Background
Loomis, Sayles & Company, L.P. (“Loomis Sayles”) has been providing investment management services since 1926, when it was established by founders Robert H. Loomis and Ralph T. Sayles. Loomis Sayles provides investment advisory or subadvisory services to institutional clients through its separate account management services. In addition, Loomis Sayles provides investment advisory or subadvisory services to a variety of investment funds (which may include, but are not limited to, U.S. and offshore mutual funds, hedge funds, collateralized fixed income pools, collective investment trusts, New Hampshire investment trusts and other public or private investment companies). Loomis Sayles also provides investment advisory services in connection with certain “wrap programs.” Finally, Loomis Sayles provides non-discretionary investment advisory and sub- advisory services to certain clients pursuant to which it provides such clients with its model portfolios and updates thereto, and the clients will execute trades based on the model if they deem it appropriate to do so. As of December 31, 2018, Loomis Sayles’ total assets under management were approximately $249.7 billion, including approximately $15.8 billion managed on a non-discretionary basis and $22.1 billion for which its wholly-owned subsidiary, Loomis Sayles Trust Company, LLC, serves as trustee.
Loomis Sayles’ Parent and Affiliated Companies
Loomis Sayles is an indirect subsidiary of Natixis Investment Managers, L.P. which is an indirect subsidiary of Natixis Investment Managers (“Natixis IM”), an international asset management group based in Paris, France. Natixis IM is in turn owned by Natixis, a French investment banking and financial services firm. Natixis is principally owned by BPCE, France’s second largest banking group. On January 1, 2019, Natixis Investment Managers, L.P. transferred its membership interests in McDonnell Investment Management, LLC, a registered investment adviser, to Loomis, Sayles & Company, Incorporated (“Loomis Sayles Inc.”). Loomis Sayles Inc. is the general partner of Loomis Sayles and a wholly owned subsidiary of Natixis Investment Managers, L.P. McDonnell’s business is expected to be integrated into Loomis Sayles by mid-2019, at which time McDonnell will cease to be a registered investment adviser.
Advisory Services
Separate Account Clients Loomis Sayles provides a wide array of fixed income and equity investment management services through separate accounts. Investment advice is furnished on either a discretionary basis, where the client authorizes Loomis Sayles to make all investment decisions for the account, or a non-discretionary basis, where Loomis Sayles makes recommendations to the client but all investment decisions are made by the client. All separate account advisory services are provided under the terms of an advisory agreement between Loomis Sayles and the client. The advisory agreement generally permits either the client or Loomis Sayles to terminate the agreement at any time upon written notice to the other party. In most cases, advance notice is required. Loomis Sayles permits customization of an account’s guidelines to meet the particular needs of clients, as long as the firm believes such customization will not unduly hamper its ability to execute the strategy. Generally, clients establish their own investment guidelines and restrictions for their accounts, although Loomis Sayles maintains standard guidelines for a number of strategies that may be used without modification by clients. Affiliated and Other Funds In addition to the separate account services described above, Loomis Sayles provides advisory or subadvisory services to mutual funds sponsored by Loomis Sayles or its affiliates. Information concerning these funds, including a description of the services provided and advisory fees, is generally contained in each fund’s prospectus. As mentioned above, Loomis Sayles also provides advisory or subadvisory services to other investment funds that are established by Loomis Sayles or its affiliates or in which Loomis Sayles, its affiliates or their personnel may have an ownership or management interest. Such investment funds may include, but are not limited to, hedge funds, collateralized fixed income pools, collective investment trusts, New Hampshire investment trusts and other types of pooled vehicles. Additional information concerning these funds is generally included in the relevant offering documents. Loomis Sayles also provides advisory or subadvisory services to otherwise unaffiliated mutual funds and investment funds. Wrap/Model Delivery Programs Loomis Sayles offers discretionary investment advice to “wrap fee” programs, also known as separately managed account programs, and platforms sponsored by investment advisers, broker- dealers and other financial service firms (“Program Sponsors”), either directly to the Program Sponsor (“Single Contract SMA”) or the Program Sponsor’s clients (“Participants”) (“Dual Contract SMA”) depending on the program (collectively referred to as “SMA Programs”). Loomis Sayles also provides discretionary and non-discretionary investment advice to Program Sponsors and/or overlay managers through model investment portfolios (“Discretionary Model Program” and “Non- Discretionary Model Program,” respectively, and collectively referred to as the “Model Program”). Loomis Sayles’ SMA Program and Model Program are collectively referred to as the “Managed Account Programs”. Loomis Sayles does not act as a “sponsor” or a “manager” as those terms are defined in Investment Company Act Rule 3a-4 with respect to the services it provides to Managed Account Programs. Depending on the Managed Account Program, services provided by the Program Sponsor to the Participants typically include manager selection, custodial services, periodic monitoring of investment managers, performance reporting and trade execution (often without a transaction- specific commission or charge), and investment advisory services, provided by one or more investment managers such as Loomis Sayles, all generally for a bundled (or “wrap”) fee paid to the Program Sponsor. Generally, Program Sponsors are primarily responsible for contact with Participants. Program Sponsors are also responsible for reviewing their Participants’ financial circumstances and investment objectives, and determining the suitability of Loomis Sayles’ strategy and the Managed Account Program for their Participants, as well as any investment restrictions applicable to a Participant’s account, based on information provided by the Participant. Loomis Sayles is entitled to rely on such information provided to it by the Program Sponsors. In a Single Contract SMA program, Loomis Sayles enters into an investment sub-advisory agreement with a Program Sponsor under which Loomis Sayles has investment discretion to manage Participant assets in an approved strategy. In the Dual Contract SMA program, Loomis Sayles enters into an investment advisory agreement directly with the Participant, and has discretion in accordance with that agreement, and the Participant also enters into an agreement directly with the Program Sponsor. The Participant may select Loomis Sayles from among the investment advisers that the Program Sponsor presents to the Participant. In a Model Program, Loomis Sayles provides model portfolio advice through an agreement with Program Sponsors and/or an overlay manager (typically another investment manager applying investment advice to the Program assets). Loomis Sayles monitors and updates the model portfolios on an ongoing basis and will deliver such updates to the Program Sponsor or overlay manager. Loomis Sayles has sole discretion for determining the appropriateness, diversification or suitability of securities selected for the model portfolios. Program Sponsors or an overlay manager will provide Participants the services described in the Program Sponsor’s or overlay manager’s agreement with such Participants, including selection of the investment strategies based on information provided by the Participant. Loomis Sayles does not provide customized investment advice or recommendations to Model Program Participants. No model portfolio is customized or in any way tailored by Loomis Sayles to reflect the personal financial circumstances or investment objectives of any Participant. There are two types of Model Programs. In the Non-Discretionary Model Program, the Program Sponsor retains investment and brokerage discretion and is responsible for investment decisions and performing many other services and functions typically handled by Loomis Sayles in a traditional institutional account relationship. In the Discretionary Model Program, Loomis Sayles forwards investment advice to the overlay manager designated by the Program Sponsor, who agrees to implement the advice in client accounts taking into account any client imposed restrictions accepted by the overlay manager. As in the Non-Discretionary Model Program, Loomis Sayles does not have brokerage discretion in the Discretionary Model Program and thus has no authority to place orders for the execution of transactions. However, in order to assist the Program Sponsor in implementing the recommendations of the model portfolio, Loomis Sayles in certain instances will place orders to buy or sell securities on the Program Sponsor’s behalf. In such instances, the transactions for Managed Account Program accounts will generally be executed concurrently with the same transactions that are being executed for Loomis Sayles’ institutional client accounts in analog products, where feasible. In the Non-Discretionary Model Program, Loomis Sayles does not consider itself to have an advisory relationship with clients of the Program Sponsor or overlay manager. If the Form ADV Part 2A is delivered to Program Sponsor’s model-based clients with whom Loomis Sayles does not have an advisory relationship, or where it is not legally required to be delivered, it is provided for informational purposes only. Details of each Managed Account Program are set forth in the Program Sponsor’s documents relating to the particular Managed Account Program. Depending upon the level of the wrap fee charged by a Program Sponsor, the amount of portfolio activity in a Participant’s account, the value of the custodial and other services that are provided under a wrap fee program and other factors, a Participant should consider that the cost for a Managed Account Program may be more or less than if a Participant were to purchase the investment advisory services and the investment products separately. Participants should also understand that Loomis Sayles will not negotiate brokerage commissions with the Sponsor with respect to transactions effected for a Participant’s account, since those brokerage commissions are normally included in the wrap fee. The Sponsor may charge higher commissions, or may provide less advantageous execution of transactions, than if Loomis Sayles selected the broker or dealer to execute the transactions or negotiated the commissions. Participants are encouraged to consult their own financial advisors and legal and tax professionals on an initial and continuous basis in connection with selecting and engaging the services of an investment manager for a particular strategy and participating in a Managed Account Program. In the course of providing services to Managed Account Program accounts advised by a financial advisor, Loomis Sayles generally relies on information or directions communicated by the financial advisor acting with apparent authority on behalf of its client. Loomis Sayles reserves the right, in its sole discretion, to reject for any reason any SMA Program Participant referred to it. Not all Loomis Sayles’ strategies are available through Managed Account Programs, and not all Program Sponsors offer all of Loomis Sayles’ strategies available through Managed Account Programs. Further, the manner in which Loomis Sayles executes a strategy through a Managed Account Program may differ from how a similar institutional strategy is executed, for example, because of the need to adhere to the restrictions imposed by the Program Sponsor or due to the use of affiliated commingled vehicles rather than individual securities. Depending on the strategy, Loomis Sayles invests in a variety of securities and other investments, and employs different investment techniques. There may be differences between the recommendations provided by Loomis Sayles and recommendations or decisions made by Loomis Sayles for its institutional client accounts resulting from, among other things, differences in cash availability, availability of securities, investment restrictions, account sizes, the use of American Depositary Receipts (“ADRs”) rather than foreign securities generally and other factors. Likewise, the performance of Loomis Sayles’ institutional client accounts and that of Participants pursuing a similar investment strategy will differ for these and other reasons. Loomis Sayles may use professional services of other third parties, including its affiliates, in servicing the Managed Account Programs. Subject to applicable law and fiduciary obligations, Loomis Sayles will make reasonably available to Program Sponsors and Participants certain staff knowledgeable about the services being provided by Loomis Sayles. Unlike most of Loomis Sayles’ other client accounts, Participant accounts generally do not generate brokerage commissions that Loomis Sayles may use to pay for research and research services (i.e., soft dollars). In addition, certain Participants have entered into arrangements with broker-dealers whereby the Participant pays a fee to such broker dealers, and in return, these broker dealers provide the Participant with certain investment consulting services, and the ability to trade with the broker dealers free of commission charges. Loomis Sayles is not required to trade with the Participant’s broker-dealer, and Loomis Sayles may decide to not trade with the broker-dealer if it believes it can get better execution with the broker-dealer being used for similarly managed accounts. In such instances, the Participant will pay a commission on such transactions. As described in Allocation of Investments or Trading Opportunities section of this ADV, when placing buy or sell orders for client accounts, Loomis Sayles (like many large asset managers) typically aggregates orders for its institutional clients that participate in a given investment strategy. In these instances, because the order will be placed on an aggregated basis, Loomis Sayles selects a broker-dealer to execute the order based on its assessment of the selected broker-dealer’s ability to achieve best execution for the order in the aggregate. Loomis Sayles believes that order aggregation, on balance and over time, is likely to produce the fairest and most appropriate results for its clients (although in any particular transaction viewed in isolation, a particular client or clients might have been advantaged if their orders were not aggregated with those of our other institutional clients). In addition, best execution is not simply a function of executing a trade at the lowest possible commission, but rather, it also includes, among other things: the price at which the security is purchased or sold; the execution capability of the broker-dealer (including its overall competitiveness, financial soundness and reputation); the order size and depth of the market; the quantity and quality of the research provided by the broker-dealer; the broker-dealer’s market making activities; the broker-dealer’s willingness to enter into difficult transactions and commit their own capital; and the trading networks (ETNs, dark pools, etc.) provided by the broker-dealer. The Loomis Trading Desk takes all of these factors into consideration when selecting broker-dealers to execute aggregated orders, in pursuit of the overall goal of best execution. While Managed Account Program clients do not pay soft dollars, they do benefit from the research and research services that are used by Loomis Sayles to assist it in its investment decision-making process, including the research and research services acquired with commissions generated by other Loomis Sayles client accounts. Unless Loomis Sayles specifically agrees otherwise with a Managed Account Program client, the trading/model delivery will occur after the portfolio adjustments have been implemented for Loomis Sayles’ other discretionary client accounts in the same Investment Product. In such instances, the Participants may trade at prices that are lower or higher than Loomis Sayles’ other client accounts. The trading/model delivery may occur concurrently with the trading of Loomis Sayles’ other client accounts if Loomis Sayles specifically agrees to such terms. Where the concurrent model delivery results in the Program Sponsor executing Participants’ transactions, such transactions may compete with similar transactions that are directed by Loomis Sayles for its non- Program client accounts in the same or similar Investment Products at the same time, thereby possibly adversely affecting the price, amount or other terms of the trade execution for some or all of the accounts. Any effect of substantially contemporaneous market activities is likely to be most pronounced when the supply or liquidity of the security is limited. Clients of the Program Sponsor should refer to their particular documentation for additional information regarding transactions for their account.
Non-Advisory Services
Loomis-Sponsored Indexes Loomis Sayles designs, sponsors and publishes one or more indexes (each, a “Loomis Index”) for use in portfolio benchmarking and portfolio management. These Loomis Indexes are rules-based and maintained by an unaffiliated third party. There is no guarantee that strategies based on any of these indexes will be successful or profitable. Indexes are unmanaged and do not permit direct investment. Loomis Sayles does not issue, sponsor, endorse, market, offer, review or otherwise express any opinion regarding any fund, strategy or other investment product based on, linked to or otherwise related to any Loomis index (each, an “Index Product”). Loomis Sayles is not acting as an investment adviser or fiduciary with respect to any Loomis Index and makes no representation regarding the advisability of investment in any Index Product. Loomis Sayles does not guarantee that any Index Product will accurately track any Loomis Index, or that any Index Product will provide positive investment returns. please register to get more info

