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Loomis Sayles Funds Ii

Filed: 30 Nov 18, 12:49pm
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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, 2018

 

 

 


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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:

 


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LOGO

 

LOGO

 

Annual Report

September 30, 2018

Loomis Sayles Global Allocation Fund

Loomis Sayles Growth Fund

 

Table of Contents

Portfolio Review  1 
Portfolio of Investments  23 
Financial Statements  45 
Notes to Financial Statements  58 

 

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LOOMIS SAYLES GLOBAL ALLOCATION 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

Global equity markets experienced widely divergent results in the 12-month period ending September 30, 2018, reflecting the broad range of economic and political trends that influenced sentiment across the major regions.

In the United States, stocks surged and finished the period just short of an all-time high (as gauged by the S&P 500® Index). US equities were boosted by the persistent strength of the US economy and associated increases in consumer, business and investor confidence. The improvement in growth also fed through to corporate profits, leading to better-than-expected results and prompting analysts to ramp up their estimates for future earnings. These developments outweighed concerns related to trade policy and ongoing interest rate increases by the US Federal Reserve, resulting in robust, broad-based gains for US equities. Growth stocks, especially those in the technology sector, were particularly strong performers. Conversely, value stocks lagged considerably amid reduced investor demand for defensive, dividend-paying companies.

The story was somewhat different overseas. The developed foreign markets came under pressure from early February onward as economic growth failed to meet the optimistic expectations that existed late in 2017. In addition, European equities faced the headwinds of tighter central bank policy and populist political movements. Emerging market stocks also weakened, largely because of protectionism in the United States and economic turmoil in countries such as Argentina and Turkey. The downturn in most foreign currencies against the US dollar also weighed on non-US equities.

Corporate credit spreads (the difference in yield between credit and Treasury securities of similar maturity) generally narrowed in the fourth quarter of 2017 on the back of solid economic numbers, stronger oil prices and the US Republican Party’s tax plan. However, spreads generally widened from January through the rest of the period, despite healthy profits and positive cyclical dynamics. Rising trade tensions, emerging market volatility and political instability in the euro zone periphery lowered investor confidence and likely contributed to reduced global demand for credit in the latter half of the year.

 

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US Treasury yields rose higher during the period and uncertainty outside of the United States resulted in a stronger US dollar and tighter global financial conditions, particularly in the second half of the period. Unsteady global risk appetite, tighter US monetary policy and capital inflows in the wake of rising volatility appear to have helped sustain the dollar rally.

Performance Results

For the 12 months ended September 30, 2018, Class Y shares of the Loomis Sayles Global Allocation Fund returned 9.49% at net asset value. The Fund underperformed its benchmark, the MSCI ACWI (Net), which returned 9.77%.

Explanation of Fund Performance

In equities, the three largest detractors were Dufry, NVR, and Julius Baer. Shares of Dufry underperformed over the period. Concerns around slower organic sales growth as compared to recent trends and top line growth weighed on stock performance. Further, concerns around volatility in emerging market currencies and the impact on traveler purchasing power also contributed to the stock’s weakness. Dufry rates highly across our quality criteria; it operates in a largely oligopolistic market structure that is well-positioned to benefit from global airline passenger growth. Its long tenured management team has smartly allocated capital, significantly increasing the company’s scale via acquisitions over the last decade. Today it has a highly diversified business model, geographically as well as by store concepts, with a mix of general shops, proprietary concepts (e.g., Hudson News) and branded boutiques (e.g., Coach). As a store operator, it is capital-lite, operating under medium-term contracts. We expect intrinsic value growth to be driven by revenues — passenger growth, square footage increases, bolt-on acquisitions, and growing initiatives such as its loyalty program — and margin expansion as it continues to leverage its scale. Using normalized earnings, the stock is attractively valued on our discounted cash flow methodology.

Shares of NVR, one of the largest home builders in the US, underperformed over the period. While revenue and earnings per share growth were healthy, the company reported lower growth rates in orders, which contributed to weakness in the shares. We believe the company has a healthy backlog and our long-term investment thesis remains intact. The company rates highly across our quality criteria. By focusing on home building rather than land development, the company has a unique asset-lite business model. It leverages purchase agreements to acquire pre-sold finished lots which significantly reduces its capital requirements. This model allowed the company to remain cash flow positive during the 2008 housing crisis. Its scale supports strong relationships with land developers and subcontractors as well as creates purchasing power. The company has a solid management team — the strength of which is demonstrated by the company’s cash flow generation and return on invested capital metrics. The CEO has been in place since 2005 and was previously the CFO for 12 years. Management also has meaningful company ownership, aligning its interests with shareholders. We expect intrinsic value to be driven by revenue growth, margin expansion, and capital allocation. A continued modest recovery in housing

 

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and favorable demographics provide further support to its business. Valuation is attractive based on our discounted cash flow methodology.

Shares of Julius Baer, a Swiss-based global wealth management company, have been weak over the period. Net interest income in the first half was disappointing, indicating that price competition for deposits may be heating up. Additionally, client transactions in Asia have been weak, reflecting client concerns around a potential trade war. Despite these short-term challenges, we are confident of the company’s quality and its strong organic growth potential, driven by continued inflows of new client assets and by bolt-on acquisitions.

Individual bond choices in the Communications sectors, in particular among select US cable and wireless companies failed to keep pace. Certain bonds held from the consumer Cyclical sectors, in particular among select automotive, retailers, and home construction, also detracted.

Allocation to emerging market currencies was negative as increased trade war rhetoric and heightened volatility dampened the risk appetite for emerging market assets. In particular, exposure to the Argentine peso, Brazilian real, South African rand, Mexican peso, and Indonesian rupiah detracted from results. Issuer selection among emerging market hard currency names, particularly those from Brazil and Argentina, detracted as emerging market assets were under pressure during the period and country vulnerabilities came into focus.

In equities, the top three individual contributors were Amazon, Sherwin-Williams, and UnitedHealth Group.

Amazon shares outperformed during the year as the company continues to deliver strong growth, led by Amazon Web Services, Subscription Services, and other revenues (primarily advertising). The composition of growth is becoming increasingly relevant for Amazon, as these segments will likely carry operating margins well above the company average. This mix effect, coupled with restrained growth in capital leases and headcount, has resulted in substantial profitability improvements in the last two quarters. We would also highlight Amazon’s planned acquisition of PillPack Pharmacy during the period — vaulting the e-Commerce giant into yet another attractive market. The company has a long history of identifying and disrupting large profit pools in established industries — either through organic or inorganic investment — and we believe that this acquisition could be a springboard for future expansion into the healthcare arena. While Amazon will bring immediate scale to the PillPack platform, the PillPack business could conversely help Amazon to grow its Prime membership base among older individuals, given that PillPack’s customer base skews to this demographic.

Sherwin-Williams performed well over the past year, demonstrating strong pricing power despite persistently rising raw material costs. Same store sales in the company’s core paint stores business steadily grew in the mid- to high single digits throughout the year and the company delivered solid gains in performance coatings. Performance also improved in the consumer brands segment, which struggled throughout 2017. Integration of the Valspar business continues apace, and the margin and revenue synergies from the acquisition are

 

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becoming increasingly meaningful. We believe the company is likely to continue to reduce debt through year-end, with an eye towards more balanced capital allocation in 2019.

Shares of UnitedHealth Group (UNH) rose steadily over the 12-month period. The company has continued its pattern of positive long-term execution of its business model. As the largest Managed Care Organization (MCO) with ~45 million members, UNH benefits from scale advantages, specifically greater underwriting experience and the ability to leverage non-medical costs. Via its Optum businesses, the company has accumulated valuable medical trend data over decades, providing insights which it leverages for its own MCO as well as external clients. UNH rates highly across our quality dimensions; the company has consistently returned cash to shareholders via its growing dividend and share buybacks. It has a strong track record of acquisitions, including Surgical Care Affiliates, Advisory Board, and DaVita Medical Group. We expect intrinsic value growth to be driven by organic top-line growth and modest margin expansion, as well as by continued share repurchases. UNH will also be a beneficiary of lower US tax rates. Valuation is attractive based on our discounted cash flow methodology.

In fixed income, corporate credit allocation was a positive source of returns during the period. Particularly helpful to performance were allocations to the consumer (cyclical and non-cyclical), banking, technology, communications, and energy sectors.

Allocations to high yield corporate issuers also contributed to positive performance. US high yield holdings lifted results as they generally outpaced higher grade names and proved among the more resilient fixed income segments during the period, aided by pockets of strength and the benefit of higher income to offset the effects of rising yields.

Holdings within the insurance sector and issuers from the supermarkets and healthcare sectors were additive. Energy issuers, in particular, US Independent and Midstream, also added value during the period.

Limited exposure to poor performing peripheral Eurozone country government bonds such as those from Italy was also positive.

Outlook

Continued positive corporate earnings reports and global growth provide broad support for equities. However, we expect recent volatility to continue, particularly as trade tensions show little sign of easing. The longer uncertainty persists around trade, the greater the risk that global growth decelerates. Companies may delay capital expenditures and hiring or preemptively make decisions regarding their supply chains — leaving a less efficient global supply chain, thus raising the cost of doing business. We also anticipate continued negative news flow surrounding the technology sector (e.g., data privacy, market concentration) which may pressure stocks; however we expect companies to continue to show resiliency over the long term. Whether it’s search, e-commerce or social media, these services remain highly desired by consumers. As such, we anticipate their share of digital advertising dollars will continue to grow. While new regulations may increase operating costs, we remain confident that our holdings’ business models will prove resilient.

 

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Renewed confidence in global growth, combined with credible monetary and fiscal policy measures, may help take pressure off emerging market and European risk assets. Disappointment, however, could prove disruptive.

Growth in China still looks set to slow moderately due to tighter financial regulations and environmental cleanup efforts. While we don’t expect a sharp rise in debt-financed fiscal initiatives by China as seen in the past, we do anticipate some modest easing of regulatory clamp-down efforts to help offset the growing downside risks to growth from US and Chinese tariffs.

Strong earnings have given global corporate credit investors confidence to stay the course, and we anticipate the vast majority of corporate industries will maintain stable credit fundamentals. A credit cycle is a cyclical pattern that follows credit availability, and corporate health behavior, such as accelerated mergers and acquisitions activity or an overly aggressive US Federal Reserve (Fed), could induce volatility. Euro investment grade credit should see stability, with reasonable valuations, healthy fundamentals and continued technical support from European Central Bank corporate buying. The UK remains hampered by the Brexit overhang, and we expect elements of contentious negotiations, both within the UK and with the EU, to be a market driver for the UK and possibly the broader European asset markets.

Valuations indicate the US dollar is expensive, but there appears to be no near-term cyclical catalyst to revert it toward fair value. Strong momentum in the US looks more likely to stick in the quarters ahead relative to the rest of the world. The Fed looks likely to stay on its current course, but we’re watching for more dovish signals that might suggest the rate hiking cycle is coming to an end sooner than anticipated. The Trump administration prefers a weaker dollar; a healthier growth and inflation trajectory in Europe and abroad may help in this regard, but only so long as China helps contain any renewed pressure on its currency.

To the extent that these events create shifts in sentiment and cause short-term volatility, they can also provide us with entry points to build long-term positions in high-quality companies and opportunities to trim or sell positions at what we consider attractive levels. Rather than try to predict macro events, we focus on companies with sustainable business models and a compelling valuation.

 

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Hypothetical Growth of $100,000 Investment in Class Y Shares4

September 30, 2008 through September 30, 2018

 

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See notes to chart on page 7.

Top Ten Holdings as of September 30, 2018

 

Security Name  % of
net assets
 
1  Sherwin-Williams Co. (The)   3.15
2  Roper Technologies, Inc.   3.04 
3  AIA Group Ltd.   2.79 
4  Amazon.com, Inc.   2.68 
5  Danaher Corp.   2.62 
6  Alibaba Group Holding Ltd., Sponsored ADR   2.43 
7  Marriott International, Inc., Class A   2.28 
8  UnitedHealth Group, Inc.   2.23 
9  Nestle S.A., (Registered)   2.23 
10  Northrop Grumman Corp.   2.15 

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

 

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Average Annual Total Returns — September 30, 20184

 

                   Expense Ratios5 
   1 Year  5 Years  10 Years  Life of
Class N
  Gross  Net 
   
Class Y (Inception 5/1/96)        
NAV  9.49  8.48  10.36    0.93  0.93
   
Class A (Inception 2/1/06)        
NAV  9.26   8.23   10.08      1.18   1.18 
With 5.75% Maximum Sales Charge  2.97   6.96   9.43       
   
Class C (Inception 2/1/06)        
NAV  8.46   7.41   9.26      1.93   1.93 
With CDSC1  7.46   7.41   9.26       
   
Class N (Inception 2/1/17)        
NAV  9.60         13.85   0.87   0.87 
  
Comparative Performance       
MSCI ACWI (Net)2  9.77   8.67   8.19   14.48    
Blended Index3  5.28   5.55   6.30   9.57         

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.

 

1

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

 

2

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

 

3

The 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.

 

4

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

 

5

Expense ratios are as shown in the Fund’s prospectus in effect as of the date of this report. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report under Ratios to Average Net Assets. Net expenses reflect contractual expense caps set to expire on 1/31/19. 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.

 

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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

US equity markets surged during the 12-month period ending September 30, 2018, and finished just short of an all-time high (as gauged by the S&P 500® Index). US equities were boosted by the persistent strength of the US economy and associated increases in consumer, business and investor confidence. The improvement in growth also fed through to corporate profits, leading to better-than-expected results and prompting analysts to ramp up their estimates for future earnings. These developments outweighed concerns related to trade policy and ongoing interest rate increases by the US Federal Reserve, resulting in robust, broad-based gains for US equities. Growth stocks, especially those in the technology sector, were particularly strong performers. Conversely, value stocks lagged considerably amid reduced investor demand for defensive, dividend-paying companies.

Performance Results

For the 12 months ended September 30, 2018, Class Y shares of Loomis Sayles Growth Fund returned 17.25% at net asset value. The Fund underperformed its benchmark, the Russell 1000® Growth Index, which returned 26.30%.

Explanation of Fund Performance

We are an active manager with a long-term, private equity approach to investing. Through our proprietary bottom-up research framework, we look to invest in those few high-quality businesses with sustainable competitive advantages and profitable growth when they trade at a significant discount to intrinsic value. Given the rare confluence of quality, growth, and valuation, we may study dozens of companies but may only invest in a select few businesses each year. We believe identifying those few businesses with these characteristics is an art, not a science. As a result of this rigorous approach, ours is a selective, high-conviction portfolio of typically 30–40 names.

The Fund’s positions in Schlumberger, Cerner, and Yum China detracted the most from performance. Stock selection in the information technology, healthcare, consumer staples, energy, financials and industrials sectors, along with our allocations in the consumer staples, consumer discretionary, energy, healthcare and financials sectors, detracted from relative performance.

 

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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. Over its 90-year history, Schlumberger has built a brand and reputation for delivering consistent service and product excellence across the spectrum of exploration, drilling, and production. Only a few companies can compete with the scope of Schlumberger’s integrated suite of products and services, and even fewer can compete with the scale and depth of its technology and service execution. The company reported global sales that rose 13% compared with the year-ago period, but stocks in the oil services sector came under pressure on short-term concerns around slowing activity in North America due to insufficient takeaway capacity in the Permian basin, as well as potential impacts on oil demand from trade disputes and emerging market weakness. In markets outside of North America, which have historically accounted for approximately 75% of revenue, the company continued to experience low demand growth for its services. Customer spending has lagged the rebound in oil prices as companies continue to repair their balance sheets following years of low prices. However, North America revenues grew over 50% during the period as the company redeployed idle capacity to accommodate growing drilling and well completion activity. While management has been prematurely optimistic about a recovery outside of the United States, based on contracts Schlumberger has already won, management indicated that international growth in 2019 would be in the double digits. Over a two-year period, which began in 2014 and saw industry spending fall by over 50%, Schlumberger gained share and maintained leading margins, while several competitors posted losses or very thin margins. Schlumberger was one of the few companies to generate positive free cash flow during the downturn, and continued to invest to strengthen its ability to offer integrated solutions to clients. 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 market supply-demand normalizes.

Cerner is a leading supplier of healthcare information technology (HCIT) solutions. Connecting providers and patients at more than 27,000 facilities worldwide, Cerner offers mission-critical enterprise software for the clinical, financial, and operational needs of healthcare organizations of every size. Managed with long-term vision and a culture of research and development, Cerner is able to deliver innovative and relevant solutions for its clients, and its products are deeply embedded in client workflows. As a result, switching costs are high and client relationships can last for decades. Cerner reported financial results during the period that were fundamentally solid, but mixed from an expectations standpoint due in part to the timing of several large new contracts that were delayed but ultimately signed. The decision to purchase and integrate enterprise HCIT represents a critical decision for an organization which can last for over a decade. Given the size and scope of the contracts, the timing of new contracts can be difficult to predict. While volatile on a quarterly basis, new bookings rose approximately 15% over the prior-year period and included a large, ten-year contract with the Department of Veterans Affairs

 

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(VA) that could have a value of up to $10 billion and provides Cerner with greater revenue visibility. Over 25% of new bookings were from outside the company’s installed base of users, representing clients that are new to the company. Revenues grew in the mid-single digits year over year, while operating margins declined, in part due to growth investments. We expect margins will begin to expand again next year. Well positioned to capitalize on the secular increase in spending on HCIT, we believe that Cerner can grow revenue in the high single digits over our investment horizon, with faster growth in earnings and cash flow as the company improves margins and benefits from lower capital intensity.

Yum China is the largest restaurant company in China, operating over 8,100 restaurants primarily under the KFC and Pizza Hut brands. With its iconic brands, large and complex supply-chain infrastructure, decades of experience as a restaurant operator in China, and real estate procurement expertise, we believe Yum China is well positioned to benefit from the secular growth of consumer spending on restaurants in China. The company, a Fund holding since the fourth quarter of 2016 when it was spun off from existing Fund holding Yum! Brands, was among the top detractors for the period. After multiple quarters of strong growth at the company’s larger, more profitable KFC segment, the company reported that KFC segment growth slowed in the most recent quarter, and it continues to experience challenges in its Pizza Hut business, which has been in the midst of a multi-year recovery. Shares reacted negatively in September following unconfirmed reports that the company rejected an unsolicited acquisition proposal from a private investor group for $46 per share. The company has not acknowledged the rumors. Despite underperformance in recent results, we believe management has proven adept at identifying business weaknesses, and devising and executing credible strategies for improvement. The slowdown in sales at KFC was the first since the segment began a strong recovery two years ago following food safety concerns and slowing consumer spending. Pizza Hut in 2017 recorded its first full year of positive same-store sales growth since 2013, but the turnaround remains in progress. The company continues to have success with its loyalty programs and delivery initiatives, with delivery sales growing faster than total sales for both brands. The company’s loyalty programs grew to over 180 million members from approximately 100 million one year ago. Overall, we believe the long-term secular growth driver remains intact as food options such as Pizza Hut and KFC become increasingly affordable to an emerging middle class with rising levels of disposable income. We expect this demand will drive unit growth in China for both restaurant brands, as per capita penetration is much lower than in developed countries. We believe the company’s long-term opportunity for increased sales due to unit growth and consumer recovery, and the resulting improvement in margins and free cash flow, are not reflected in current market expectations. We believe the shares of all three detractors are selling at a significant discount to our estimate of intrinsic value and offer compelling reward-to-risk opportunities. During the period, we added to our holdings in each company as near-term price weakness increased the attractiveness of the reward-to-risk opportunity.

The Fund’s positions in Amazon, Visa, and Cisco Systems contributed the most to performance. Stock selection in the consumer discretionary sector, along with our

 

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allocations in the industrials and information technology (IT) sectors, contributed positively to relative performance.

Online retailer Amazon offers millions of products — sold by Amazon or by third parties — with the value proposition to consumers of selection, price, and convenience. Amazon’s enterprise IT business, Amazon Web Services (AWS), offers a suite of secure, on-demand cloud-computing services, with a value proposition to clients of speed, agility, and savings. In both of its core markets, Amazon possesses strong and sustainable competitive advantages that would be difficult to replicate. In e-commerce these include its brand, scale, network advantage, technology platform, and logistics and distribution systems. The AWS business benefits from its massive scale, which allows it to pass along cost savings while continuing to innovate. Amazon reported healthy fundamentals and strong growth in revenue during the period. With gross merchandise volume (GMV) growing, by our estimates, well above growth in the teens for US e-commerce and low single-digit growth in global retail sales, the company continued to take market share. AWS also posted impressive revenue growth, exceeding a $24 billion annual run rate, that was many multiples higher than our estimate of single-digit growth in overall enterprise IT spending. Under the thoughtful leadership of founder Jeff Bezos, Amazon continued rapid investment in key areas that capitalize on its strength, focusing on businesses with high, durable growth prospects and strong financial returns. With an increasing shift to higher-margin product categories such as third-party sales, AWS, and advertising, gross margins expanded during the period. Amazon is one of the best-positioned companies in e-commerce and enterprise IT — each addressing large, underpenetrated markets. The secular shift in consumer preference from traditional brick-and-mortar retail to online retail is the primary growth driver for Amazon, but both markets benefit from secular growth that is still in its early stages. We believe the current share price shows a lack of appreciation for Amazon’s significant long-term growth opportunities and the sustainability of its business model. We believe the shares are trading at a significant discount to our estimate of intrinsic value, offering a compelling reward-to-risk opportunity.

Visa is the largest payments technology company in the world, with a comprehensive offering of digital payment products including credit cards, debit cards — which Visa invented — and transaction security services known as tokenization. Visa has one of the world’s most recognized brands, which took decades and significant investment to build. Through its open-loop, multi-party system, Visa has built a massive global network, orchestrating transaction settlements between merchants, merchants’ banks, card-issuer banks and cardholders in more than 200 countries. A global network with 3.3 billion Visa-branded cards outstanding that are accepted by over 46 million merchants worldwide creates a powerful virtuous cycle, reinforcing Visa’s difficult-to-replicate competitive advantages. During the period, Visa reported revenue and earnings that were strong and above market expectations. Payment dollar volume growth in the low double digits benefited from stronger global growth, but was well above the growth in the approximately $45 trillion of global personal consumer expenditures, demonstrating the strength of the long-term secular shift from cash to electronic payments. We estimate Visa can generate

 

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double-digit cash flow growth over our forecast period. As the company continues to scale its businesses in regions around the world, we expect it will be able to increase cash flow growth, expand margins, and improve its return on invested capital. We believe the shares are trading at a significant discount to our estimate of intrinsic value, offering a compelling reward-to-risk opportunity.

Cisco designs, manufactures, and markets internet networking equipment, primarily at the high end of the market. We believe Cisco’s scale, end-to-end architecture solutions, and large installed customer base uniquely position the company to benefit from exponential growth in internet traffic, which will require a corresponding exponential increase in bandwidth capacity. Cisco returned to positive year-over-year revenue growth and finished its 2018 fiscal year with record quarterly revenues and earnings per share (EPS). Cisco is transitioning its business to a software and product subscription model, where a portion of revenue that was previously recognized up front is now earned as recurring revenue over time, which creates a near-term revenue headwind. However, over the long run, we believe the subscription model contributes to a higher customer lifetime value and will improve the overall quality of the business by increasing the visibility of future revenue streams, lowering cyclicality, and raising profitability. New innovation is enabling Cisco to expand product recurring revenue beyond its smaller collaboration, wireless, and security businesses and into its core networking products. In its large campus switching business, where Cisco is the market leader, Cisco had previously been unable to drive growth because it lacked the innovation needed to spark an upgrade cycle. However, a unique automation feature in the company’s next-generation Catalyst 9000 series switching product reduces customer operating expenses — which represent the lion’s share of IT department operating budgets — and creates an economic incentive to upgrade. That product, announced in mid-2017, has become Cisco’s fastest-growing product innovation in history, with almost 10,000 new customers — most of which are opting for the highest-level subscription services. Another attraction of the subscription model is that it allows customers to more easily adopt future functionality and innovations, making it less likely that customers will base their decisions solely on the price of competing hardware options. Cisco expects to extend this model to other core products, which we believe will contribute to recurring revenue within the product segment growing from approximately 12% today to approximately 40% over our investment time horizon. Total recurring revenue accounted for approximately 32% of total company revenue, which we believe can exceed 50% over the next decade. Leading with its unique end-to-end architecture, including differentiated cloud-enabled hardware and software solutions, Cisco is well positioned to benefit from the ever increasing demand for internet bandwidth capability. We believe the shares are selling at a discount to our estimate of intrinsic value and offer an attractive reward-to-risk opportunity.

