  (5.39  (3.20  (1.57  (0.28
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $23.10  $20.73  $23.98  $28.47  $25.59 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(c)

  16.33  9.65  (5.59)%   17.97%(b)   24.35

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $185,153  $191,909  $124,662  $580,092  $171,327 

Net expenses

  0.96  0.94  0.95  0.96  0.97

Gross expenses

  0.96  0.94  0.95  0.96  0.97

Net investment income

  1.65  1.65  1.07  1.63%(b)   1.31

Portfolio turnover rate

  27  15  20  28  24

 

(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Includes non-recurring dividends. Without these dividends, net investment income per share would have been $0.29, total return would have been 17.02% and the ratio of net investment income to average net assets would have been 1.05%.
(c)A sales charge for Class A shares is not reflected in total return calculations.

 

See accompanying notes to financial statements.

 

65  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Value Fund—Class C 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $20.43  $23.69  $28.14  $25.33  $20.65 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.19   0.20   0.10   0.31(b)   0.13 

Net realized and unrealized gain (loss)

  2.91   1.76   (1.57  3.89   4.68 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  3.10   1.96   (1.47  4.20   4.81 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.20  (0.11  (0.31  (0.09  (0.13

Net realized capital gains

  (0.56  (5.11  (2.67  (1.30   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.76  (5.22  (2.98  (1.39  (0.13
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $22.77  $20.43  $23.69  $28.14  $25.33 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(c)

  15.46  8.85  (6.30)%   17.07%(b)   23.41

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $10,948  $11,474  $15,071  $16,958  $15,158 

Net expenses

  1.71  1.69  1.70  1.71  1.72

Gross expenses

  1.71  1.69  1.70  1.71  1.72

Net investment income

  0.89  0.94  0.40  1.15%(b)   0.55

Portfolio turnover rate

  27  15  20  28  24

 

(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Includes non-recurring dividends. Without these dividends, net investment income per share would have been $0.08, total return would have been 16.11% and the ratio of net investment income to average net assets would have been 0.28%.
(c)A contingent deferred sales charge for Class C shares is not reflected in total return calculations.

 

See accompanying notes to financial statements.

 

|  66


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Value Fund—Class N 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Period Ended
September 30,
2013*
 

Net asset value, beginning of the period

 $20.80  $24.09  $28.58  $25.65  $22.59 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.46   0.44   0.42   0.63(b)   0.25 

Net realized and unrealized gain (loss)

  2.94   1.80   (1.61  3.94   2.81 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  3.40   2.24   (1.19  4.57   3.06 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.45  (0.42  (0.63  (0.34   

Net realized capital gains

  (0.56  (5.11  (2.67  (1.30   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (1.01  (5.53  (3.30  (1.64   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $23.19  $20.80  $24.09  $28.58  $25.65 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  16.80  10.08  (5.23)%   18.43%(b)   13.55%(c) 

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $594,165  $499,533  $554,946  $392,811  $260,643 

Net expenses

  0.58  0.57  0.57  0.57  0.57%(d) 

Gross expenses

  0.58  0.57  0.57  0.57  0.57%(d) 

Net investment income

  2.07  2.11  1.55  2.28%(b)   1.50%(d) 

Portfolio turnover rate

  27  15  20  28  24

 

*From commencement of Class operations on February 1, 2013 through September 30, 2013.
(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Includes non-recurring dividends. Without these dividends, net investment income per share would have been $0.39, total return would have been 17.48% and the ratio of net investment income to average net assets would have been 1.43%.
(c)Periods less than one year are not annualized.
(d)Computed on an annualized basis for periods less than one year.

 

See accompanying notes to financial statements.

 

67  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Value Fund—Class Y 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $20.81  $24.10  $28.58  $25.65  $20.91 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.41   0.41   0.37   0.60(b)   0.36 

Net realized and unrealized gain (loss)

  2.97   1.79   (1.60  3.94   4.72 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  3.38   2.20   (1.23  4.54   5.08 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.42  (0.38  (0.58  (0.31  (0.34

Net realized capital gains

  (0.56  (5.11  (2.67  (1.30   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.98  (5.49  (3.25  (1.61  (0.34
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $23.21  $20.81  $24.10  $28.58  $25.65 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  16.63  9.92  (5.37)%   18.27%(b)   24.65

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $377,162  $553,259  $681,109  $1,303,492  $1,513,807 

Net expenses

  0.71  0.69  0.70  0.71  0.72

Gross expenses

  0.71  0.69  0.70  0.71  0.72

Net investment income

  1.86  1.95  1.36  2.19%(b)   1.56

Portfolio turnover rate

  27  15  20  28  24

 

(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Includes non-recurring dividends. Without these dividends, net investment income per share would have been $0.35, total return would have been 17.32% and the ratio of net investment income to average net assets would have been 1.28%.

 

See accompanying notes to financial statements.