Standard Fees
Loomis Sayles’ advisory fees are set forth in each client’s advisory agreement. In general, Loomis Sayles’ advisory fees are based on its standard fee schedule in effect at the time the advisory agreement is entered into. Advisory fees are negotiated with many clients, however, and may therefore vary from the standard fee schedule. For comparable services, other investment advisers may charge higher or lower fees than those charged by Loomis Sayles. Loomis Sayles’ current standard fee schedule is set forth at the end of this section. Advisory fees under this schedule are calculated as a percentage of assets under management and may be subject to a specified minimum annual fee and/or a specified minimum account size. The standard fee schedule may be modified from time to time. The client’s advisory agreement generally dictates if Loomis Sayles’ values or the client’s custodian’s values will be used for fee calculations. Where Loomis Sayles’ values are used in determining the fee calculation, certain securities may be fair valued in accordance with the firm’s Securities Pricing Policies and Procedures. Most advisory fees are generally paid quarterly in arrears and billed to the client, although there are some exceptions. Certain clients pay fees monthly, semi-annually or annually, and a few clients pay fees up to three months in advance. Prepaid advisory fees covering any period after a client’s advisory agreement is terminated are refunded to the client after pro rating the fee for the partial period. Loomis Sayles does not deduct fees from client accounts, although Loomis Sayles advises some investment funds for which fees are deducted by the relevant custodian.
Performance Fees
Loomis Sayles may agree to charge a performance fee (i.e., a fee based on a share of the income, capital gains or capital appreciation in the client’s account or a portion of the client’s account) where such fee arrangements are acceptable to the client and permitted under applicable laws and regulations. Please see “Performance-Based Fees and Side-by-Side Management” below for more information about performance fees.
Custodial Services
Generally, clients select their own custodians for account assets and pay all fees charged by the custodian. Certain clients, however, have elected to utilize a custodian bank that does not charge the client for custodial services. In these instances, the fees of the custodian are paid by Loomis Sayles, and Loomis Sayles charges the client a higher advisory fee than it might otherwise charge. This arrangement is not available to new clients.
Brokerage and Other Costs
Clients incur brokerage and other transaction costs which are in addition to any advisory fees. Please see “Brokerage Practices” for more information about these costs.
Affiliated and Other Funds
Loomis Sayles or its affiliates may recommend to clients, or Loomis Sayles may invest for client accounts in, various investment funds that are sponsored, advised or subadvised by Loomis Sayles or its affiliates and in which Loomis Sayles, its affiliates or their personnel may have an ownership or management interest and for which Loomis Sayles and/or its affiliates collect asset-based or other fees. Such investment funds may include, but are not limited to, mutual funds, hedge funds, collateralized fixed income pools, collective investment trusts and other public or private investment companies. Broker-dealers affiliated with Loomis Sayles (“Affiliated Broker-Dealers”) may act as principal underwriter, distributor, dealer or placement agent or perform a similar function, and/or a Loomis Sayles affiliate may provide other services such as administrative or transfer agent services for such funds. Please see “Other Financial Industry Activities and Affiliations” for more information.
Fees for Managed Account Program Clients
Loomis Sayles is retained by certain clients under Managed Account Programs (also known as wrap fee programs) offered by a third party sponsor, where the sponsor may: (1) recommend retention of Loomis Sayles as investment adviser; (2) pay Loomis Sayles’s investment advisory fee on behalf of the client; (3) monitor and evaluate Loomis Sayles’s performance; (4) execute the client's portfolio transactions without commission charge (in the case of transactions with such broker/dealer sponsors); and (5) provide custodial services for the client's assets, or provide any combination of these or other services, all for a single fee paid by the client to the Program Sponsor. Loomis Sayles is compensated in one of two ways. In most programs, the client pays a single fee payable to the sponsor, of which a percentage is payable to Loomis Sayles for its investment advisory services. Fees, investment minimums, and other features of these programs vary, and are described in each Program Sponsor’s disclosure brochure. In other programs, Loomis Sayles enters into separate agreements with clients. Clients pay compensation separately to Loomis Sayles as well as to the Program Sponsor for its services, which may include preparing an investment policy statement, considering an appropriate asset allocation, and providing account statements, among others. As a fiduciary, Loomis Sayles seeks to place trades in a manner that is consistent with its obligation to seek most favorable price and execution under the circumstances (“best execution”). Based on our trading experience over time, best execution is typically provided by third party dealers for the municipal bond and other fixed income strategies utilized by Loomis Sayles. As a result, Loomis Sayles executes virtually all trades away from the Program Sponsor or the Program Sponsor’s broker-dealer affiliate. In such cases, clients generally incur transaction costs that are in addition to the Managed Account Program fee. These costs, which are in the form of markups or markdowns that are embedded in the net purchase or sale price of the security, are difficult to quantify because they are not separately disclosed by the executing dealer. Participants may wish to evaluate whether the Managed Account Program fee structure is appropriate for them in light of the additional charges from the trades done away from the Program Sponsor and/or the Program Sponsor’s broker-dealer affiliate, and are encouraged to review the Program Sponsor’s program brochure regarding possible alternative fee structures in which trading is not included but charged separately on a transaction by transaction basis. Wrap fees are typically paid quarterly, in advance, to the Program Sponsor. Loomis Sayles receives a portion of this fee as compensation for investment advice it provides to Participants that typically ranges from 0.20% to 0.30% of the Participant’s assets under management.
Standard Fee Schedule
The standard fee schedule for Loomis Sayles’ separate accounts is set forth below. Generally, fees are calculated as a percentage of assets under management (including accrued income, cash and cash equivalents). All fees shown below reflect annual rates; however, fees are normally paid on a quarterly basis. Minimum annual fees and/or minimum account sizes may apply and may vary. Fees shown below generally relate only to investment styles that are currently offered to new clients. Fees for other investment styles that are not generally offered to new clients, but are used in managing accounts for existing clients, are as set forth in the contracts with the particular clients. Advisory fees are negotiated with many clients and may therefore vary from the standard fee schedule shown below. This fee schedule may be modified from time to time.
FIXED INCOME
Investment Grade Corporate Bond Investment Grade Intermediate Corporate Bond

.32% on the first $50 million .25% on the next $50 million .20% on value over $100 million Minimum account size: $50 million Minimum annual fee: $160,000

Agency MBS Core Fixed Income

.29% on the first $50 million .25% on the next $50 million .18% on value over $100 million Minimum account size: $50 million Minimum annual fee: $145,000

Multisector Full Discretion Securitized Credit

.50% on the first $20 million .40% on the next $30 million .30% on value over $50 million Minimum account size: $50 million Minimum annual fee: $220,000 Investment Grade Securitized Global Investment Grade Securitized Core Plus Fixed Income .34% on the first $50 million .30% on the next $50 million .25% on value over $100 million Minimum account size: $50 million Minimum annual fee: $170,000 High Yield Securitized High Yield Conservative High Yield Full Discretion Global High Yield .50% on total value Minimum account size: $50 million Minimum annual fee: $250,000 Core Plus Full Discretion

.40% on the first $20 million .30% on the next $80 million .20% on value over $100 million Minimum account size: $50 million Minimum annual fee: $170,000 U.S. High Yield

.50% on the first $100 million .45% on the next $100 million .40% on the value over $200 million Minimum account size: $50 million Minimum annual fee: $250,000

Long Duration Credit Long Duration Corporate Bond Long Duration Government/Credit

.30% on the first $100 million .25% on the next $50 million .20% on the value over $150 million Minimum account size: $50 million Minimum annual fee: $150,000

Short Duration Fixed Income

.24% on the first $50 million .20% on the next $50 million .15% on value over $100 million Minimum account size: $50 million Minimum annual fee: $120,000 Senior Floating Rate and Fixed Income

.50% on the first $100 million .40% on the value over $100 million Minimum account size: $100 million Minimum annual fee: $500,000

Strategic Alpha

.47% on the first $100 million .40% on value over $100 million Minimum account size: $100 million Minimum annual fee: $470,000

Bank Loans

.47% on the first $100 million .40% on value over $100 million Minimum account size: $50 million Minimum annual fee: $235,000 LLC Minimum account size: $5 million LLC Minimum annual fee: $23,500 (Bank loan asset class may also be a component of a broader based portfolio. In that case, the fee schedule will generally be the fee schedule applicable to the overall portfolio and not the Bank Loans schedule shown immediately above.) Global Disciplined Alpha 0.325% on the first $100 million 0.20% on the value over $100 million Minimum account size: $100 million Minimum annual fee: $325,000

Long Duration Disciplined Alpha Corporate Disciplined Alpha Long Corporate Disciplined Alpha Intermediate Core Disciplined Alpha Long Credit Disciplined Alpha Core Disciplined Alpha

.35% on the first $20 million .25% on the next $80 million .20% on the next $100 million .18% on value over $200 million Minimum account size: $50 million Minimum annual fee: $145,000

Global Credit Global Corporate Global Bond

.40% on the first $50 million .30% on the next $50 million .20% on the value over $100 million Minimum account size: $50 million Minimum annual fee: $200,000

Global Debt Unconstrained

.50% on the first $50 million .40% on the next $50 million .30% on value over $100 million Minimum account size: $50 million Minimum annual fee: $250,000

Asia Bond Plus Emerging Markets Corporate Debt Emerging Markets Debt Local Currency

.65% on the first $25 million .55% on the next $25 million .45% on the next $50 million .40% on value over $100 million Minimum account size: $30 million Minimum annual fee: $190,000

Emerging Markets Short Duration Credit

.45% on the first $100 million .35% on the next $400 million .30% on value over $500 million Minimum account size: $30 million Minimum annual fee: $135,000

World Credit Asset

.50% on total value Minimum account size: $100 million Minimum annual fee: $500,000 Credit Asset .45% on total value Minimum account size: $100 million Minimum annual fee: $450,000 Strategic Income .45% on the first $100 million .40% on the next $100 million .35% on value over $200 million Minimum account size: $50 million Minimum annual fee: $225,000 Intermediate Duration Fixed Income

.29% on the first $50 million .25% on the next $50 million .20% on value over $100 million Minimum account size: $50 million Minimum annual fee: $145,000

Custom LDI

0.35% on the first $75 million 0.30% on the next $75 million 0.25% on the value over $150 million Minimum account size: $75 million Minimum annual fee: $262,500

Short Duration Municipal Bond

0.28% on the first $30 million 0.24% on the next $20 million 0.20% on the next $200 million 0.16% on the value over $250 million Minimum account size: $5 million Minimum annual fee: $14,000

Medium Duration Municipal Bond

0.32% on the first $10 million 0.28% on the next $40 million 0.24% on the next $200 million 0.20% on the value over $250 million Minimum account size: $5 million Minimum annual fee: $16,000

Intermediate Duration Municipal Bond 3-15 Year National Municipal Bond

0.32% on the first $10 million 0.28% on the next $20 million 0.24% on the next $20 million 0.20% on the next $200 million 0.16% on the value over $250 million Minimum account size: $5 million Minimum annual fee: $16,000
EQUITY
Large Cap Growth .575% on the first $20 million .50% on the next $30 million .45% on the next $50 million .40% on value over $100 million Minimum account size: $20 million Minimum annual fee: $115,000 All Cap Growth .675% on the first $20 million .60% on the next $30 million .55% on the next $50 million .50% on the next $100 million .45% on the value over $200 million Minimum account size: $20 million Minimum annual fee: $135,000

Small/Mid Cap Core

.90% on the first $10 million .80% on the next $20 million .70% on the next $20 million .60% on value over $50 million Minimum account size: $10 million Minimum annual fee: $90,000

Small Cap Value

1% on the first $10 million .80% on the next $20 million .60% on value over $30 million Minimum account size: $10 million Minimum annual fee: $100,000

Small Cap Growth*

1.00% on the first $20 million .85% on the next $30 million .75% on the next $50 million .70% on value over $100 million Minimum account size: $20 million Minimum annual fee: $200,000

Global Equity Opportunities

.75% on the first $10 million .60% on the next $40 million .55% on the next $50 million .50% on the next $100 million .40% on value over $200 million Minimum account size: $20 million Minimum annual fee: $135,000

Small/Mid Cap Growth

.90% on the first $20 million .80% on the next $30 million .70% on the next $50 million .65% on value over $100 million Minimum account size: $20 million Minimum annual fee: $180,000

Global Allocation

.55% on the first $100 million .45% on the next $100 million .40% on the value over $200 million Minimum account size: $100 million Minimum annual fee: $550,000

Global Growth .75% on the first $50 million .60% on the next $50 million .55% on the next $150 million .50% on value over $250 million Minimum account size $20 million Minimum annual fee: $150,000 *These strategies are currently closed to new separate account business.
COLLECTIVE INVESTMENT TRUSTS
FIXED INCOME Core Plus Fixed Income .45% on the first $10 million .35% on the next $10 million .25% on value over $20 million

Investment Grade Bond Core Plus Full Discretion

.45% on the first $10 million .35% on the next $10 million .25% on the next $100 million .20% on value over $120 million Minimum account size: $5 million

Multisector Full Discretion

.57% on the first $15 million .45% on the next $15 million .30% on value over $30 million Minimum account size: $5 million

High Yield Conservative

.50% on total value Minimum account size: $5 million Minimum annual fee: $25,000

Global International Bond USD Hedged

.50% on the first $10 million .30% on the next $65 million .20% on the balance over $75 million Minimum account size: $5 million

Core Disciplined Alpha

.40% on the first $10 million .25% on the next $40 million .20% on the next $50 million .18% on value over $100 million Minimum account size: $5 million

Core Fixed Income

.35% on the first $5 million .225% on the next $45 million .18% on value over $50 million Minimum account size: $5 million

U.S. High Yield Bond

.50% on the first $50 million .45% on the next $50 million .40% on the value over $100 million Minimum account size: $5 million Minimum annual fee: $25,000

World Credit Asset

.50% on total value Intermediate Duration Fixed Income .35% on the first $5 million .25% on the next $45 million .20% on value over $50 million EQUITY Small/Mid Cap Core .90% on the first $10 million .75% on the next $40 million .60% on value over $50 million All Cap Growth

0.775% on the first $10 million 0.60% on the next $10 million 0.55% on the next $80 million 0.50% on the next $100 million 0.45% on value over $200 million Minimum account size: $5 million

Small Cap Growth

.95% on the first $10 million .90% on the next $10 million .80% on the next $30 million .70% on the value over $50 million Minimum account size: $5 million