All aspects of our quality-growth-valuation investment thesis must be present simultaneously for us to make an investment. Often our research is completed well in advance of the opportunity to invest. We are patient investors and maintain coverage of high-quality businesses in order to take advantage of meaningful price dislocations if and when they occur. During the period, we initiated new positions in Starbucks and

 

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LOOMIS SAYLES GROWTH FUND

 

Colgate-Palmolive. We added to our existing holdings in Oracle, Schlumberger, Regeneron Pharmaceuticals, Cerner, Procter & Gamble and Yum China. We trimmed our existing positions in Varian Medical Systems, Cisco, United Parcel Service, and American Express. We also trimmed our positions in Alibaba and Amazon as they approached our maximum allowable position size. We sold our position in Analog Devices as it approached our estimate of intrinsic value.

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 year with overweight positions in the consumer staples, energy, financials, and healthcare sectors and underweight positions in the industrials, consumer discretionary and information technology sectors. We did not own positions in the real estate, materials, telecommunication services or utilities sectors.

 

 

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

September 30, 2008 through September 30, 2018

 

LOGO

See notes to chart on page 15.

 

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Top Ten Holdings as of September 30, 2018

 

Security Name  % of
net assets
 
1  Amazon.com, Inc.   7.71
2  Visa, Inc., Class A   5.97 
3  Oracle Corp.   5.16 
4  Facebook, Inc., Class A   4.93 
5  Alibaba Group Holding Ltd., Sponsored ADR   4.65 
6  Autodesk, Inc.   4.52 
7  Microsoft Corp.   3.60 
8  Regeneron Pharmaceuticals, Inc.   3.55 
9  Monster Beverage Corp.   3.55 
10  QUALCOMM, Inc.   3.35 

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

 

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LOOMIS SAYLES GROWTH FUND

 

Average Annual Total Returns — September 30, 20183

 

                   Expense Ratios4 
   1 Year  5 Years  10 Years  Life of
Class N
  Gross  Net 
   
Class Y (Inception 5/16/91)        
NAV  17.25  16.10  13.34    0.66  0.66
   
Class A (Inception 12/31/96)        
NAV  16.98   15.82   13.01      0.91   0.91 
With 5.75% Maximum Sales Charge  10.23   14.47   12.34       
   
Class C (Inception 9/12/03)        
NAV  16.09   14.95   12.18      1.66   1.66 
With CDSC1  15.09   14.95   12.18       
   
Class N (Inception 2/1/13)        
NAV  17.40   16.14      16.61   0.58   0.58 
  
Comparative Performance       
Russell 1000® Growth Index2  26.30   16.58   14.31   17.35         

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.

 

1

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

 

2

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.

 

3

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

 

4

Expense ratios are as shown in the Fund’s prospectus in effect as of the date of this report. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report under Ratios to Average Net Assets. Net expenses reflect contractual expense caps set to expire on 1/31/19. 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.

 

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ADDITIONAL INFORMATION

The views expressed in this report reflect those of the portfolio managers as of the dates indicated. The managers’ views are subject to change at any time without notice based on changes in market or other conditions. References to specific securities or industries should not be regarded as investment advice. Because the 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.

 

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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, 2018 through September 30, 2018. 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.

 

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LOOMIS SAYLES GLOBAL ALLOCATION
FUND
 BEGINNING
ACCOUNT VALUE
4/1/2018
  ENDING
ACCOUNT VALUE
9/30/2018
  EXPENSES PAID
DURING PERIOD*
4/1/2018 – 9/30/2018
 
Class A    
Actual  $1,000.00   $1,029.40   $5.90 
Hypothetical (5% return before expenses)  $1,000.00   $1,019.25   $5.87 
Class C    
Actual  $1,000.00   $1,025.70   $9.70 
Hypothetical (5% return before expenses)  $1,000.00   $1,015.49   $9.65 
Class N    
Actual  $1,000.00   $1,031.00   $4.23 
Hypothetical (5% return before expenses)  $1,000.00   $1,020.91   $4.20 
Class Y    
Actual  $1,000.00   $1,030.60   $4.63 
Hypothetical (5% return before expenses)  $1,000.00   $1,020.51   $4.61 

 

*

Expenses are equal to the Fund’s annualized expense ratio (after waiver/reimbursement): 1.16%, 1.91%, 0.83% and 0.91% 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
4/1/2018
  ENDING
ACCOUNT VALUE
9/30/2018
  EXPENSES PAID
DURING PERIOD*
4/1/2018 – 9/30/2018
 
Class A    
Actual  $1,000.00   $1,095.60   $4.78 
Hypothetical (5% return before expenses)  $1,000.00   $1,020.51   $4.61 
Class C    
Actual  $1,000.00   $1,091.40   $8.70 
Hypothetical (5% return before expenses)  $1,000.00   $1,016.75   $8.39 
Class N    
Actual  $1,000.00   $1,098.00   $3.00 
Hypothetical (5% return before expenses)  $1,000.00   $1,022.21   $2.89 
Class Y    
Actual  $1,000.00   $1,097.30   $3.47 
Hypothetical (5% return before expenses)  $1,000.00   $1,021.76   $3.35 

 

*

Expenses are equal to the Fund’s annualized expense ratio (after waiver/reimbursement): 0.91%, 1.66%, 0.57% and 0.66% for Class A, C, N and Y, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (183), divided by 365 (to reflect the half-year period).

 

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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’ advisory fees 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, to the extent applicable, the use of “soft” commission dollars 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 expense differentials against each Fund’s peer group/category of

 

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funds, performance 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 or Committee 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 for a one-year period at its meeting held in June 2018. 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 and shareholder 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 reviewed data prepared by an independent third party that analyzed the performance of the Funds using a variety of performance metrics, including metrics that measured the performance of the Funds on a risk adjusted basis.

The Board noted that, through December 31, 2017, each Fund’s one-, three- and five-year performance, 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

  

Five-Year

 

Loomis Sayles Global Allocation Fund

   2  1  6

Loomis Sayles Growth Fund

   24  3  5

 

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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 and/or other relevant factors 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 and administrative services as well as the total expense levels of the Funds. This information included comparisons (provided both by management and 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. They noted that all of the Funds included have expense caps in place, and the Trustees considered that the current expenses of each Fund were below its cap. The Trustees also noted that the total advisory fee rates for the Funds were at or below the medians of their respective peer group of funds.

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 Funds, the expense levels of the Funds, whether the Adviser had implemented breakpoints and/or expense caps with respect to such Funds and the overall profit margin of Natixis Investment Managers compared to that of certain other investment managers for which such data was available.

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

 

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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 caps. The Trustees also discussed with management the factors considered with respect to the implementation of breakpoints in investment advisory fees or expense 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 the Loomis Sayles Global Allocation Fund had breakpoints in its advisory fee and that all of the Funds were subject to an expense cap. 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.

 

· 

So-called “fallout benefits” to the Adviser, such as the engagement of affiliates of the Adviser to provide distribution and administrative 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, 2019.

 

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Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund

 

    
Shares
   Description  Value (†) 
 Common Stocks — 66.2% of Net Assets  
  Canada — 1.6%  
 609,200   CGI Group, Inc., Class A(a)  $39,278,579 
    

 

 

 
  China — 2.4%  
 359,704   Alibaba Group Holding Ltd., Sponsored ADR(a)   59,264,831 
    

 

 

 
  France — 1.6%  
 284,260   Thales S.A.   40,387,889 
    

 

 

 
  Hong Kong — 2.8%  
 7,638,800   AIA Group Ltd.   68,114,525 
    

 

 

 
  India — 0.7%  
 634,450   HDFC Bank Ltd.   17,524,813 
    

 

 

 
  Japan — 1.1%  
 519,987   Nomura Research Institute Ltd.   26,258,307 
    

 

 

 
  Sweden — 2.0%  
 1,085,734   Assa Abloy AB   21,762,323 
 932,874   Atlas Copco AB, Class A   26,827,751 
    

 

 

 
     48,590,074 
    

 

 

 
  Switzerland — 6.5%  
 238,849   Dufry AG, (Registered)   26,986,029 
 26,470   Geberit AG, (Registered)   12,285,830 
 481,683   Julius Baer Group Ltd.   24,072,640 
 654,593   Nestle S.A., (Registered)   54,486,063 
 249,570   Temenos AG, (Registered)   40,648,074 
    

 

 

 
     158,478,636 
    

 

 

 
  United Kingdom — 4.6%  
 1,320,288   Halma PLC   24,856,883 
 11,482,864   Legal & General Group PLC   39,200,122 
 496,011   London Stock Exchange Group PLC   29,639,992 
 192,434   Reckitt Benckiser Group PLC   17,578,845 
    

 

 

 
     111,275,842 
    

 

 

 
  United States — 42.9%  
 217,171   Accenture PLC, Class A   36,962,504 
 21,729   Alphabet, Inc., Class C(a)   25,932,910 
 42,205   Alphabet, Inc., Class A(a)   50,944,811 
 32,661   Amazon.com, Inc.(a)   65,419,983 
 4,058   Arconic, Inc.   89,317 
 9,032   Booking Holdings, Inc.(a)   17,919,488 
 595,150   CBRE Group, Inc., Class A(a)   26,246,115 
 490   Cincinnati Bell, Inc.(a)   7,816 
 590,116   Danaher Corp.   64,122,005 
 670   Dex Media, Inc.(a)(b)   7,035 
 207,954   EOG Resources, Inc.   26,528,692 
 222,799   Facebook, Inc., Class A(a)   36,641,524 
 174,352   Goldman Sachs Group, Inc. (The)   39,096,692 
 543,099   Intercontinental Exchange, Inc.   40,672,684 

 

See accompanying notes to financial statements.

 

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Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

    
Shares
   Description  Value (†) 
  United States — continued  
 292,063   LyondellBasell Industries NV, Class A  $29,939,378 
 221,239   M&T Bank Corp.   36,402,665 
 422,846   Marriott International, Inc., Class A   55,828,357 
 300,905   McCormick & Co., Inc.   39,644,234 
 53,766   Mettler-Toledo International, Inc.(a)   32,742,419 
 165,443   Northrop Grumman Corp.   52,506,645 
 7,626   NVR, Inc.(a)   18,842,321 
 157,681   Parker Hannifin Corp.   29,002,266 
 250,529   Roper Technologies, Inc.   74,209,195 
 197,860   S&P Global, Inc.   38,659,865 
 169,319   Sherwin-Williams Co. (The)   77,075,702 
 368,575   Texas Instruments, Inc.   39,544,412 
 160,120   Travelers Cos., Inc. (The)   20,769,165 
 74,657   Tyler Technologies, Inc.(a)   18,295,444 
 205,236   UnitedHealth Group, Inc.   54,600,985 
    

 

 

 
     1,048,654,629 
    

 

 

 
  Total Common Stocks
(Identified Cost $1,190,734,121)
   1,617,828,125 
    

 

 

 
    
Principal
Amount (‡)
          
 Bonds and Notes — 23.7% 
 Non-Convertible Bonds — 23.2% 
  Argentina — 0.2%

 

$775,000   Provincia de Buenos Aires, 9.125%, 3/16/2024, 144A   718,750 
 535,000   Republic of Argentina, 6.875%, 4/22/2021   510,925 
 2,460,000   Republic of Argentina, 7.125%, 6/28/2117   1,912,650 
 1,390,000   Republic of Argentina, 7.625%, 4/22/2046   1,127,304 
 355,000   YPF S.A., 8.750%, 4/04/2024, 144A   353,935 
 17,745,000   YPF S.A., 16.500%, 5/09/2022, 144A, (ARS)   268,023 
    

 

 

 
     4,891,587 
    

 

 

 
  Australia — 0.2%

 

 1,675,000   Australia Government Bond, Series 133, 5.500%, 4/21/2023, (AUD)(c)   1,380,488 
 1,150,000   Commonwealth Bank of Australia, 2.250%, 3/10/2020, 144A(c)   1,135,284 
 670,000   GAIF Bond Issuer Pty Ltd., 3.400%, 9/30/2026, 144A(c)   621,385 
 110,000   Incitec Pivot Finance LLC, 6.000%, 12/10/2019, 144A   112,826 
 935,000   National Australia Bank, 2.500%, 1/12/2021(c)   916,010 
 95,000   Sydney Airport Finance Co. Pty Ltd., 3.375%, 4/30/2025, 144A   90,429 
    

 

 

 
     4,256,422 
    

 

 

 
  Belgium — 0.1%

 

 1,040,000   Anheuser-Busch InBev Finance, Inc., 3.650%, 2/01/2026   1,010,564 
 440,000   Solvay Finance (America) LLC, 3.400%, 12/03/2020, 144A   439,547 
    

 

 

 
     1,450,111 
    

 

 

 
  Brazil — 0.6%

 

 800,000   Braskem Finance Ltd., 5.750%, 4/15/2021, 144A   821,400 
 8,500(††)   Brazil Notas do Tesouro Nacional, Series F, 10.000%, 1/01/2025, (BRL)   1,984,195 

 

See accompanying notes to financial statements.

 

|  24


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Brazil — continued

 

 2,250(††)   Brazil Notas do Tesouro Nacional, Series F, 10.000%, 1/01/2019, (BRL)  $561,347 
 8,815(††)   Brazil Notas do Tesouro Nacional, Series F, 10.000%, 1/01/2021, (BRL)   2,205,319 
 2,300(††)   Brazil Notas do Tesouro Nacional, Series F, 10.000%, 1/01/2027, (BRL)   523,123 
 1,085,000   Brazilian Government International Bond, 4.625%, 1/13/2028   993,328 
 1,000,000   CIMPOR Financial Operations BV, 5.750%, 7/17/2024, 144A   705,010 
 400,000   Cosan Luxembourg S.A., 5.000%, 3/14/2023, 144A   382,000 
 1,100,000   Embraer Netherlands Finance BV, 5.050%, 6/15/2025(c)   1,104,136 
 1,045,000   Klabin Finance S.A., 5.250%, 7/16/2024   1,010,933 
 1,140,000   Petrobras Global Finance BV, 4.375%, 5/20/2023   1,082,772 
 2,685,000   Petrobras Global Finance BV, 5.999%, 1/27/2028   2,476,913 
 300,000   Petrobras Global Finance BV, 6.875%, 1/20/2040   278,775 
 575,000   Raizen Fuels Finance S.A., 5.300%, 1/20/2027, 144A   540,500 
 500,000   Tupy Overseas S.A., 6.625%, 7/17/2024, 144A   506,255 
    

 

 

 
     15,176,006 
    

 

 

 
  Canada — 2.7%

 

 447,260   Air Canada Pass Through Trust, Series 2015-2, Class A, 4.125%, 6/15/2029, 144A(c)   444,106 
 895,000   Air Canada Pass Through Trust, Series 2017-1, Class AA, 3.300%, 7/15/2031, 144A(c)   850,966 
 1,010,000   Antares Holdings LP, 6.000%, 8/15/2023, 144A   1,013,975 
 815,000   Bank of Montreal, 1.750%, 6/15/2021, 144A(c)   783,525 
 3,000,000   BMW Canada Auto Trust, Series 2017-1A, Class A2, 1.677%, 5/20/2020, 144A, (CAD)(c)   2,313,971 
 12,965,000   Canadian Government Bond, 0.500%, 3/01/2022, (CAD)(c)   9,455,371 
 25,500,000   Canadian Government Bond, 0.750%, 3/01/2021, (CAD)(c)   19,056,544 
 15,925,000   Canadian Government International Bond, 1.750%, 9/01/2019, (CAD)(c)   12,297,875 
 970,000   Canadian Imperial Bank of Commerce, 1.600%, 9/06/2019(c)   958,977 
 800,000   CPPIB Capital, Inc., 0.375%, 6/20/2024, 144A, (EUR)(c)   924,698 
 430,000   Enbridge, Inc., 2.900%, 7/15/2022   417,079 
 905,000   Export Development Canada, 1.800%, 9/01/2022, (CAD)(c)   681,758 
 1,335,000   Institutional Mortgage Securities Canada, Inc., Series 2014-5A, Class A2, 2.616%, 7/12/2047, 144A, (CAD)(c)   1,023,733 
 6,165,000   Province of Ontario Canada, 1.250%, 6/17/2019(c)   6,100,238 
 7,200,000   Province of Ontario Canada, 1.875%, 5/21/2020(c)   7,068,096 
 1,690,000   Tornoto-Dominion Bank (The), Series GMTN, 3.500%, 7/19/2023(c)   1,686,868 
    

 

 

 
     65,077,780 
    

 

 

 
  Chile — 0.5%

 

 815,000,000   Bonos de la Tesoreria de la Republica de Chile, 4.500%, 3/01/2026, (CLP)(c)   1,239,513 
 1,250,000   Corp. Nacional del Cobre de Chile, 3.625%, 8/01/2027, 144A(c)   1,195,288 
 1,700,000   Corp. Nacional del Cobre de Chile, 4.500%, 9/16/2025(c)   1,725,755 
 1,160,000   Corp. Nacional del Cobre de Chile, 4.500%, 9/16/2025, 144A(c)   1,177,574 
 525,000   Enel Chile S.A., 4.875%, 6/12/2028   529,673 
 250,000   Engie Energia Chile S.A., 5.625%, 1/15/2021, 144A   259,166 
 800,000   Inversiones CMPC S.A., 4.375%, 5/15/2023, 144A(c)   799,906 
 240,000   Latam Airlines Group S.A., 7.250%, 6/09/2020, 144A   245,119 

 

See accompanying notes to financial statements.

 

25  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Chile — continued

 

$748,651   Latam Airlines Pass Through Trust, Series 2015-1, Class A, 4.200%, 8/15/2029  $720,576 
 473,492   Latam Airlines Pass Through Trust, Series 2015-1, Class B, 4.500%, 8/15/2025   458,104 
 950,000   Latam Finance Ltd., 6.875%, 4/11/2024, 144A   922,688 
 935,000   Republic of Chile, 3.240%, 2/06/2028(c)   895,730 
 1,120,000   Transelec S.A., 4.250%, 1/14/2025, 144A(c)   1,108,800 
    

 

 

 
     11,277,892 
    

 

 

 
  China — 0.3%

 

 920,000   Alibaba Group Holding Ltd., 3.400%, 12/06/2027(c)   857,527 
 795,000   Baidu, Inc., 3.875%, 9/29/2023   787,360 
 400,000   China Resources Gas Group Ltd., 4.500%, 4/05/2022, 144A(c)   403,925 
 835,000   Country Garden Holdings Co. Ltd., 7.500%, 3/09/2020   850,141 
 905,000   Industrial & Commercial Bank of China Ltd., 2.957%, 11/08/2022(c)   872,076 
 890,000   Longfor Group Holdings Ltd., 3.900%, 4/16/2023   843,285 
 985,000   Sinopec Group Overseas Development 2017 Ltd., 2.375%, 4/12/2020, 144A(c)   968,777 
 500,000   Tencent Holdings Ltd., 2.985%, 1/19/2023, 144A(c)   484,271 
 1,820,000   Three Gorges Finance I Cayman Islands Ltd., 3.150%, 6/02/2026(c)   1,697,641 
 900,000   Yingde Gases Investment Ltd., 6.250%, 1/19/2023   868,730 
    

 

 

 
     8,633,733 
    

 

 

 
  Colombia — 0.2%

 

 435,000,000   Emgesa S.A. E.S.P., 8.750%, 1/25/2021, (COP)   153,721 
 830,000,000   Emgesa S.A. E.S.P., 8.750%, 1/25/2021, 144A, (COP)   293,307 
 2,140,000,000   Empresas Publicas de Medellin E.S.P., 8.375%, 2/01/2021, 144A, (COP)(c)   726,788 
 575,000   Republic of Colombia, 3.875%, 4/25/2027   557,750 
 200,000,000   Republic of Colombia, 7.750%, 4/14/2021, (COP)   70,717 
 6,150,000,000   Titulos De Tesoreria, Series B, 7.500%, 8/26/2026, (COP)(c)   2,176,045 
    

 

 

 
     3,978,328 
    

 

 

 
  Denmark — 0.0%

 

 670,000   Danske Bank AS, 3.875%, 9/12/2023, 144A   656,221 
    

 

 

 
  Dominican Republic — 0.1%

 

 1,410,000   Dominican Republic, 5.500%, 1/27/2025, 144A   1,415,287 
 590,000   Dominican Republic, 5.950%, 1/25/2027, 144A   602,355 
 995,000   Dominican Republic, 6.000%, 7/19/2028, 144A   1,014,462 
 425,000   Dominican Republic, 8.625%, 4/20/2027, 144A   483,438 
    

 

 

 
     3,515,542 
    

 

 

 
  France — 0.5%

 

 970,000   Air Liquide Finance S.A., 1.375%, 9/27/2019, 144A(c)   955,673 
 200,000   AXA S.A., 7.125%, 12/15/2020, (GBP)   289,966 
 205,000   BNP Paribas S.A., 4.375%, 5/12/2026, 144A   199,618 
 1,415,000   Caisse d’Amortissement de la Dette Sociale, 1.875%, 2/12/2022(c)   1,357,049 
 250,000   Credit Agricole S.A., 4.125%, 1/10/2027, 144A   241,899 
 390,000   Credit Agricole S.A., (fixed rate to 6/23/2026, variable rate thereafter), 7.500%, (GBP)(d)   560,424 

 

See accompanying notes to financial statements.