 

|  68


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Value Fund—Admin Class 
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
  Year Ended
September 30,
2013
 

Net asset value, beginning of the period

 $20.37  $23.81  $28.34  $25.51  $20.79 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.31   0.32   0.26   0.30(b)   0.24 

Net realized and unrealized gain (loss)

  2.92   1.69   (1.61  4.07   4.71 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  3.23   2.01   (1.35  4.37   4.95 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

     (0.34  (0.51  (0.24  (0.23

Net realized capital gains

  (0.56  (5.11  (2.67  (1.30   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.56  (5.45  (3.18  (1.54  (0.23
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $23.04  $20.37  $23.81  $28.34  $25.51 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  16.06  9.11  (5.83)%   17.68%(b)   24.08

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $841  $854  $85,387  $268  $12 

Net expenses

  1.21  1.19  1.23  1.21  1.19

Gross expenses

  1.21  1.19  1.23  1.21  1.19

Net investment income

  1.44  1.61  1.03  1.07%(b)   1.01

Portfolio turnover rate

  27  15  20  28  24

 

(a)Per share net investment income has been calculated using the average shares outstanding during the period.
(b)Includes non-recurring dividends. Without these dividends, net investment income per share would have been $0.27, total return would have been 16.73% and the ratio of net investment income to average net assets would have been 0.96%.

 

See accompanying notes to financial statements.

 

69  |


Table of Contents

Notes to Financial Statements

 

September 30, 2017

 

1.  Organization.  Loomis Sayles Funds 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 an open-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 Equity and Income Fund (the “Global Equity and Income Fund”)

Loomis Sayles Growth Fund (the “Growth Fund”)

Loomis Sayles Value Fund (the “Value Fund”)

Each Fund is a diversified investment company.

Growth Fund was closed to new investors effective April 28, 2017. Growth Fund continues to offer Class A, Class C, Class N, and Class Y shares to existing shareholders and clients of registered investment advisers and registered representatives trading through intermediary programs/platforms on which the Fund is already available. New defined contribution and defined benefit plans will be permitted to invest in Growth Fund if they have started the process of adding the Fund as an investment option based on discussions with Loomis Sayles prior to April 28, 2017 and the Fund has been added to the plan line-up by December 31, 2017.

Each Fund offers Class A, Class C, Class N (effective February 1, 2017 for Global Equity and Income Fund) and Class Y shares. In addition, the Value Fund offers Admin Class shares. Class T shares of the Funds are not currently available for purchase. As of the close of business on January 11, 2016, Class B shares were converted into Class A shares and are no longer offered.

Class A shares are sold with a maximum front-end sales charge of 5.75%. Class C shares do not pay a front-end sales charge, do not convert to any other class of shares, pay higher Rule 12b-1 fees than Class A shares and may be subject to a 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 a front-end sales charge, a CDSC or Rule 12b-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 as outlined in the relevant Funds’ prospectus. Admin Class shares do not pay a front-end sales charge or a CDSC, but do pay a Rule 12b-1 fee. Admin Class shares are offered exclusively through intermediaries.

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, 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 borne pro rata by the holders of each class of shares, except that each class bears

 

|  70


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

expenses unique to that class (such as the Rule 12b-1 fees applicable to Class A, Class C and Admin Class), and transfer agent fees are borne collectively for Class A, Class C, Class Y and Admin Class (for Value Fund) and individually for Class N. In addition, each class votes as a class only with respect to its own Rule 12b-1 Plan. Shares of each class would receive their pro 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 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 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 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:

Listed equity securities (including shares of closed-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. Senior loans are valued at bid prices supplied by an independent pricing service, if available. 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

 

71  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

independent pricing service does not provide a reliable price for the security. Forward foreign currency contracts are valued utilizing interpolated rates determined based on information provided by an independent pricing service.

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 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 (“NYSE”). 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 September 30, 2017, securities held by Global Equity and Income Fund were fair valued as follows:

 

Equity

securities1

 

Percentage

of Net

Assets

 

Securities

classified as

fair valued

 

Percentage

of Net

Assets

 

Securities fair

valued by the

Fund’s

adviser

 

Percentage of Net

Assets

$321,436,393

 18.0% $3,570,032 0.2% $161,986 Less than 0.1%

 

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, is recorded on ex-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. Dividends reinvested are reflected as non-cash dividend on the Statement of Operations. Interest income is increased by the accretion of discount and decreased by the amortization of premium, if applicable. In

 

|  72


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

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 a pro rata basis to each class based on the relative net assets of each class to the total net assets of the Fund.

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 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 Fund has net losses, reduce the amount of income available to be distributed by the Fund.

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.

During the year ended September 30, 2017, the amount of income available to be distributed by Global Equity and Income Fund has been reduced by $7,930,360.

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.  Forward Foreign Currency Contracts.  The Funds may enter into forward foreign currency contracts, including forward foreign cross currency contracts to acquire exposure to foreign currencies or to hedge the Funds’ investments against currency fluctuation. A contract can also be used to offset a previous contract. These contracts

 

73  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

involve market risk in excess of the unrealized gain or loss reflected in the Funds’ Statements of Assets and Liabilities. The U.S. dollar value of the currencies a Fund has committed to buy or sell represents the aggregate exposure to each currency the Fund has acquired or hedged through currency contracts outstanding at period end. Gains or losses are recorded for financial statement purposes as unrealized until settlement date. Contracts are traded over-the-counter directly with a counterparty. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Certain contracts may require the movement of cash and/or securities as collateral for the Funds’ or counterparty’s net obligations under the contracts.