Small/Mid Cap Growth

.85% on first $10 million .80% on the next $10 million .70% on the next $30 million .65% on the value over $50 million Minimum account size: $5 million

Large Cap Growth

.65% on the first $10 million .50% on the next $10 million .45% on the next $80 million .40% on the value over $100 million Minimum account size: $5 million

Global Growth

.85% on the first $10 million .75% on the next $10 million .60% on the next $30 million .55% on the next $200 million .50% on value over $250 million Minimum account size: $5 million
NEW HAMPSHIRE INVESTMENT TRUSTS
Investment Grade Corporate Bond Intermediate Duration Fixed Income Investment Grade Intermediate Corporate Bond

.35% on the first $5 million .25% on the next $45 million .20% on value over $50 million Minimum account size: $5 million

Agency MBS Core Fixed Income .35% on the first $5 million .225% on the next $45 million .18% on value over $50 million Long Duration Credit Long Duration Corporate Bond Long Duration Government / Credit .25% on the first $150 million .20% on the value over $150 million Minimum account size: $5 million Emerging Markets Corporate Debt

.65% on the first $25 million .55% on the next $25 million .45% on the next $50 million .40% on value over $100 million Minimum account size: $5 million

Securitized Credit Multisector Full Discretion

.57% on the first $15 million .45% on the next $15 million .30% on value over $30 million Minimum account size: $5 million

High Yield Full Discretion

.50% on total value Minimum account size: $5 million Minimum annual fee: $25,000

Credit Asset

.45% on value of account Minimum account size: $5 million

World Credit Asset

.50% on value of account Minimum account size: $5 million

Core Disciplined Alpha

.40% on the first $10 million .25% on the next $40 million .20% on the next $50 million .18% on value over $100 million Minimum account size: $5 million

U.S. High Yield Bond

.50% on the first $50 million .45% on the next $50 million .40% on the value over $100 million Minimum account size: $5 million Minimum annual fee: $25,000

Strategic Alpha

.60% on the first $20 million .50% on the next $30 million .40% on value over $50 million Minimum account size: $5 million

World Bond Global Fixed Income Global Bond USD Hedged Global Corporate

.50% on the first $10 million .30% on the next $65 million .20% on the balance over $75 million Minimum size: $5 million

Global Equity Opportunities

.70% on the first $10 million .60% on the next $40 million .50% on the next $150 million .40% on value over $200 million Short Duration Fixed Income .30% on the first $10 million .25% on the next $10 million .20% on the next $30 million .15% on value over $50 million Core Plus Full Discretion .45% on the first $10 million .35% on the next $10 million .25% on the next $100 million .20% on value over $120 million SRI Core Plus Fixed Income Core Plus Fixed Income

.45% on the first $10 million .35% on the next $10 million .25% on value over $20 million Minimum account size: $5 million

Dynamic Fixed Income

0.40% on the total value Minimum account size: $5 million

Senior Floating Rate and Fixed Income

.50% on the first $100 million .40% on value over $100 million Minimum account size: $5 million

U.S. Treasury STRIPS

.05% on the total value Minimum account size: $5 million please register to get more info

Performance Fees
Loomis Sayles may charge a performance fee (i.e., a fee based on a share of the income, capital gains or capital appreciation in the client’s account or a portion of the client’s account) where such fee arrangements are acceptable to the client and permitted under applicable laws and regulations. However, most Loomis Sayles clients pay advisory fees based on assets under management without a performance fee component.
Side-by-Side Management and Conflicts
Having both asset-based and performance-based fees in the same strategy may create conflicts of interests, as there may be an incentive to favor accounts whose fee is based on good performance. Loomis has adopted the following policies and procedures to address this conflict.
Particular Conflicts of Interest Associated with Hedge Funds
Loomis Sayles may make recommendations and take action with respect to a particular client’s account that may be the same as or may differ from the recommendations made or the timing or nature of the action taken with respect to other client accounts. For example, a hedge fund may generally have greater investment flexibility than many other client accounts (including, but not limited to, the ability to use leverage, sell securities short, and engage in high portfolio turnover), and therefore, investment or trading decisions for the hedge fund will not be identical to those for non- hedge fund client accounts that invest in the same types of securities. In fact, such investment decisions may even be contrary to Loomis Sayles’ contemporaneous recommendations or transactions for non-hedge fund client accounts. Thus, by way of illustration, a hedge fund or other client account may, in certain circumstances, be selling (or selling short) a security that other client accounts are buying or holding, or buying a security that other client accounts are selling, and this may have an impact on the securities being purchased or that are held long for such client accounts. Hedge funds generally use a more diverse array of investment tools and techniques than most other investment strategies, including the use of short sales, leverage and a wide range of derivative instruments. Hedge funds also typically have significantly different investment objectives, strategies, time horizons and risk profiles and different tax and other considerations from long-only accounts, and they typically pursue absolute returns versus long-only accounts that typically measure performance against a specific index or benchmark. Finally, hedge funds often provide investors with limited redemption opportunities that require significant advance notice, so they tend to have less need for portfolio liquidity. From time to time, Loomis Sayles or a related person may act as general partner, portfolio manager, or perform a similar function for partnerships or other vehicles, including hedge funds in which Loomis Sayles’ clients may be solicited to invest. Certain aspects of such funds’ structures or operations may give rise to potential conflicts of interest vis-à-vis Loomis Sayles’ other clients. Such potential conflicts may be similar to, or may be different from, the types of conflicts that Loomis Sayles typically faces with respect to its other client accounts. Particular conflicts of interest associated with the hedge funds may arise from, among other things, the fact that Loomis Sayles and/or certain of its affiliates or personnel may participate in the investment return achieved by hedge funds, through performance-based fees payable by hedge funds or as investors in hedge funds. The portfolio managers of hedge funds receive a percentage of the performance fee paid to Loomis Sayles. As a result, these portfolio managers have an economic incentive to favor hedge funds over other accounts they manage. This participation may be material, both in relation to the overall investment return of the hedge fund and in relation to the overall compensation or financial circumstances of participating affiliates or personnel. Loomis Sayles seeks to manage conflicts associated with side-by-side management of client accounts through a requirement that the firm’s policies and procedures regarding broker selection, trade aggregation and allocation, trade errors, cross trading, soft dollars and pricing all apply equally to the management of hedge funds and long-only accounts. In addition, there is enhanced oversight performed by the Loomis Sayles Legal and Compliance Department over the trading by hedge fund portfolio managers to confirm that they are allocating investment opportunities in a fair and equitable manner over time, and that they are not front-running the purchase and sale transactions of their long only accounts. There is also oversight of the hedge fund portfolio managers’ rationale for maintaining simultaneous long and short positions in the same security in different accounts or for transactions that appear to be an appropriate investment but are not executed concurrently in a portfolio manager’s hedge fund and long-only accounts. While the procedures used to manage these conflicts differ depending upon the specific risks presented, all are designed to guard against intentionally favoring one account over another.
Cross Trading, Brokerage Allocation and Securities Pricing
Loomis Sayles will not knowingly or intentionally cross securities among hedge funds and long-only accounts unless the transaction is approved in advance by Loomis Sayles’ Chief Compliance Officer. In addition, brokerage allocation and securities pricing is handled in the same manner for hedge funds as it is for long-only accounts. please register to get more info

Loomis Sayles provides investment advisory or subadvisory services to a wide variety of institutional clients, including public funds, endowments, pension plans, Taft-Hartley plans, corporations, foundations, and insurance companies. Loomis Sayles also serves as advisor or subadviser to a variety of investment funds which may include, but are not limited to, U.S. and offshore mutual funds, hedge funds, collective investment trusts, New Hampshire investment trusts, collateralized pools and other public or private investment companies. Some of these investment funds may be sponsored or established by Loomis Sayles or its affiliates or in which Loomis Sayles, its affiliates or their personnel may have an ownership or management interest. Loomis Sayles also provides investment advisory services in connection with certain Managed Account Programs. As described above under “Advisory Services,” Loomis Sayles offers discretionary investment advice to separately managed account or “wrap fee” programs and platforms sponsored by investment advisers, broker- dealers and other financial service firms, either directly to the Program Sponsor or the Participants depending on the program. Loomis Sayles also provides discretionary and non-discretionary investment advice to Program Sponsors and/or overlay managers through model investment portfolios.
Account Requirements
For separate accounts, Loomis Sayles generally requires a minimum dollar value of assets for establishing or maintaining a client’s account and/or charges a specified minimum annual fee (see the “Standard Fee Schedule” above). The account minimums or minimum annual fees may, however, be subject to waiver or negotiation. Funds, other investment pools and Managed Account Program accounts have their own investment requirements. Loomis Sayles will not accept an account from any investor whose investment objectives or guidelines are inconsistent with Loomis Sayles’ philosophy and investment approach. please register to get more info