 

|  26


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  France — continued

 

$735,000   Danone S.A., 1.691%, 10/30/2019, 144A(c)  $724,176 
 500,000   Dexia Credit Local S.A., 2.250%, 2/18/2020, 144A(c)   494,662 
 1,215,000   Electricite de France S.A., 4.500%, 9/21/2028, 144A   1,196,856 
 1,100,000   Electricite de France SA, (fixed rate to 1/29/2026, variable rate thereafter), 6.000%, (GBP)(d)   1,462,415 
 1,730,000   French Republic Government Bond OAT, 4.250%, 10/25/2023, (EUR)(c)   2,436,634 
 1,015,000   Societe Generale S.A., 4.750%, 11/24/2025, 144A(c)   1,006,077 
 475,000   Societe Generale S.A., (fixed rate to 4/07/2021, variable rate thereafter), 6.750%, (EUR)(d)   594,251 
    

 

 

 
     11,519,700 
    

 

 

 
  Germany — 0.2%

 

 500,000   Allianz SE, (fixed rate to 7/07/2025, variable rate thereafter), 2.241%, 7/07/2045, (EUR)(c)   580,351 
 865,000   Bayer U.S. Finance II LLC, 4.250%, 12/15/2025, 144A   859,684 
 285,000   Bayer U.S. Finance II LLC, 4.375%, 12/15/2028, 144A   279,228 
 235,000   Commerzbank AG, EMTN, 4.000%, 3/23/2026, (EUR)   293,930 
 675,000   Daimler Finance North America LLC, 1.750%, 10/30/2019, 144A(c)   665,208 
 100,000   Deutsche Bank AG, EMTN, 4.500%, 5/19/2026, (EUR)   124,482 
 380,000   Deutsche Telekom International Finance BV, 2.820%, 1/19/2022, 144A   371,001 
 1,150,000   Deutsche Telekom International Finance BV, 4.375%, 6/21/2028, 144A   1,146,462 
    

 

 

 
     4,320,346 
    

 

 

 
  Hong Kong — 0.1%

 

 355,000   AIA Group Ltd., 3.200%, 3/11/2025, 144A(c)   337,501 
 1,135,000   AIA Group Ltd., 3.900%, 4/06/2028, 144A   1,112,746 
    

 

 

 
     1,450,247 
    

 

 

 
  India — 0.1%

 

 650,000   Greenko Dutch BV, 5.250%, 7/24/2024, 144A   605,742 
 1,630,000   ICICI Bank Ltd., 3.800%, 12/14/2027   1,464,584 
    

 

 

 
     2,070,326 
    

 

 

 
  Indonesia — 0.4%

 

 875,000   Chandra Asri Petrochemical Tbk PT, 4.950%, 11/08/2024   764,522 
 35,310,000,000   Indonesia Government International Bond, 8.250%, 7/15/2021, (IDR)   2,397,367 
 300,000   Indonesia Government International Bond, 4.125%, 1/15/2025, 144A   295,071 
 735,000   Indonesia Government International Bond, 4.750%, 1/08/2026   745,065 
 34,000,000,000   Indonesia Government International Bond, 7.000%, 5/15/2022, (IDR)   2,228,195 
 3,500,000,000   Indonesia Government International Bond, 9.500%, 7/15/2023, (IDR)   245,236 
 781,000,000   Indonesia Government International Bond, 11.500%, 9/15/2019, (IDR)   54,294 
 14,000,000,000   Indonesia Treasury Bond, 8.375%, 3/15/2024, (IDR)(c)   946,079 
 795,000   Perusahaan Listrik Negara PT, 5.250%, 10/24/2042, 144A   745,153 
 1,475,000   Perusahaan Listrik Negara PT, MTN, 4.125%, 5/15/2027   1,381,716 
 545,000   Republic of Indonesia, 2.875%, 7/08/2021, 144A, (EUR)   668,398 
 525,000   Republic of Indonesia, 4.750%, 1/08/2026, 144A   533,033 
    

 

 

 
     11,004,129 
    

 

 

 

 

See accompanying notes to financial statements.

 

27  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Ireland — 0.1%

 

$475,000   AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 4.500%, 5/15/2021  $482,371 
 1,250,000   Bank of Ireland Group PLC, 4.500%, 11/25/2023, 144A   1,247,885 
    

 

 

 
     1,730,256 
    

 

 

 
  Israel — 0.1%

 

 510,000   Teva Pharmaceutical Finance Co. LLC, 6.150%, 2/01/2036   511,801 
 780,000   Teva Pharmaceutical Finance Netherlands II B.V., 0.375%, 7/25/2020, (EUR)   890,006 
    

 

 

 
     1,401,807 
    

 

 

 
  Italy — 0.6%

 

 500,000   Assicurazioni Generali S.p.A., EMTN, 4.125%, 5/04/2026, (EUR)   598,057 
 665,000   Enel Finance International NV, 1.375%, 6/01/2026, (EUR)   751,761 
 1,250,000   Enel Finance International NV, 2.875%, 5/25/2022, 144A   1,188,918 
 210,000   Enel Finance International NV, EMTN, 1.125%, 9/16/2026, (EUR)   230,792 
 425,000   Intesa Sanpaolo SpA, 5.710%, 1/15/2026, 144A   386,618 
 530,000   Intesa Sanpaolo SpA, EMTN, 3.928%, 9/15/2026, (EUR)   615,673 
 3,305,000   Italy Buoni Poliennali Del Tesoro, 2.000%, 2/01/2028, (EUR)   3,539,461 
 4,255,000   Italy Buoni Poliennali Del Tesoro, 5.000%, 3/01/2022, (EUR)   5,433,388 
 1,775,000   Telecom Italia Capital S.A., 6.000%, 9/30/2034   1,690,688 
 430,000   UniCredit SpA, (fixed rate to 6/19/2027, variable rate thereafter), 5.861%, 6/19/2032, 144A   384,377 
    

 

 

 
     14,819,733 
    

 

 

 
  Japan — 0.0%

 

 1,165,000   Nomura Holdings, Inc., GMTN, 2.750%, 3/19/2019(c)   1,165,444 
    

 

 

 
  Korea — 0.4%

 

 765,000   Export-Import Bank of Korea, 3.000%, 11/01/2022(c)   744,817 
 125,000,000   Export-Import Bank of Korea, MTN, 6.750%, 8/09/2022, (INR)(c)   1,647,463 
 1,100,000   Hyundai Capital Services, Inc., 3.750%, 3/05/2023, 144A   1,086,165 
 1,575,000   Kia Motors Corp., 3.000%, 4/25/2023, 144A   1,498,936 
 630,000   Korea Development Bank (The), MTN, 4.500%, 11/22/2019, (AUD)(c)   463,194 
 910,000   Korea Gas Corp., 2.750%, 7/20/2022, 144A(c)   877,295 
 670,000   KT Corp., 2.500%, 7/18/2026, 144A(c)   595,763 
 1,125,000   Minera y Metalurgica del Boleo S.A. de CV, 2.875%, 5/07/2019, 144A(c)   1,121,348 
 1,440,000,000   Republic of Korea, Series 2209, 2.000%, 9/10/2022, (KRW)(c)   1,291,366 
 770,000   Shinhan Bank Co. Ltd., 3.875%, 3/24/2026, 144A(c)   729,839 
 140,000   SK Telecom Co. Ltd., 6.625%, 7/20/2027, 144A(c)   164,220 
 200,000   Woori Bank, 5.875%, 4/13/2021, 144A(c)   208,384 
    

 

 

 
     10,428,790 
    

 

 

 
  Mexico — 0.4%

 

 620,000   Alfa SAB de CV, 6.875%, 3/25/2044   638,600 
 770,000   America Movil SAB de CV, 2.125%, 3/10/2028, (EUR)(c)   919,948 
 10,000,000   America Movil SAB de CV, 6.450%, 12/05/2022, (MXN)(c)   489,799 
 675,000   Banco Nacional de Comercio Exterior SNC, (fixed rate to 8/11/2021, variable rate thereafter), 3.800%, 8/11/2026, 144A   658,132 
 1,150,000   Cemex Finance LLC, 6.000%, 4/01/2024, 144A   1,184,534 

 

See accompanying notes to financial statements.

 

|  28


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Mexico — continued

 

 1,055,000   Cemex SAB de CV, 2.750%, 12/05/2024, 144A, (EUR)  $1,221,650 
 800,000   Gruma SAB de CV, 4.875%, 12/01/2024(c)   819,080 
 10,000,000   Grupo Televisa SAB, EMTN, 7.250%, 5/14/2043, (MXN)(c)   378,465 
 142,000(†††)   Mexican Fixed Rate Bonds, Series M, 5.750%, 3/05/2026, (MXN)   669,253 
 190,229(†††)   Mexican Fixed Rate Bonds, Series M, 6.500%, 6/10/2021, (MXN)(c)   985,483 
 196,000   Mexico Government International Bond, 4.000%, 3/15/2115, (EUR)(c)   209,342 
 1,020,000   Mexico Government International Bond, 4.125%, 1/21/2026(c)   1,010,871 
 100,000   Sigma Alimentos S.A. de CV, 2.625%, 2/07/2024, 144A, (EUR)   120,670 
 835,000   Sigma Alimentos, S.A. de C.V, 4.125%, 5/02/2026   801,183 
 1,010,000   Unifin Financiera SAB de CV SOFOM ENR, 7.250%, 9/27/2023   997,385 
    

 

 

 
     11,104,395 
    

 

 

 
  Netherlands — 0.1%

 

 870,000   Cooperatieve Rabobank UA, 4.375%, 8/04/2025(c)   860,343 
 675,000   ING Bank NV, 1.650%, 8/15/2019, 144A(c)   667,593 
 1,105,000   Ziggo BV, 5.500%, 1/15/2027, 144A   1,036,766 
    

 

 

 
     2,564,702 
    

 

 

 
  Norway — 0.2%  
 17,000,000   City of Oslo, Norway, 3.550%, 2/12/2021, (NOK)(c)   2,177,554 
 550,000   Kommunalbanken AS, 1.750%, 9/15/2020, 144A(c)   537,378 
 13,760,000   Norway Government Bond, 4.500%, 5/22/2019, 144A, (NOK)(c)   1,730,259 
 3,815,000   Norway Government Bond, Series 475, 2.000%, 5/24/2023, 144A, (NOK)(c)   478,407 
    

 

 

 
     4,923,598 
    

 

 

 
  Panama — 0.0%  
 680,000   Banco Latinoamericano de Comercio Exterior S.A., 3.250%, 5/07/2020, 144A(c)   674,166 
    

 

 

 
  Paraguay — 0.1%  
 800,000   Republic of Paraguay, 5.000%, 4/15/2026, 144A   811,000 
 572,000   Telefonica Celular del Paraguay S.A., 6.750%, 12/13/2022   583,806 
    

 

 

 
     1,394,806 
    

 

 

 
  Peru — 0.1%  
 580,000   Southern Copper Corp., 3.875%, 4/23/2025(c)   564,203 
 1,050,000   Transportadora de Gas del Peru S.A., 4.250%, 4/30/2028, 144A(c)   1,030,313 
 1,050,000   Union Andina de Cementos SAA, 5.875%, 10/30/2021, 144A   1,074,937 
    

 

 

 
     2,669,453 
    

 

 

 
  Poland — 0.1%  
 5,380,000   Republic of Poland Government Bond, Series 0726, 2.500%, 7/25/2026, (PLN)(c)   1,396,512 
    

 

 

 
  Portugal — 0.0%  
 400,000   EDP Finance BV, 4.125%, 1/15/2020, 144A   402,032 
    

 

 

 
  Senegal — 0.0%  
 625,000   Republic of Senegal, 4.750%, 3/13/2028, 144A, (EUR)   700,694 
    

 

 

 
  Singapore — 0.2%  
 785,000   BOC Aviation Ltd., 2.750%, 9/18/2022, 144A   745,066 
 495,000   BOC Aviation Ltd., 3.000%, 3/30/2020(c)   489,765 

 

See accompanying notes to financial statements.

 

29  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  Singapore — (continued)

 

$345,000   DBS Group Holdings Ltd., (fixed rate to 12/11/2023, variable rate thereafter), 4.520%, 12/11/2028, 144A  $349,192 
 3,215,000   United Overseas Bank Ltd., 3.200%, 4/23/2021, 144A(c)   3,193,877 
    

 

 

 
     4,777,900 
    

 

 

 
  South Africa — 0.3%  
 930,000   MTN (Mauritius) Investments Ltd., 4.755%, 11/11/2024, 144A   841,120 
 500,000   Myriad International Holdings BV, 6.000%, 7/18/2020, 144A   519,135 
 113,940,000   South Africa Government International Bond, Series R213, 7.000%, 2/28/2031, (ZAR)(c)   6,606,163 
    

 

 

 
     7,966,418 
    

 

 

 
  Spain — 0.3%  
 400,000   Banco Santander S.A., 3.125%, 2/23/2023   379,625 
 700,000   Gas Natural Fenosa Finance BV, EMTN, 1.500%, 1/29/2028, (EUR)   794,597 
 100,000   Iberdrola International BV, EMTN, 0.375%, 9/15/2025, (EUR)   110,374 
 725,000   Spain Government International Bond, 0.750%, 7/30/2021, (EUR)(c)   858,597 
 430,000   Spain Government International Bond, 1.600%, 4/30/2025, 144A, (EUR)(c)   521,677 
 760,000   Spain Government International Bond, 4.300%, 10/31/2019, 144A, (EUR)(c)   926,342 
 2,565,000   Spain Government International Bond, 4.400%, 10/31/2023, 144A, (EUR)(c)   3,541,731 
    

 

 

 
     7,132,943 
    

 

 

 
  Supranationals — 0.1%  
 1,115,000   Corporacion Andina de Fomento, 4.375%, 6/15/2022(c)   1,144,035 
 1,140,000   International Bank for Reconstruction & Development, 2.500%, 3/12/2020, (AUD)(c)   827,386 
 70,000,000   International Finance Corp., Series GDIF, MTN, 7.800%, 6/03/2019, (INR)(c)   963,816 
    

 

 

 
     2,935,237 
    

 

 

 
  Sweden — 0.0%  
 2,450,000   Sweden Government Bond, 5.000%, 12/01/2020, (SEK)(c)   308,432 
    

 

 

 
  Switzerland — 0.1%  
 1,075,000   Glencore Finance Canada Ltd., 5.550%, 10/25/2042, 144A(c)   1,060,498 
 900,000   Syngenta Finance NV, EMTN, 1.250%, 9/10/2027, (EUR)   913,625 
    

 

 

 
     1,974,123 
    

 

 

 
  Thailand — 0.2%  
 1,570,000   Kasikornbank PCL, EMTN, 3.256%, 7/12/2023   1,513,522 
 1,010,000   Siam Commercial Bank PCL, 3.500%, 4/07/2019, 144A(c)   1,009,805 
 85,000,000   Thailand Government Bond, 2.125%, 12/17/2026, (THB)   2,524,482 
 950,000   Thaioil Treasury Center Co. Ltd., 3.625%, 1/23/2023, 144A   927,076 
    

 

 

 
     5,974,885 
    

 

 

 
  Trinidad — 0.0%  
 415,000   Trinidad Generation UnLtd., 5.250%, 11/04/2027, 144A   402,031 
    

 

 

 
  Turkey — 0.1%  
 1,775,000   Turkey Government International Bond, 6.125%, 10/24/2028   1,602,186 
    

 

 

 

 

See accompanying notes to financial statements.

 

|  30


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United Arab Emirates — 0.2%  
$1,610,000   Abu Dhabi Crude Oil Pipeline LLC, 3.650%, 11/02/2029(c)  $1,525,861 
 1,275,000   DP World Crescent Ltd., 4.848%, 9/26/2028, 144A   1,257,482 
 850,000   DP World Ltd., 3.250%, 5/18/2020, 144A(c)   843,540 
 200,000   DP World Ltd., MTN, 3.250%, 5/18/2020   198,480 
    

 

 

 
     3,825,363 
    

 

 

 
  United Kingdom — 0.4%  
 95,000   Avon Products, Inc., 8.950%, 3/15/2043   85,025 
 585,000   BP Capital Markets PLC, 3.216%, 11/28/2023(c)   573,932 
 445,000   FCE Bank PLC, EMTN, 1.615%, 5/11/2023, (EUR)   517,421 
 300,000   HSBC Holdings PLC, 4.375%, 11/23/2026(c)   294,855 
 565,000   HSBC Holdings PLC, (fixed rate to 6/01/2021, variable rate thereafter), 6.875%(d)   584,775 
 295,000   HSBC Holdings PLC, EMTN, 5.750%, 12/20/2027, (GBP)(c)   451,247 
 150,000   Imperial Brands Finance PLC, EMTN, 6.250%, 12/04/2018, (GBP)   197,168 
 635,000   Lloyds Banking Group PLC, 4.050%, 8/16/2023   630,817 
 400,000   Lloyds Banking Group PLC, 4.500%, 11/04/2024(c)   392,911 
 1,020,000   Lloyds Banking Group PLC, (fixed rate to 6/27/2024, variable rate thereafter), 7.500%(d)   1,051,875 
 1,130,000   Royal Bank of Scotland Group PLC, 6.000%, 12/19/2023(c)   1,175,561 
 950,000   Royal Bank of Scotland Group PLC, (fixed rate to 8/10/2020, variable rate thereafter), 7.500%(d)   971,099 
 350,000   Santander UK Group Holdings PLC, 4.750%, 9/15/2025, 144A(c)   341,151 
 250,000   Standard Chartered PLC, EMTN, 3.125%, 11/19/2024, (EUR)   308,679 
 500,000   United Kingdom Gilt, 1.750%, 7/22/2019, (GBP)   656,653 
 130,000   Virgin Media Finance PLC, 4.500%, 1/15/2025, 144A, (EUR)   154,321 
 115,000   Virgin Media Secured Finance PLC, 4.875%, 1/15/2027, (GBP)   147,334 
 1,660,000   Vodafone Group PLC, 4.375%, 5/30/2028   1,635,477 
    

 

 

 
     10,170,301 
    

 

 

 
  United States — 12.9%  
 15,000   21st Century Fox America, Inc., 6.400%, 12/15/2035   19,117 
 9,890,000   AbbVie, Inc., 2.500%, 5/14/2020   9,779,161 
 1,745,000   AES Corp. (The), 4.875%, 5/15/2023   1,760,269 
 480,000   Allison Transmission, Inc., 4.750%, 10/01/2027, 144A   453,000 
 8,000,000   Ally Financial, Inc., 4.125%, 2/13/2022   7,990,000 
 745,000   Ally Financial, Inc., 5.125%, 9/30/2024   767,350 
 129,000   Ally Financial, Inc., 8.000%, 12/31/2018   130,290 
 1,728,000   Ally Financial, Inc., 8.000%, 11/01/2031   2,093,040 
 149,955   American Airlines Pass Through Certificates, Series 2013-1, Class A, 4.000%, 1/15/2027   149,129 
 2,140,427   American Airlines Pass Through Certificates, Series 2016-1, Class B, 5.250%, 7/15/2025   2,206,099 
 1,672,664   American Airlines Pass Through Certificates, Series 2016-3, Class B, 3.750%, 4/15/2027   1,614,756 
 630,000   American Airlines Pass Through Certificates, Series 2017-2, Class B, 3.700%, 4/15/2027   607,760 
 487,013   American Airlines Pass Through Certificates, Series 2017-1B, Class B, 4.950%, 8/15/2026   490,519 

 

See accompanying notes to financial statements.

 

31  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued  
$6,190,000   Anadarko Petroleum Corp., 3.450%, 7/15/2024  $5,958,593 
 300,000   Anadarko Petroleum Corp., 4.500%, 7/15/2044   274,779 
 400,000   Antero Resources Corp., 5.125%, 12/01/2022   406,200 
 175,000   Antero Resources Corp., 5.375%, 11/01/2021   177,240 
 3,060,000   Antero Resources Corp., 5.625%, 6/01/2023   3,132,675 
 260,000   Aptiv PLC, 1.600%, 9/15/2028, (EUR)   287,372 
 1,510,000   AT&T, Inc., 3.400%, 5/15/2025   1,437,624 
 3,960,000   AT&T, Inc., 4.300%, 2/15/2030, 144A   3,808,321 
 925,000   Aviation Capital Group LLC, 6.750%, 4/06/2021, 144A   989,072 
 200,000   Bank of America Corp., 5.490%, 3/15/2019   202,468 
 2,700,000   Bank of America Corp., 6.110%, 1/29/2037   3,105,134 
 115,000   Bank of America Corp., MTN, 4.250%, 10/22/2026   113,682 
 3,000   Beazer Homes USA, Inc., 7.250%, 2/01/2023   2,955 
 71,000   California Resources Corp., 5.500%, 9/15/2021   65,398 
 10,000   California Resources Corp., 6.000%, 11/15/2024   8,500 
 1,870,000   California Resources Corp., 8.000%, 12/15/2022, 144A   1,785,850 
 60,000   CenturyLink, Inc., 5.625%, 4/01/2025   58,668 
 55,000   CenturyLink, Inc., Series G, 6.875%, 1/15/2028   52,806 
 370,000   CenturyLink, Inc., Series P, 7.600%, 9/15/2039   330,225 
 880,000   CenturyLink, Inc., Series S, 6.450%, 6/15/2021   913,000 
 34,000   Chemours Co. (The), 6.625%, 5/15/2023   35,516 
 3,210,000   Chesapeake Energy Corp., 4.875%, 4/15/2022   3,117,712 
 315,000   Chesapeake Energy Corp., 5.750%, 3/15/2023   306,731 
 495,000   Chesapeake Energy Corp., 6.125%, 2/15/2021   507,375 
 190,000   Chesapeake Energy Corp., 6.625%, 8/15/2020   198,550 
 95,000   Chesapeake Energy Corp., 6.875%, 11/15/2020   99,513 
 3,232,000   Chesapeake Energy Corp., 8.000%, 12/15/2022, 144A   3,377,440 
 4,700,000   Chesapeake Energy Corp., 8.000%, 6/15/2027   4,794,000 
 780,000   Chevron Corp., 2.419%, 11/17/2020(c)   770,654 
 1,635,000   Cimarex Energy Co., 4.375%, 6/01/2024   1,649,139 
 525,000   Cincinnati Bell, Inc., 7.000%, 7/15/2024, 144A   481,687 
 450,000   Cincinnati Bell, Inc., 8.000%, 10/15/2025, 144A   419,625 
 500,000   Citizens Financial Group, Inc., 4.300%, 12/03/2025   493,016 
 2,913,000   Clear Channel Worldwide Holdings, Inc., Series B, 7.625%, 3/15/2020   2,920,282 
 390,000   Consolidated Communications, Inc., 6.500%, 10/01/2022   368,550 
 265,000   Constellation Brands, Inc., 4.750%, 11/15/2024   274,370 
 485,000   Continental Resources, Inc., 3.800%, 6/01/2024   475,621 
 640,000   Continental Resources, Inc., 4.500%, 4/15/2023   651,265 
 92,000   Continental Resources, Inc., 5.000%, 9/15/2022   93,334 
 375,000   Cox Communications, Inc., 4.800%, 2/01/2035, 144A   350,004 
 395,000   CSC Holdings LLC, 5.375%, 2/01/2028, 144A   376,238 
 155,000   Cummins, Inc., 5.650%, 3/01/2098   165,222 
 475,000   Dell International LLC/EMC Corp., 6.020%, 6/15/2026, 144A   507,695 
 113,552   Delta Air Lines Pass Through Trust, Series 2007-1, Class B, 8.021%, 2/10/2024(e)   124,748 
 1,200,000   Devon Energy Corp., 3.250%, 5/15/2022   1,178,914 
 50,000   Dillard’s, Inc., 7.000%, 12/01/2028   52,439 

 

See accompanying notes to financial statements.