e.  Due to/from Brokers.  Transactions and positions in certain forward foreign currency contracts are maintained and cleared by registered U.S. broker/dealers pursuant to customer agreements between a Fund and the various broker/dealers. The due to brokers balance in the Statement of Assets and Liabilities for Global Equity and Income Fund represents cash received as collateral for forward foreign currency contracts. The due from brokers balance in the Statement of Assets and Liabilities for Global Equity and Income Fund represents cash pledged as collateral for forward foreign currency contracts. In certain circumstances the Fund’s use of cash held at brokers is restricted by regulation or broker mandated limits.

f.  When-Issued and Delayed Delivery Transactions.  The Funds may enter into when-issued or delayed delivery transactions. When-issued refers to transactions made conditionally because a security, although authorized, has not been issued. Delayed delivery refers to transactions for which delivery or payment will occur at a later date, beyond the normal settlement period. The price of when-issued and delayed delivery securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The security and the obligation to pay for it are recorded by the Funds at the time the commitment is entered into. The value of the security may vary with market fluctuations during the time before the Funds take delivery of the security. No interest accrues to the Funds until the transaction settles.

Delayed delivery transactions include those designated as To Be Announced (“TBAs”) in the Portfolios of Investments. For TBAs, the actual security that will be delivered to fulfill the transaction is not designated at the time of the trade. The security is “to be announced” 48 hours prior to the established trade settlement date. Certain transactions require the Funds or counterparty to post cash and/or securities as collateral for the net mark-to-market exposure to the other party. The Funds cover their net obligations under outstanding delayed delivery commitments by segregating or earmarking cash or securities at the custodian.

Purchases of when-issued or delayed delivery securities may have a similar effect on the Funds’ NAV as if the Funds’ had created a degree of leverage in the portfolio. Risks may arise upon entering into such transactions from the potential inability of

 

|  74


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

counterparties to meet their obligations under the transactions. Additionally, losses may arise due to changes in the value of the underlying securities.

There were no when-issued or delayed delivery securities held by the Funds as of September 30, 2017.

g.  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 September 30, 2017 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 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.

h.  Dividends and Distributions to Shareholders.  Dividends and distributions are recorded on 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, paydown gains and losses, contingent payment debt instruments, capital gain and return of capital

 

75  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

distributions received, convertible bonds, capital gains taxes, redemptions in-kind and premium amortization. Permanent book and tax basis differences relating to shareholder distributions 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, forward foreign currency contract mark-to-market, wash sales, premium amortization, contingent payment debt instruments, trust preferred securities, convertible bonds and return of capital distributions received. 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 short-term capital gains are considered to be 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 September 30, 2017 and 2016 were as follows:

 

  2017 Distributions Paid From:  2016 Distributions Paid From: 

Fund

 

Ordinary
Income

  

Long-Term
Capital
Gains

  

Total

  

Ordinary
Income

  

Long-Term
Capital
Gains

  

Total

 

Global Equity and Income Fund

 $17,489,512  $  $17,489,512  $13,560,829  $57,954,573  $71,515,402 

Growth Fund

  37,517,315   30,869,007   68,386,322   8,526,987      8,526,987 

Value Fund

  24,631,854   32,144,771   56,776,625   22,731,511   303,533,014   326,264,525 

Differences between these amounts and those reported in the Statements of Changes in Net Assets are primarily attributable to different book and tax treatment for short-term capital gains.

As of September 30, 2017, the components of distributable earnings on a tax basis were as follows:

 

   

Global
Equity and
Income Fund

   

Growth
Fund

   

Value
Fund

 

Undistributed ordinary income

  $10,707,388   $29,427,423   $23,352,385 

Undistributed long-term capital gains

   17,299,264    121,055,922    105,751,631 
  

 

 

   

 

 

   

 

 

 

Total undistributed earnings

   28,006,652    150,483,345    129,104,016 
  

 

 

   

 

 

   

 

 

 

Unrealized appreciation

   351,247,683    1,474,914,282    293,378,621 
  

 

 

   

 

 

   

 

 

 

Total accumulated earnings

  $379,254,335   $1,625,397,627   $422,482,637 
  

 

 

   

 

 

   

 

 

 

Capital loss carryforward utilized in the current year

  $5,486,121   $   $ 
  

 

 

   

 

 

   

 

 

 

 

|  76


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

As of September 30, 2017, unrealized appreciation (depreciation) as a component of distributable earnings was as follows:

 

   

Global
Equity and
Income Fund

  

Growth Fund

   

Value Fund

 

Unrealized appreciation (depreciation)

     

Investments

  $353,536,260  $1,474,914,282   $293,378,621 

Foreign currency translations

   (2,288,577       
  

 

 

  

 

 

   

 

 

 

Total unrealized appreciation (depreciation)

  $351,247,683  $1,474,914,282   $293,378,621 
  

 

 

  

 

 

   

 

 

 

As of September 30, 2017, the cost of investments (including derivatives, if applicable) and unrealized appreciation (depreciation) on a federal tax basis were as follows:

 

   

Global
Equity and
Income Fund

  

Growth
Fund

  

Value
Fund

 

Federal tax cost

  $1,461,143,306  $5,670,930,182  $875,446,310 
  

 

 

  

 

 

  

 

 

 

Gross tax appreciation

  $362,601,925  $1,511,887,526  $319,270,542 

Gross tax depreciation

   (11,297,707  (36,973,244  (25,891,921
  

 

 

  

 

 

  

 

 

 

Net tax appreciation

  $351,304,218  $1,474,914,282  $293,378,621 
  

 

 

  

 

 

  

 

 

 

Differences between these amounts and those reported in the components of distributable earnings are primarily attributable to foreign currency translation and capital gains taxes.

i.  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 are tri-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 September 30, 2017, 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.