Methods of Analysis, Sources of Information and Investment Strategies
The overall investment philosophy of Loomis Sayles is based on the premise that our disciplined, research-based investment strategies can identify market inefficiencies that can lead to consistent outperformance of benchmarks.
Fixed Income - General
We believe that bond markets are not efficient, often mispricing risk and overreacting to news, corporate and market events, and technical supply and demand factors. These inefficiencies may provide investors the opportunity to generate risk-adjusted performance in excess of traditional market benchmarks. We believe that the combination of fundamental and quantitative research offers the best approach to identifying attractive investment opportunities. Successful strategy development, portfolio construction and investment implementation are best achieved through our specialized and disciplined team collaboration. In addition, a consistent application of our value- driven investment approach enables us to capitalize on the unique opportunities of any set of market conditions. We believe intensive bottom-up investment analysis combined with a clear macroeconomic and market perspective is the best way to deliver excellent performance. Our portfolios are constructed by small, focused portfolio management teams supported by extensive economic, market, sector, issuer, security, trading and quantitative analysis. Macro Outlook. An analysis of the global macro economic outlook is an important complement to the bottom-up focus of our sector teams. We develop our top-down perspective through the research efforts of our macro strategies group. The team provides research and views on global economies and markets, with forecasts for policy and market rates. Members of the macro strategies team meet frequently with sector and product teams to share insights and develop market outlooks. The views come together at the Global Asset Allocation Team discussion, where sector team forecasts and relative value across major market sectors are reviewed. Sector Teams. Deep perspectives on sector opportunities and risks are developed by sector teams through the collaborative effort of research analysts, traders, strategists and portfolio managers. Research analysts share views on countries, sectors, industries, issuers and issues. The traders add market intelligence on pricing, positioning and liquidity, providing product teams (described below) with a broad view of potential opportunities. Each team develops top-down and bottom-up valuation frameworks and market analysis with the goal of identifying where the investment value might lie in the sector. The teams provide market outlooks, including return forecasts that are used to determine relative value across sectors at the Global Asset Allocation Team meetings. Product Teams. Product teams are small groups of portfolio managers and strategists focused on strategy development and implementation for similar portfolios. Key investment themes are developed reflective of the macro perspective and sector teams’ assessments. Quantitative research and risk analysis tools assist portfolio managers in constructing portfolios. The portfolio construction process seeks to maximize risk-aware performance for our clients. Macro Strategies. The macro strategies group provides a research and data-driven assessment of global macro investment conditions and offers strategic insight into related opportunities and risks. The team’s top down output and its integration into the investment process complements the bottom-up work done by the firm’s other research groups. Analysts in the macro strategies group are responsible for economic, commodity and sovereign analysis, along with market strategy. Macro views are published to the firm detailing the team’s views on economic, investment or geopolitical events along with suggested strategies. Sovereign Research. Sovereign research for the firm is conducted as part of the macro strategies group. The analysts follow and assign credit ratings to over 100 countries which are published internally and updated as needed. Analysts follow the “VCT” process developed within macro strategies, which stands for “valuation, cyclical and technicals.” For each country under coverage, analysts seek to determine the macro variables that are driving relative value. They do this through a combination of quantitative and qualitative metrics. Classic cyclical analysis of the macroeconomic environment helps determine why there might be a deviation from fair value and the possible catalysts for mean reversion. Technicals are analyzed to understand what factors, including positioning or investor expectations, might be impacting markets. The final output is an expected return and assessment of the associated risks. Reports published to the firm include views on the drivers of yield curve, duration, spread and currency movements. The analysts meet frequently with product and sector teams to discuss how their research views translate into investment ideas. Our sovereign analysts focus on specific developed and emerging markets within a particular geographic location (our chief economist covers the US). The analysts travel to visit central banks and other local institutions to uncover attractive sovereign debt ideas. Credit Research. Our dedicated credit research group offers broad and in-depth coverage across the corporate and municipal debt universe. This includes approximately 2,250 corporate credits (both investment grade and speculative grade, including bank loans) globally, including both developed and emerging markets. Our credit analysts typically cover more than one industry, and the debt-issuing companies within them. On average, each senior credit analyst generally follows approximately 60 credits. The analysts’ primary function is to identify attractive – and unattractive – debt investment opportunities within their respective coverage universe. The analysts do this by performing rigorous fundamental research to develop an assessment of the creditworthiness of the issuers under their coverage. Incorporating their credit opinions as well as the relative valuation of those issuers’ debt securities, the credit analysts provide recommendations to the portfolio managers to help them make investment decisions. Analysts extract information from issuer filings and releases, industry trade periodicals, financial news publications, specialist data services, and economic and political consulting groups. They also communicate with the major credit rating agencies to understand the reasoning behind their ratings and have considerable access to Wall Street research publications and sell-side analysts. These resources serve primarily as complementary sources of market information to the research group’s own efforts. External information becomes part of the knowledge base of credit research analysts, and is incorporated into their views of company and industry fundamentals, and market valuation, which in turn influence the security selections made by the product teams. Analysts build financial models for issuers under their coverage. The highly developed models attempt to create a clear picture of debt protection measures, interest coverage, financial leverage, and level of discretionary cash from which a qualitative credit assessment can be made. They allow the analyst to assess the outlook for the company using differentiated factors while also providing a basis for relative comparisons. The construction of the model can differ based upon the nature of the company and the industry. Analysts extract information from numerous services, including Bloomberg, Covenant Review, RatingsDirect, CreditSights, and Capital IQ. During the assessment process, credit analysts apply models tailored to each bond market sector and to individual industries and issuers. They primarily focus on a company’s projected cash flow, underlying asset values, and credit dynamics, taking into account any anticipated industry developments. In seeking to identify the best investment opportunities, analysts also examine factors such as: capital structure, market position, future earnings and cash flow forecast, debt protection measures such as covenants, management strength and strategy, corporate governance, risks including contingent liabilities, environmental, event and political risk, industry drivers, developments and outlook, political climate and economic forecasts. Analysts develop actionable perspectives on (1) their respective companies’ creditworthiness and direction—where the issuer’s credit quality is headed and how long it will take to get there, and (2) the valuation of their issuers’ bonds in the market. We maintain an internal credit rating system, one of the oldest in the industry, to document our current opinion and long-term credit outlook for a company, and relative value-based research recommendation.
Municipal Credit Research. Similar to the corporate research group, our dedicated municipal
credit research team provides in-depth coverage across the broad spectrum of the municipal debt universe. Issuers in the municipal sector include state, county and city governments; local school districts; public and private colleges and universities; hospitals and healthcare providers; water and sewer systems; toll roads; airports and ports; housing agencies; and public power utilities. We cover approximately 2,200 individual issuers across all the various sectors and states. While our analysts will typically cover more than one sector, each of our analysts has an emphasis in a particular sector to ensure a rigorous, fundamental analytical approach is applied across our entire municipal coverage universe. On average, each senior credit analyst generally follows approximately 275 credits. The analysts’ primary function is to identify attractive – and unattractive – debt investment opportunities within their respective coverage universe. The analysts do this by performing in-depth research to develop an assessment of the current and future creditworthiness of the issuers under their coverage. Incorporating their credit opinions as well as the relative valuation of those issuers’ debt securities, the credit analysts provide recommendations to the portfolio managers to help them make investment decisions. During the credit review process, analysts apply both a top down and bottom up approach to each issuer. Our top down analysis starts with the impact of broad macro-economic, demographic and political trends on a borrower as well as the credit profile sensitivity to changes in the business cycle. Many issuers in the municipal market provide essential social and governmental services, for which the demands, are immune or counter-cyclical to changes in the business cycle. With the growing impacts of climate change on society, an assessment of environmental costs over the near and long term is becoming an increasingly important credit component. Our bottom up analysis is specific to an individual issuer and includes, among other things, an assessment of: a borrower’s revenue diversification and reserve levels; debt burden; infrastructure and capital needs; contingent liabilities; bondholder security provisions; market position; and public support/engagement. Our analytical approach allows us to find undervalued bonds in out-of-favor sectors and avoid overvalued bonds in popular sectors. Varying to some degree by a client’s stated investment objectives, capital preservation is a core value of the overall investment approach. Analysts develop actionable perspectives on (1) the absolute and relative credit quality of an issuer; (2) the directional credit quality of an issuer, and (3) the sensitivity of an issuer to changes in the business cycle. We maintain an internal credit rating system, one of the longest-tenured in the industry, to document our current opinion and long-term credit outlook for an issuer, and relative value-based research recommendation. Securitized Assets Research. Our Mortgage and Structured Finance group is responsible for research and strategy recommendations to the firm across all sectors of the securitized market: agency MBS, asset-backed securities, commercial mortgage-backed securities, and non-agency RMBS. The team uses a fundamental top-down approach in formulating broad sector and capital structure allocation/“tranche” recommendations. The security selection process uses a bottom-up approach aimed at assigning an independent credit rating, which is used to test the suitability for client portfolios. Scenario analysis is used to understand the risk/return profile of the security. Each senior analyst takes the lead in developing a customized research platform specific to his/her sector of the market. A mix of third party and proprietary models are developed to generate expectations of future performance trends and the risk of the collateral backing the bonds. Key third party model providers include CPR-CDR Technologies and Citigroup’s Yield Book. Analysts use both pool level and loan level data, where available. Key data vendors include CoreLogic Loan Performance, Trepp, and Lewtan ABSNet. Qualitative factors, such as the originator of the collateral, the servicer, and other key corporate linkages, are also analyzed. The collateral performance expectations are compared to the structure of the bonds using industry standard cash flow models, such as Intex, or proprietary models when necessary: the bond’s payment waterfall is analyzed and bonds are stress-tested across a broad range of scenarios to determine the internal credit rating and the return profile. The research effort in the US Agency MBS sector aims to provide strategic and relative value insight with respect to sector and inter sector allocation within the Agency mortgage space, spread positioning of mortgages vis-à-vis Treasuries, security selection, and CMO (collateralized mortgage obligations) arbitrage. Security selection is driven by maximizing option adjusted spreads (OAS) and hedge adjusted carry (HAC) subject to duration and liquidity constraints. We have developed a modified version of a standard industry model that corrects for historical model biases and also allows for a fast and flexible expression of future views of mortgage behavior. We compare and triangulate relative value from our modified model with other Wall Street models, such as Barclay’s POINT and JP Morgan’s Bond Studio. Analysts use monthly/quarterly pool or loan level performance data to monitor the performance of their respective sector, both at the macro level and at the individual security level. The ongoing surveillance process is key in assessing the adequacy of the assumptions embedded in the models used. The output of the surveillance process is also used in assessing the fundamental views of each sector. The analysts team up with our traders and several portfolio managers in securitized assets sector team meetings. Between the research group and the sector team, our portfolio managers receive frequent updates on opportunities in the sector and updates on current positions. Reports are distributed as part of our internal publishing system and views are shared directly with product teams by sector representatives integrated into the products’ investment processes. Quantitative Research Risk Analysis (QRRA). The foundation of the Loomis Sayles investment process is based upon proprietary fundamental research including macro, sovereign, credit, and securitized. The QRRA team is designed to complement this foundation. We believe that the combination of fundamental and quantitative research provides a unique competitive advantage to our investment process and allows us to better leverage the insights across the organization into a robust investment platform. The combination allows the strengths of one approach to complement the limitations of another and vice versa. One of the most important differentiating elements of the QRRA team is the level of integration into the investment process. The focus of the QRRA team is directly on the investment process and its research is designed to incorporate the dynamics of the markets and the intuition of our investment process. Although the research has a strong foundation in quantitative theory, it is designed to be applied, practical, and usable. The QRRA team provides research and tools across four dimensions of our investment process, including: risk awareness, relative value, portfolio construction and product & process.
Equity - General
In our view, equity markets are inefficient. We believe that a consistently applied investment process that incorporates rigorous fundamental and quantitative research can successfully exploit the inefficiencies. We believe intensive bottom-up investment analysis augmented by experience and market perspective is the best way to deliver superior risk adjusted performance. Our portfolios are constructed by small teams, each with a distinct investment philosophy on how best to capitalize on market inefficiencies. Our teams are supported by extensive economic, market, sector and company research, as well as customized quantitative research and risk analysis. Macro and Market Insights. The equity group draws upon the insights of the firm’s macro strategies group and our senior equity strategist. Weekly meetings with the strategist focus on recent developments, new insights and market expectations. Working with our quantitative research group, the strategist also provides equity market research and historical perspective for the market. Research. Equity research analysts are assigned to specific product teams to enable them to focus on each team’s respective investment philosophies and processes and incorporate different valuation perspectives, time horizons and opportunity sets. Analysts are generally charged with developing sector, industry and company expertise, and using this knowledge to identify the stocks within their coverage that they believe offer the best total return opportunity looking out over a specified time horizon. The analysts may evaluate a company’s competitive position, its growth and profitability potential and the strength of its management team and uses this information to build models forecasting future earnings and cash flow. These financial models serve as inputs to their valuation work. Companies are valued using numerous frameworks, with discounted cash flow (DCF) the common language across all industries and sectors. The DCF valuation analysis is augmented with other valuation metrics that are most appropriate for the industry or sector. These metrics include: price/earnings ratios, price/book ratios, price/normalized earnings ratio, free cash flow yield, price/sales ratio, and price/break up value. Super Sector Teams. These team are comprised of the senior equity strategist and the analysts, traders and portfolio managers who specialize in the key sectors of the market. The teams meet regularly to discuss and evaluate the sector from a strategic point of view with a goal of assessing its attractiveness from a fundamental and valuation perspective. Quantitative Research and Risk Analysis (QRRA). QRRA provides quantitative research to and for the investment teams, research analysts and the senior equity strategists. In addition, risk awareness reports, customized to each specific investment approach are provided to the investment teams.
Institutional Strategies
Set forth below is a basic description of each institutional investment strategy. All limits reflect the basic guidelines for the strategy, but the actual strategy employed for any particular client account will depend on the investment guidelines and limitations specific to that account, which will vary. All limitations, numbers and ranges are approximate and subject to client guidelines. Clients should consult their specific guidelines for a complete description of permissible investments and investment restrictions. Various fixed income strategies are able to be run in the buy-and-maintain style. Buy-and-maintain strategies are fundamentally driven, low turnover approaches that seek to provide a high level of diversification and preservation of capital, while minimizing credit events in portfolios. To achieve client objectives we combine Loomis Sayles’ bottom-up fundamental credit research with specific parameters such as cash flow needs, yield and/or return targets within our rigorous portfolio construction process.
There is no guarantee that any strategy will achieve any objective or obtain any positive or
excess return.
Fixed Income
Full Discretion Strategies:
Our fixed income philosophy is based on our experience and belief that the bond markets do not properly assess credit risk and tend to overreact to corporate events, and that through intensive research we can identify mispriced securities to generate a superior excess return. We also take advantage of the basic structure of the bond market, in particular, the persistent positive slope of the corporate yield spread curve. Similar opportunities of mispriced credit risk and market structure often arise in the government, mortgage and other sectors as well, as liquidity enters and leaves the markets. Our track record in all of these sectors has shown that such inefficiencies can be exploited through rigorous investment research and insightful trading strategies. The application of quantitative, proprietary tools and models provides portfolio managers with risk oversight capability and portfolio scenario analysis. Our full discretion portfolio managers attempt to construct portfolios with securities of issuers that we believe are fundamentally sound, have growth potential, exhibit a yield advantage and are mispriced in the market place. The managers apply the output from our research and sector teams in order to prioritize “buy” candidates. The team examines current valuations, risk levels and long- term security outlook generally over the prospective three to five year period. We generally limit our investment in a single issuer to approximately 0-3% of the portfolio (at the time of purchase). We normally do not buy issues smaller than $150 million in gross size – as they limit our ability to build meaningful positions. Exceptions are made when we identify a significant relative value opportunity. As to credit quality, we will invest opportunistically in lower-rated bonds where we see value and upside potential. Securities are selected from our credit research universe, which extends to US and foreign government bonds, mortgage and asset-backed bonds, corporate investment grade and high-yield issues, municipal, convertible and emerging market debt. We frequently employ issues other than straight dollar-pay domestically issued debt (including emerging market issues and foreign currency denominated debt) with a goal of enhancing return and increasing portfolio diversification. We make decisions based on the overall risk and relative value of a particular security, tailored to specific client guidelines. The product team constructs portfolios by selecting from a group of securities identified as potential opportunities by the sector teams. Portfolio managers typically do not purchase securities unless they have undergone the research and analytical processes of the sector teams and research analysts. The factors (in order of importance) that are crucial in building full discretion portfolios include:  Security selection  Industry selection  Sector allocation  Country and currency selection  Duration and maturity structure  Yield curve positioning

Portfolio managers also apply our global risk model, which uses historical correlation data and sector team forecasts and allows the team to test various investment scenarios on a real time basis. The model addresses three sources of portfolio risk: currency, yield curve and spread change. We are primarily opportunistic in our approach. We make decisions based on the overall risk and relative value of a particular security, as well as on specific client guidelines. Our portfolios can move in and out of sectors and individual securities on an opportunistic basis. Issue selection across the credit spectrum, and the opportunistic use of non-US dollar securities, convertibles, securitized and emerging market debt have historically contributed to excess return. However, in most cases a significant yield advantage is an important criterion for an attractive investment.
Core Plus Full Discretion
The strategy seeks to exploit the collaborative efforts of our macro strategies group and sector teams in conjunction with the fundamental credit analysis from our credit research department. Our Macro Strategies group and our yield curve and global asset allocation sector teams provide global economic and interest rate frameworks for identifying sectors that we think are attractive. Our research analysts, along with our sector teams, seek to identify specific investment opportunities primarily within the global fixed income market. Asset class and sector allocations reflect the macroeconomic view, while security selection based on fundamental and relative value analysis within sectors provides our primary source of excess return. Portfolio guidelines are flexible allowing a broad range of sectors for investment. Full latitude is permitted with investment grade debt, which may encompass 100% of the portfolio. The primary area of restraint is the below BBB- allocation which is limited to 15% of the portfolio. There is substantial flexibility to include allocations to non- benchmark sectors, including non-dollar and emerging markets debt. Portfolio managers incorporate the long-term macroeconomic view along with a stringent bottom- up investment evaluation process that drives portfolio ideas and resulting sector allocations. Experienced portfolio managers and other fixed income professionals collaborate to identify high potential total return investment ideas in the fixed income markets. The product team then establishes strategy and constructs client portfolios consistent with these ideas, the benchmark characteristics and the guideline limits associated with the product. The resulting portfolios are well diversified, and positioned to generate strong long-term risk adjusted investment performance. As to credit quality, while the majority of issues purchased for the strategy are highly rated, we will invest opportunistically in lower-rated bonds where we see value and upside potential.
Multisector Full Discretion
The strategy seeks to exploit the collaborative efforts of our macro strategies group and sector teams in conjunction with the fundamental credit analysis from our credit research department. Our Macro Strategies group and our yield curve and global asset allocation sector teams provide global economic and interest rate frameworks for identifying sectors that we think are attractive. Our credit research department, along with our sector teams, seeks to identify specific investment opportunities primarily within the global fixed income market. Asset class and sector allocations reflect the macroeconomic view, while security selection based on fundamental and relative value analysis within sectors provides our primary source of excess return. The benchmark does not play a significant role in constructing the portfolios. Guidelines are very flexible providing the opportunity to pursue investment ideas in a wide range of global fixed income sectors. Individual client guidelines permit non-investment grade assets to reach a maximum of 20-50% of the portfolio. Investment flexibility authorizes significant non-dollar, emerging markets and convertible debt investments. Opportunistic investments in these non-benchmark sectors are incorporated to manage portfolio credit quality and for total return contribution. Portfolio managers incorporate the long-term macroeconomic view along with a stringent bottom- up investment evaluation process that drives portfolio ideas and resulting sector allocations. Yield curve and duration management are additional tools utilized by the portfolio management team. Experienced research analysts, traders, portfolio managers and other fixed income professionals collaborate to identify high potential total return investment ideas in the global fixed income markets. The product team then establishes strategy and constructs client portfolios consistent with these ideas, the benchmark characteristics and the guideline limits associated with the product. Resulting portfolios are constructed to fully leverage the organizational insights, accepting specific risk where potential return opportunities are justified. We do not have stated limits on the current credit quality ratings assigned to the securities purchased for the strategy’s portfolios. A typical portfolio would aim to be widely diversified amongst the following market sectors: high yield corporates, investment grade corporates, emerging market corporates, non-US dollar-denominated sovereign and supranational debt, securitized and convertible securities. This is an example only and subject to change due to account objectives, client guidelines, and market conditions, among other factors.
High Yield Conservative/High Yield Full Discretion
Our high yield investment philosophy is based on the theory that the market for high yield assets is inefficient and can be exploited through rigorous fundamental and quantitative research. Portfolio construction is the result of four primary factors: 1. Application of fundamental research and relative value analysis in order to identify undervalued sectors and securities 2. Use of non-benchmark opportunity sets to help manage risk and enhance total return potential 3. Application of quantitative, proprietary tools and models that provide portfolio managers with continuous risk oversight capabilities and portfolio scenario analysis 4. A long term investing philosophy, marked by low portfolio turnover, allowing for fundamental improvement in a particular credit’s metrics.