 

|  32


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued  
$8,000   Dillard’s, Inc., 7.750%, 7/15/2026  $8,832 
 1,680,000   DISH DBS Corp., 5.000%, 3/15/2023   1,524,600 
 1,495,000   DISH DBS Corp., 5.875%, 11/15/2024   1,339,894 
 310,000   DR Horton, Inc., 4.375%, 9/15/2022   314,199 
 340,000   Enable Midstream Partners LP, 5.000%, 5/15/2044   306,051 
 235,000   Enbridge Energy Partners LP, 7.375%, 10/15/2045   310,573 
 1,075,000   Energy Transfer Partners LP/Regency Energy Finance Corp., 5.000%, 10/01/2022   1,113,352 
 600,000   EnLink Midstream Partners LP, 4.150%, 6/01/2025   568,928 
 1,310,000   Federal National Mortgage Association, Series 2017-M14, Class A2, 2.974%, 11/25/2027(c)(f)   1,236,399 
 410,000   FedEx Corp., 1.000%, 1/11/2023, (EUR)   485,056 
 80,000   Foot Locker, Inc., 8.500%, 1/15/2022   90,200 
 40,000   Ford Motor Co., 4.346%, 12/08/2026   37,646 
 685,000   Ford Motor Co., 5.291%, 12/08/2046   610,101 
 25,000   Ford Motor Co., 6.375%, 2/01/2029   25,856 
 50,000   Ford Motor Co., 6.625%, 2/15/2028   52,787 
 2,105,000   Ford Motor Co., 6.625%, 10/01/2028   2,221,116 
 5,000   Ford Motor Co., 7.500%, 8/01/2026   5,673 
 5,000,000   Ford Motor Credit Co. LLC, 2.459%, 3/27/2020   4,916,013 
 770,000   Ford Motor Credit Co. LLC, 3.470%, 4/05/2021   760,600 
 1,600,000   Ford Motor Credit Co. LLC, 3.588%, 6/02/2020, (AUD)(c)   1,166,495 
 865,000   Frontier Communications Corp., 6.875%, 1/15/2025   525,773 
 560,000   Frontier Communications Corp., 11.000%, 9/15/2025   436,638 
 131,000   Gates Global LLC/Gates Global Co., 6.000%, 7/15/2022, 144A   131,819 
 50,000   General Electric Co., GMTN, 3.100%, 1/09/2023   48,966 
 740,000   General Electric Co., Series D, (fixed rate to 1/21/2021, variable rate thereafter), 5.000%(c)(d)   720,945 
 310,000   General Motors Co., 5.200%, 4/01/2045   281,620 
 240,000   General Motors Financial Co., Inc., 3.450%, 4/10/2022   236,043 
 925,000   General Motors Financial Co., Inc., 5.250%, 3/01/2026   947,862 
 100,000   General Motors Financial Co., Inc., EMTN, 0.955%, 9/07/2023, (EUR)   113,703 
 3,435,000   Georgia-Pacific LLC, 7.250%, 6/01/2028   4,285,082 
 105,000   Georgia-Pacific LLC, 7.375%, 12/01/2025   125,439 
 180,000   Georgia-Pacific LLC, 7.750%, 11/15/2029   236,616 
 315,000   Georgia-Pacific LLC, 8.875%, 5/15/2031   457,956 
 905,000   Global Atlantic Fin Co., 8.625%, 4/15/2021, 144A   1,000,821 
 2,295,000   Goldman Sachs Group, Inc. (The), 6.750%, 10/01/2037   2,760,782 
 1,935,000   Goodyear Tire & Rubber Co. (The), 4.875%, 3/15/2027   1,777,781 
 165,000   Goodyear Tire & Rubber Co. (The), 7.000%, 3/15/2028   171,600 
 4,627   GS Mortgage Securities Trust, Series 2007-GG10, Class AM, 5.977%, 8/10/2045(f)   4,688 
 1,000,000   HCA Healthcare, Inc., 6.250%, 2/15/2021   1,042,500 
 20,000   HCA, Inc., 4.750%, 5/01/2023   20,350 
 6,670,000   HCA, Inc., 5.375%, 9/01/2026   6,736,700 
 225,000   HCA, Inc., 7.050%, 12/01/2027   241,313 
 820,000   HCA, Inc., 7.500%, 11/06/2033   888,782 

 

See accompanying notes to financial statements.

 

33  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued  
$395,000   HCA, Inc., 8.360%, 4/15/2024  $449,312 
 195,000   HCA, Inc., MTN, 7.580%, 9/15/2025   216,938 
 75,000   HCA, Inc., MTN, 7.750%, 7/15/2036   81,750 
 855,000   Hecla Mining Co., 6.875%, 5/01/2021   857,137 
 490,000   Hewlett Packard Enterprise Co., 6.350%, 10/15/2045   503,539 
 310,000   Hexion, Inc., 7.875%, 2/15/2023(g)(h)   248,000 
 485,000   Huntington Ingalls Industries, Inc., 5.000%, 11/15/2025, 144A   502,363 
 1,585,000   Hyundai Capital America, 2.750%, 9/27/2026, 144A(c)   1,387,794 
 450,000   International Lease Finance Corp., 4.625%, 4/15/2021   459,116 
 1,250,000   International Lease Finance Corp., 6.250%, 5/15/2019   1,274,313 
 745,000   INVISTA Finance LLC, 4.250%, 10/15/2019, 144A   744,069 
 2,233,000   iStar, Inc., 5.000%, 7/01/2019   2,236,740 
 48,000   J.C. Penney Corp., Inc., 6.375%, 10/15/2036   19,200 
 5,000   J.C. Penney Corp., Inc., 7.625%, 3/01/2097   1,900 
 1,070,000   Jefferies Group LLC, 6.250%, 1/15/2036   1,082,282 
 7,760,000   Jeld-Wen, Inc., 4.625%, 12/15/2025, 144A   7,158,600 
 15,000   K. Hovnanian Enterprises, Inc., 5.000%, 11/01/2021   13,401 
 1,665,000   KB Home, 8.000%, 3/15/2020   1,760,904 
 330,000   Level 3 Financing, Inc., 5.125%, 5/01/2023   331,650 
 760,000   Level 3 Financing, Inc., 5.375%, 5/01/2025   758,092 
 140,000   Level 3 Parent LLC, 5.750%, 12/01/2022   141,603 
 20,000   Macy’s Retail Holdings, Inc., 4.500%, 12/15/2034   16,437 
 44,000   Masco Corp., 6.500%, 8/15/2032   48,225 
 403,000   Masco Corp., 7.750%, 8/01/2029   478,027 
 254,000   Micron Technology, Inc., 5.500%, 2/01/2025   262,666 
 1,430,000   Midas Intermediate Holdco II LLC/Midas Intermediate Holdco II Finance, Inc., 7.875%, 10/01/2022, 144A   1,265,550 
 220,000   Morgan Stanley, 2.500%, 1/24/2019   219,875 
 450,000   Morgan Stanley, 3.950%, 4/23/2027   431,916 
 725,000   Morgan Stanley, 5.750%, 1/25/2021   762,059 
 3,150,000   Morgan Stanley, MTN, 4.100%, 5/22/2023   3,169,500 
 600,000   Morgan Stanley, MTN, 6.250%, 8/09/2026   674,482 
 25,000   MPLX LP, 4.500%, 7/15/2023   25,632 
 95,000   MPLX LP, 4.875%, 6/01/2025   98,110 
 3,890,000   Nationstar Mortgage Holdings, Inc., 9.125%, 7/15/2026, 144A   4,074,775 
 3,000,000   Navient Corp., 5.000%, 10/26/2020   3,036,930 
 95,000   Navient Corp., 5.875%, 10/25/2024   93,100 
 1,600(††††)   Navient Corp., 6.000%, 12/15/2043   35,577 
 935,000   Navient Corp., 6.750%, 6/15/2026   923,312 
 750,000   Navient Corp., MTN, 6.125%, 3/25/2024   750,000 
 915,000   Navient LLC, 5.500%, 1/25/2023   912,712 
 60,000   Navient LLC, MTN, 5.500%, 1/15/2019   60,300 
 415,000   Navient LLC, MTN, 7.250%, 1/25/2022   437,825 
 3,418,000   Navient LLC, Series A, MTN, 5.625%, 8/01/2033   2,862,575 
 4,583,000   New Albertsons LP, 7.450%, 8/01/2029   3,780,975 
 525,000   New Albertsons LP, 7.750%, 6/15/2026   457,926 
 5,540,000   New Albertsons LP, 8.000%, 5/01/2031   4,709,000 

 

See accompanying notes to financial statements.

 

|  34


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued  
$2,150,000   New Albertsons LP, 8.700%, 5/01/2030  $1,897,375 
 1,309,000   New Albertsons LP, Series C, MTN, 6.625%, 6/01/2028   991,567 
 365,000   Newell Brands, Inc., 4.000%, 12/01/2024   352,831 
 65,000   Newfield Exploration Co., 5.625%, 7/01/2024   68,494 
 900,000   NGL Energy Partners LP/NGL Energy Finance Corp., 6.125%, 3/01/2025   843,750 
 55,000   NGL Energy Partners LP/NGL Energy Finance Corp., 6.875%, 10/15/2021   56,029 
 405,000   NGL Energy Partners LP/NGL Energy Finance Corp., 7.500%, 11/01/2023   405,000 
 20,000   NGPL PipeCo LLC, 7.768%, 12/15/2037, 144A   24,500 
 540,000   Nissan Motor Acceptance Corp., 2.000%, 3/08/2019, 144A(c)   538,234 
 1,765,000   Nissan Motor Acceptance Corp., 3.650%, 9/21/2021, 144A   1,769,462 
��120,000   Oasis Petroleum, Inc., 6.875%, 1/15/2023   122,100 
 2,275,000   Oceaneering International, Inc., 4.650%, 11/15/2024   2,206,659 
 420,000   Old Republic International Corp., 4.875%, 10/01/2024   432,106 
 3,693,000   ONEOK Partners LP, 4.900%, 3/15/2025   3,833,169 
 25,000   ONEOK Partners LP, 6.200%, 9/15/2043   28,019 
 55,000   Outfront Media Capital LLC/Outfront Media Capital Corp., 5.250%, 2/15/2022   55,688 
 140,000   Outfront Media Capital LLC/Outfront Media Capital Corp., 5.875%, 3/15/2025   141,400 
 310,000   Owens Corning, 7.000%, 12/01/2036   353,192 
 2,965,000   Owens-Brockway Glass Container, Inc., 5.375%, 1/15/2025, 144A   2,935,350 
 585,000   Prologis LP, 2.250%, 6/30/2029, (GBP)   714,117 
 540,000   PulteGroup, Inc., 6.000%, 2/15/2035   508,950 
 785,000   PulteGroup, Inc., 6.375%, 5/15/2033   753,686 
 220,000   PulteGroup, Inc., 7.875%, 6/15/2032   236,775 
 285,000   QEP Resources, Inc., 5.250%, 5/01/2023   277,519 
 210,000   QEP Resources, Inc., 5.375%, 10/01/2022   210,788 
 135,000   Quicken Loans, Inc., 5.250%, 1/15/2028, 144A   125,381 
 120,000   Quicken Loans, Inc., 5.750%, 5/01/2025, 144A   119,850 
 1,335,000   Qwest Capital Funding, Inc., 6.500%, 11/15/2018   1,339,272 
 650,000   Qwest Capital Funding, Inc., 6.875%, 7/15/2028   602,745 
 400,000   Qwest Capital Funding, Inc., 7.625%, 8/03/2021   413,496 
 45,000   Qwest Capital Funding, Inc., 7.750%, 2/15/2031   41,794 
 476,000   Qwest Corp., 6.875%, 9/15/2033   473,358 
 115,000   Qwest Corp., 7.250%, 9/15/2025   124,067 
 540,000   Radian Group, Inc., 4.500%, 10/01/2024   530,550 
 230,000   Range Resources Corp., 4.875%, 5/15/2025   217,638 
 850,000   Range Resources Corp., 5.000%, 8/15/2022   840,437 
 220,000   Range Resources Corp., 5.000%, 3/15/2023   215,600 
 970,000   Santander Holdings USA, Inc., 2.650%, 4/17/2020(c)   957,526 
 25,000   Sealed Air Corp., 4.875%, 12/01/2022, 144A   25,250 
 640,000   Sealed Air Corp., 5.500%, 9/15/2025, 144A   649,600 
 420,000   ServiceMaster Co. LLC (The), 7.450%, 8/15/2027   441,525 
 140,000   Silgan Holdings, Inc., 3.250%, 3/15/2025, (EUR)   167,601 
 2,495,000   Springleaf Finance Corp., 5.250%, 12/15/2019   2,529,306 
 1,170,000   Springleaf Finance Corp., 5.625%, 3/15/2023   1,165,612 
 860,000   Springleaf Finance Corp., 6.875%, 3/15/2025   857,850 

 

See accompanying notes to financial statements.

 

35  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued  
$2,310,000   Springleaf Finance Corp., 7.125%, 3/15/2026  $2,298,450 
 330,000   Springleaf Finance Corp., 7.750%, 10/01/2021   355,981 
 130,000   Springleaf Finance Corp., 8.250%, 10/01/2023   143,325 
 2,349,000   Sprint Capital Corp., 6.875%, 11/15/2028   2,360,745 
 2,240,000   Sprint Capital Corp., 8.750%, 3/15/2032   2,520,000 
 1,720,000   Sprint Communications, Inc., 6.000%, 11/15/2022   1,754,400 
 120,000   Sprint Corp., 7.125%, 6/15/2024   124,500 
 2,840,000   Sprint Corp., 7.875%, 9/15/2023   3,063,650 
 1,365,000   Targa Resources Partners LP/Targa Resources Partners Finance Corp., 6.750%, 3/15/2024   1,440,075 
 840,000   Tenet Healthcare Corp., 5.125%, 5/01/2025   827,400 
 100,000   Tenet Healthcare Corp., 6.750%, 6/15/2023   99,625 
 1,405,000   Tenet Healthcare Corp., 6.875%, 11/15/2031   1,257,756 
 820,000   Textron, Inc., 5.950%, 9/21/2021   864,095 
 90,000   Time Warner Cable LLC, 4.500%, 9/15/2042   76,805 
 85,000   Time Warner Cable LLC, 5.500%, 9/01/2041   81,870 
 1,680,000   Transcontinental Gas Pipe Line Co. LLC, 7.850%, 2/01/2026   2,046,395 
 171,000   TransDigm, Inc., 6.500%, 7/15/2024   175,190 
 185,000   TransDigm, Inc., 6.500%, 5/15/2025   188,469 
 6,665,000   TRI Pointe Group, Inc., 4.875%, 7/01/2021   6,665,000 
 90,000   TRI Pointe Group, Inc./TRI Pointe Homes, Inc., 4.375%, 6/15/2019   90,450 
 5,000   TRI Pointe Group, Inc./TRI Pointe Homes, Inc., 5.875%, 6/15/2024   4,963 
 656,000   TRU Taj LLC/TRU Taj Finance, Inc., 11.000%, 1/22/2019, 144A   671,875 
 9,434,874   U.S. Treasury Inflation Indexed Note, 0.125%, 4/15/2022(c)(i)   9,166,324 
 4,069,290   U.S. Treasury Inflation Indexed Note, 0.375%, 7/15/2027(c)(i)   3,887,444 
 2,655,000   U.S. Treasury Note, 0.875%, 6/15/2019(c)   2,624,509 
 4,615,000   U.S. Treasury Note, 1.375%, 4/30/2020(c)   4,514,948 
 18,115,000   U.S. Treasury Note, 1.500%, 11/30/2019(c)   17,866,626 
 3,460,000   U.S. Treasury Note, 1.750%, 11/30/2021(c)   3,340,252 
 8,530,000   U.S. Treasury Note, 2.500%, 6/30/2020(c)   8,486,017 
 6,555,000   U.S. Treasury Note, 2.750%, 5/31/2023(c)   6,500,972 
 15,150,000   U.S. Treasury Note, 2.750%, 2/28/2025(c)   14,930,443 
 6,605,000   U.S. Treasury Note, 2.875%, 5/15/2028(c)   6,505,409 
 406,800   United Airlines Pass Through Trust, Series 2016-2, Class B, 3.650%, 4/07/2027   390,031 
 2,940,000   United Rentals North America, Inc., 5.500%, 7/15/2025   2,998,800 
 2,635,000   United Rentals North America, Inc., 5.750%, 11/15/2024   2,710,888 
 1,940,000   United States Steel Corp., 6.650%, 6/01/2037   1,733,875 
 690,000   United States Steel Corp., 7.375%, 4/01/2020   721,912 
 96,787   US Airways Pass Through Trust, Series 2012-1A, Class A, 5.900%, 4/01/2026   103,562 
 50,057   US Airways Pass Through Trust, Series 2012-1B, Class B, 8.000%, 4/01/2021   52,185 
 363,393   US Airways Pass Through Trust, Series 2012-2A, Class A, 4.625%, 12/03/2026   371,501 
 25,000   Viacom, Inc., 4.375%, 3/15/2043   21,818 
 395,000   Viacom, Inc., 5.250%, 4/01/2044   384,735 

 

See accompanying notes to financial statements.

 

|  36


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Principal
Amount (‡)
   Description  Value (†) 
  United States — continued  
$145,000   Viacom, Inc., 5.850%, 9/01/2043  $153,407 
 1,150,000   Walmart, Inc., 3.700%, 6/26/2028   1,150,310 
 60,000   Weyerhaeuser Co., 6.950%, 10/01/2027   70,353 
 315,000   Weyerhaeuser Co., 7.375%, 3/15/2032   398,402 
 525,000   Whiting Petroleum Corp., 5.750%, 3/15/2021   538,125 
 195,000   Whiting Petroleum Corp., 6.250%, 4/01/2023   201,854 
 3,052,000   Windstream Services LLC/Windstream Finance Corp., 9.000%, 6/30/2025, 144A   2,357,670 
 65,000   Windstream Services LLC/Windstream Finance Corp., 10.500%, 6/30/2024, 144A   55,250 
    

 

 

 
     316,008,890 
    

 

 

 
  Uruguay — 0.0%  
 17,410,000   Republic of Uruguay, 9.875%, 6/20/2022, 144A, (UYU)   519,291 
    

 

 

 
  Total Non-Convertible Bonds
(Identified Cost $568,318,213)
   568,252,758 
    

 

 

 
    
 Convertible Bonds — 0.5% 
  United States — 0.5%  
 1,450,000   Booking Holdings, Inc., 0.900%, 9/15/2021   1,720,350 
 105,000   CalAmp Corp., 1.625%, 5/15/2020   110,215 
 60,000   Chesapeake Energy Corp., 5.500%, 9/15/2026   59,265 
 545,000   DISH Network Corp., 2.375%, 3/15/2024   483,052 
 2,290,000   DISH Network Corp., 3.375%, 8/15/2026   2,184,124 
 290,000   Evolent Health, Inc., 2.000%, 12/01/2021   389,562 
 1,855,000   iStar, Inc., 3.125%, 9/15/2022, 144A   1,803,312 
 855,000   KB Home, 1.375%, 2/01/2019   867,679 
 2,020,000   Nuance Communications, Inc., 1.000%, 12/15/2035   1,906,536 
 240,000   Nuance Communications, Inc., 1.250%, 4/01/2025   247,867 
 10,000   Nuance Communications, Inc., 1.500%, 11/01/2035   10,132 
 1,660,000   Rovi Corp., 0.500%, 3/01/2020   1,565,563 
 40,000   RPM International, Inc., 2.250%, 12/15/2020   49,248 
 380,000   SM Energy Co., 1.500%, 7/01/2021   415,945 
 250,000   Western Digital Corp., 1.500%, 2/01/2024, 144A   231,343 
    

 

 

 
  Total Convertible Bonds
(Identified Cost $11,603,824)
   12,044,193 
    

 

 

 
    
 Municipals — 0.0%  
  United States — 0.0%  
 155,000   State of Illinois, 5.100%, 6/01/2033   148,761 
 130,000   Virginia Tobacco Settlement Financing Corp., Series A-1, 6.706%, 6/01/2046   128,869 
    

 

 

 
  Total Municipals
(Identified Cost $253,900)
   277,630 
    

 

 

 
    
  Total Bonds and Notes
(Identified Cost $580,175,937)
   580,574,581 
    

 

 

 

 

See accompanying notes to financial statements.

 

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Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

    
Shares
   Description  Value (†) 
 Preferred Stocks — 0.1% 
  United States — 0.1%

 

 460   Chesapeake Energy Corp., 5.000%  $28,350 
 40   Chesapeake Energy Corp., 5.750%   23,953 
 736   Chesapeake Energy Corp., 5.750%   463,010 
 84   Chesapeake Energy Corp., Series A, 5.750% 144A   50,302 
 38,269   El Paso Energy Capital Trust I, 4.750%   1,798,260 
    

 

 

 
  Total Preferred Stocks
(Identified Cost $2,255,025)
   2,363,875 
    

 

 

 
    
Principal
Amount (‡)
          
 Short-Term Investments — 8.8% 
$69,586,967   Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 9/28/2018 at 1.300% to be repurchased at $69,594,506 on 10/01/2018 collateralized by $8,815,000 Federal Home Loan Mortgage Corp., 3.750% due 3/27/2019 valued at $8,872,597; $62,535,000 U.S. Treasury Bond, 3.125% due 8/15/2044 valued at $62,109,262 including accrued interest (Note 2 of Notes to Financial Statements)   69,586,967 
 20,000,000   U.S. Treasury Bills, 1.995%-2.008%, 11/08/2018(j)(k)   19,956,300 
 15,470,000   U.S. Treasury Bills, 2.030%-2.047%, 11/15/2018(j)(k)   15,429,754 
 55,000,000   U.S. Treasury Bills, 2.060%, 11/29/2018(j)   54,808,680 
 8,925,000   U.S. Treasury Bills, 2.075%, 10/18/2018(j)   8,916,286 
 10,000,000   U.S. Treasury Bills, 2.118%, 12/20/2018(j)   9,952,695 
 1,075,000   U.S. Treasury Bills, 2.140%, 12/27/2018(j)   1,069,408 
 35,000,000   U.S. Treasury Bills, 2.160%-2.200%, 04/25/2019(j)(k)   34,530,849 
    

 

 

 
  Total Short-Term Investments
(Identified Cost $214,294,492)
   214,250,939 
    

 

 

 
    
  Total Investments — 98.8%
(Identified Cost $1,987,459,575)
   2,415,017,520 
  Other assets less liabilities — 1.2%   28,664,152 
    

 

 

 
  Net Assets — 100.0%  $2,443,681,672 
    

 

 

 
    
 (‡)   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)   Securities subject to restriction on resale. At September 30, 2018, the restricted securities held by the Fund are as follows:

 

        
   Acquisition
Date
   Acquisition
Cost
  Value   % of
Net Assets
 
Dex Media, Inc.   August 12, 2016   $3,266  $7,035    Less than 0.1% 

 

See accompanying notes to financial statements.

 

|  38


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

 (c)   Security (or a portion thereof) has been designated to cover the Fund’s obligations under open derivative contracts.
 (d)   Perpetual bond with no specified maturity date.
 (e)   Level 3 security. Value has been determined using significant unobservable inputs. See Note 3 of Notes to Financial Statements.
 (f)   Variable rate security. The interest rate adjusts periodically based on; (i) changes in current interest rates and/or prepayments on underlying pools of assets, if applicable, (ii) reference to a base lending rate plus or minus a margin, and/or (iii) reference to a base lending rate adjusted by a multiplier and/or subject to certain floors or caps. Rate as of September 30, 2018 is disclosed.
 (g)   Illiquid security. (Unaudited)
 (h)   Securities classified as fair valued pursuant to the Fund’s pricing policies and procedures. At September 30, 2018, the value of these securities amounted to $248,000 or less than 0.1% of net assets. See Note 2 of Notes to Financial Statements.
 (i)   Treasury Inflation Protected Security (TIPS).
 (j)   Interest rate represents discount rate at time of purchase; not a coupon rate.
 (k)   The Fund’s investment in U.S. Government/Agency securities 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.
  
 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, 2018, the value of Rule 144A holdings amounted to $118,389,594 or 4.8% 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.
 EMTN   Euro Medium Term Note
 GMTN   Global Medium Term Note
 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
 JPY   Japanese Yen
 KRW   South Korean Won
 MXN   Mexican Peso
 NOK   Norwegian Krone
 PLN   Polish Zloty
 SEK   Swedish Krona
 THB   Thai Baht
 UYU   Uruguayan Peso
 ZAR   South African Rand

 

See accompanying notes to financial statements.