 

77  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

j.  Securities Lending.  The Funds have entered into an agreement with State Street Bank and Trust Company (“State Street Bank”), as agent of the Funds, to lend securities to certain designated borrowers. The loans are collateralized with cash or securities in an amount equal to at least 105% or 102% of the market value (including accrued interest) of the loaned international or domestic securities, respectively, when the loan is initiated. Thereafter, the value of the collateral must remain at least 102% of the market value (including accrued interest) of loaned securities for U.S. equities and U.S. corporate debt; at least 105% of the market value (including accrued interest) of loaned securities for non-U.S. equities; and at least 100% of the market value (including accrued interest) of loaned securities for U.S. Government securities, sovereign debt issued by non-U.S. Governments and non-U.S. corporate debt. In the event that the market value of the collateral falls below the required percentages described above, the borrower will deliver additional collateral on the next business day. As with other extensions of credit, the Funds may bear the risk of loss with respect to the investment of the collateral. The Funds invest cash collateral in short-term investments, a portion of the income from which is remitted to the borrowers and the remainder allocated between the Funds and State Street Bank as lending agent.

For the year ended September 30, 2017, none of the Funds had loaned securities under this agreement.

k.  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 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.

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).

 

|  78


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

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 Funds’ investments as of September 30, 2017, at value:

Global Equity and Income Fund

Asset Valuation Inputs

 

Description

  

Level 1

   

Level 2

   

Level 3

  

Total

 

Common Stocks

       

Belgium

  $   $15,721,894   $  $15,721,894 

France

       33,535,826       33,535,826 

Hong Kong

       44,708,521       44,708,521 

India

       16,249,812       16,249,812 

Japan

       13,929,710       13,929,710 

Sweden

       50,251,656       50,251,656 

Switzerland

       76,291,780       76,291,780 

United Kingdom

       70,747,194       70,747,194 

United States

   782,543,604        3,886(b)   782,547,490 

All Other Common Stocks(a)

   99,757,346           99,757,346 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total Common Stocks

   882,300,950    321,436,393    3,886   1,203,741,229 
  

 

 

   

 

 

   

 

 

  

 

 

 

 

79  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

Global Equity and Income Fund (continued)

Asset Valuation Inputs (continued)

 

Description

  

Level 1

   

Level 2

   

Level 3

  

Total

 

Bonds and Notes

       

Non-Convertible Bonds

       

United States

  $38,351   $284,387,688   $1,075,475(c)  $285,501,514 

All Other Non-Convertible Bonds(a)

       207,927,921       207,927,921 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total Non-Convertible Bonds

   38,351    492,315,609    1,075,475   493,429,435 
  

 

 

   

 

 

   

 

 

  

 

 

 

Convertible Bonds(a)

       12,652,270       12,652,270 

Municipals(a)

       275,674       275,674 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total Bonds and Notes

   38,351    505,243,553    1,075,475   506,357,379 
  

 

 

   

 

 

   

 

 

  

 

 

 

Senior Loans(a)

       119,250       119,250 

Preferred Stocks

       

Convertible Preferred Stocks(a)

   508,277    546,495       1,054,772 

Non-Convertible Preferred Stock(a)

   100,556           100,556 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total Preferred Stocks

   608,833    546,495       1,155,328 
  

 

 

   

 

 

   

 

 

  

 

 

 

Short-Term Investments

       101,052,609       101,052,609 

Forward Foreign Currency Contracts (unrealized

appreciation)

       1,242,722       1,242,722 
  

 

 

   

 

 

   

 

 

  

 

 

 

Total

  $882,948,134   $929,641,022   $1,079,361  $1,813,668,517 
  

 

 

   

 

 

   

 

 

  

 

 

 

 

Liability Valuation Inputs 

Description

  

Level 1

   

Level 2

  

Level 3

   

Total

 

Forward Foreign Currency Contracts (unrealized depreciation)

  $  —   $(1,445,015 $  —   $(1,445,015
  

 

 

   

 

 

  

 

 

   

 

 

 

 

(a)Details of the major categories of the Fund’s investments are reflected within the Portfolio of Investments.
(b)Fair valued by the Fund’s adviser using broker-dealer bid prices for which the inputs are unobservable to the Fund.
(c)Valued using broker-dealer bid prices ($917,375) or fair valued by the Fund’s adviser ($158,100).

 

 

|  80


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

A common stock valued at $15,561,172 was transferred from Level 1 to Level 2 during the period ended September 30, 2017. At September 30, 2016, this security was valued at the market price in the foreign market in accordance with the Fund’s valuation policies. At September 30, 2017, 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 at the beginning of the reporting period.

Growth Fund

Asset Valuation Inputs

 

Description

  

Level 1

   

Level 2

   

Level 3

   

Total

 

Common Stocks(a)

  $7,007,340,225   $   $   $7,007,340,225 

Short-Term Investments

       138,504,239        138,504,239 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $7,007,340,225   $138,504,239   $  —   $7,145,844,464 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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

For the year ended September 30, 2017, there were no transfers among Levels 1, 2 and 3.