Our high yield portfolio managers attempt to construct portfolios with securities of companies that we believe are fundamentally sound, have growth potential, exhibit a yield advantage and are mispriced in the market place. The portfolio managers apply the output from our research and sector teams in order to prioritize “buy” candidates. The team examines current valuations, risk levels and long-term security outlook over the prospective three to five year period. Investing is limited to viable companies, as we do not manage distressed portfolios; we generally do not buy defaulted securities. The high yield product team constructs portfolios by selecting credits from a group of securities identified as potential opportunities by the various sector teams. Portfolio managers cannot purchase securities not formally covered and rated by our research department. In assembling high yield portfolios, the investment team monitors credit risk, duration, industry, issuer and quality concentration, currency risk and concentration in bond market sectors, among other factors. We have developed quantitative tools to help portfolio managers assess and monitor risk. RiskInsite is a real time portfolio analysis tool with which portfolio managers can view sector and security weights, duration, coupon, maturity, quality, etc. on a standalone basis or relative to a particular benchmark or group of accounts. Our global risk model uses historical correlation data and sector team forecasts, allowing to portfolio managers to test various investment scenarios on a real time basis. The model addresses three sources of portfolio risk: currency, yield curve and spread change.
US High Yield
The strategy seeks to outperform the Barclays High Yield 2% Capped Index through a diversified and actively managed exposure to the US High Yield credit market. The strategy is benchmark aware and seeks to provide a diversified, actively managed exposure to the US High Yield credit market which emphasizes a disciplined portfolio construction and risk assessment process, leveraging the insights of Loomis Sayles’ credit research and high yield sector team. A rigorous and disciplined portfolio construction process is then applied which seeks to ensure appropriate risk diversification and minimize unintended risks. Developed by the team, this process seeks to effectively manage portfolio risk, both market and specific, while seeking to capture the full return potential of the sector and our investment insights. The portfolio management team participates in each step of the process and ensures the final portfolio reflects our best views and macro-level risk considerations. The team also seeks to add value through limited exposure of off benchmark positions. The strategy may invest up to 100% in fixed income and related investments of any credit quality, including lower-rated fixed income investments, and of any maturity.
Global High Yield
The strategy seeks to outperform the Bloomberg Barclays Global Yield Index through a diversified and actively managed exposure to the Global High Yield credit market. The strategy is benchmark aware and seeks to provide a diversified, actively managed exposure to the Global High Yield credit market which emphasizes a disciplined portfolio construction and risk assessment process. The strategy leverages the insights of Loomis Sayles’ credit research and high yield sector teams in seeking to outperform through issue and sector selection. A rigorous and disciplined portfolio construction process is then applied which seeks to ensure appropriate risk diversification and minimize unintended risks. Developed by the team, this process seeks to effectively manage portfolio risk, both market and specific, while seeking to capture the full return potential of the sector and our investment insights. The portfolio management team participates in each step of the process and ensures the final portfolio reflects our best views and macro-level risk considerations. The team also seeks to add value through limited exposure of off benchmark positions. The strategy may invest up to 100% of its market value in fixed income and related investments of any credit quality, including lower-rated fixed income investments, and of any maturity.
Global High Yield Full Discretion
The strategy seeks to achieve high total return through individual security selection using fundamental credit analysis from our Fixed Income Research Department, as well as input from various sector and macro teams. The strategy employs an opportunistic style, focusing on out-of- favor sectors of the fixed income markets to generate ideas. The strategy emphasizes a long term view of market developments, with the intention being to hold securities through a cycle, as they improve fundamentally. The strategy does not focus on the benchmark as a starting point for portfolio construction. Instead, we view the entire spectrum of fixed income markets as a global opportunity set from which to choose the most attractive total return opportunities, regardless of the sector. Our research department, in conjunction with sector teams, seeks to identify specific investment opportunities primarily within the global fixed income market. Our macro sector teams provide global economic and interest rate frameworks for identifying sectors that may offer attractive investment opportunities. Asset class and sector allocations reflect the macroeconomic view, while security selection based on fundamental and relative value analysis within sectors provides our primary source of excess return. Portfolio guidelines are very flexible and allow a broad range of sectors for investment, including allocations to non-benchmark sectors such as non-dollar and emerging markets debt as well as structured finance and convertible bonds. Opportunistic investments in these non-benchmark sectors are incorporated to manage portfolio credit quality and for their total return potential. Long-term macroeconomic themes and strategies along with a stringent bottom-up investment evaluation process drive portfolio ideas and resulting sector allocations. The resulting portfolios are well diversified and positioned to generate strong long-term risk-adjusted investment performance. “”Global Fixed Income Strategies:
Global Bond/International Bond
Our global bond portfolio construction process is the result of research-driven, bottom-up selection of specific issuers combined with top-down macro-economic analysis. Portfolios are team-managed and investment decisions are research-based. For global fixed income portfolios we seek to construct highly diversified portfolios that include a broad range of fixed income securities we consider to be undervalued and preferably trading at a discount to their par value. We follow a broad global universe of securities including government and quasi-government and agency securities, corporate credits, and asset-backed securities including mortgages. Where guidelines and mandates permit, we make use of emerging market debt, high yield, and out-of-benchmark ideas. Where permitted we will use over-the-counter derivatives as well as exchange-traded futures contracts. Our sovereign research universe currently comprises over 90 countries, and global portfolios are typically invested in 25-35 countries at any given time. For active currency mandates, we invest in 10-20 currencies. We are value investors as opposed to momentum investors. Our research and decision processes are designed to identify undervalued securities across all of the relevant risk factor dimensions, including country, currency, curve, sector, and specific credit. We manage active-currency and currency- hedged portfolios in various base currencies. For hedged global portfolios, we believe that the chief drivers of excess return are to be found in issue, sector, industry, and country selection. Diversification is our primary risk control. Secondary risk control is achieved via formal tracking error comparisons of portfolios to the relevant benchmark.
Global Debt Unconstrained
Our Global Debt Unconstrained portfolio construction process is the result of research-driven, bottom-up selection of specific issuers combined with top-down macro-economic analysis. Portfolios are team-managed and investment decisions are research-based. For Global Debt Unconstrained portfolios, we seek to construct highly diversified portfolios that are benchmark agnostic and include a broad range of fixed income securities we consider to be undervalued and preferably trading at a discount to their par value. We follow a broad global universe of securities including government and quasi-government and agency securities, corporate credits, and asset- backed securities including mortgages. We make extensive use of emerging market debt, high yield, and out of benchmark ideas and positions tend to be more concentrated than in Global Bond portfolios. Where permitted we will use over-the-counter derivatives as well as exchange-traded futures contracts. Our sovereign research universe currently comprises over 90 countries, and global portfolios are typically invested in 25-30 countries at any given time. For active currency mandates, we invest in 20-30 currencies. We are value investors as opposed to momentum investors. Our research and decision processes are designed to identify undervalued securities across all of the relevant risk factor dimensions, including specific credit, sector, country, currency, and curve. Our goal is Sharpe Ratio efficiency; we seek to outperform benchmarks in both absolute and risk-adjusted terms.
Global Credit
The Global Credit strategy’s philosophy emphasizes bottom-up credit research-based issue selection to maximize fixed income returns. Portfolios are team-managed and investment decisions are research-based. For global credit portfolios we seek to construct highly diversified portfolios that will include a broad menu of undervalued, preferably discount fixed income securities around the world. We follow a broad global universe of securities including corporate credits, asset-backed securities including mortgages, as well as government, quasi-government and agency securities. Where guidelines and mandates permit, we make use of emerging market, high yield, inflation linked, and out-of-benchmark ideas. Our sovereign research universe currently comprises over 80 countries, and portfolios are typically invested in 25 to 30 countries. The portfolio construction process combines research driven, bottom-up selection of specific issuers combined with top-down, macro economic analysis. The team seeks a high Sharpe ratio; striving to produce high risk adjusted absolute returns as well as excess returns relative to the Barclays Capital Global Aggregate-Credit Index. Of the key potential drivers of any excess return – currency, curve, and credit – credit spreads may exhibit the greatest inefficiencies in the market over time and through issuer selection, offer the greatest opportunity for active bottom-up management to add value. All positions are monitored for risk efficiency and broad portfolio diversification is maintained to limit specific issue, industry, and sector risks.
Global Corporate
The strategy’s portfolio construction process is the result of research-driven, bottom-up selection of specific issuers combined with top-down macro-economic analysis. Portfolios are team-managed and investment decisions are research-based. For global corporate fixed income portfolios we seek to construct highly diversified portfolios that will include a broad menu of undervalued, preferably discount fixed income corporate securities around the world. The core holdings will focus on a broad global universe of corporate credits. We are value investors as opposed to momentum investors. Our research and decision processes are designed to identify undervalued securities across all of the relevant risk factor dimensions, including specific credit, sector, country, currency, and curve. We manage active-currency and currency- hedged portfolios in various base currencies. The primary drivers of excess return will be security selection and sector allocation with country, currency and yield curve positioning secondary sources of excess performance. For hedged global corporate portfolios, the chief drivers of excess return will be security selection and sector allocation while country and yield curve will be secondary sources of alpha. Diversification is a primary risk control. Secondary risk control is achieved via formal tracking error comparisons of portfolios to the relevant benchmark.
Asia Bond Plus
The Loomis Sayles Asia Bond Plus strategy invests in emerging Asian corporate and government bonds. It also includes investments from emerging European, Middle Eastern and African countries to further capitalize on the Asia growth story and provide diversification to the highly concentrated Asia High Yield universe. The strategy invests primarily in US dollar-denominated debt securities of issuers in Asian countries excluding Japan. Debt securities also include floating rate securities, commercial paper, Regulation S securities and Rule 144A securities. The strategy may invest any portion of its total assets in below investment grade securities and may invest up to one-third of its total assets in cash, money market instruments, or securities of issuers in other countries including in Europe, Middle East, and Africa. The strategy may invest up to 20% of its total assets in securities denominated in currencies other than US dollar. The strategy may invest no more than 10% of its total assets in equities, or other equity-type securities and may invest up to 10% of its total assets in bank loans that qualify as money market instruments and up to 10% of its total assets in undertakings for collective investment.
Relative Return Strategies:
Core Fixed Income
The strategy seeks to exploit the US investment grade fixed income insights generated by the Loomis Sayles fixed income organization in portfolios with benchmark-aware risk and return objectives. Investment flexibility is constrained to the investment grade portion of the US fixed income markets. Portfolio construction is driven by a combination of bottom-up security selection and top-down macroeconomics and market analysis. Portfolio duration is managed in a narrow range relative to the portfolio benchmark. Individual investment ideas are evaluated on the basis of their investment return potential and contribution to portfolio risk. Experienced portfolio managers and other fixed income professionals collaborate to identify high potential relative return investment ideas in the US fixed income markets. The product team and portfolio managers then establish strategy and construct client portfolios consistent with these ideas, the benchmark characteristics and the guideline limits associated with the product. The resulting portfolios are well diversified, and in our view, positioned to meet our objective of generating moderate long-term risk adjusted investment outperformance.
Short Duration Fixed Income
The strategy seeks to outperform the Barclays US Government/Credit 1-3 Year index over a 3 to 5 year market cycle. It is a benchmark-aware strategy that seeks to be within 0.5 years of the benchmark duration. Portfolio construction is driven by a combination of bottom-up security selection and top-down macroeconomic analysis. Potential sources of alpha include sector allocation, security selection, duration management and yield curve positioning. Risk management is an integral part of the investment process and includes monitoring of relative and absolute risk and issuer specific limits based on credit quality. Non-government position sizes are typically small (between 0.5 -1.5%) but may be up to 3%.
Core Plus Fixed Income
The Core Plus portfolio managers develop a macroeconomic view that guides their broad sector allocations, duration and yield curve positioning and the portfolio’s risk profile relative to the benchmark. In our view, a top down, benchmark-aware, core plus bond strategy that actively manages sector allocations within a conservative risk framework can add value over a market cycle. “Plus” sector allocations can include high yield, non-US dollar and emerging market exposures. The foundation of the investment process is the strategy’s managers’ continuous assessment of the investment cycle and the drivers of the global capital markets. This encompasses weighing investor risk tolerance, market liquidity and security price transparency within sectors. Based on this examination, the managers determine a balance between the goals of return maximization and capital preservation and position the portfolio relative to the benchmark accordingly. The portfolio managers base their security selection on bottom-up analysis that incorporates a focus on valuation, volatility and market liquidity. The portfolio management team tactically seeks to exploit investment opportunities in non- benchmark sectors and securities. Market liquidity is a major factor in assessing these types of investments.
Intermediate Duration Fixed Income
The strategy seeks to exploit the US investment grade fixed income insights generated by the Loomis Sayles fixed income organization in portfolios with intermediate benchmark aware risk and return objectives. Investment flexibility is focused on the investment grade portion of the US fixed income markets, however, some portfolios do allow allocations to below investment grade assets. Securities are typically limited to a maximum maturity of 10 years. Portfolio construction is driven by a combination of bottom-up security selection and top-down macroeconomic analysis. Portfolio duration is managed in a narrow range relative to the portfolio benchmark. Individual investment ideas are evaluated on the basis of their investment return potential and contribution to portfolio risk. Experienced portfolio managers and other fixed income professionals collaborate to identify what they believe are high potential relative return investment ideas in the US fixed income markets. The product team and portfolio managers then establish strategy and construct client portfolios consistent with these ideas, the benchmark characteristics and the guideline limits associated with the product. The resulting portfolios are well diversified, and in our view, positioned to meet our objective of generating moderate long-term risk adjusted investment outperformance.
Long Duration Government/Credit Fixed Income
The strategy seeks to exploit the complete range of insights generated by the Loomis Sayles fixed income organization in portfolios with benchmark-aware risk and return objectives. Investment flexibility is primarily focused on the investment grade portion of the US fixed income markets, however, some portfolios do allow allocations to below investment grade assets. Portfolio construction is driven by a combination of bottom-up security selection and top-down macroeconomic analysis. Portfolio duration is managed in a narrow range relative to the portfolio benchmark. Individual investment ideas are evaluated on the basis of their investment return potential and contribution to portfolio risk. Experienced portfolio managers and other fixed income professionals collaborate to identify high potential relative return investment ideas in the US fixed income markets. The product team then establishes strategy and constructs client portfolios consistent with these ideas, the benchmark characteristics and the guideline limits associated with the product. Portfolios are intended to be well diversified, and positioned in those securities and strategies expected to be effective contributors to moderate long-term risk adjusted relative investment outperformance.
Long Duration Corporate Bond
The strategy seeks to outperform the Barclays Long Corporate Index by providing diversified, managed exposure to the US investment grade long corporate credit market. The strategy seeks to exploit the complete range of insights generated by the Loomis Sayles fixed income organization in portfolios with benchmark-aware risk and return objectives. Individual investment ideas are evaluated on the basis of their investment return potential and contribution to portfolio risk. Security selection within the corporate sector and industry allocation have been the two key contributors to historic investment results. Portfolio construction is driven primarily through bottom-up security selection and secondarily through top-down macroeconomic analysis that supports allocations to non-benchmark sectors and duration/yield curve decisions. Experienced portfolio managers and other fixed income professionals collaborate to identify high potential relative return investment ideas in the US fixed income markets. The product team and portfolio managers then establish investment strategy and construct client portfolios consistent with these ideas, the benchmark characteristics and the guideline limits associated with the product. Portfolios are intended to be well diversified, and positioned in those securities and strategies expected to be effective contributors to strong long-term risk adjusted relative investment performance.
Long Duration Credit Bond
The strategy seeks to outperform the Barclays Long Credit Index by providing diversified, managed exposure to the US investment grade long credit market. The strategy seeks to exploit the complete range of insights generated by the Loomis Sayles fixed income organization in portfolios with benchmark-aware risk and return objectives. Individual investment ideas are evaluated on the basis of their investment return potential and contribution to portfolio risk. Security selection within the corporate sector and industry allocation, have been the two key contributors to historical investment results. Portfolio construction is driven primarily through bottom-up security selection and secondarily through top-down macroeconomic analysis that supports allocations to non-benchmark sectors and duration/yield curve decisions. Experienced portfolio managers and other fixed income professionals collaborate to identify high potential relative return investment ideas in the US fixed income markets. The product team and portfolio managers then establish investment strategy and construct client portfolios consistent with these ideas, the benchmark characteristics and the guideline limits associated with the product. Portfolios are intended to be well diversified, and positioned in those securities and strategies expected to be effective contributors to strong long- term risk adjusted relative investment performance.
Disciplined Alpha Strategies:
Core Disciplined Alpha
Corporate Disciplined Alpha
Global Disciplined Alpha
Intermediate Core Disciplined Alpha
Long Corporate Disciplined Alpha
Long Credit Disciplined Alpha
Long Government/Corporate Disciplined Alpha
The objective of the Disciplined Alpha strategies is to outperform the portfolio’s benchmark consistently over time while maintaining the portfolio’s risk close to the benchmark. The Disciplined Alpha investment philosophy is that artfully marrying proprietary fundamental and quantitative analysis with market intelligence can generate relative value insights that, when adjusted for risk, help identify compelling investment opportunities across the investment grade fixed income universe. Security selection is expected to be the primary source of excess returns and analysis and measurement of risk are important components of the investment strategy. The Disciplined Alpha risk management tools are embedded throughout the security selection process. Decision-Making Structure The head of Disciplined Alpha is supported by a team of highly experienced investment professionals. The head of Disciplined Alpha has ultimate authority and accountability for portfolio construction and performance. The decision-making structure was designed to support security selection, which is expected to be the primary driver of excess returns. In regular weekly discussions, the head of Disciplined Alpha, the sector specialists and traders discuss fundamentals, relative value and trading technicals in their respective areas of expertise. At the conclusion of the meeting, head of Disciplined Alpha and the senior sector specialists then set targets for duration and yield curve. These exposures are allowed to change opportunistically within a reasonably tight range. Sector risk targets are also decided at the weekly target meeting with each senior sector specialist allowed discretion to move sector risk within pre-agreed guidelines. The head of Disciplined Alpha leads a team of seasoned investment professionals with responsibility for researching, selecting, and trading securities in specific investment grade sectors including government, mortgage-backed, credit, and commercial mortgage-backed and asset-backed securities. These sector specialists are responsible for working closely with the firm’s research teams to generate investment ideas and implement them. They work with the team’s dedicated traders to implement buy and sell decisions within the framework of the Disciplined Alpha risk management system. Investment Process The Disciplined Alpha investment process seeks to deliver alpha versus the benchmark by focusing the team’s efforts on research, relative value across bonds and sectors and consistent, systematic risk management. The Disciplined Alpha team applies the investment process primarily to high-grade bonds and builds portfolios whose alpha is expected to be derived principally from security selection rather than exposures to duration, yield curve, or sector positions. The team’s risk management tools ease the task of keeping the portfolios in line with agreed-upon risk targets. Sector specialists on the team are responsible for accessing the research of the Loomis Sayles credit research and securitized sector teams to help generate investment ideas. The sector specialists are dedicated to credit, structured products (such as asset-backed and commercial-mortgage backed securities), and mortgage-backed securities. They understand the nuances of their sectors and the analysis required to determine relative value. Their constant challenge is to assess and compare securities in order to know which investments might present opportunities. Each team member focuses on seeking to find and capture attractive relative value through security selection, which requires understanding fundamental value and drivers of change in relationships. When valuations change, the team often trades positions. Within their areas of responsibility, the team selects securities to buy and sell, and allocate risk within agreed-upon guidelines. The size of the team facilitates many daily conversations among its members, including regular team meetings to review information about sectors and ongoing discussions with the head of Disciplined Alpha about positions, risks, and trading. Whenever they buy (or sell) bonds, team members consult the Disciplined Alpha risk management system to determine the appropriate size of purchase or sale to maintain the levels of risk pre-set by the team. Risk Management Analysis and measurement of risk are important components of the Disciplined Alpha investment strategy. The team evaluates many measures of risk bond by bond, including duration, sector, yield curve, prepayment, spread volatility and credit exposure. The team uses proprietary risk management tools intended to gain a real-time view of the portfolio and the incremental risks of any given bond. These tools are critical resources in allowing the decision-makers to judiciously weigh the risks and opportunities of each security under consideration. Loomis Sayles’ deep resources in fundamental and quantitative research help contribute value throughout the investment process. Fundamental value is the principal criterion for a security to be considered for investment. On this fundamental basis, the team generates relative value views and an exit strategy for the investment once it reaches its expected level. The Disciplined Alpha team selects securities one-by-one rather than thematically. When valuations change, the analysts are responsible for re-evaluating their positions and making trades as required. Recognizing that relative value changes rapidly, the strategy has a bias toward more liquid securities in order to reduce trading costs, as many buy and sell decisions may be made in the portfolio daily.
Sector Specific Strategies:
Senior Loans
Our fixed income philosophy is based on our experience that credit markets do not properly assess credit risk and tend to overreact to corporate events. Through intensive research and bottom-up investing guided by our macro views, we believe that we can identify loans that have attractive risk/return prospects. We believe the uniquely attractive attributes of the asset class are best exploited through a conservative strategy relative to the overall market. We focus on par loans in the management of this asset class. We believe distressed loans, in general, represent a less attractive risk/return profile than par loans except at market bottoms. Yield and quality are the primary focus for choosing loans for our portfolios. We strive to buy only loans with collateral values significantly in excess of market value. We would expect to hold loans that were worth more than their trading price, and we would prefer to sell a loan if significant long-term negative price volatility is likely, even if the ultimate value expectation is at or above the then-current price. The senior loan team seeks to achieve the following investment objectives:  Provide a high current level of income  Preserve capital in all economic environments  Meet or exceed gross benchmark returns over a full market cycle through credit selection and disciplined portfolio construction, not excess risk (relative bench please register to get more info