 

39  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

At September 30, 2018, 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.  10/09/2018  ARS  S   22,765,000  $748,848  $546,117  $202,731 
Bank of America, N.A.  12/04/2018  BRL  B   7,285,000   1,748,806   1,794,847   46,041 
Bank of America, N.A.  12/04/2018  BRL  S   18,850,000   4,519,192   4,644,183   (124,991
Credit Suisse International  12/19/2018  CAD  B   4,605,000   3,541,218   3,571,209   29,991 
Credit Suisse International  12/19/2018  CAD  S   52,245,000   40,232,408   40,516,353   (283,945
Credit Suisse International  12/19/2018  COP  S   2,593,255,000   834,193   873,911   (39,718
Credit Suisse International  12/19/2018  GBP  B   5,230,000   6,842,984   6,842,369   (615
Credit Suisse International  12/19/2018  IDR  B   52,301,300,000   3,458,067   3,475,223   17,156 
Credit Suisse International  12/19/2018  IDR  S   100,991,415,000   6,616,747   6,710,497   (93,750
Credit Suisse International  12/19/2018  JPY  B   7,275,500,000   65,761,882   64,430,428   (1,331,454
Goldman Sachs & Co.  12/19/2018  MXN  B   66,055,000   3,421,556   3,487,390   65,834 
HSBC Bank USA  12/19/2018  AUD  B   905,000   642,668   654,567   11,899 
Morgan Stanley Capital Services, Inc.  12/19/2018  EUR  B   49,825,000   58,224,000   58,228,497   4,497 
UBS AG  12/19/2018  NOK  S   4,200,000   502,086   517,779   (15,693
UBS AG  12/19/2018  SEK  B   7,350,000   817,713   832,673   14,960 
UBS AG  12/19/2018  THB  S   83,000,000   2,539,003   2,572,883   (33,880
UBS AG  12/19/2018  ZAR  B   26,115,000   1,757,698   1,827,786   70,088 
UBS AG  12/19/2018  ZAR  S   42,125,000   2,816,078   2,948,325   (132,247
       

 

 

 
Total

 

 $(1,593,096
       

 

 

 

At September 30, 2018, 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   12/19/2018   NOK   14,180,000    EUR    1,443,139   $1,686,540  $(61,581
             

 

 

 

 

See accompanying notes to financial statements.

 

|  40


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Global Allocation Fund – (continued)

 

Industry Summary at September 30, 2018

 

Treasuries

   7.4

Capital Markets

   7.1 

Internet & Direct Marketing Retail

   5.8 

Insurance

   5.3 

Interactive Media & Services

   4.7 

Chemicals

   4.4 

IT Services

   4.2 

Aerospace & Defense

   3.8 

Food Products

   3.8 

Industrial Conglomerates

   3.0 

Health Care Equipment & Supplies

   2.6 

Software

   2.4 

Machinery

   2.3 

Hotels, Restaurants & Leisure

   2.3 

Health Care Providers & Services

   2.2 

Banks

   2.2 

Other Investments, less than 2% each

   26.5 

Short-Term Investments

   8.8 
  

 

 

 

Total Investments

   98.8 

Other assets less liabilities (including forward foreign currency contracts)

   1.2 
  

 

 

 

Net Assets

   100.0
  

 

 

 

Currency Exposure Summary at September 30, 2018

 

United States Dollar

   73.0

Swiss Franc

   6.5 

British Pound

   4.7 

Canadian Dollar

   3.5 

Hong Kong Dollar

   2.8 

Euro

   2.6 

Swedish Krona

   2.0 

Other, less than 2% each

   3.7 
  

 

 

 

Total Investments

   98.8 

Other assets less liabilities (including forward foreign currency contracts)

   1.2 
  

 

 

 

Net Assets

   100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

41  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Growth Fund

 

Shares   Description  Value (†) 
 Common Stocks — 98.4% of Net Assets  
  Air Freight & Logistics — 4.1%  
 3,620,357   Expeditors International of Washington, Inc.  $266,204,850 
 836,386   United Parcel Service, Inc., Class B   97,648,066 
    

 

 

 
     363,852,916 
    

 

 

 
  Beverages — 6.1%  
 4,822,051   Coca-Cola Co. (The)   222,730,536 
 5,378,625   Monster Beverage Corp.(a)   313,466,265 
    

 

 

 
     536,196,801 
    

 

 

 
  Biotechnology — 5.5%  
 835,189   Amgen, Inc.   173,126,328 
 775,954   Regeneron Pharmaceuticals, Inc.(a)   313,516,454 
    

 

 

 
     486,642,782 
    

 

 

 
  Capital Markets — 4.4%  
 720,212   FactSet Research Systems, Inc.   161,118,626 
 3,746,716   SEI Investments Co.   228,924,348 
    

 

 

 
     390,042,974 
    

 

 

 
  Communications Equipment — 3.0%  
 5,401,854   Cisco Systems, Inc.   262,800,197 
    

 

 

 
  Consumer Finance — 1.2%  
 984,244   American Express Co.   104,812,144 
    

 

 

 
  Energy Equipment & Services — 2.5%  
 3,675,383   Schlumberger Ltd.   223,904,332 
    

 

 

 
  Food Products — 2.9%  
 16,488,325   Danone S.A., Sponsored ADR   254,991,946 
    

 

 

 
  Health Care Equipment & Supplies — 1.6%  
 1,301,597   Varian Medical Systems, Inc.(a)   145,687,752 
    

 

 

 
  Health Care Technology — 2.2%  
 3,047,927   Cerner Corp.(a)   196,316,978 
    

 

 

 
  Hotels, Restaurants & Leisure — 5.7%  
 4,038,599   Starbucks Corp.   229,553,967 
 3,179,037   Yum China Holdings, Inc.   111,615,989 
 1,766,803   Yum! Brands, Inc.   160,620,061 
    

 

 

 
     501,790,017 
    

 

 

 
  Household Products — 4.6%  
 2,613,864   Colgate-Palmolive Co.   174,998,195 
 2,760,214   Procter & Gamble Co. (The)   229,732,611 
    

 

 

 
     404,730,806 
    

 

 

 
  Interactive Media & Services — 10.2%  
 194,559   Alphabet, Inc., Class A(a)   234,848,278 
 194,290   Alphabet, Inc., Class C(a)   231,879,286 
 2,648,309   Facebook, Inc., Class A(a)   435,540,898 
    

 

 

 
     902,268,462 
    

 

 

 

 

See accompanying notes to financial statements.

 

|  42


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Growth Fund – (continued)

 

Shares   Description  Value (†) 
  Internet & Direct Marketing Retail — 12.4%  
 2,494,077   Alibaba Group Holding Ltd., Sponsored ADR(a)  $410,924,127 
 340,000   Amazon.com, Inc.(a)   681,020,000 
    

 

 

 
     1,091,944,127 
    

 

 

 
  IT Services — 7.0%  
 621,048   Automatic Data Processing, Inc.   93,567,092 
 3,514,774   Visa, Inc., Class A   527,532,429 
    

 

 

 
     621,099,521 
    

 

 

 
  Machinery — 2.7%  
 1,560,189   Deere & Co.   234,543,212 
    

 

 

 
  Pharmaceuticals — 5.7%  
 1,454,810   Merck & Co., Inc.   103,204,222 
 1,765,158   Novartis AG, Sponsored ADR   152,086,013 
 5,198,936   Novo Nordisk AS, Sponsored ADR   245,077,843 
    

 

 

 
     500,368,078 
    

 

 

 
  Semiconductors & Semiconductor Equipment — 3.3%  
 4,114,537   QUALCOMM, Inc.   296,370,100 
    

 

 

 
  Software — 13.3%  
 2,561,037   Autodesk, Inc.(a)   399,803,486 
 2,778,159   Microsoft Corp.   317,738,045 
 8,849,897   Oracle Corp.   456,300,689 
    

 

 

 
     1,173,842,220 
    

 

 

 
  Total Common Stocks
(Identified Cost $6,304,109,536)
  ��8,692,205,365 
    

 

 

 
    
Principal
Amount
          
 Short-Term Investments — 1.4%  
$129,834,440   Tri-Party Repurchase Agreement with Fixed Income Clearing Corporation, dated 9/28/2018 at 1.300% to be repurchased at $129,848,505 on 10/01/2018 collateralized by $133,340,000 U.S. Treasury Bond, 3.125% due 8/15/2044 valued at $132,432,221 including accrued interest (Note 2 of Notes to Financial Statements) (Identified Cost $129,834,440)   129,834,440 
    

 

 

 
    
  Total Investments — 99.8%
(Identified Cost $6,433,943,976)
   8,822,039,805 
  Other assets less liabilities — 0.2%   14,138,815 
    

 

 

 
  Net Assets — 100.0%  $8,836,178,620 
    

 

 

 
    
 (†)   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.

 

43  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Growth Fund – (continued)

 

Industry Summary at September 30, 2018

 

Software

   13.3

Internet & Direct Marketing Retail

   12.4 

Interactive Media & Services

   10.2 

IT Services

   7.0 

Beverages

   6.1 

Hotels, Restaurants & Leisure

   5.7 

Pharmaceuticals

   5.7 

Biotechnology

   5.5 

Household Products

   4.6 

Capital Markets

   4.4 

Air Freight & Logistics

   4.1 

Semiconductors & Semiconductor Equipment

   3.3 

Communications Equipment

   3.0 

Food Products

   2.9 

Machinery

   2.7 

Energy Equipment & Services

   2.5 

Health Care Technology

   2.2 

Other Investments, less than 2% each

   2.8 

Short-Term Investments

   1.4 
  

 

 

 

Total Investments

   99.8 

Other assets less liabilities

   0.2 
  

 

 

 

Net Assets

   100.0
  

 

 

 

 

See accompanying notes to financial statements.

 

|  44


Table of Contents

Statements of Assets and Liabilities

 

September 30, 2018

 

   Global Allocation
Fund
   Growth Fund 

ASSETS

    

Investments at cost

  $1,987,459,575   $6,433,943,976 

Net unrealized appreciation

   427,557,945    2,388,095,829 
  

 

 

   

 

 

 

Investments at value

   2,415,017,520    8,822,039,805 

Due from brokers (Note 2)

   1,070,000     

Foreign currency at value (identified cost $8,591,827 and $0, respectively)

   8,496,638     

Receivable for Fund shares sold

   8,332,013    15,816,390 

Receivable for securities sold

   10,030,041     

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

   610,000     

Dividends and interest receivable

   7,088,817    5,935,719 

Unrealized appreciation on forward foreign currency contracts (Note 2)

   463,197     

Tax reclaims receivable

   650,865    3,880,910 

Prepaid expenses (Note 8)

   2,118    8,251 
  

 

 

   

 

 

 

TOTAL ASSETS

   2,451,761,209    8,847,681,075 
  

 

 

   

 

 

 

LIABILITIES

    

Payable for securities purchased

   1,530,404     

Payable for Fund shares redeemed

   1,406,184    6,818,085 

Unrealized depreciation on forward foreign currency contracts (Note 2)

   2,117,874     

Foreign taxes payable (Note 2)

   831     

Due to brokers (Note 2)

   610,000     

Management fees payable (Note 6)

   1,485,120    3,603,635 

Deferred Trustees’ fees (Note 6)

   186,609    303,332 

Administrative fees payable (Note 6)

   86,301    312,650 

Payable to distributor (Note 6d)

   43,216    79,497 

Other accounts payable and accrued expenses

   612,998    385,256 
  

 

 

   

 

 

 

TOTAL LIABILITIES

   8,079,537    11,502,455 
  

 

 

   

 

 

 

NET ASSETS

  $2,443,681,672   $8,836,178,620 
  

 

 

   

 

 

 

NET ASSETS CONSIST OF:

    

Paid-in capital

  $1,932,322,057   $6,112,654,110 

Accumulated earnings

   511,359,615    2,723,524,510 
  

 

 

   

 

 

 

NET ASSETS

  $2,443,681,672   $8,836,178,620 
  

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

45  |


Table of Contents

Statements of Assets and Liabilities (continued)

 

September 30, 2018

 

   Global Allocation
Fund
   Growth Fund 

COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE:

    

Class A shares:

    

Net assets

  $401,035,799   $1,083,361,687 
  

 

 

   

 

 

 

Shares of beneficial interest

   17,362,620    67,487,441 
  

 

 

   

 

 

 

Net asset value and redemption price per share

  $23.10   $16.05 
  

 

 

   

 

 

 

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

  $24.51   $17.03 
  

 

 

   

 

 

 

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

    

Net assets

  $412,610,176   $130,133,034 
  

 

 

   

 

 

 

Shares of beneficial interest

   18,116,511    8,862,438 
  

 

 

   

 

 

 

Net asset value and offering price per share

  $22.78   $14.68 
  

 

 

   

 

 

 

Class N shares:

    

Net assets

  $80,346,328   $1,001,687,563 
  

 

 

   

 

 

 

Shares of beneficial interest

   3,455,458    58,424,350 
  

 

 

   

 

 

 

Net asset value, offering and redemption price per share

  $23.25   $17.15 
  

 

 

   

 

 

 

Class Y shares:

    

Net assets

  $1,549,689,369   $6,620,996,336 
  

 

 

   

 

 

 

Shares of beneficial interest

   66,642,864    386,202,855 
  

 

 

   

 

 

 

Net asset value, offering and redemption price per share

  $23.25   $17.14 
  

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

|  46


Table of Contents

Statements of Operations

 

For the Year Ended September 30, 2018

 

   Global Allocation
Fund
  Growth Fund 

INVESTMENT INCOME

   

Dividends

  $19,035,949  $101,439,418 

Non-cash dividends (Note 2b)

      6,153,115 

Interest

   27,732,812   1,007,782 

Less net foreign taxes withheld

   (658,305  (2,845,183
  

 

 

  

 

 

 
   46,110,456   105,755,132 
  

 

 

  

 

 

 

Expenses

   

Management fees (Note 6)

   15,669,842   40,912,661 

Service and distribution fees (Note 6)

   4,682,654   3,998,693 

Administrative fees (Note 6)

   920,112   3,599,450 

Trustees’ fees and expenses (Note 6)

   84,322   246,949 

Transfer agent fees and expenses (Notes 6 and 7)

   1,653,427   6,475,850 

Audit and tax services fees

   56,526   41,976 

Custodian fees and expenses

   249,415   267,879 

Legal fees

   41,638   175,122 

Registration fees

   162,909   314,934 

Shareholder reporting expenses

   147,423   725,787 

Miscellaneous expenses (Note 8)

   96,227   211,146 
  

 

 

  

 

 

 

Total expenses

   23,764,495   56,970,447 

Less waiver and/or expense reimbursement (Note 6)

   (478  (29,092
  

 

 

  

 

 

 

Net expenses

   23,764,017   56,941,355 
  

 

 

  

 

 

 

Net investment income

   22,346,439   48,813,777 
  

 

 

  

 

 

 

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

   

Net realized gain (loss) on:

   

Investments

   77,877,116   330,004,291 

Forward foreign currency contracts (Note 2d)

   (230,410   

Foreign currency transactions (Note 2c)

   (624,490   

Net change in unrealized appreciation (depreciation) on:

   

Investments

   74,564,259   902,573,085 

Forward foreign currency contracts (Note 2d)

   (1,452,384   

Foreign currency translations (Note 2c)

   (77,945   
  

 

 

  

 

 

 

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

   150,056,146   1,232,577,376 
  

 

 

  

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

  $172,402,585  $1,281,391,153 
  

 

 

  

 

 

 

 

See accompanying notes to financial statements.

 

47  |


Table of Contents

Statements of Changes in Net Assets

 

   Global Allocation Fund 
   Year Ended
September 30,
2018
  Year Ended
September 30,
2017
 

FROM OPERATIONS:

 

Net investment income

  $22,346,439  $24,109,319 

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

   77,022,216   12,813,326 

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

   73,033,930   173,627,998 
  

 

 

  

 

 

 

Net increase in net assets resulting from operations

   172,402,585   210,550,643 
  

 

 

  

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

 

Class A

   (7,114,532  (3,289,853)(a) 

Class C

   (4,826,992  (1,771,656)(a) 

Class N

   (1,642,868   

Class Y

   (26,544,930  (12,428,003)(a) 
  

 

 

  

 

 

 

Total distributions

   (40,129,322  (17,489,512
  

 

 

  

 

 

 

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

   525,543,091   53,800,129 
  

 

 

  

 

 

 

Net increase in net assets

   657,816,354   246,861,260 

NET ASSETS

 

Beginning of the year

   1,785,865,318   1,539,004,058 
  

 

 

  

 

 

 

End of the year

  $2,443,681,672  $1,785,865,318 
  

 

 

  

 

 

 

 

 (a)

See Note 2g of Notes to Financial Statements.

 

See accompanying notes to financial statements.

 

|  48


Table of Contents

Statements of Changes in Net Assets (continued)

 

   Growth Fund 
   Year Ended
September 30,
2018
  Year Ended
September 30,
2017
 

FROM OPERATIONS:

 

Net investment income

  $48,813,777  $35,730,679 

Net realized gain on investments

   330,004,291   111,820,263 

Net change in unrealized appreciation (depreciation) on investments

   902,573,085   937,804,825 
  

 

 

  

 

 

 

Net increase in net assets resulting from operations

   1,281,391,153   1,085,355,767 
  

 

 

  

 

 

 

FROM DISTRIBUTIONS TO SHAREHOLDERS:

 

Class A

   (23,626,171  (9,966,200)(a) 

Class C

   (2,938,721  (1,227,895)(a) 

Class N

   (9,153,975  (1,680,867)(a) 

Class Y

   (147,324,401  (55,511,360)(a) 
  

 

 

  

 

 

 

Total distributions

   (183,043,268  (68,386,322
  

 

 

  

 

 

 

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

   530,718,841   1,795,629,622 
  

 

 

  

 

 

 

Net increase in net assets

   1,629,066,726   2,812,599,067 

NET ASSETS

 

Beginning of the year

   7,207,111,894   4,394,512,827 
  

 

 

  

 

 

 

End of the year

  $8,836,178,620  $7,207,111,894 
  

 

 

  

 

 

 

 

 (a)

See Note 2g of Notes to Financial Statements.

 

See accompanying notes to financial statements.

 

49  |


Table of Contents

Financial Highlights

 

For a share outstanding throughout each period.

 

  Global Allocation Fund—Class A 
  Year Ended
September 30,
2018
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
 

Net asset value, beginning of the period

 $21.60  $19.17  $18.45  $19.77  $18.57 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.23   0.31   0.24   0.21   0.28 

Net realized and unrealized gain (loss)

  1.75   2.36   1.47   (0.37  1.49 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  1.98   2.67   1.71   (0.16  1.77 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.19  (0.24  (0.15  (0.20  (0.33

Net realized capital gains

  (0.29     (0.84  (0.96  (0.24
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.48  (0.24  (0.99  (1.16  (0.57
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $23.10  $21.60  $19.17  $18.45  $19.77 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(b)

  9.26  14.10  9.64  (0.91)%   9.62

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $401,036  $305,275  $280,263  $246,371  $237,167 

Net expenses

  1.16  1.18  1.17  1.18  1.17

Gross expenses

  1.16  1.18  1.17  1.18  1.17

Net investment income

  1.03  1.57  1.32  1.06  1.46

Portfolio turnover rate

  22  35  43  48  49

 

(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.

 

See accompanying notes to financial statements.

 

|  50


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Global Allocation Fund—Class C 
  Year Ended
September 30,
2018
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
 

Net asset value, beginning of the period

 $21.29  $18.89  $18.19  $19.51  $18.36 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.06   0.16   0.10   0.06   0.14 

Net realized and unrealized gain (loss)

  1.73   2.33   1.46   (0.36  1.45 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  1.79   2.49   1.56   (0.30  1.59 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.01  (0.09  (0.02  (0.06  (0.20

Net realized capital gains

  (0.29     (0.84  (0.96  (0.24
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.30  (0.09  (0.86  (1.02  (0.44
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $22.78  $21.29  $18.89  $18.19  $19.51 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(b)

  8.46  13.22  8.88  (1.66)%   8.72

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $412,610  $354,017  $423,350  $393,416  $377,001 

Net expenses

  1.91  1.93  1.92  1.93  1.92

Gross expenses

  1.91  1.93  1.92  1.93  1.92

Net investment income

  0.29  0.84  0.57  0.31  0.71

Portfolio turnover rate

  22  35  43  48  49

 

(a)

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

(b)

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

 

See accompanying notes to financial statements.

 

51  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Global Allocation Fund—Class N 
  Year Ended
September 30,
2018
  Period Ended
September 30,
2017*
 

Net asset value, beginning of the period

 $21.73  $19.20 
 

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

  

Net investment income(a)

  0.31   0.20 

Net realized and unrealized gain (loss)

  1.75   2.33 
 

 

 

  

 

 

 

Total from Investment Operations

  2.06   2.53 
 

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

  

Net investment income

  (0.25   

Net realized capital gains

  (0.29   
 

 

 

  

 

 

 

Total Distributions

  (0.54   
 

 

 

  

 

 

 

Net asset value, end of the period

 $23.25  $21.73 
 

 

 

  

 

 

 

Total return

  9.60  13.18%(b) 

RATIOS TO AVERAGE NET ASSETS:

  

Net assets, end of the period (000’s)

 $80,346  $59,512 

Net expenses

  0.83  0.87%(c) 

Gross expenses

  0.83  0.87%(c) 

Net investment income

  1.36  1.48%(c) 

Portfolio turnover rate

  22  35%(d) 

 

*

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.

 

|  52


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Global Allocation Fund—Class Y 
  Year Ended
September 30,
2018
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
 

Net asset value, beginning of the period

 $21.74  $19.29  $18.55  $19.89  $18.68 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.29   0.36   0.29   0.25   0.33 

Net realized and unrealized gain (loss)

  1.75   2.37   1.49   (0.37  1.49 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.04   2.73   1.78   (0.12  1.82 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.24  (0.28  (0.20  (0.26  (0.37

Net realized capital gains

  (0.29     (0.84  (0.96  (0.24
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.53  (0.28  (1.04  (1.22  (0.61
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $23.25  $21.74  $19.29  $18.55  $19.89 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  9.49  14.42  9.97  (0.72)%   9.87

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $1,549,689  $1,067,062  $835,391  $604,609  $633,057 

Net expenses

  0.91  0.93  0.92  0.93  0.92

Gross expenses

  0.91  0.93  0.92  0.93  0.92

Net investment income

  1.29  1.79  1.58  1.30  1.69

Portfolio turnover rate

  22  35  43  48  49

 

(a)

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

 

See accompanying notes to financial statements.

 

53  |


Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Growth Fund—Class A 
  Year Ended
September 30,
2018
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
 

Net asset value, beginning of the period

 $14.04  $11.96  $9.90  $9.45  $8.07 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.06   0.06   0.06   0.05   0.05 

Net realized and unrealized gain (loss)

  2.29   2.18   2.05   0.45   1.34 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.35   2.24   2.11   0.50   1.39 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.05  (0.05  (0.05  (0.05  (0.01

Net realized capital gains

  (0.29  (0.11         
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.34  (0.16  (0.05  (0.05  (0.01
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $16.05  $14.04  $11.96  $9.90  $9.45 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(b)

  16.98  18.99  21.32  5.30  17.23

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $1,083,362  $983,047  $729,989  $122,203  $63,682 

Net expenses

  0.90  0.91  0.92  0.92  0.94

Gross expenses

  0.90  0.91  0.92  0.92  0.94

Net investment income

  0.39  0.45  0.58  0.45  0.55

Portfolio turnover rate

  11  8  11  27%(c)   14

 

(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.