Value Fund

Asset Valuation Inputs

 

Description

  

Level 1

   

Level 2

   

Level 3

   

Total

 

Common Stocks(a)

  $1,155,249,722   $   $   $1,155,249,722 

Short-Term Investments

       13,575,209        13,575,209 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $1,155,249,722   $13,575,209   $  —   $1,168,824,931 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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

For the year ended September 30, 2017, there were no transfers among Levels 1, 2 and 3.

 

81  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value as of September 30, 2016 and/or September 30, 2017:

Global Equity and Income Fund

Asset Valuation Inputs

 

Investments in Securities

 

Balance as of
September 30,
2016

  

Accrued
Discounts
(Premiums)

  

Realized
Gain
(Loss)

  

Change in
Unrealized
Appreciation
(Depreciation)

  

Purchases

 

Common Stocks

     

United States

 $1,332  $  $  $2,554  $ 

Bonds and Notes

     

Non-Convertible Bonds

     

United States

  118,622   4,772   1,150   98,833   859,200 

Warrants

  3,776      5,273   (3,776   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

 $123,730  $4,772  $6,423  $97,611  $859,200 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Investments in Securities

 

Sales

  

Transfers
into
Level 3

  

Transfers
out of
Level 3

  

Balance as of
September 30,
2017

  

Change in
Unrealized
Appreciation
(Depreciation)
from
Investments
Still Held at
September 30,
2017

 

Common Stocks

     

United States

 $  $  —  $  —  $3,886  $2,554 

Bonds and Notes

     

Non-Convertible Bonds

     

United States

  (7,102        1,075,475   99,903 

Warrants

  (5,273            
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

 $(12,375 $  $  $1,079,361  $102,457 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

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 Global Equity and Income Fund used during the period include forward foreign currency contracts.

 

|  82


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

Global Equity and Income Fund is subject to the risk that changes in foreign currency exchange rates will have an unfavorable effect on the value of Fund assets denominated in foreign currencies. The Fund may enter into forward foreign currency contracts for hedging purposes to protect the value of the Fund’s holdings of foreign securities. The Fund may also use forward foreign currency contracts to gain exposure to foreign currencies, regardless of whether securities denominated in such currencies are held in the Fund. During the year ended September 30, 2017, the Fund engaged in forward foreign currency transactions for hedging purposes and to gain exposure to foreign currencies.

The following is a summary of derivative instruments for Global Equity and Income Fund as of September 30, 2017, as reflected within the Statements of Assets and Liabilities

 

Assets

 

Unrealized

Appreciation on

forward foreign
currency contracts

Over-the-counter asset derivatives

 

Foreign exchange contracts

 $1,242,722

Liabilities

 

Unrealized

Depreciation on

forward foreign
currency contracts

Over-the-counter liability derivatives

Foreign exchange contracts

 $(1,445,015)

Transactions in derivative instruments for the Global and Equity Income Fund during the year ended September 30, 2017, as reflected within the Statement of Operations, were as follows:

 

Net Realized Gain (Loss) on:

 

Forward foreign
currency contracts

Foreign exchange contracts

 $(4,243,171)

 

Net Change in Unrealized Appreciation
(Depreciation) on:

 

Forward foreign
currency contracts

Foreign exchange contracts $(519,161)

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 be non-hedge transactions for the purpose of these disclosures.

 

83  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

The volume of forward foreign currency contract activity, as a percentage of net assets, for Global Equity and Income Fund, based on gross month-end notional amounts outstanding during the period, including long and short positions at absolute value, was as follows for the year ended September 30, 2017:

 

Global Equity and Income Fund

  

Forwards

 
Average Notional Amount Outstanding   8.04
Highest Notional Amount Outstanding   9.14
Lowest Notional Amount Outstanding   7.09
Notional Amount Outstanding as of September 30, 2017   7.38

Notional amounts outstanding at the end of the prior period are included in the average notional amount outstanding.

Unrealized gain and/or loss on open forwards is recorded in the Statements of Assets and Liabilities. The aggregate notional values of forward contracts are not recorded in the Statements of Assets and Liabilities, and therefore are not included in the Fund’s net assets.

Global Equity and Income Fund enters into over-the-counter derivatives, including forward foreign currency contracts, pursuant to International Swaps and Derivatives Association, Inc. (“ISDA”) agreements negotiated between the Fund and its counterparties. ISDA agreements typically contain, among other things, terms for the posting of collateral and master netting provisions in the event of a default or other termination event. Collateral is posted by the Fund or the counterparty to the extent of the net mark-to-market exposure to the other party of all open contracts under the agreement, subject to minimum transfer requirements. Master netting provisions allow the Fund and the counterparty, in the event of a default or other termination event, to offset amounts owed by each related to derivative contracts, including any posted collateral, to one net amount payable by either the Fund or the counterparty. The Fund’s ISDA agreements typically contain provisions that allow a counterparty to terminate open contracts early if the NAV of a Fund declines beyond a certain threshold. For financial reporting purposes, the Fund does not offset derivative assets and liabilities, and any related collateral received or pledged, on the Statements of Assets and Liabilities.