Loomis Sayles has not been subject to any material legal or disciplinary events during the last ten years. please register to get more info

Material Business Relationships with Related Parties
Loomis Sayles acts as investment adviser or subadviser for a number of U.S. and offshore funds that are sponsored and/or distributed by its affiliates. These funds include the Loomis Sayles Funds, the Natixis Funds, and the Natixis International Funds. Natixis Distribution, L.P., a Loomis Sayles affiliate, acts as principal underwriter, distributor and administrator for the Loomis Sayles Funds and the Natixis Funds, and another affiliated entity acts as principal underwriter and distributor of Natixis International Funds. Loomis Sayles also provides investment advice to certain privately offered investment funds established by Loomis Sayles and/or in which Loomis Sayles or its personnel, or its affiliates or their personnel may have an ownership or management interest. Interests in the above investment funds may be offered to parties with whom Loomis Sayles and/or its affiliates have an existing client relationship as well as other parties, including Loomis Sayles’ employees or its affiliates and their employees. In certain circumstances, Loomis Sayles may recommend or purchase shares of one or more funds for all or a portion of a separate account client’s portfolio. In certain cases, the funds may be advised or subadvised by Loomis Sayles (or an affiliate of Loomis Sayles) and/or an affiliate of Loomis Sayles may provide other services to the funds such as distribution, administrative or transfer agent services.
Other Financial Industry Activities
Commodity Trading Advisor/Commodity Pool Operator. Loomis Sayles is registered as a commodity trading advisor (“CTA”) and a commodity pool operator (“CPO”) and uses futures contracts in the management of some client accounts, including pooled vehicles. As a CTA and CPO, Loomis Sayles can provide futures trading advice to individual separate accounts and pools (e.g. mutual funds) and can also advise pools that may be defined by the Commodity Futures Trading Commission as “commodity pools.” Certain Loomis Sayles employees are registered as “principals” or “associated persons” of the CTA. Broker-Dealer. Loomis Sayles is the sole limited partner of Loomis Sayles Distributors (“LSD”), a registered broker-dealer. Certain Loomis Sayles employees are “registered representatives” of LSD. Trust Company. Loomis Sayles is the direct owner of a non-depository trust company licensed by the State of New Hampshire, Loomis Sayles Trust Company, LLC (“LSTC”). LSTC serves as trustee of several collective investment trusts (“Collective Investment Trusts”) and New Hampshire investment trusts (“NHITs”). In its capacity as trustee, LSTC may receive fees for its investment advice to the Collective Investment Trusts and NHITs. The Board of Managers and officers of LSTC are dual employees of Loomis Sayles and LSTC. In addition, the portfolio managers dedicated to the strategies represented by the respective Collective Investment Trusts or NHITs and traders who execute trades for the Collective Investment Trusts or NHITs at the direction of the portfolio managers are either dual employees of Loomis Sayles and LSTC or act for Loomis Sayles pursuant to an investment management agreement between Loomis Sayles and LSTC. All employees of LSTC are also employees of Loomis Sayles, and in that capacity provide investment management, trading, compliance, legal, accounting, marketing and administrative services to client accounts of Loomis Sayles as well as of LSTC. As a result, employees of LSTC have access to Loomis Sayles’ fixed-income and equity research and associated analytics, and dual employees of Loomis Sayles and LSTC have access to each other’s trading and compliance information. In addition to those policies and procedures that are unique to LSTC, and therefore only apply to LSTC, LSTC employees are required to comply with Loomis Sayles’ compliance policies and procedures, the effect of which is designed to reasonably assure that the clients of Loomis Sayles and LSTC are treated fairly and equitably as to each other. Sponsor of Private Funds. Loomis Sayles acts as sponsor to investment vehicles, including hedge funds that are offered through private placements to qualified investors. These sponsorship activities include serving as the sole managing member and/or controlling the general partner of funds organized as limited partnerships or limited liability companies. Generally, Loomis Sayles also acts as investment advisor to these funds, for which it receives advisory fees. Non-U.S. Subsidiaries. Loomis Sayles has established subsidiaries in the United Kingdom and Singapore that assist it in its investment, client service and marketing efforts. The UK subsidiary, Loomis Sayles Investments Limited, provides discretionary investment management, product expertise, regional company research, client service, consultant support, marketing services and trading for Loomis Sayles in the UK office. The Singapore subsidiary, Loomis Sayles Investments Asia Pte. Ltd., provides fund management, trading, investment research, distribution, marketing and client services and support for Loomis Sayles in the Singapore office. In order to mitigate potential conflicts of interest that may arise with respect to the business conducted by these subsidiaries, each entity has implemented formal compliance policies and procedures which are based primarily on Loomis Sayles’ policies and procedures and modified as necessary to address UK and Singapore regulatory requirements. Among other requirements, employees of each non-U.S. subsidiary are required to abide by and annually certify compliance with Loomis Sayles’ Code of Ethics, its Insider Trading Policies and Procedures, and its Gifts, Business Entertainment and Political Contributions Policies and Procedures. In addition, the activities of the UK office are monitored by a Compliance Officer in the UK office as well as by the Legal and Compliance Department of Loomis Sayles; the activities of the Singapore office are monitored by the Compliance Manager in the Singapore office as well as by the Loomis Sayles Legal and Compliance Department.
Industry Affiliations
Loomis Sayles is an indirect subsidiary of Natixis IM, which owns, in addition to Loomis Sayles, a number of other asset management and distribution and service entities (each, together with any advisory affiliates of Loomis Sayles, a “related person”). As noted above, Natixis IM is owned by Natixis, which is principally owned by BPCE, France’s second largest banking group. BPCE is owned by banks comprising two autonomous and complementary retail banking networks consisting of the Caisse d’Epargne regional savings banks and the Banque Populaire regional cooperative banks. There are several intermediate holding companies and general partnership entities in the ownership chain between BPCE and Loomis Sayles. In addition, Natixis IM’s parent companies Natixis and BPCE each own, directly or indirectly, other investment advisers and securities and financial services firms which also engage in securities transactions. Loomis Sayles Inc., the general partner of Loomis Sayles, acquired all membership interests in McDonnell Investment Management, LLC, a registered investment adviser, on January 1, 2019. McDonnell’s business is expected to be integrated into Loomis Sayles by mid-2019, at which time McDonnell will cease to be a registered investment adviser. Loomis Sayles does not presently enter into transactions, other than as set out below, with related persons on behalf of its clients. Because Loomis Sayles is affiliated with a number of asset management, distribution and service entities, Loomis Sayles occasionally may engage in business activities with some of these entities, subject to Loomis Sayles’ policies and procedures. Given that related persons are equipped to provide a number of services and investment products to Loomis Sayles’ clients, subject to applicable law, clients of Loomis Sayles may engage one or more of its related persons to provide any number of such services, including advisory, custodial or banking services, or may invest in the investment products provided or sponsored by a related person. The relationships described herein could give rise to potential conflicts of interest or otherwise may have an adverse effect on Loomis Sayles’ clients. For example, when acting in a commercial capacity, related persons of Loomis Sayles may take commercial steps in their own interests, which may be adverse to those of Loomis Sayles’ clients. Given the interrelationships among Loomis Sayles and its related persons and the changing nature of Loomis Sayles’ related persons’ businesses and affiliations, there may be other or different potential conflicts of interest that arise in the future or that are not covered by this discussion. Additional information regarding potential conflicts of interest arising from the Loomis Sayles’ relationships and activities with its related persons is provided below. Loomis Sayles has a variety of relationships with the Natixis IM affiliates, including:  Advisory or subadvisory arrangements which may be on a discretionary or non- discretionary basis (including arrangements where Loomis Sayles acts as subadviser to certain Natixis IM affiliates who may themselves be investment advisers for the account of an affiliated entity, an unaffiliated client or in connection with Managed Account Programs and other similar programs sponsored by various financial intermediaries).