 

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Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Growth Fund—Class C 
  Year Ended
September 30,
2018
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
 

Net asset value, beginning of the period

 $12.92  $11.06  $9.18  $8.79  $7.55 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment loss(a)

  (0.05  (0.03  (0.02  (0.03  (0.02

Net realized and unrealized gain (loss)

  2.10   2.00   1.90   0.42   1.26 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.05   1.97   1.88   0.39   1.24 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net realized capital gains

  (0.29  (0.11         
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.29  (0.11         
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $14.68  $12.92  $11.06  $9.18  $8.79 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return(b)

  16.09  18.03  20.48  4.44  16.42

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $130,133  $133,329  $109,798  $41,421  $29,837 

Net expenses

  1.65  1.66  1.66  1.67  1.69

Gross expenses

  1.65  1.66  1.66  1.67  1.69

Net investment loss

  (0.36)%   (0.29)%   (0.16)%   (0.29)%   (0.20)% 

Portfolio turnover rate

  11  8  11  27%(c)   14

 

(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.

 

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Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Growth Fund—Class N 
  Year Ended
September 30,
2018
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
 

Net asset value, beginning of the period

 $14.97  $12.73  $10.52  $10.01  $8.56 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.12   0.11   0.10   0.08   0.05 

Net realized and unrealized gain (loss)

  2.44   2.32   2.18   0.49   1.42 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.56   2.43   2.28   0.57   1.47 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.09  (0.08  (0.07  (0.06  (0.02

Net realized capital gains

  (0.29  (0.11         
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.38  (0.19  (0.07  (0.06  (0.02
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $17.15  $14.97  $12.73  $10.52  $10.01 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  17.40%(b)   19.39%(b)   21.75  5.65%(b)   17.21%(b) 

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $1,001,688  $341,160  $60,765  $1  $1 

Net expenses

  0.57%(c)   0.57%(c)   0.58  0.55%(c)   0.95%(c) 

Gross expenses

  0.58  0.58  0.58  9.82  3.45

Net investment income

  0.73  0.80  0.82  0.71  0.52

Portfolio turnover rate

  11  8  11  27%(d)   14

 

(a)

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

(b)

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

(c)

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

(d)

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

 

See accompanying notes to financial statements.

 

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Table of Contents

Financial Highlights (continued)

 

For a share outstanding throughout each period.

 

  Growth Fund—Class Y 
  Year Ended
September 30,
2018
  Year Ended
September 30,
2017
  Year Ended
September 30,
2016
  Year Ended
September 30,
2015
  Year Ended
September 30,
2014
 

Net asset value, beginning of the period

 $14.97  $12.73  $10.53  $10.04  $8.57 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

     

Net investment income(a)

  0.10   0.09   0.10   0.07   0.08 

Net realized and unrealized gain (loss)

  2.44   2.33   2.16   0.49   1.42 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total from Investment Operations

  2.54   2.42   2.26   0.56   1.50 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

LESS DISTRIBUTIONS FROM:

     

Net investment income

  (0.08  (0.07  (0.06  (0.07  (0.03

Net realized capital gains

  (0.29  (0.11         
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Distributions

  (0.37  (0.18  (0.06  (0.07  (0.03
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net asset value, end of the period

 $17.14  $14.97  $12.73  $10.53  $10.04 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total return

  17.25  19.31  21.55  5.59  17.51

RATIOS TO AVERAGE NET ASSETS:

     

Net assets, end of the period (000’s)

 $6,620,996  $5,749,576  $3,493,961  $1,174,150  $1,004,157 

Net expenses

  0.65  0.66  0.66  0.67  0.69

Gross expenses

  0.65  0.66  0.66  0.67  0.69

Net investment income

  0.64  0.69  0.82  0.69  0.79

Portfolio turnover rate

  11  8  11  27%(b)   14

 

(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.

 

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Table of Contents

Notes to Financial Statements

 

September 30, 2018

 

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 Allocation Fund (the “Global Allocation Fund”)

Loomis Sayles Growth Fund (the “Growth Fund”)

Each Fund is a diversified investment company.

Global Allocation Fund offers Class A, Class C, Class N and Class Y shares. 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.

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, pay higher Rule 12b-1 fees than Class A shares for ten years (at which point they automatically convert to Class A shares) and may be subject to a contingent deferred sales charge (“CDSC”) of 1.00% if those shares are redeemed within one year of acquisition, except for reinvested distributions. Class N and Class Y shares do not pay 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.

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 expenses unique to that class (such as the Rule 12b-1 fees applicable to Class A and Class C), and transfer agent fees are borne collectively for Class A, Class C, Class Y 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.

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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 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.

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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. 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 Fund’s pricing policies and procedures.

As of September 30, 2018, securities held by Global Allocation Fund were fair valued as follows:

 

Equity
securities
1

  

Percentage
of Net
Assets

  

Securities
classified as
fair valued

   

Percentage
of Net
Assets

 

$470,630,086

   19.3 $248,000    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 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 dividends on the Statements of Operations. Interest income is increased by the accretion of discount and decreased by the amortization of premium, if applicable. In determining net gain or loss on securities sold, the cost of securities has been determined on an identified cost

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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, 2018, the amount of income available to be distributed by the Global Allocation Fund has been reduced by $4,511,893.

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

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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 Allocation 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 Allocation 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

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

may arise upon entering into such transactions from the potential inability of 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, 2018.

g.  New Disclosure Requirements.  In accordance with new reporting requirements pursuant to Regulation S-X of the Securities and Exchange Commission, presentation of certain amounts on the Statements of Changes in Net Assets, for the year ended September 30, 2017, have been conformed to meet the new disclosure requirements. These adjustments include Distributions to Shareholders; where the prior disclosure separately stated distributions from net investment income and distributions from net realized capital gains for each share class of the Fund, they are now combined into a single line item for each respective share class. In addition, disclosure of Undistributed Net Investment Income has been removed from the Statements of Changes in Net Assets.

The following is a summary of the previously disclosed amounts, as reported at September 30, 2017:

 

Global Allocation Fund    

FROM DISTRIBUTIONS TO SHAREHOLDERS:

  

Net investment income

  

Class A

  $(3,289,853

Class C

   (1,771,656

Class Y

   (12,428,003
  

 

 

 

Total distributions

  $(17,489,512
  

 

 

 

UNDISTRIBUTED NET INVESTMENT INCOME

  $10,545,895 
  

 

 

 
Growth Fund    

FROM DISTRIBUTIONS TO SHAREHOLDERS:

  

Net investment income

  

Class A

  $(2,941,318

Class N

   (688,493

Class Y

   (21,181,423

Net realized capital gains

  

Class A

   (7,024,882

Class C

   (1,227,895

Class N

   (992,374

Class Y

   (34,329,937
  

 

 

 

Total distributions

  $(68,386,322
  

 

 

 

UNDISTRIBUTED NET INVESTMENT INCOME

  $28,890,806 
  

 

 

 

h.  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

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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, 2018 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.

i.  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, convertible bonds, 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

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

distributed on a tax basis are determined annually, and at other times during the Funds’ fiscal year as may be necessary to avoid knowingly declaring and paying a return of capital distribution. Distributions from net investment income and net realized short-term capital gains are reported as distributed from ordinary income for tax purposes.

The tax characterization of distributions is determined on an annual basis. The tax character of distributions paid to shareholders during the years ended September 30, 2018 and 2017 were as follows:

 

  2018 Distributions Paid From:  2017 Distributions Paid From: 

Fund

 

Ordinary
Income

  

Long-Term
Capital
Gains

  

Total

  

Ordinary
Income

  

Long-Term
Capital
Gains

  

Total

 

Global Allocation Fund

 $15,533,777  $24,595,545  $40,129,322  $17,489,512  $  $17,489,512 

Growth Fund

  38,048,905   144,994,363   183,043,268   37,517,315   30,869,007   68,386,322 

For the year ended September 30, 2017 differences between amounts previously reported and now disclosed in Note 2g of the Notes to Financial Statements are primarily attributable to different book and tax treatment for short-term capital gains.

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

As of September 30, 2018, the components of distributable earnings on a tax basis were as follows:

 

   

Global
Allocation
Fund

   

Growth
Fund

 

Undistributed ordinary income

  $14,665,257   $33,931,827 

Undistributed long-term capital gains

   71,351,617    312,860,361 
  

 

 

   

 

 

 

Total undistributed earnings

   86,016,874    346,792,188 
  

 

 

   

 

 

 

Unrealized appreciation

   425,529,351    2,377,035,654 
  

 

 

   

 

 

 

Total accumulated earnings

  $511,546,225   $2,723,827,842 
  

 

 

   

 

 

 

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

As of September 30, 2018, unrealized appreciation (depreciation) as a component of distributable earnings was as follows:

 

   

Global
Allocation
Fund

  

Growth
Fund

 

Unrealized appreciation (depreciation)

   

Investments

  $432,961,062  $2,377,035,654 

Foreign currency translations

   (7,431,711   
  

 

 

  

 

 

 

Total unrealized appreciation

  $425,529,351  $2,377,035,654 
  

 

 

  

 

 

 

As of September 30, 2018, the cost of investments (including derivatives, if applicable) and unrealized appreciation (depreciation) on a federal tax basis were as follows:

 

   

Global
Allocation
Fund

  

Growth
Fund

 

Federal tax cost

  $1,989,471,226  $6,445,004,151 
  

 

 

  

 

 

 

Gross tax appreciation

  $458,142,747  $2,424,426,221 

Gross tax depreciation

   (32,504,196  (47,390,567
  

 

 

  

 

 

 

Net tax appreciation

  $425,638,551  $2,377,035,654 
  

 

 

  

 

 

 

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

j.  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, 2018, 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.

k.  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

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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, 2018, neither Fund had loaned securities under this agreement.

l.  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).

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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

The Funds’ 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 Funds 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 Funds do 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 Funds’ 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, 2018, at value:

Global Allocation Fund

Asset Valuation Inputs

 

Description

  

Level 1

   

Level 2

   

Level 3

   

Total

 

Common Stocks

        

France

  $   $40,387,889   $  —   $40,387,889 

Hong Kong

       68,114,525        68,114,525 

India

       17,524,813        17,524,813 

Japan

       26,258,307        26,258,307 

Sweden

       48,590,074        48,590,074 

Switzerland

       158,478,636        158,478,636 

United Kingdom

       111,275,842        111,275,842 

United States

   1,048,647,594    7,035        1,048,654,629 

All Other Common Stocks(a)

   98,543,410            98,543,410 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Common Stocks

   1,147,191,004    470,637,121        1,617,828,125 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

Global Allocation Fund (continued)

Asset Valuation Inputs (continued)

 

Description

 

Level 1

  

Level 2

  

Level 3

  

Total

 

Bonds and Notes

    

Non-Convertible Bonds

    

United States

 $35,577  $315,848,565  $124,748(b)  $316,008,890 

All Other Non-Convertible Bonds(a)

     252,243,868      252,243,868 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total Non-Convertible Bonds

  35,577   568,092,433   124,748   568,252,758 
 

 

 

  

 

 

  

 

 

  

 

 

 

Convertible Bonds(a)

     12,044,193      12,044,193 

Municipals(a)

     277,630      277,630 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total Bonds and Notes

  35,577   580,414,256   124,748   580,574,581 
 

 

 

  

 

 

  

 

 

  

 

 

 

Preferred Stocks(a)

  1,798,260   565,615      2,363,875 

Short-Term Investments

     214,250,939      214,250,939 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total Investments

  1,149,024,841   1,265,867,931   124,748   2,415,017,520 
 

 

 

  

 

 

  

 

 

  

 

 

 

Forward Foreign Currency Contracts (unrealized appreciation)

     463,197      463,197 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total

 $1,149,024,841  $1,266,331,128  $124,748  $2,415,480,717 
 

 

 

  

 

 

  

 

 

  

 

 

 

Liability Valuation Inputs

 

Description

  

Level 1

   

Level 2

  

Level 3

   

Total

 

Forward Foreign Currency Contracts (unrealized depreciation)

  $  —   $(2,117,874 $  —   $(2,117,874
  

 

 

   

 

 

  

 

 

   

 

 

 

 

(a)

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

(b)

Valued using broker-dealer bid prices.

Growth Fund

Asset Valuation Inputs

 

Description

  

Level 1

   

Level 2

   

Level 3

   

Total

 

Common Stocks(a)

  $8,692,205,365   $   $  —   $8,692,205,365 

Short-Term Investments

       129,834,440        129,834,440 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $8,692,205,365   $129,834,440   $  —   $8,822,039,805 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

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

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

For the year ended September 30, 2018, there were no transfers among Levels 1, 2 and 3.

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value as of September 30, 2017 and/or September 30, 2018:

Global Allocation Fund

Asset Valuation Inputs

 

Investments in Securities

 

Balance as of
September 30,
2017

  

Accrued
Discounts
(Premiums)

  

Realized
Gain (Loss)

  

Change in
Unrealized
Appreciation
(Depreciation)

  

Purchases

 

Common Stocks

     

United States

 $3,886  $  $  $  $ 

Bonds and Notes

     

Non-Convertible Bonds

     

United States

  1,075,475      (132  (7,526   
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

 $1,079,361  $  $(132 $(7,526 $ 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Investments in Securities

 

Sales

  

Transfers
into Level 3

  

Transfers
out of
Level 3

  

Balance as of
September 30,
2018

  

Change in
Unrealized
Appreciation
(Depreciation)
from
Investments
Still Held at
September 30,
2018

 

Common Stocks

     

United States

 $  $  $(3,886 $  $ 

Bonds and Notes

     

Non-Convertible Bonds

     

United States

  (21,120  153,526   (1,075,475  124,748   (7,526
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total

 $(21,120 $153,526  $(1,079,361 $124,748  $(7,526
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

A common stock valued at $3,886 was transferred from Level 3 to Level 2 during the period ended September 30, 2018. At September 30, 2017, this security was valued at fair value as determined in good faith by the Fund’s advisor using broker-dealer bid prices for which the inputs are unobservable to the Fund. At September 30, 2018, this security was valued on the basis of closing bid quotations furnished to the Fund by an independent pricing service in accordance with the Fund’s valuation policies.

 

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September 30, 2018

 

A debt security valued at $153,526 was transferred from Level 2 to Level 3 during the period ended September 30, 2018. At September 30, 2017, this security was valued on the basis of evaluated bids furnished to the Fund by an independent pricing service in accordance with the Fund’s valuation policies. At September 30, 2018, this security was valued using broker-dealer bid prices based on inputs unobservable to the Fund as an independent pricing service did not provide a reliable price for the security.

A debt security valued at $158,100 was transferred from Level 3 to Level 2 during the period ended September 30, 2018. At September 30, 2017, this security was valued at fair value as determined in good faith by the Fund’s investment adviser as an independent pricing service did not provide a reliable price for the security. At September 30, 2018, this security was valued on the basis of evaluated bids furnished to the Fund by an independent pricing service in accordance with the Fund’s valuation policies.

A debt security valued at $917,375 was transferred from Level 3 to Level 2 during the period ended September 30, 2018. At September 30, 2017, this security was valued using broker-dealer bid prices based on inputs unobservable to the Fund as an independent pricing service was unable to price the security. At September 30, 2018, this security was valued on the basis of evaluated bids furnished to the Fund by an independent pricing service in accordance with the Fund’s valuation policies.

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

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 Allocation Fund used during the period include forward foreign currency contracts.

Global Allocation 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, 2018, the Fund engaged in forward foreign currency transactions for hedging purposes and to gain exposure to foreign currencies.

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

The following is a summary of derivative instruments for Global Allocation Fund as of September 30, 2018, 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

  $463,197 

 

Liabilities

  

Unrealized
depreciation on
forward foreign
currency contracts

Over-the-counter liability derivatives

Foreign exchange contracts

  $(2,117,874)

Transactions in derivative instruments for Global Allocation Fund during the year ended September 30, 2018 as reflected within the Statements of Operations were as follows:

 

Net Realized Gain (Loss) on:

  

Forward foreign
currency contracts

 

Foreign exchange contracts

  $(230,410

 

Net Change in Unrealized Appreciation
(Depreciation) on:

  

Forward foreign
currency contracts

 

Foreign exchange contracts

  $(1,452,384

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.

The volume of forward foreign currency contract activity, as a percentage of net assets, for Global Allocation 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, 2018:

 

Global Allocation Fund

  

Forwards

 

Average Notional Amount Outstanding

   7.57

Highest Notional Amount Outstanding

   9.08

Lowest Notional Amount Outstanding

   6.66

Notional Amount Outstanding as of September 30, 2018

   8.51

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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 Allocation 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.

As of September 30, 2018, 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 Allocation Fund

 

Counterparty

 

Gross Amounts of
Assets

  

Offset
Amount

  

Net
Asset
Balance

  

Collateral
(Received)/
Pledged

  

Net
Amount

 

Bank of America, N.A.

 $248,772  $(124,991 $123,781  $(123,781 $ 

Credit Suisse International

  47,147   (47,147         

Goldman Sachs & Co.

  65,834      65,834      65,834 

HSBC Bank USA

  11,899      11,899      11,899 

Morgan Stanley Capital Services, Inc.

  4,497      4,497   (4,497   

UBS AG

  85,048   (85,048         
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
 $463,197  $(257,186 $206,011  $(128,278 $77,733 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

Global Allocation Fund (continued)

 

Counterparty

 

Gross Amounts of
Assets

  

Offset
Amount

  

Net
Liability
Balance

  

Collateral
(Received)/
Pledged

  

Net
Amount

 

Bank of America, N.A.

 $(124,991 $124,991  $  $  $ 

Credit Suisse International

  (1,811,063  47,147   (1,763,916  1,070,000   (693,916

UBS AG

  (181,820  85,048   (96,772     (96,772
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 
 $(2,117,874 $257,186  $(1,860,688 $1,070,000  $(790,688
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

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. A 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 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 clearing house, 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 each 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

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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, 2018:

 

Fund

  

Maximum Amount

of Loss - Gross

   

Maximum Amount

of Loss - Net

 

Global Allocation Fund

  $1,533,197   $77,733 

Net loss amount reflects cash received as collateral for Global Allocation Fund of $610,000.

5.  Purchases and Sales of Securities.  For the year ended September 30, 2018, 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 Allocation Fund

  $659,469,104   $358,710,754 

Growth Fund

   1,344,874,832    892,934,941 

For the year ended September 30, 2018, purchases and sales of U.S. Government/Agency securities by the Global Allocation Fund were $115,817,515 and $75,987,821, respectively.

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, 2018, 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 Allocation Fund

   0.75  0.73

Growth 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, 2019, may be terminated before then only with the consent of the Funds’ Board of Trustees and are reevaluated

 

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September 30, 2018

 

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, 2018 the expense limits as a percentage of average daily net assets under the expense limitation agreements were as follows:

 

   Expense Limit as a Percentage of Average
Daily Net Assets
 

Fund

  

Class A

  

Class C

  

Class N

  

Class Y

 

Global Allocation Fund

   1.25  2.00  0.95  1.00

Growth Fund

   1.25  2.00  0.95  1.00

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

For the year ended September 30, 2018, the management fees for each Fund were as follows:

 

Fund

  

Gross
Management
Fees

   

Percentage of
Average
Daily Net Assets

 

Global Allocation Fund

  $15,669,842    0.75

Growth Fund

   40,912,661    0.50

No expenses were recovered for either Fund during the year ended September 30, 2018 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”).

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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.

For the year ended September 30, 2018, the service and distribution fees for each Fund were as follows:

 

   Service Fees   Distribution
Fees
 

Fund

  

Class A

   

Class C

   

Class C

 

Global Allocation Fund

  $888,699   $948,489   $2,845,466 

Growth Fund

   2,648,173    337,629    1,012,891 

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

Prior to July 1, 2018, each Fund paid 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 was reevaluated on an annual basis.

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

For the year ended September 30, 2018, the administrative fees for each Fund were as follows:

 

Fund

  

Administrative
Fees

 

Global Allocation Fund

  $920,112 

Growth Fund

   3,599,450 

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, 2018, 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 Allocation Fund

  $1,576,887 

Growth Fund

   6,067,378 

As of September 30, 2018, 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 Allocation Fund

  $43,216 

Growth Fund

   79,497 

Sub-transfer agent fees attributable to Class A, Class C and Class Y 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.

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

e.  Commissions.  Commissions (including CDSCs) on Fund shares retained by Natixis Distribution during the year ended September 30, 2018, were as follows:

 

Fund

  

Commissions

 

Global Allocation Fund

  $125,405 

Growth Fund

   75,263 

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 US or their affiliates. The Chairperson of the Board of Trustees receives a retainer fee at the annual rate of $340,000. The Chairperson does not receive any meeting attendance fees for Board of Trustees meetings or committee meetings that he attends. Each Independent Trustee (other than the Chairperson) receives, in the aggregate, a retainer fee at the annual rate of $170,000. Each Independent Trustee also receives a meeting attendance fee of $10,000 for each meeting of the Board of Trustees that he or she attends in person and $5,000 for each meeting of the Board of Trustees that he or she attends telephonically. In addition, the chairperson of the Contract Review Committee and the chairperson of the Audit Committee each receive an additional retainer fee at the annual rate of $20,000. The chairperson of the Governance Committee receives an additional retainer fee at the annual rate of $12,000. Each Contract Review Committee member is compensated $6,000 for each Committee meeting that he or she attends in person and $3,000 for each meeting that he or she attends telephonically. Each Audit Committee member is compensated $6,000 for each Committee meeting that he or she attends in person and $3,000 for each meeting that he or she attends telephonically. These fees are allocated among the funds in the Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust based on a formula that takes into account, among other factors, the relative net assets of each fund. Trustees are reimbursed for travel expenses in connection with attendance at meetings.

Prior to January 1, 2018, the Chairperson of the Board received a retainer fee at the annual rate of $325,000 and each Independent Trustee (other than the Chairperson) received, in the aggregate, a retainer fee at the annual rate of $155,000, the chairperson of the Contract Review Committee and Audit Committee each received an additional retainer fee at the annual rate of $17,500 and the chairperson of the Governance Committee received an additional retainer fee at the annual rate of $10,000. All other Trustee fees remained unchanged.

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

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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.

g.  Affiliated Ownership.  As of September 30, 2018, 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 Funds’ net assets:

 

Fund

  

Pension
Plan

  

Retirement
Plan

  

Total Affiliated
Ownership

 

Global Allocation Fund

      0.80  0.80

Growth Fund

   0.21  0.64  0.85

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 Allocation Fund to reimburse any and all transfer agency expenses for the Fund’s Class N shares. This undertaking is in effect through January 31, 2019.

Natixis Advisors has given a binding contractual undertaking to the Growth Fund to reimburse any and all transfer agency expenses attributable to accounts admitted to Class N via a provision that allows Natixis Distribution, at its sole discretion, to waive the investment minimum for certain accounts, as described in the Fund’s prospectus. This undertaking is in effect through June 30, 2019. Prior to February 1, 2018, Natixis Advisors had given a binding contractual undertaking to the Fund to reimburse any and all transfer agency expenses for the Fund’s Class N shares.

Expenses reimbursed pursuant to these undertakings are not subject to recovery under the expense limitation agreement described above.

For the year ended September 30, 2018, Natixis Advisors reimbursed the Funds for transfer agency expenses as follows:

 

Fund

  

Reimbursement of Transfer Agency Expenses

 
   

Class N

 

Global Allocation Fund

  $478 

Growth Fund

   29,092 

7.  Class-Specific Transfer Agent Fees and Expenses.  Transfer agent fees and expenses attributable to Class A, Class C and Class Y are allocated on 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.