 

|  84


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

As of September 30, 2017, gross amounts of over-the-counter derivative assets and liabilities not offset in the Statements of Assets and Liabilities and the related net amounts after taking into account master netting arrangements, by counterparty, are as follows:

Global Equity and Income Fund

 

Counterparty

 

Gross Amounts of
Assets

  

Offset
Amount

  

Net
Asset
Balance

  

Collateral
(Received)/
Pledged

  

Net
Amount

 

Bank of America, N.A.

 $157,398  $  $157,398  $  $157,398 

Credit Suisse International

  692,046   (692,046         

UBS AG

  393,278   (149  393,129   (360,000  33,129 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
 $1,242,722  $(692,195 $550,527  $(360,000 $190,527 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Counterparty

 

Gross Amounts of
Liabilities

  

Offset
Amount

  

Net
Liability
Balance

  

Collateral
(Received)/
Pledged

  

Net
Amount

 

Credit Suisse International

 $(1,217,439 $692,046  $(525,393 $525,393  $ 

Morgan Stanley & Co.

  (227,427     (227,427  227,427    

UBS AG

  (149  149          
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
 $(1,445,015 $692,195  $(752,820 $752,820  $ 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

The actual collateral received or pledged, if any, may exceed the amounts shown in the table due to overcollateralization. Timing differences may exist between when contracts under the ISDA agreements are marked-to-market and when collateral moves. The ISDA agreements include tri-party control agreements under which collateral is held for the benefit of the secured party at a third party custodian, State Street Bank.

Counterparty risk is managed based on policies and procedures established by the Fund’s adviser. Such policies and procedures may include, but are not limited to, minimum counterparty credit rating requirements, monitoring of counterparty credit default swap spreads and posting of collateral. The Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the Fund’s aggregated unrealized gains and the amount of any collateral pledged to the counterparty, which may be offset by any collateral posted to the Fund by the counterparty. ISDA master agreements can help to manage counterparty risk by specifying collateral posting arrangements at pre-arranged exposure levels. Under these ISDA agreements, collateral is routinely transferred if the total net exposure in respect of certain transactions, net of existing collateral already in place, exceeds a

 

85  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

specified amount (typically $250,000, depending on the counterparty). With exchange-traded derivatives, there is minimal counterparty credit risk to the Fund because the exchange’s clearinghouse, as counterparty to these instruments, stands between the buyer and the seller of the contract. Credit risk still exists in exchange-traded derivatives with respect to initial and variation margin that is held in a broker’s customer accounts. While brokers are required to segregate customer margin from their own assets, in the event that a broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro rata basis across all of the broker’s customers, potentially resulting in losses to the Fund. Based on balances reflected on the Fund’s Statement of Assets and Liabilities, the following table shows (i) the maximum amount of loss due to credit risk that, based on the gross fair value of the financial instrument, the Fund would incur if parties (including OTC derivative counterparties and brokers holding margin for exchange-traded derivatives) to the relevant financial instruments failed completely to perform according to the terms of the contracts and the collateral or other security, if any, for the amount due proved to be of no value to the Fund, and (ii) the amount of loss that the Fund would incur after taking into account master netting provisions pursuant to ISDA agreements, as of September 30, 2017:

 

Fund

  

Maximum Amount

of Loss - Gross

   

Maximum Amount

of Loss - Net

 

Global Equity and Income Fund

  $2,239,126   $434,111 

These amounts include cash received as collateral for Global Equity and Income Fund of $360,000.

5.  Purchases and Sales of Securities.  For the year ended September 30, 2017, purchases and sales of securities (excluding short-term investments and U.S. Government/Agency securities and including paydowns) were as follows:

 

Fund

  

Purchases

   

Sales

 

Global Equity and Income Fund

  $489,907,456   $487,232,442 

Growth Fund

   2,072,416,567    435,295,944 

Value Fund

   324,354,769    567,099,287 

For the year ended September 30, 2017, purchases and sales of U.S. Government/Agency securities by the Global Equity and Income Fund were $80,074,238 and $52,565,050, respectively.

 

|  86


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

6. Management Fees and Other Transactions with Affiliates.

a.  Management Fees.  Loomis, Sayles & Company, L.P. (“Loomis Sayles”) serves as investment adviser to each Fund. Separate management agreements for each Fund in effect for the year ended September 30, 2017, provided for fees at the following annual percentage rates of each Fund’s average daily net assets:

 

   Percentage of
Average
Daily Net Assets
 

Fund

  

First

$2 billion

  

Over

$2 billion

 

Global Equity and Income Fund

   0.75  0.73

Growth Fund

   0.50  0.50

Value Fund

   0.50  0.50

Loomis Sayles has 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, taxes, organizational and extraordinary expenses such as litigation and indemnification expenses. These undertakings are in effect until January 31, 2018, may be terminated 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 September 30, 2017 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

  

Admin Class

 

Global Equity and Income Fund

  1.25  2.00  0.95  1.00   

Growth Fund

  1.25  2.00  0.95  1.00   

Value Fund

  1.10  1.85  0.80  0.85  1.35

Loomis Sayles shall be permitted to recover expenses it has borne under the expense limitation agreements (whether through waiver of its 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.