 Arrangements where Natixis IM affiliates refer business to, or otherwise solicit or assist in securing business for, Loomis Sayles for separate accounts and commingled investment vehicles.

 Research sharing relationships between Loomis Sayles and its affiliates that manage accounts for both affiliated entities and unaffiliated clients.

 Personnel sharing relationships, including circumstances where certain personnel of Loomis Sayles serve as directors of entities owned by Natixis IM (and certain personnel of Natixis IM affiliates serve as directors of Loomis Sayles or entities sponsored by Loomis Sayles).

While these relationships may benefit the overall investment capability of each firm, they may also present, in a particular instance or in general, conflicts with the actions Loomis Sayles performs on behalf of its clients. Since the trading activities of Natixis IM affiliates are not coordinated, each firm may trade the same security at about the same time, on the same or opposite side of the market, thereby possibly affecting the price, amount or other terms of the trade execution realized by the clients of either firm. Any effect of substantially contemporaneous market activities is likely to be most pronounced where the supply or other liquidity of the security traded is limited. Natixis IM is also the direct or indirect owner of, or is otherwise affiliated with, various broker- dealer entities established in the United States or elsewhere. Loomis Sayles generally does not conduct any brokerage business for client accounts with broker-dealers owned by Natixis IM. However, should Loomis Sayles decide to use Affiliated Broker-Dealers to execute client transactions, it will do so in accordance with the applicable rules and regulations that govern such activity. Certain of Loomis Sayles’ affiliates also provide investment banking services, and Loomis Sayles has policies and procedures in place to reasonably ensure compliance with the regulatory requirements relating to participating in affiliated underwritings. In addition, Loomis Sayles has entered into a dual employee arrangement with an employee of LS Investment Advisers, LLC (“LSIA”), under which the LSIA employee may provide certain services to Loomis Sayles’ fixed income trading desk, research department and product teams, including gathering market information relating to municipal securities; making recommendations for the purchase and sale of municipal securities to Loomis Sayles’ product teams based on Loomis Sayles’ client investment objectives and strategies; executing all trades for such securities; monitoring all Loomis Sayles client municipal holdings; responding to any pricing issues; and providing other services as necessary. Pursuant to the arrangement, the LSIA employee will comply with all applicable Loomis Sayles compliance policies and procedures, not knowingly or intentionally cross securities among or between Loomis Sayles and LSIA clients and maintain the confidentiality of Loomis Sayles’ client and trading information. Certain Affiliated Broker-Dealers may also act as placement agent or otherwise participate (for example, as a dealer or selling group member) in offerings of interests in pooled investment vehicles for which Loomis Sayles acts as adviser or subadviser and may receive compensation for acting in such capacity. Such compensation may be paid to such Affiliated Broker-Dealers by one or more of (1) the pooled investment vehicles themselves, (2) the underwriters or placement agents for such pooled investment vehicles, (3) the advisers, subadvisers or other sponsors of such pooled investment vehicles (which may include Loomis Sayles or its affiliates) or (4) the purchasers of interests in such pooled investment vehicles. Details of such compensation arrangements will generally be disclosed in the offering documents relating to the particular pooled investment vehicle. As mentioned above, Loomis Sayles is directly or indirectly owned by, or otherwise affiliated with, various entities. These affiliated entities may also include foreign insurance companies. From time to time, Loomis Sayles may manage accounts for these affiliated entities (or for investment vehicles formed, sponsored or promoted by these affiliated entities). Loomis Sayles, and certain privately placed pooled vehicles for which Loomis Sayles may act as an investment adviser, may utilize the capital introduction services of the prime broker(s) to such pooled vehicles. These services typically involve the communication of general information about the pooled vehicle to qualified prospects that have a pre-existing relationship with the prime broker or its affiliates. These arrangements do not result in the payment of placement fees or commissions by Loomis Sayles or the pooled vehicle to the prime broker or its affiliate that makes the introductions, regardless of whether or not the introductions lead to an investment in the pooled vehicle. please register to get more info

and Personal Trading
Code of Ethics
Loomis Sayles employees are permitted to buy, sell or hold securities for their personal accounts subject to the restrictions set forth in the firm’s Code of Ethics (the “Code”), which includes the requirements of Section 206 of the Investment Advisers Act of 1940, Rule 17j -1 of the Investment Company Act of 1940 and many of the recommendations of the ICI’s Blue Ribbon Panel on Personal Investing. Among other things, the Code restrictions are designed to avoid apparent and actual conflicts of interest with clients and inadvertent violations of the securities laws as they relate to personal trading. The Code applies to employees of Loomis Sayles, Loomis Sayles Distributors, Loomis Sayles Investments Limited, Loomis Sayles Investments Asia Pte. Ltd., and Loomis Sayles Trust Company and may, in certain cases, apply to specified employees of certain of Loomis Sayles’ affiliates (“Participating Affiliates”). The Participating Affiliates may recommend to their clients securities that are also recommended to Loomis Sayles’ US-based clients. Each Loomis Sayles employee agrees in writing to abide by the Code as a condition of employment. Among other things, the Code: i. Requires employees to pre-clear certain transactions for their personal accounts; ii. Provides for blackout periods for certain investment personnel relative to client trading activity; iii. Provides for certain blackout periods relative to research recommendations initiated by Loomis Sayles’ Research Departments; iv. Provides for holding periods for personal investments; v. Prohibits investments in initial public offerings unless approved on an exceptional basis by the Chief Compliance Officer; vi. Requires special approval for private placement investments and outside activities; vii. Requires initial holdings, quarterly transactions, and annual holdings reporting; viii. Requires employees to maintain their personal brokerage accounts with one or more “Select Brokers” with whom Loomis Sayles has established electronic links to receive trade confirmations on TD+1, and periodic statement information in an automated fashion unless approved on an exceptional basis by the Chief Compliance Officer; and ix. Requires employees to certify as to their initial receipt and understanding of the Code upon joining the firm and then as to their compliance therewith and the accuracy of their account information annually thereafter. Loomis Sayles has implemented an automated system called PTA, which employees are required to use to pre-clear their personal securities transactions. In addition, unless otherwise approved by the Chief Compliance Officer, all employees are required to maintain their personal brokerage accounts at Select Brokers from whom Loomis Sayles receives automated feeds on a daily basis. The employee transaction information from these feeds is fed into PTA, and the Personal Trading Compliance Team is responsible for performing the oversight and monitoring functions necessary to ensure that employees’ personal securities transactions comply with the applicable requirements of the Code, and they do this on a daily basis. PTA is also used by employees to satisfy their quarterly and annual reporting obligations as well as their annual certification requirements whereby they certify that they have complied with all of the requirements of the Code. A copy of the Code is distributed to all new employees of Loomis Sayles within the first 10 days of their employment with the firm and each employee certifies in writing that he or she will abide by the Code as a condition of employment. In general, all new employees receive one-on-one training on the Code and its requirements and what it means to be a fiduciary, within the first 10 days of their employment. The firm’s Personal Trading Compliance Manager or a designee thereof conducts these sessions. In addition to the Code, all new employees receive the New Hire package and a Quick Reference Guide handbook that provide more detailed information relating to the requirements and administration of the Code and the use of the PTA pre-clearance system. Finally, all employees are required to pass an on-line Code of Ethics and Fiduciary Duty tutorial on an annual basis. The Ethics Committee oversees the operation of the firm’s Code. The General Counsel chairs the Ethics Committee, which also includes the Chief Executive Officer, Chief Compliance Officer and other senior members of the firm. The Ethics Committee meets on a quarterly basis, generally before the firm’s Board of Directors meeting to review Code exceptions, if any, by the firm’s employees. The Committee also considers various enhancements that may be made to the Code as necessary and appropriate in connection with improvements in automation, regulatory requirements, or trends in industry best practices. Material matters discussed by the Ethics Committee, if any, are reported to the Board at its next meeting. Material amendments to the Code are communicated to all employees in writing and the revised Code is posted on the firm’s intranet site. A copy of the Code will be provided to any client or prospective client upon request. While our investment professionals do not actively seek material, non-public information (“MNPI”), in accordance with Loomis Sayles’ Insider Trading Policies and Procedures they may on occasion receive MNPI through meetings with companies, broker dealers or from a client with publicly traded securities. If this occurs, employees must contact the Loomis Sayles Legal and Compliance Department, which then review the facts and circumstances and take measures designed to protect our firm and our personnel from unlawful trading or the appearance of unlawful trading based upon that information. Those measures can include the imposition of information barriers (i.e. firewall) or a restriction on trading in the relevant securities.
Personal Securities Transactions
Loomis Sayles does not buy or sell for its own account securities that Loomis Sayles recommends to clients, except for shares in investment funds sponsored or advised by Loomis Sayles or its affiliates as described below or seed capital that Loomis Sayles or its affiliates may invest at the inception of an investment pool. However, Loomis Sayles may find itself holding such securities in connection with the correction of certain trade errors as discussed under “Correction of Trade Errors and Investment Guideline Breaches” below. In addition, Loomis Sayles’ employees are permitted to buy, sell or hold such securities for their personal accounts (and as mentioned above, securities may be bought, sold or held for certain investment pools in which employees have invested or accounts in which employees are otherwise considered to have a beneficial interest, including the Loomis Sayles Funded Pension Plan and Trust and the Loomis Sayles Employees’ Profit Sharing Retirement Plan) subject to the restrictions contained in the Code. Finally, as discussed previously herein, from time to time Loomis Sayles may manage hedge funds, and employees of Loomis Sayles, including the hedge fund’s investment team and supervisors thereof, may make personal investments in such hedge funds. At times, especially during the early stages of a new hedge fund, there may be limited outside investors (i.e., clients and non-employee individual investors) in such funds. In order to mitigate the appearance that investing personally in a hedge fund can potentially be used as a way to benefit from certain trading practices that would otherwise be prohibited by the Code if employees engaged in such trading practices in their personal accounts, investment team members of a hedge fund they manage are individually required to limit their personal investments in such funds to no more than 20% of the hedge funds’ total assets, unless the Chief Compliance Officer approves a higher percentage based on the facts and circumstances. In addition, the supervisor of a hedge fund investment team must limit his/her personal investment in such hedge fund to no more than 25% of the hedge fund’s total assets. By limiting the personal interests in the hedge fund by the investment teams and their supervisors in this manner, all Loomis Sayles hedge funds are deemed to be exempt from the pre-clearance and trading restrictions of the Code.
Correction of Trade Errors and Investment Guideline Breaches
Consistent with its fiduciary duties, Loomis Sayles’ policy is to take the utmost care in making and implementing investment decisions for client accounts. To the extent that trade errors or investment guideline breaches occur, Loomis Sayles’ policy is to seek to ensure that its clients’ best interests are served when correcting such errors and that clients are reimbursed for net losses caused by Loomis Sayles’ error. Loomis Sayles has adopted trade error and investment guideline breach policies and procedures to guide the resolution of, and to help prevent the reoccurrence of, such errors. If it appears that a trade error or investment guideline breach has occurred, Loomis Sayles will review all relevant facts and circumstances to determine an appropriate course of action. Where it is determined that Loomis Sayles has caused or contributed to a trade error or investment guideline breach, the client will be reimbursed by Loomis Sayles for the net loss attributable to Loomis Sayles’ error, or will retain any gain realized in connection with the error correction, except as described below. If an error is discovered after the settlement of the transaction the “correcting” transaction will also be executed in the client’s account and the client will either be reimbursed for the net loss or will retain any gain realized in connection with the error correction as described above. However, if an error is discovered prior to the settlement of the transaction and the trade cannot practicably be broken, the trade will generally be settled in a Loomis Sayles error account, outside of the client’s account, and will not be reflected on the client’s account statements. In this latter circumstance, Loomis Sayles and the broker-dealer, custodian or other parties involved in the transaction (other than the client) will determine who among them is obligated to bear any loss or retain any gain realized in connection with the error correction. Additionally, subject to the approval of the Chief Compliance Officer or designee thereof, securities purchased in error for one client’s account may be allocated to another client’s account if Loomis Sayles determines that it would be appropriate to do so under the facts and circumstances, such as, but not limited to, a pro rata re-allocation of securities purchased in error for one account to the remaining accounts in the original order when such accounts have not achieved their desired weighting in the securities being acquired. While Loomis Sayles’ general policy is to execute an off-setting transaction in its error account as soon as practical, under certain circumstances, senior management of Loomis Sayles may decide to maintain the erroneously transacted security in the error account. Under such circumstances, the position is not being maintained for investment purposes, but rather in an effort to mitigate a financial loss with respect to the security. In addition, Loomis Sayles may decide to hedge the position held in the error account with the intention of preventing further loss, while not hedging the same security to the extent that it is held in client accounts for investment purposes. Loomis Sayles will review all of the relevant facts and circumstances, which may include the netting of gains and losses, when determining the financial impact of an error in a client’s account. In addition, if a client realizes a loss in connection with the correction of an error, but it is determined that the client would have experienced an even greater loss from the originally intended transaction, Loomis Sayles may determine that the client was not financially harmed by the error. With the possible exception of immaterial operational errors such as failed trades and overdraft charges, Loomis Sayles will provide its clients with written notices of errors in their account, and such notice will include a description of the error and its correction and the financial impact on the client’s account. All trade errors and investment guideline breaches will be resolved with the involvement of Loomis Sayles’ Chief Compliance Officer or designee thereof, the Chief Investment Officer, if securities purchased in an erroneous transaction will be reallocated to other Loomis Sayles clients, and other legal/compliance, portfolio management, trading or other personnel, as appropriate, in accordance with Loomis Sayles’ trade error and investment guideline breach policies and procedures. All such errors will be reported to Loomis Sayles’ trading oversight committee, risk management committee and audit committee on a quarterly basis.
Ownership Interests of Loomis Sayles and Its Affiliates
From time to time, Loomis Sayles may recommend or purchase for the accounts of certain clients securities issued by entities (or affiliates of entities) in which a controlling person or other related person of Loomis Sayles has an ownership interest. In addition, Loomis Sayles (or its affiliates) may recommend to clients that they purchase or sell, or Loomis Sayles may invest on behalf of client accounts in, securities which are also purchased, sold or held:  by Loomis Sayles for the account of investment pools advised or subadvised by Loomis Sayles and in which Loomis Sayles itself, its affiliates or their personnel may have an ownership or management interest. Such investment pools may include, but are not limited to:  mutual funds, hedge funds, collateralized fixed income pools, investment trusts and other public or private investment companies, certain of which may be sponsored or established by Loomis Sayles or its affiliates; and  pension or other benefit plans that are sponsored by Loomis Sayles or its affiliates and/or in which employees of such entities have an interest;  by Loomis Sayles for the account of affiliated clients; or