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

For the year ended September 30, 2018 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

 

Global Allocation Fund

  $290,463   $310,328   $478   $1,052,158 

Growth Fund

   905,599    115,568    30,440    5,424,243 

8.  Line of Credit.  Effective April 12, 2018, each Fund, together with certain other funds of Natixis Funds Trusts, Loomis Sayles Funds Trusts and Natixis ETF Trust, entered into a $400,000,000 committed unsecured line of credit provided by State Street Bank. Any one Fund may borrow up to $350,000,000 under the line of credit agreement (as long as all borrowings by all Funds in the aggregate do not exceed the $400,000,000 limit at any time), subject to each Fund’s investment restrictions and its contractual obligations under the line of credit. Interest is charged to the Funds based upon the terms set forth in the agreement. In addition, a commitment fee of 0.15% per annum, payable at the end of each calendar quarter, is accrued and apportioned among the participating funds based on their average daily unused portion of the line of credit. The Funds paid an arrangement fee, an upfront fee, and 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 12, 2018, 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, committed, unsecured line of credit with Citibank, N.A. to be used for temporary or emergency purposes only. Any one Fund was able borrow up to the full $400,000,000 under the line of credit (as long as all borrowings by all Funds in the aggregate did not exceed the $400,000,000 limit at any time), subject to each Fund’s investment restrictions and its contractual obligations under the line of credit. Interest was 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, was accrued and apportioned among the participating funds based on their average daily unused portion of the line of credit.

For the year ended September 30, 2018, neither Fund had borrowings under this agreement.

9.  Brokerage Commission Recapture.  Each Fund had 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

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

included in realized gains on investments on the Statements of Operations. For the year ended September 30, 2018, amounts rebated under these agreements were as follows:

 

Fund

  

Rebates

 

Global Allocation Fund

  $19,202 

Growth Fund

   42,577 

Effective March 9, 2018, the brokerage commission recapture program was terminated.

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, 2018, based on management’s evaluation of the shareholder account base, the Funds had accounts representing controlling ownership of more than 5% of the Funds’ total outstanding shares. The number of such accounts, based on accounts that represent more than 5% of an individual class of shares, and the aggregate percentage of net assets represented by such holdings were as follows:

 

   

Number of 5%
Non- Affiliated
Account Holders

   

Percentage of
Non- Affiliated
Ownership

 

Growth Fund

   6    57.34

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.

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

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, 2018

 
  
Year Ended
September 30, 2017(a)

 

Global Allocation Fund

   Shares   Amount   Shares   Amount 
Class A

 

Issued from the sale of shares

   8,103,965  $184,844,305   4,990,165  $100,716,829 

Issued in connection with the reinvestment of distributions

   259,737   5,734,993   140,170   2,609,969 

Redeemed

   (5,133,874  (116,824,548  (5,616,924  (111,165,803
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   3,229,828  $73,754,750   (486,589 $(7,839,005
  

 

 

  

 

 

  

 

 

  

 

 

 
Class C

 

Issued from the sale of shares

   6,101,385  $

 

137,2

96,960

 

 

  1,966,061  $38,867,350 

Issued in connection with the reinvestment of distributions

   149,300   3,268,181   55,158   1,018,222 

Redeemed

   (4,761,750  (107,144,492  (7,808,773  (152,602,063
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   1,488,935  $33,420,649   (5,787,554 $(112,716,491
  

 

 

  

 

 

  

 

 

  

 

 

 
Class N     

Issued from the sale of shares

   880,524  $20,044,847   2,739,038  $58,209,318 

Issued in connection with the reinvestment of distributions

   70,593   1,565,047       

Redeemed

   (234,590  (5,402,022  (107  (2,286
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   716,527  $16,207,872   2,738,931  $58,207,032 
  

 

 

  

 

 

  

 

 

  

 

 

 
   
Year Ended
September 30, 2018

 
  
Year Ended
September 30, 2017(a)

 

Global Allocation Fund

   Shares   Amount   Shares   Amount 
Class Y     

Issued from the sale of shares

   26,704,228  $611,912,156   19,036,860  $382,730,980 

Issued in connection with the reinvestment of distributions

   905,490   20,083,757   520,438   9,732,190 

Redeemed

   (10,059,816  (229,836,093  (13,769,090  (276,314,577
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   17,549,902  $402,159,820   5,788,208  $116,148,593 
  

 

 

  

 

 

  

 

 

  

 

 

 

Increase (decrease) from capital share transactions

   22,985,192  $525,543,091   2,252,996  $53,800,129 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

(a)

From commencement of operations on February 1, 2017 through September 30, 2017 for Class N shares.

 

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Notes to Financial Statements (continued)

 

September 30, 2018

 

12.  Capital Shares (continued).

 

   
Year Ended
September 30, 2018

 
  
Year Ended
September 30, 2017

 

Growth Fund

   Shares   Amount   Shares   Amount 
Class A

 

Issued from the sale of shares

   9,892,333  $148,235,534   23,963,667  $290,490,483 

Issued in connection with the reinvestment of distributions

   1,464,494   21,381,619   786,586   8,974,953 

Redeemed

   (13,865,728  (209,484,702  (15,774,109  (197,838,024
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (2,508,901 $(39,867,549  8,976,144  $101,627,412 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class C

 

Issued from the sale of shares

   1,122,136  $15,439,085   3,905,114  $42,699,406 

Issued in connection with the reinvestment of distributions

   148,410   1,993,145   68,093   719,057 

Redeemed

   (2,724,624  (37,772,137  (3,588,005  (41,290,336
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   (1,454,078 $(20,339,907  385,202  $2,128,127 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class N

 

Issued from the sale of shares

   43,285,115  $684,373,304   19,181,068  $266,844,514 

Issued in connection with the reinvestment of distributions

   380,354   5,914,498   138,457   1,680,867 

Redeemed

   (8,026,613  (130,323,337  (1,306,361  (17,394,963
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   35,638,856  $559,964,465   18,013,164  $251,130,418 
  

 

 

  

 

 

  

 

 

  

 

 

 
Class Y

 

Issued from the sale of shares

   134,173,905  $2,158,881,553   245,187,409  $3,227,208,558 

Issued in connection with the reinvestment of distributions

   7,592,419   118,138,051   2,860,266   34,723,626 

Redeemed

   (139,565,871  (2,246,057,772  (138,438,910  (1,821,188,519
  

 

 

  

 

 

  

 

 

  

 

 

 

Net change

   2,200,453  $30,961,832   109,608,765  $1,440,743,665 
  

 

 

  

 

 

  

 

 

  

 

 

 

Increase (decrease) from capital share transactions

   33,876,330  $530,718,841   136,983,275  $1,795,629,622 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

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Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of Loomis Sayles Funds II and Shareholders of Loomis Sayles Global Allocation Fund and Loomis Sayles Growth Fund:

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the portfolio of investments, of Loomis Sayles Global Allocation Fund and Loomis Sayles Growth Fund (two of the funds constituting Loomis Sayles Funds II, hereafter collectively referred to as the “Funds”) as of September 30, 2018, the related statements of operations for the year ended September 30, 2018, the statements of changes in net assets for each of the two years in the period ended September 30, 2018, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of September 30, 2018, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period ended September 30, 2018 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinions

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

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

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

 

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Report of Independent Registered Public Accounting Firm

 

September 30, 2018 by correspondence with the custodian, and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

PricewaterhouseCoopers LLP

Boston, Massachusetts

November 20, 2018

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

 

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2018 U.S. Tax Distribution Information to Shareholders (Unaudited)

 

Corporate Dividends Received Deduction.  For the fiscal year ended September 30, 2018, a percentage of dividends distributed by the Funds listed below qualify for the dividends received deduction for corporate shareholders. These percentages are as follows:

 

Fund

  

Qualifying
Percentage

 

Global Allocation

   52.71

Growth

   100.00

Capital Gains Distributions.  Pursuant to Internal Revenue Section 852(b), the following Funds paid distributions, which have been designated as capital gains distributions for the fiscal year ended September 30, 2018, unless subsequently determined to be different.

 

Fund

  

Amount

 

Global Allocation

  $24,595,545 

Growth

   144,994,363 

Qualified Dividend Income.  For the fiscal year ended September 30, 2018, the Funds below will designate up to the maximum amount allowable pursuant to the Internal Revenue Code as qualified dividend income eligible for reduced tax rates. These lower rates range from 0% to 20% depending on an individual’s tax bracket. If the Funds pay a distribution during calendar year 2018, complete information will be reported in conjunction with Form 1099-DIV.

 

Fund

  

 

 

Global Allocation

                        

Growth

  

 

87  |


Table of Contents

Trustee and Officer Information

 

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

 

Name and Year of
Birth

 

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

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2

and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

INDEPENDENT TRUSTEES   

Kenneth A. Drucker

(1945)

 

Chairperson of the Board of Trustees since January 2017

Trustee since 2008

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

 Retired 

51

None

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

Trustee since 2013

Audit Committee Member and Governance Committee Member

 Executive Chairman; formerly, Chief Executive Officer of Bob’s Discount Furniture (retail) 

51

Director, Burlington Stores, Inc. (retail)

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

 

|  88


Table of Contents

Trustee and Officer Information

 

Name and Year of
Birth

 

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

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2

and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

 

INDEPENDENT TRUSTEES

continued

   

Richard A. Goglia

(1951)

 

Trustee since 2015

Audit Committee Member

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

51

None

 Experience on the Board and executive experience (including his role as vice president and treasurer of a defense company and experience at a financial services company)
Wendell J. Knox (1948) 

Trustee since 2009

Contract Review Committee Member and Governance Committee Member

 Director of Abt Associates Inc. (research and consulting) 

51

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

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

 

89  |


Table of Contents

Trustee and Officer Information

 

Name and Year of
Birth

 

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

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2

and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

 

INDEPENDENT TRUSTEES

continued

   
Martin T. Meehan (1956) 

Trustee since 2012

Audit Committee Member

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

51

None

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

Maureen B. Mitchell

(1951)

 

Trustee since 2017

Contract Review Committee Member

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

51

Director, Sterling Bancorp (Bank)

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

 

|  90


Table of Contents

Trustee and Officer Information

 

Name and Year of
Birth

 

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

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2

and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

 

INDEPENDENT TRUSTEES

continued

   
James P. Palermo (1955) 

Trustee since 2016

Contract Review Committee Member

 Founding Partner, Breton Capital Management, LLC (private equity); Partner, STEP Partners, LLC (private equity); formerly, Chief Executive Officer of Global Client Management of The Bank of New York Mellon Corporation 

51

Director,
FutureFuel Corp. (Chemicals and Biofuels)

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

Erik R. Sirri

(1958)

 

Trustee since 2009

Chairperson of the Audit Committee

 Professor of Finance at Babson College 

51

None

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

 

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Table of Contents

Trustee and Officer Information

 

Name and Year of
Birth

 

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

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2

and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

 

INDEPENDENT TRUSTEES

continued

   

Peter J. Smail

(1952)

 

Trustee since 2009

Chairperson of the Contract Review Committee and Governance Committee Member

 Retired 

51

None

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

Cynthia L. Walker

(1956)

 

Trustee since 2005

Chairperson of the Governance Committee and Audit Committee Member

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

51

None

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

Kevin P. Charleston3

(1965)

One Financial Center

Boston, MA 02111

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

51

None

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

 

|  92


Table of Contents

Trustee and Officer Information

 

Name and Year of
Birth

 

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

 

Principal
Occupation(s)
During Past
5 Years

 

Number of
Portfolios in
Fund Complex
Overseen2

and Other
Directorships Held
During Past
5 Years

 

Experience,
Qualifications,
Attributes, Skills
for Board
Membership

 

INTERESTED TRUSTEES

continued

   
David L. Giunta4 (1965) 

Trustee since 2011

President of Loomis Sayles Funds II since 2008; Chief Executive Officer of Loomis Sayles Funds II since 2015

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

51

None

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

 

1 

Each trustee serves until retirement, resignation or removal from the Board. The current retirement age is 75. The position of Chairperson of the Board is appointed for a three-year term.

 

2 

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

 

3 

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

 

4 

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

 

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Table of Contents

Trustee and Officer Information

 

Name and Year of Birth

 

Position(s) Held
with the Trust

 

Term of Office1 and
Length of Time Served

 

Principal Occupation(s)
During Past 5 Years2

OFFICERS OF THE TRUST 

Daniel J. Fuss

(1933)

One Financial Center

Boston, MA 02111

 Executive Vice President Since June 2003 Vice Chairman and Director, Loomis, Sayles & Company, L.P.

Russell L. Kane

(1969)

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

Michael C. Kardok

(1959)

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

Rosa Licea-Mailloux

(1976)

 Chief Compliance Officer, Assistant Secretary and Anti-Money Laundering Officer Since July 2016 Senior Vice President, Deputy General Counsel, Assistant Secretary and Assistant Clerk, Natixis Distribution Corporation, Natixis Advisors, L.P. and Natixis Distribution, L.P.; formerly, Associate General Counsel, Natixis Distribution, L.P.

 

1 

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

 

2 

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

 

|  94


Table of Contents

LOGO

 

Loomis Sayles Small Cap Growth Fund

Loomis Sayles Small Cap Value Fund

Loomis Sayles Small/Mid Cap Growth Fund

Annual Report

September 30, 2018


Table of Contents

LOOMIS SAYLES SMALL CAP GROWTH FUND

 

Managers Symbols  
Mark F. Burns, CFA® Institutional Class  LSSIX
John J. Slavik, CFA® Retail Class  LCGRX
 Class N  LSSNX

 

 

Investment Objective

The Fund’s investment objective is long-term capital growth from investments in common stocks or other equity securities.

 

 

Market Conditions

The domestic equity markets were strong during the period. In the small- and mid-cap segments of the market, growth-oriented stocks outperformed value stocks.

In particular, factors that typically favor growth managers were in favor during the period, and companies with the strongest sales growth outperformed slower-growing companies. Given the dominance of growth stocks, sectors such as information technology and healthcare, which are more growth-oriented areas, outperformed. More broadly, large-cap stocks outperformed small- and mid-cap stocks, as measured by the Russell indices.

Performance Results

For the 12-month period ending September 30, 2018, the Institutional Class shares of the Loomis Sayles Small Cap Growth Fund returned 29.77% at net asset value. The Fund outperformed its benchmark, the Russell 2000® Growth Index, which returned 21.06%.

Explanation of Fund Performance

The Fund’s relative outperformance was driven primarily by stock selection in the healthcare, consumer discretionary, materials and information technology sectors.

The Fund’s top individual contributors to performance were Teledoc Health Inc., Inogen Inc. and RingCentral Inc. Teledoc is a leading company in the telemedicine market, providing patients with rapid access to healthcare via phone and video. The company reported very strong results with robust revenue growth driven by increasing subscriptions and total patient visits. Inogen manufactures and markets portable oxygen concentrators for patients on oxygen therapy. Results in the most recent quarter beat expectations as all segments of the business performed well, and sales were very strong in the United States and Europe. RingCentral is a provider of cloud-based business communications solutions. The secular shift from on-premises to cloud-based communications tools has been a tailwind, and the company has executed well in taking advantage of that shift. Core subscription growth was robust during the period, and the company continued to expand its share of the enterprise market.

 

1  |


Table of Contents

Dermira Inc., WageWorks, Inc. and Mercury Systems Inc. were the individual largest detractors from performance during the period. Biotechnology company Dermira declined during the time period after announcing that two clinical trials had failed to meet their primary endpoints and that as a result, the company would abandon pursuit of the treatments. The resulting drop in the stock triggered our stop-loss, and Dermira was sold from the portfolio. Benefits administrator WageWorks declined after delaying a key company filing. Defense electronics contractor Mercury Systems declined during the quarter due to ongoing federal budget delays. The stock’s decline triggered our stop-loss, and it was sold from the portfolio.

Outlook

Over time, the market has followed the trajectory of earnings, with some volatility when the market overcorrects in both directions. Given the length of the expansion and bull market since 2009, and despite the fact that there was a notable pause in 2016, market participants have worried that the equity markets have overshot to the upside and are overdue for a correction. Based on recent favorable earnings growth and macroeconomic readings on the US economy, as well as the current outlook for the coming year, the overall market doesn’t appear to be particularly overvalued.

With these cornerstones in place, we feel that the market can continue to rise at a similar pace to earnings growth for the foreseeable future. However, higher interest rates, trade tensions, political instability, and sluggish international economic growth are all potential threats to the current positive market environment.

We see no reason to alter our philosophy and process of bottom-up investing in quality secular growth companies and using risk management tools to help control the volatility of the portfolio.

 

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Table of Contents

LOOMIS SAYLES SMALL CAP GROWTH FUND

 

 

Hypothetical Growth of $100,000 Investment in Institutional Class Shares

September 30, 2008 through September 30, 20182

 

LOGO

Top Ten Holdings as of September 30, 2018

 

    Security Name  % of
net assets
 
1  PRA Health Sciences, Inc.   1.55
2  Insulet Corp.   1.43 
3  HealthEquity, Inc.   1.43 
4  Grand Canyon Education, Inc.   1.42 
5  Teladoc Health, Inc.   1.42 
6  Q2 Holdings, Inc.   1.40 
7  RealPage, Inc.   1.39 
8  Proto Labs, Inc.   1.37 
9  Novocure Ltd.   1.33 
10  Planet Fitness, Inc., Class A   1.32 

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.

 

3  |


Table of Contents

Average Annual Total Returns — September 30, 20182

 

                   Expense Ratios3 
   1 year  5 years  10 years  

Life of

Class N

  Gross  Net 
   
Institutional Class
(Inception 
12/31/96)
  29.77  12.47  13.75    0.95  0.95
   
Retail Class
(Inception
12/31/96)
  29.45   12.19   13.45      1.20   1.20 
   
Class N
(Inception
2/1/13)
  29.93   12.59      16.37   0.82   0.82 
  
Comparative Performance       
Russell 2000® Growth Index1  21.06   12.14   12.65   14.81         

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 loomissayles.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.

 

1  

Russell 2000® Growth Index is an unmanaged index that measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000® companies with higher price-to-book ratios and higher forecasted growth values.

 

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

 

3  Expense ratios are as shown in the Fund’s prospectus in effect as of the date of this report. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report under Ratios to Average Net Assets. Net expenses reflect contractual expense caps set to expire on 01/31/19. When a Fund’s expenses are below the cap, gross and net expense ratios will be the same. See Note 5 of the Notes to Financial Statements for more information about the Fund’s expense caps.

 

|  4


Table of Contents

LOOMIS SAYLES SMALL CAP VALUE FUND

 

Managers Symbols  
Joseph R. Gatz, CFA® Institutional Class  LSSCX
Jeffrey Schwartz, CFA® Retail Class  LSCRX
 Admin Class  LSVAX
 Class N  LSCNX

 

 

Investment Objective

The Fund’s investment objective is long-term capital growth from investments in common stocks or other equity securities.

 

 

Market Conditions

Domestic equity markets continued to move higher, aided by modest economic expansion in addition to a corporate tax rate cut which significantly boosted corporate earnings. Throughout most of the period, growth stocks significantly outperformed value stocks. Investors showed a preference for companies that achieved faster revenue growth and stronger earnings, while valuations had little influence on stock performance.

During the second quarter of 2018, political rhetoric regarding international trade and import tariffs resulted in lowered global growth expectations and a stronger US dollar. Investors repositioned their portfolios toward a more domestic focus, selling large-cap equities and buying small-cap equities, mostly using index funds and ETFs. The result was a shift in small-cap leadership into the stocks with the smallest market caps, and lower quality companies with little or no earnings were the strongest performers.

The Federal Reserve raised interest rates multiple times during the period and moved from an accommodative monetary policy to a more normalized posture. Interest-sensitive sectors such as REITs and utilities lagged the performance of the overall market.

Performance Results

For the 12 months ended September 30, 2018, Institutional Class shares of Loomis Sayles Small Cap Value Fund returned 6.21% at net asset value. The Fund underperformed its benchmark, the Russell 2000® Value Index, which returned 9.33%.

Explanation of Fund Performance

The Fund’s underperformance was primarily due to stock selection despite making favorable sector allocations. The Fund performed well versus the benchmark for the majority of the period. However, the Fund handily underperformed late in the period, when investors using passive strategies invested heavily in small-cap equities in a macro-driven market rotation. This produced outsized returns for smaller, less liquid stocks, including many companies with low or depressed earnings. The Fund had very little exposure to stocks with those characteristics, detracting from relative performance and more than offsetting the outperformance of the Fund during the remainder of the period.

 

5  |


Table of Contents

Weak stock selection within the energy and consumer discretionary sectors detracted from returns versus the benchmark, as did an overweight position to the information technology sector. Our oilfield services holdings within energy failed to keep pace with a steady improvement in oil prices, as competitive dynamics within the industry weighed on performance. Among consumer discretionary stocks, a handful of company-specific disappointments detracted from performance, as did the Fund’s lack of exposure to the fundamentally challenged retail, restaurant, textile and apparel industries, all of which rallied sharply during the spring of 2018.

Specific holdings that were the biggest detractors from the Fund’s performance were RPC, Inc., Horizon Global Corporation and Houghton Mifflin Harcourt. RPC is a provider of pressure pumping and other oilfield services. The stock underperformed as investors became concerned about industry capacity growth and management’s preference for shorter-term contracts, which negatively impacted revenue in a declining price environment.

Horizon Global manufactures towing and trailering accessories for the automotive market. Revenue during the period was negatively impacted by retailers decreasing inventory, and profitability was hurt by rising materials costs. This resulted in a decline in cash flow that Horizon Global had originally planned to use to pay down debt.

Houghton Mifflin operates as a global education and learning company. The company lost market share in a declining education book market during 2017, and that caused significant underperformance in the stock during the second half of 2017 and early 2018.

Sector allocation versus the benchmark was positive in both the real estate and industrials sectors, while strong stock selection in the information technology and industrials sectors also added to relative performance. Leading contributors among technology stocks were data services stocks with steady growth as well as internet and media-related holdings. Among industrials, top performers were steady growth, less economically cyclical professional services holdings.

Among individual names, Insperity, Inc., WEX Inc. and Mellanox Technologies, Ltd. had the largest positive stock contribution to the Fund’s performance. Insperity is a provider of human resource services including payroll, benefits administration, workers’ compensation and recruiting to small and medium-sized businesses. The company extended its streak to five consecutive quarters of materially exceeding consensus earnings estimates, reflecting favorable employment trends, strong customer retention, improved sales productivity and excellent cost management.

WEX Inc. is a leading outsourced service provider of business-to-business payment solutions for the truck fleet, corporate, and health & employee benefit industries. WEX exhibited strong performance during the period largely due to growth in transactions, new business opportunities and higher fuel prices. Recently acquired high-profile customers

 

|  6


Table of Contents

LOOMIS SAYLES SMALL CAP VALUE FUND

 

included Verizon, Shell, and Chevron, as well as some government fleet contracts. While there are some initial costs associated with new business, the wins provided evidence of future revenue and earnings growth.

Mellanox Technologies is the leading provider of interconnect products used in high performance computing. As artificial intelligence and flash memory continued their growth, data centers have required higher performance interconnects, and Mellanox is well positioned to benefit from this trend. In addition, profitability has increased faster than sales due to a renewed focus on lowering operating costs.

Outlook

The Small Cap Value fund seeks potential investments in smaller companies where the stock price and valuation do not accurately reflect our assessment of the underlying value of the corporate enterprise due to one of these market inefficiencies: a misunderstood franchise, an underfollowed stock or a company in the midst of a special situation.

We look for trustworthy and capable management teams whose interests are aligned with shareholders, as well as fundamentally sound business models with sustainable and understandable advantages that could lead to growth in value over time.

We apply these principles consistently regardless of the market environment. With a margin of safety and a proper time horizon, our goal is to achieve an attractive total return for our investors, while managing to an appropriate level of risk.

 

 

7  |


Table of Contents

Hypothetical Growth of $100,000 Investment in Institutional Class Shares

September 30, 2008 through September 30, 20183

 

LOGO

See notes to chart on page 9.

Top Ten Holdings as of September 30, 2018

 

    Security Name  % of
net assets
 
1  Littelfuse, Inc.   1.51
2  KAR Auction Services, Inc.   1.30 
3  Popular, Inc.   1.21 
4  ALLETE, Inc.   1.17 
5  WEX, Inc.   1.13 
6  Viad Corp.   1.12 
7  Euronet Worldwide, Inc.   1.12 
8  Wintrust Financial Corp.   1.12 
9  Employers Holdings, Inc.   1.11 
10  Churchill Downs, Inc.   1.08 

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.