 

87  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

For the year ended September 30, 2017, the management fees for each Fund were as follows:

 

Fund

  Gross
Management
Fees
   Percentage of
Average
Daily Net Assets
 

Global Equity and Income Fund

  $11,866,210    0.75

Growth Fund

   28,270,208    0.50

Value Fund

   6,153,022    0.50

No expenses were recovered for any of the Funds during the year ended September 30, 2017 under the terms of the expense limitation agreements.

Certain officers and employees of Loomis Sayles are also officers or Trustees of the Trust. Loomis Sayles’ general partner 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.

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 Rule 12b-1 under the 1940 Act, the Trust has adopted a Service Plan relating to each Fund’s Class A shares (the “Class A Plans”), a Distribution and Service Plan relating to each Fund’s Class C shares (the “Class C Plans”), and Value Fund has adopted a Distribution Plan relating to its Admin Class shares (the “Admin Class Plan”).

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 an annual rate of 0.75% of the average daily net assets attributable to the Funds’ Class C shares, as compensation for services provided by Natixis Distribution in connection with the marketing or sale of Class C shares.

 

|  88


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

Under the Admin Class Plan, Value Fund pays Natixis Distribution a monthly distribution fee at an annual rate not to exceed 0.25% of the average daily net assets attributable to the Fund’s Admin Class shares, as compensation for services provided by Natixis Distribution in connection with the marketing or sale of Admin Class shares or for payments made by Natixis Distribution to securities dealers or other financial intermediaries as commissions, asset-based sales charges or other compensation with respect to the sale of Admin Class shares, or for providing personal services to investors and/or the maintenance of shareholder accounts.

In addition, the Admin Class shares of Value Fund may pay Natixis Distribution an administrative service fee, at an annual rate not to exceed 0.25% of the average daily net assets attributable to Admin Class shares. These fees are subsequently paid to securities dealers or financial intermediaries for providing personal services and/or account maintenance for their customers who hold such shares.

For the year ended September 30, 2017, the service and distribution fees for each Fund were as follows:

 

   Service Fees   Distribution Fees 

Fund

  

Class A

   

Class C

   

Admin
Class

   

Class C

   

Admin
Class

 

Global Equity and Income Fund

  $685,934   $942,737   $   $2,828,211   $ 

Growth Fund

   2,142,985    317,441        952,323     

Value Fund

   467,921    29,156    2,058    87,469    2,058 

c.  Administrative Fees.  Natixis Advisors, L.P. (“Natixis Advisors”) provides certain administrative services for the Funds and contracts with State Street Bank to serve as sub-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, each Fund pays Natixis Advisors monthly its pro 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, 0.0350% of the next $30 billion and 0.0325% 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.

For the year ended September 30, 2017, the administrative fees for each Fund were as follows:

 

Fund

  

Administrative
Fees

 

Global Equity and Income Fund

  $705,928 

Growth Fund

   2,522,317 

Value Fund

   549,206 

 

89  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

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 current per-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.

For the year ended September 30, 2017, the sub-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 Equity and Income Fund

  $1,287,609 

Growth Fund

   4,705,620 

Value Fund

   778,033 

As of September 30, 2017, the Funds owe Natixis Distribution the following reimbursements for sub-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 Equity and Income Fund

  $17,238 

Growth Fund

   66,374 

Value Fund

   9,424 

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

 

|  90


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

e.  Commissions.  Commissions (including CDSCs) on Fund shares retained by Natixis Distribution during the year ended September 30, 2017, were as follows:

 

Fund

  

Commissions

 

Global Equity and Income Fund

  $116,819 

Growth Fund

   131,895 

Value Fund

   7,394 

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 $325,000. The Chairperson does not receive any meeting attendance fees for Board of Trustees meetings or committee meetings that she attends. Each Independent Trustee (other than the Chairperson) receives, in the aggregate, a retainer fee at the annual rate of $155,000. 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 $17,500. The chairperson of the Governance Committee receives an additional retainer fee at the annual rate of $10,000. 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.

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 allocated pro 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 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.

 

91  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

g.  Affiliated Ownership.  As of September 30, 2017, Loomis Sayles Funded Pension Plan and Trust (“Pension Plan”) and Loomis Sayles Employees’ Profit Sharing Retirement Plan (“Retirement Plan”) held shares of the Funds representing the following percentages of the Fund’s net assets:

 

Fund

  

Pension
Plan

  

Retirement
Plan

 

Global Equity and Income Fund

   0.75  1.00

Growth Fund

   0.16  0.68

Value Fund

   0.95  2.29

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 Global Equity and Income Fund and Growth Fund to reimburse any and all transfer agency expenses for the Funds’ Class N shares. This undertaking is in effect through January 31, 2018 and is not subject to recovery under the expense limitation agreement described above.

For the year ended September 30, 2017, Natixis Advisors reimbursed the Funds for transfer agency expenses as follows:

 

Fund

  Reimbursement of Transfer Agency Expenses 
   

Class N

 

Global Equity and Income Fund

  $265 

Growth Fund

   1,348 

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

For the year ended September 30, 2017 (February 1, 2017, commencement of Class N operations, through September 30, 2017 for Global Equity and Income Fund), the Funds incurred the following class-specific transfer agent fees and expenses (including sub-transfer agent fees, where applicable):

 

   Transfer Agent Fees and Expenses 

Fund

  

Class A

   

Class C

   

Class N

   

Class Y

   

Admin Class

 

Global Equity and Income Fund

  $237,266   $326,888   $265   $796,838   $ 

Growth Fund

   777,606    115,714    1,348    4,092,571     

Value Fund

   236,640    14,747    1,243    613,941    1,044 

8.  Line of Credit.  Each Fund, together with certain other funds of Natixis Funds Trusts and Loomis Sayles Funds Trusts, entered into a 364-day, $400,000,000 syndicated,

 

|  92


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

committed, unsecured line of credit with Citibank, N.A. to be used for temporary or emergency purposes only. Any one Fund may borrow up to the full $400,000,000 under the line of credit (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. Interest is charged to the Funds at a rate equal to the greater of the eurodollar or the federal funds rate plus 1.00%. In addition, a commitment fee of 0.15% per annum, payable on the last business day of each month, 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 other fees in connection with the new line of credit agreement, which are being amortized over a period of 364 days and are reflected as miscellaneous expenses on the Statements of Operations. The unamortized balance is reflected as prepaid expenses on the Statements of Assets and Liabilities.

Prior to April 13, 2017, the commitment fee was 0.10% per annum based on the average daily unused portion of the line of credit.

For the year ended September 30, 2017, none of the Funds had borrowings under this agreement.

9.  Brokerage Commission Recapture.  Each Fund has entered into agreements with certain brokers whereby the brokers will rebate a portion of brokerage commissions. All amounts rebated by the brokers are returned to the Funds under such agreements and are included in realized gains on investments on the Statements of Operations. For the year ended September 30, 2017, amounts rebated under these agreements were as follows:

 

Fund

  

Rebates

 

Global Equity and Income Fund

  $30,352 

Growth Fund

   84,817 

Value Fund

   62,099 

10.  Concentration of Risk.  Each Fund’s investments in foreign securities are subject to foreign currency fluctuations, higher volatility than U.S. securities, varying degrees of regulation and limited liquidity. Greater political, economic, credit and information risks are also associated with foreign securities.

11.  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 September 30, 2017, based on management’s evaluation of the shareholder account base, the Funds had accounts representing controlling ownership of more than

 

93  |


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

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:

 

Fund

  

Number of 5%
Account Holders

   

Percentage of
Ownership

 

Growth Fund

   5    54.90

Value Fund

   3    50.79

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 a non-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.

12.  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
September 30, 2017

 
  
Year Ended
September 30, 2016

 

Global Equity and Income Fund

   Shares   Amount   Shares   Amount 
Class A     

Issued from the sale of shares

   4,990,165  $100,716,829   6,518,060  $118,574,424 

Issued in connection with the reinvestment of distributions

   140,170   2,609,969   577,893   10,419,401 

Redeemed

   (5,616,924  (111,165,803  (5,833,275  (106,983,972
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (486,589 $(7,839,005  1,262,678  $22,009,853 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class C     

Issued from the sale of shares

   1,966,061  $38,867,350   5,118,112�� $92,412,220 

Issued in connection with the reinvestment of distributions

   55,158   1,018,222   632,650   11,305,458 

Redeemed

   (7,808,773  (152,602,063  (4,961,383  (89,655,498
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (5,787,554 $(112,716,491  789,379  $14,062,180 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class N(a)     

Issued from the sale of shares

   2,739,038  $58,209,318     $ 

Redeemed

   (107  (2,286      
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   2,738,931  $58,207,032     $ 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class Y     

Issued from the sale of shares

   19,036,860  $382,730,980   20,904,782  $383,282,778 

Issued in connection with the reinvestment of distributions

   520,438   9,732,190   1,658,138   30,028,870 

Redeemed

   (13,769,090  (276,314,577  (11,843,072  (215,508,066
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   5,788,208  $116,148,593   10,719,848  $197,803,582 
  

 

 

  

 

 

  

 

 

  

 

 

 

Increase (decrease) from capital share transactions

   2,252,996  $53,800,129   12,771,905  $233,875,615 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

(a)From commencement of Class operations on February 1, 2017 through September 30, 2017.

 

|  94


Table of Contents

Notes to Financial Statements (continued)

 

September 30, 2017

 

12.  Capital Shares (continued).

 

   
Year Ended
September 30, 2017

 
  
Year Ended
September 30, 2016

 

Growth Fund

   Shares   Amount   Shares   Amount 
Class A 

Issued from the sale of shares

   23,963,667  $290,490,483   56,665,269  $606,177,061 

Issued in connection with the reinvestment of distributions

   786,586   8,974,953   45,231   484,871 

Redeemed

   (15,774,109  (197,838,024  (8,031,026  (87,510,712
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   8,976,144  $101,627,412   48,679,474  $519,151,220 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class B(a) 

Issued from the sale of shares

     $     $ 

Redeemed

         (2,435  (23,311
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

     $   (2,435 $(23,311
  

 

 

  

 

 

  

 

 

  

 

 

 
Class C 

Issued from the sale of shares

   3,905,114  $42,699,406   7,094,313  $72,448,712 

Issued in connection with the reinvestment of distributions

   68,093   719,057       

Redeemed

   (3,588,005  (41,290,336  (1,673,262  (16,737,009