 

|  8


Table of Contents

LOOMIS SAYLES SMALL CAP VALUE FUND

 

Average Annual Total Returns — September 30, 20183

 

                   Expense Ratios4 
   1 year  5 years  10 years  

Life of

Class N

  

Gross

  Net 
   
Institutional Class (Inception 5/13/91)  6.21  9.78  10.82    0.98  0.95
   
Retail Class
(Inception
12/31/96)
  5.95   9.51   10.54      1.23   1.20 
   
Admin Class
(Inception
1/2/98)
  5.68   9.24   10.27      1.48   1.45 
   
Class N
(Inception
2/1/13)
  6.28   9.86      11.67   0.88   0.88 
  
Comparative Performance       
Russell 2000® Value Index1  9.33   9.91   9.52   11.43    
Russell 2000® Index2  15.24   11.07   11.11   13.15         

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 loomissayles.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.

 

1  

Russell 2000® Value Index is an unmanaged index that measures the performance of the small-cap value segment of the U.S. equity universe. It includes those Russell 2000® companies with lower price-to-book ratios and lower forecasted growth values.

 

2  

Russell 2000® Index is an unmanaged index that measures the performance of the small-cap segment of the U.S. equity universe.

 

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

 

4  Expense ratios are as shown in the Fund’s prospectus in effect as of the date of this report. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report under Ratios to Average Net Assets. Net expenses reflect contractual expense caps set to expire on 01/31/19. When a Fund’s expenses are below the cap, gross and net expense ratios will be the same. See Note 5 of the Notes to Financial Statements for more information about the Fund’s expense caps.

 

9  |


Table of Contents

LOOMIS SAYLES SMALL/MID CAP GROWTH FUND

 

Managers Symbols  
Mark F. Burns, CFA® Institutional Class  LSMIX
John J. Slavik, CFA®   

 

 

Investment Objective

The Fund’s investment objective is long-term capital growth from investments in common stocks or other equity securities.

 

 

Market Conditions

The domestic equity markets were strong during the period. In the small- and mid-cap segments of the market, growth-oriented stocks outperformed value stocks.

In particular, factors that typically favor growth managers were in favor during the period, and companies with the strongest sales growth outperformed slower-growing companies. Given the dominance of growth stocks, sectors such as information technology and healthcare, which are more growth-oriented areas, outperformed. More broadly, large-cap stocks outperformed small- and mid-cap stocks, as measured by the Russell indices.

Performance Results

For the 12-month period ending September 30, 2018, the Institutional Class shares of Loomis Sayles Small/Mid Cap Growth Fund returned 25.83% at net asset value. The Fund outperformed its benchmark, the Russell 2500™ Growth Index, which returned 23.13%.

Explanation of Performance

The Fund’s relative outperformance was driven primarily by stock selection, with particular strength in the healthcare and materials sectors. An underweight to the real estate sector also contributed to performance. However, stock selection in the financials and industrials sectors detracted from relative performance.

At an individual stock level, the Fund’s top contributors to performance were Planet Fitness Inc., WellCare Health Plans, Inc. and HubSpot Inc.

Fitness and exercise club operator Planet Fitness executed well and reported strong growth over the course of the period. Revenues increased, driven largely by the company’s franchise business. Margins expanded, and the company also increased its store base. WellCare Health Plans is a managed care company focused on government memberships with the majority of its business Medicaid. Earnings were strong in the most recent quarter, with improved performance across products and a favorable lower tax rate. Inbound marketing software platform Hubspot was the top performer for the quarter. The company announced new products and reported exceptionally strong results as sales grew, driven by subscription revenues.

 

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LOOMIS SAYLES SMALL/MID CAP GROWTH FUND

 

Mercury Systems Inc., Healthcare Services Group Inc. and Advanced Energy Industries Inc. were the largest individual stock detractors from performance during the period. Defense electronics contractor Mercury Systems declined during the quarter due to ongoing federal budget delays. The stock fell significantly enough to trigger our stop-loss and was sold from the portfolio. Healthcare Services Group provides janitorial and other facility-related services to the healthcare industry, particularly nursing homes. The company reported very strong results late in the period, citing unprecedented demand, but a downgrade from a sell-side stock analyst resulted in the stock falling. Investors also reacted negatively when a significant customer filed for bankruptcy, leading to questions about the overall health of the industry. Semiconductor capital equipment company Advanced Energy Industries was down during the time period. The stock was a very strong performer early in the period, as were most in the semiconductor space. However, the semiconductor industry sold off toward the end of 2017, and Advanced Energy fell in sympathy.

Outlook

Over time, the market has followed the trajectory of earnings, with some volatility when the market overcorrects in both directions. Given the length of the expansion and bull market since 2009, and despite the fact that there was a notable pause in 2016, market participants have worried that the equity markets have overshot to the upside and are overdue for a correction. Based on recent favorable earnings growth and macroeconomic readings on the US economy, as well as the current outlook for the coming year, the overall market doesn’t appear to be particularly overvalued.

With these cornerstones in place, we feel that the market can continue to rise at a similar pace to earnings growth for the foreseeable future. However, higher interest rates, trade tensions, political instability, and sluggish international economic growth are all potential threats to the current positive market environment.

We see no reason to alter our philosophy and process of bottom-up investing in quality secular growth companies and using risk management tools to help control the volatility of the portfolio.

 

 

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Hypothetical Growth of $1,000,000 Investment in Institutional Class Shares2

June 30, 2015 (inception) through September 30, 2018

 

LOGO

See notes to chart on page 13.

Top Ten Holdings as of September 30, 2018

 

    Security Name  % of
net assets
 
1  PTC, Inc.   2.04
2  WellCare Health Plans, Inc.   1.81 
3  ICON PLC   1.76 
4  CoStar Group, Inc.   1.71 
5  Grand Canyon Education, Inc.   1.71 
6  HEICO Corp.   1.67 
7  Guidewire Software, Inc.   1.66 
8  Ingevity Corp.   1.65 
9  HubSpot, Inc.   1.63 
10  HealthEquity, Inc.   1.58 

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

 

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LOOMIS SAYLES SMALL/MID CAP GROWTH FUND

 

Average Annual Total Returns — September 30, 20182

 

           Expense Ratios3 
   1 year  Life of
Fund
  Gross  Net 
   
Institutional Class (Inception 6/30/15)  25.83  14.47  1.57  0.85
  
Comparative Performance     
Russell 2500TM Growth Index1  23.13   12.34         

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 loomissayles.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.

 

1  

The Russell 2500TM Growth Index measures the performance of the small-to-mid-cap growth segment of the US equity universe. It includes those Russell 2500 Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2500 Growth Index is constructed to provide a comprehensive and unbiased barometer of the small-to-mid-cap growth market. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-to-mid-cap opportunity set and that the represented companies continue to reflect growth characteristics. Indices are unmanaged.

 

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

 

3  Expense ratios are as shown in the Fund’s prospectus in effect as of the date of this report. The expense ratios for the current reporting period can be found in the Financial Highlights section of this report under Ratios to Average Net Assets. Net expenses reflect contractual expense caps set to expire on 01/31/19. When a Fund’s expenses are below the cap, gross and net expense ratios will be the same. See Note 5 of the Notes to Financial Statements for more information about the Fund’s expense caps.

 

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ADDITIONAL INFORMATION

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

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

Additional Index Information

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

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

Proxy Voting Information

A description of the Funds’ proxy voting policies and procedures is available without charge upon request, by calling Loomis Sayles at 800-633-3330; on the Funds’ website, at www.loomissayles.com, and on the Securities and Exchange Commission’s (SEC’s) website at www.sec.gov. Information about how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Funds’ website and the SEC’s website.

Quarterly Portfolio Schedules

The Funds file a complete schedule 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.

UNDERSTANDING YOUR FUND’S EXPENSES

As a mutual fund shareholder you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, distribution and/or service fees (12b-1 fees), and other fund expenses. Certain exemptions may apply. These costs are described in more detail in the Funds’ prospectus. The following examples are intended to help you understand the ongoing costs of investing in the Funds and help you compare these with the ongoing costs of investing in other mutual funds.

 

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The first line in the table of each Fund shows the actual amount of Fund expenses you would have paid on a $1,000 investment in the Fund from April 1, 2018 through September 30, 2018. 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 column as shown below for your class.

The second line in the table of each Fund 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 other funds.

Please note that the expenses shown reflect ongoing costs only, and do not include any transaction costs. Therefore, the second line in the table 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.

Loomis Sayles Small Cap Growth Fund

 

Institutional Class Beginning
Account Value
4/1/2018
   Ending
Account Value
9/30/2018
   Expenses Paid
During Period*
4/1/2018 – 9/30/2018
 

Actual

  $1,000.00    $1,185.60    $5.15 

Hypothetical (5% return before expenses)

  $1,000.00    $1,020.36    $4.76 

Retail Class

           

Actual

  $1,000.00    $1,184.00    $6.52 

Hypothetical (5% return before expenses)

  $1,000.00    $1,019.10    $6.02 

Class N

           

Actual

  $1,000.00    $1,186.40    $4.49 

Hypothetical (5% return before expenses)

  $1,000.00    $1,020.96    $4.15 

*  Expenses are equal to the Fund’s annualized expense ratio: 0.94%, 1.19% and 0.82% for Institutional Class, Retail Class and Class N, respectively, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (183), divided by 365 (to reflect the half-year period).

   

 

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Loomis Sayles Small Cap Value Fund

 

Institutional Class

 Beginning
Account Value
4/1/2018
   Ending
Account Value
9/30/2018
   Expenses Paid
During Period
*
4/1/2018 – 9/30/2018
 

Actual

  $1,000.00    $1,055.00    $4.64 

Hypothetical (5% return before expenses)

  $1,000.00    $1,020.56    $4.56 

Retail Class

           

Actual

  $1,000.00    $1,053.80    $5.92 

Hypothetical (5% return before expenses)

  $1,000.00    $1,019.30    $5.82 

Admin Class

           

Actual

  $1,000.00    $1,052.50    $7.20 

Hypothetical (5% return before expenses)

  $1,000.00    $1,018.05    $7.08 

Class N

           

Actual

  $1,000.00    $1,055.60    $4.23 

Hypothetical (5% return before expenses)

  $1,000.00    $1,020.96    $4.15 

*  Expenses are equal to the Fund’s annualized expense ratio (after waiver/reimbursement): 0.90%, 1.15%, 1.40% and 0.82% for Institutional Class, Retail Class, Admin Class and Class N, 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 Small/Mid Cap Growth Fund

 

Institutional Class

 Beginning
Account Value
4/1/2018
   Ending
Account Value
9/30/2018
   Expenses Paid
During Period
*
4/1/2018 – 9/30/2018
 

Actual

  $1,000.00    $1,141.50    $4.56 

Hypothetical (5% return before expenses)

  $1,000.00    $1,020.81    $4.31 

*  Expenses are equal to the Fund’s annualized expense ratio (after waiver/reimbursement) of 0.85%, multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year (183), divided by 365 (to reflect the half-year period).

   

 

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BOARD APPROVAL OF THE EXISTING ADVISORY AGREEMENTS

The Board of Trustees of the Trusts (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’ advisory fees 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, to the extent applicable, the use of “soft” commission dollars 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

 

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Fund’s performance and expense differentials against each Fund’s peer group/category, performance 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 or Committee 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 for a one-year period at its meeting held in June 2018. 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 and shareholder 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 reviewed data prepared by an independent third party that analyzed the performance of the Funds using a variety of performance metrics, including metrics that measured the performance of the Funds on a risk adjusted basis.

The Board noted that, through December 31, 2017, each Fund’s one-, three- and five-year performance, as applicable, stated as percentile rankings within categories selected by the

 

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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   Five-Year 

Loomis Sayles Small Cap Growth Fund

   23%    40%    31% 

Loomis Sayles Small Cap Value Fund

   70%    35%    43% 

Loomis Sayles Small/Mid Cap Growth Fund

   10%    N/A    N/A 

In the case of each Fund that had performance that lagged that of a relevant category median as determined by the independent third party for certain (although not necessarily all) periods, the Board concluded that other factors relevant to performance supported renewal of the Agreements. These factors included: (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 performance, although lagging in certain periods, was stronger over the long term relative to its category; and (3) that the Fund’s net expense ratio was below the median for a peer group of funds.

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 and/or other relevant factors 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 and administrative services as well as the total expense levels of the Funds. This information included comparisons (provided both by management and 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

 

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family. They noted that all of the Funds have expense caps in place, and they considered the amounts waived or reimbursed by the Adviser for certain Funds under their caps. The Trustees also considered that Loomis Sayles Small Cap Growth Fund’s current expenses are below its cap. The Trustees noted that the Funds had total advisory fee rates that were below the medians of their respective peer groups of funds.

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 Funds, the expense levels of the Funds, whether the Adviser had implemented breakpoints and/or expense caps with respect to such Funds and the overall profit margin of Natixis Investment Managers compared to that of certain other investment managers for which such data was available.

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 caps. The Trustees also discussed with management the factors considered with respect to the implementation of breakpoints in investment advisory fees or expense 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 although none of the Funds’ management fees were subject to breakpoints, each of the Funds was subject to an expense cap. 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.

 

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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.

 

 

So-called “fallout benefits” to the Adviser, such as the engagement of affiliates of the Adviser to provide distribution and administrative 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, 2019.

 

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Portfolio of Investments – as of September 30, 2018

Loomis Sayles Small Cap Growth Fund

 

    
Shares
  Description Value (†) 
 Common Stocks – 96.0% of Net Assets 
 Aerospace & Defense – 3.4%

 

 236,528  AAR Corp. $11,327,326 
 299,398  Astronics Corp.(a)  13,023,813 
 244,303  Hexcel Corp.  16,380,516 
 212,083  KLX, Inc.(a)  13,314,571 
  

 

 

 
   54,046,226 
  

 

 

 
 Banks – 3.6%

 

 221,278  Chemical Financial Corp.  11,816,245 
 245,125  Pacific Premier Bancorp, Inc.(a)  9,118,650 
 200,570  Pinnacle Financial Partners, Inc.  12,064,285 
 324,142  Renasant Corp.  13,357,892 
 159,604  UMB Financial Corp.  11,315,924 
  

 

 

 
   57,672,996 
  

 

 

 
 Beverages – 0.8%

 

 159,978  MGP Ingredients, Inc.  12,635,062 
  

 

 

 
 Biotechnology – 4.7%

 

 140,093  Agios Pharmaceuticals, Inc.(a)  10,803,972 
 276,074  Aimmune Therapeutics, Inc.(a)  7,531,299 
 117,591  Argenx SE, ADR(a)  8,918,101 
 277,121  Genomic Health, Inc.(a)  19,459,437 
 185,619  Global Blood Therapeutics, Inc.(a)  7,053,522 
 609,861  Ironwood Pharmaceuticals, Inc.(a)  11,258,034 
 244,826  Xencor, Inc.(a)  9,540,869 
  

 

 

 
   74,565,234 
  

 

 

 
 Building Products – 1.9%

 

 187,339  Patrick Industries, Inc.(a)  11,090,469 
 252,302  Trex Co., Inc.(a)  19,422,208 
  

 

 

 
   30,512,677 
  

 

 

 
 Capital Markets – 1.5%

 

 291,250  Artisan Partners Asset Management, Inc., Class A  9,436,500 
 76,101  MarketAxess Holdings, Inc.  13,583,268 
  

 

 

 
   23,019,768 
  

 

 

 
 Chemicals – 1.2%

 

 193,693  Ingevity Corp.(a)  19,733,443 
  

 

 

 
 Construction & Engineering – 1.7%

 

 527,405  Primoris Services Corp.  13,090,192 
 794,882  Willscot Corp.(a)  13,632,226 
  

 

 

 
   26,722,418 
  

 

 

 
 Consumer Finance – 1.2%

 

 214,699  Green Dot Corp., Class A(a)  19,069,565 
  

 

 

 

 

See accompanying notes to financial statements.

 

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Portfolio of Investments – as of September 30, 2018

Loomis Sayles Small Cap Growth Fund – continued

 

    
Shares
  Description Value (†) 
 Common Stocks – continued 
 Distributors – 1.2%

 

 117,815  Pool Corp. $19,660,967 
  

 

 

 
 Diversified Consumer Services – 4.3%

 

 119,684  Bright Horizons Family Solutions, Inc.(a)  14,103,563 
 507,445  Chegg, Inc.(a)  14,426,661 
 199,300  Grand Canyon Education, Inc.(a)  22,481,040 
 1,097,047  Laureate Education, Inc., Class A(a)  16,938,406 
  

 

 

 
   67,949,670 
  

 

 

 
 Diversified Telecommunication Services – 1.0%

 

 293,193  Cogent Communications Holdings, Inc.  16,360,169 
  

 

 

 
 Electrical Equipment – 1.2%

 

 329,973  Generac Holdings, Inc.(a)  18,613,777 
  

 

 

 
 Energy Equipment & Services – 1.8%

 

 437,772  Cactus, Inc., Class A(a)  16,757,912 
 177,396  Dril-Quip, Inc.(a)  9,268,941 
 84,773  KLX Energy Services Holdings, Inc.(a)  2,713,584 
  

 

 

 
   28,740,437 
  

 

 

 
 Entertainment – 0.5%

 

 316,346  IMAX Corp.(a)  8,161,727 
  

 

 

 
 Food & Staples Retailing – 0.5%

 

 211,900  Chefs’ Warehouse, Inc. (The)(a)  7,702,565 
  

 

 

 
 Food Products – 0.7%

 

 293,791  Freshpet, Inc.(a)  10,782,130 
  

 

 

 
 Health Care Equipment & Supplies – 10.1%

 

 521,947  AtriCure, Inc.(a)  18,283,803 
 59,505  Inogen, Inc.(a)  14,526,361 
 214,027  Insulet Corp.(a)  22,676,161 
 191,749  iRhythm Technologies, Inc.(a)  18,150,960 
 211,186  Merit Medical Systems, Inc.(a)  12,977,380 
 86,343  Neogen Corp.(a)  6,176,115 
 401,665  Novocure Ltd.(a)  21,047,246 
 116,993  Penumbra, Inc.(a)  17,513,852 
 156,165  Tactile Systems Technology, Inc.(a)  11,095,523 
 595,956  Wright Medical Group NV(a)  17,294,643 
  

 

 

 
   159,742,044 
  

 

 

 
 Health Care Providers & Services – 4.8%

 

 115,423  Amedisys, Inc.(a)  14,423,258 
 281,830  AMN Healthcare Services, Inc.(a)  15,416,101 
 206,177  BioTelemetry, Inc.(a)  13,288,108 
 239,518  HealthEquity, Inc.(a)  22,612,894 

 

See accompanying notes to financial statements.

 

23  |


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Small Cap Growth Fund – continued

 

    
Shares
  Description Value (†) 
 Common Stocks – continued 
 Health Care Providers & Services – continued

 

 295,660  Tivity Health, Inc.(a) $9,505,469 
  

 

 

 
   75,245,830 
  

 

 

 
 Health Care Technology – 3.6%

 

 256,638  Medidata Solutions, Inc.(a)  18,814,131 
 259,254  Teladoc Health, Inc.(a)  22,386,583 
 431,941  Vocera Communications, Inc.(a)  15,800,402 
  

 

 

 
   57,001,116 
  

 

 

 
 Hotels, Restaurants & Leisure – 2.6%

 

 385,517  Planet Fitness, Inc., Class A(a)  20,829,483 
 291,773  Wingstop, Inc.  19,919,343 
  

 

 

 
   40,748,826 
  

 

 

 
 Insurance – 2.0%

 

 275,401  Kinsale Capital Group, Inc.  17,587,108 
 395,460  Trupanion, Inc.(a)  14,129,786 
  

 

 

 
   31,716,894 
  

 

 

 
 IT Services – 4.9%

 

 119,236  Euronet Worldwide, Inc.(a)  11,949,832 
 312,408  Evo Payments, Inc., Class A(a)  7,466,551 
 305,005  InterXion Holding NV(a)  20,526,836 
 334,608  Virtusa Corp.(a)  17,971,796 
 389,180  WNS Holdings Ltd., ADR(a)  19,750,885 
  

 

 

 
   77,665,900 
  

 

 

 
 Leisure Products – 0.4%

 

 123,638  Malibu Boats, Inc., Class A(a)  6,765,471 
  

 

 

 
 Life Sciences Tools & Services – 1.6%

 

 222,399  PRA Health Sciences, Inc.(a)  24,506,146 
  

 

 

 
 Machinery – 5.0%

 

 227,707  Albany International Corp., Class A  18,102,706 
 690,971  Harsco Corp.(a)  19,727,222 
 133,813  Proto Labs, Inc.(a)  21,644,253 
 125,291  RBC Bearings, Inc.(a)  18,838,755 
  

 

 

 
   78,312,936 
  

 

 

 
 Multiline Retail – 1.3%

 

 213,429  Ollie’s Bargain Outlet Holdings, Inc.(a)  20,510,527 
  

 

 

 
 Oil, Gas & Consumable Fuels – 0.7%

 

 231,370  PDC Energy, Inc.(a)  11,327,875 
  

 

 

 
 Pharmaceuticals – 1.9%

 

 212,531  Aerie Pharmaceuticals, Inc.(a)  13,081,283 

 

See accompanying notes to financial statements.

 

|  24


Table of Contents

Portfolio of Investments – as of September 30, 2018

Loomis Sayles Small Cap Growth Fund – continued

 

    
Shares
  Description Value (†) 
 Common Stocks – continued 
 Pharmaceuticals – continued

 

 328,179  Supernus Pharmaceuticals, Inc.(a) $16,523,813 
  

 

 

 
   29,605,096 
  

 

 

 
 Semiconductors & Semiconductor Equipment – 2.6%

 

 128,431  MKS Instruments, Inc.  10,293,744 
 130,673  Monolithic Power Systems, Inc.  16,403,382 
 165,286  Silicon Laboratories, Inc.(a)  15,173,255 
  

 

 

 
   41,870,381 
  

 

 

 
 Software – 14.5%

 

 173,434  2U, Inc.(a)  13,040,503 
 148,764  Blackbaud, Inc.  15,096,571 
 305,154  Envestnet, Inc.(a)  18,599,136 
 462,441  Five9, Inc.(a)  20,204,047 
 198,702  Guidewire Software, Inc.(a)  20,070,889 
 114,601  HubSpot, Inc.(a)  17,299,021 
 482,252  Mimecast Ltd.(a)  20,196,714 
 364,885  Q2 Holdings, Inc.(a)  22,093,787 
 496,007  Rapid7, Inc.(a)  18,312,578 
 334,608  RealPage, Inc.(a)  22,050,667 
 214,326  RingCentral, Inc., Class A(a)  19,943,034 
 216,419  Talend S.A., ADR(a)  15,093,061 
 105,406  Varonis Systems, Inc.(a)  7,720,990 
  

 

 

 
   229,720,998 
  

 

 

 
 Specialty Retail – 2.2%

 

 468,796  At Home Group, Inc.(a)  14,781,138 
 425,960  National Vision Holdings, Inc.(a)  19,227,834 
  

 

 

 
   34,008,972 
  

 

 

 
 Textiles, Apparel & Luxury Goods – 4.2%

 

 196,833  Columbia Sportswear Co.  18,319,247 
 682,748  Crocs, Inc.(a)  14,535,705 
 385,218  G-III Apparel Group Ltd.(a)  18,563,655 
 276,523  Steven Madden Ltd.  14,628,067 
  <