 by Loomis Sayles’ affiliates for their account or for the account of their clients.
Certain Investment Funds
As mentioned above, Loomis Sayles or its affiliates may recommend to clients, or Loomis Sayles may invest for client accounts, in investment funds that are sponsored, advised or subadvised by Loomis Sayles or its affiliates and in which Loomis Sayles, its affiliates or their personnel may have an ownership or management interest. Such investment pools may include, but are not limited to, mutual funds, hedge funds, collateralized fixed income pools, collective investment trusts and other public or private investment companies. For certain of these investment pools, Affiliated Broker- Dealers may act as principal underwriter, distributor, dealer or placement agent or perform a similar function and/or a Loomis Sayles affiliate may provide other services such as administrative or transfer agent services. In connection with these relationships, Loomis Sayles or a subsidiary generally receives advisory or trustee fees in its capacity as investment adviser, trustee or subadviser (and in cases where Loomis Sayles acts as subadviser to a Natixis entity, that Natixis entity also receives advisory fees in its capacity as investment adviser) from such investment funds. When Loomis Sayles purchases shares of a fund advised or subadvised by Loomis Sayles for a separate account client’s portfolio, Loomis Sayles’ policy, with certain exceptions particularly with respect to no-fee funds, is not to charge a separate account advisory fee for any portfolio assets invested in the fund. However, Loomis Sayles will receive advisory fees from the fund and the client will indirectly pay a pro rata portion of those fees. Such fees may be higher than the fees charged by Loomis Sayles for separately managed assets. Loomis Sayles may charge a separate account advisory fee for funds advised or subadvised by it that do not charge management fees and that have been designed for use by separate accounts. When Loomis Sayles purchases shares of a fund that is not advised or subadvised by Loomis Sayles for a separate account client’s portfolio (and even where such fund may be advised or subadvised by an affiliate of Loomis Sayles), Loomis Sayles may charge a separate account advisory fee for portfolio assets invested in the fund. In this circumstance, clients should be aware that (a) in addition to the separate account advisory fee charged by Loomis Sayles, the client will be paying fees at the fund level (such as advisory fees and other fund expenses) and (b) the client may have been able to purchase fund shares directly without using the services of Loomis Sayles. Investment trusts for which a Loomis Sayles subsidiary serves as trustee offer multiple classes of shares with different trustee fees, as well as classes that do not pay a trustee fee. These “no-fee” classes are available to participants advised by Loomis Sayles who pay Loomis Sayles an advisory fee for assets invested in the investment trust under their investment management agreements with Loomis Sayles. In connection with all purchases of shares of a fund for a separate account client’s portfolio, the client should be aware that such funds may incur additional and/or higher expenses than the expenses incurred for separate accounts. In the case of funds advised or subadvised by Loomis Sayles or its affiliates, such expenses may include payments to Loomis Sayles and/or its affiliates for advisory and other services (such as distribution, administrative or transfer agent services) provided by such entities to the funds.
Certain Transactions for Collateralized Fixed Income Pools
From time to time, Loomis Sayles may act as collateral manager for certain collateralized fixed income pools. Certain of these pools may enter into interest rate protection agreements at the direction of Loomis Sayles. Such interest rate protection agreements may be entered into between the pool and one or more related parties of Loomis Sayles or arranged by one or more related parties of Loomis Sayles who are compensated for making such arrangements. The fact that such interest rate protection agreements may be entered into by a particular pool will be disclosed to the pool’s investors in the pool’s offering documents.
Related Persons -- Transactions and Potential Conflicts
In connection with providing investment management and advisory services to its clients, Loomis Sayles acts independently of other affiliated investment advisers and manages the assets of each of its clients in accordance with the investment mandate selected by such clients. Related persons of Loomis Sayles are engaged in securities transactions. Loomis Sayles or its related persons may invest in the same securities that Loomis Sayles recommends for, purchases for or sells to its clients. Loomis Sayles and its related persons (to the extent they have independent relationships with the client) may give advice to and take action with their own accounts or with other client accounts that may compete or conflict with the advice Loomis Sayles may give to, or an investment action Loomis Sayles may take on behalf of, the client or may involve different timing than with respect to the client. Since the trading activities of Natixis IM firms are not coordinated, each firm may trade the same security at about the same time, on the same or opposite side of the market, thereby possibly affecting the price, amount or other terms of the trade execution, adversely affecting some or all clients. Similarly, one or more clients of Loomis Sayles’ related persons may dilute or otherwise disadvantage the price or investment strategies of another client through their own transactions in investments. Loomis Sayles’ management on behalf of its clients may benefit Loomis Sayles or its related persons. For example, clients may, to the extent permitted by applicable law, invest directly or indirectly in the securities of companies in which Loomis Sayles or a related person, for itself or its clients, has an economic interest, and clients, or Loomis Sayles or a related person on behalf its client, may engage in investment transactions which could result in other clients being relieved of obligations, or which may cause other clients to divest certain investments. The results of the investment activities of a client of Loomis Sayles may differ significantly from the results achieved by Loomis Sayles for other current or future clients. Because certain of Loomis Sayles’ clients may be related persons, Loomis Sayles may have incentives to resolve conflicts of interest in favor of certain clients over others (e.g., where Loomis Sayles has an incentive to favor one account over another); however, Loomis Sayles has established policies and procedures that identify and manage such potential conflicts of interest. Potential conflicts may be inherent in Loomis Sayles’ and its related persons’ use of multiple strategies. For instance, conflicts could arise where Loomis Sayles and its related persons invest in distinct parts of an issuer’s capital structure. Moreover, one or more of Loomis Sayles’ clients may own private securities or obligations of an issuer while a client of a related person may own public securities of that same issuer. For example, Loomis Sayles or a related person may invest in an issuer’s senior debt obligations for one client and in the same issuer’s junior debt obligations for another client. In certain situations, such as where the issuer is financially distressed, these interests may be adverse. Loomis Sayles or a related person may also cause a client to purchase from, or sell assets to, an entity in which other clients may have an interest, potentially in a manner that will adversely affect such other clients. In other cases, Loomis Sayles may receive material non-public information (“MNPI”) on behalf of some of its clients, which may prevent Loomis Sayles from buying or selling securities on behalf of other of its clients even when it would be beneficial to do so. Conversely, Loomis Sayles may refrain from receiving MNPI on behalf of clients, even when such receipt would benefit those clients, to prevent Loomis Sayles from being restricted from trading on behalf of its other clients. In all of these situations, Loomis Sayles or its related persons, on behalf of itself or its clients, may take actions that are adverse to some or all of Loomis Sayles’ clients. Loomis Sayles will seek to resolve conflicts of interest described herein on a case-by-case basis, taking into consideration the interests of the relevant clients, the circumstances that gave rise to the conflict and applicable laws. There can be no assurance that conflicts of interest will be resolved in favor of a particular client’s interests, and such a conflict of interest may result in certain clients receiving less consideration than they may have otherwise received in the absence of such a conflict. Moreover, Loomis Sayles typically will not have the ability to influence the actions of its related persons. In addition, certain related persons of Loomis Sayles may engage in banking or other financial services, and in the course of conducting such business, such persons may take actions that adversely affect Loomis Sayles’ clients. For example, a related person engaged in lending may foreclose on an issuer or security in which Loomis Sayles’ clients have an interest. As noted above, Loomis Sayles typically will not have the ability to influence the actions of its related persons. Loomis Sayles from time to time purchases securities in initial public offerings or secondary offerings on behalf of client accounts in which a related person may be a member in the underwriting syndicate. Such participation is in accordance with Loomis Sayles’ policies and procedures and applicable law, and Loomis Sayles does not purchase directly from such related person. please register to get more info

Brokerage Discretion
Generally, Loomis Sayles’ clients give it full discretion to choose broker-dealers. Some clients, however, direct Loomis Sayles to use only a specified broker-dealer, while other clients suggest that Loomis Sayles use a specified broker-dealer subject to Loomis Sayles’ ability to obtain best execution when executing transactions with such specified broker-dealer.
When Loomis Sayles Selects Broker-Dealers
Generally When Loomis Sayles has full discretion in the selection of brokers dealers for the execution of client transactions, it seeks to obtain quality executions at favorable security prices and at competitive commission rates, where applicable, through broker-dealers including Electronic Communication Networks (ECNs), Alternative Trading Systems (ATSs) or other execution systems that in Loomis Sayles’ opinion can provide the best overall net results for its clients. Fixed income securities are generally purchased from the issuer or a primary market maker acting as principal on a net basis with no brokerage commission paid by the client. Such securities, as well as equity securities, may also be purchased from underwriters at prices which include underwriting fees. Brokerage allocation is handled in the same manner for hedge funds as it is for long-only accounts. Best Execution Best execution is more of a process than a result. It is the process of executing portfolio transactions at prices and, if applicable, commissions that provide the most favorable total cost or proceeds reasonably obtainable under the circumstances, taking into account all relevant factors. The lowest possible commission, while very important, is not the only consideration. Commissions and Other Factors in Broker-Dealer Selection Loomis Sayles uses its best efforts to obtain information as to the general level of commission rates being charged by the brokerage community, from time to time, and to evaluate the overall reasonableness of brokerage commissions paid on client portfolio transactions by reference to such data. In making this evaluation, all factors affecting liquidity and execution of the order, as well as the amount of the capital commitment by the broker or dealer, are taken into account. Other relevant factors may include, without limitation: (a) the execution capabilities of the brokers and/or dealers, (b) research and other products or services provided by such broker-dealers which are expected to enhance Loomis Sayles’ general portfolio management capabilities, (c) the size of the transaction, (d) the difficulty of execution, (e) the operations facilities of the brokers and/or dealers involved, (f) the risk in positioning a block of securities, (g) fair dealing and (h) the quality of the overall brokerage and research services provided by the broker-dealer. Our policies and procedures strictly prohibit the direct or indirect use of client account transactions to compensate any broker, dealer for the promotion or sale of Loomis Sayles/Natixis mutual funds, services or other products. Global Trading Analytics, LLC (“GTA”) performs trading cost analysis of Loomis Sayles’ trading in certain fixed income securities (primarily sovereign governments, agencies, US corporates, mortgages, municipal bonds, certain foreign corporates and foreign currency) for representative fixed income client accounts (i.e. typically, commingled vehicles or other accounts whose trading is representative of the trading for a specific fixed income product). GTA’s trading cost analysis includes key measurement points for analyzing fixed income trading. These measurement points are displayed on an overall basis for all of the trades included in the analysis, on a fund-by-fund basis, by market sector and by dealer. Trade Informatics (“TI”) employs a process-based consultative approach to performance measurement in which they visit frequently with Loomis Sayles’ equity traders and provide continuous feedback on the trading process. TI evaluates the transaction process from three perspectives: portfolio management, the trading desk, and broker dealer / venue. In addition, TI provides quarterly reporting used by Loomis Sayles’ Trading Oversight Committee, and more frequent daily reports detailing performance of all current equity trades. Soft Dollars Brokerage trading activity is an essential factor in accessing Wall Street and third-party firm research, as well as key market data. First and foremost, Loomis Sayles recognizes that it has a fiduciary duty to seek best execution of its clients transactions. Importantly, Loomis Sayles will only allocate brokerage to firms that charge higher commissions when we believe the cost is reasonable in relation to the research and execution services received. In making the evaluation of the amount paid, all factors affecting liquidity and execution of the order, the amount of capital commitment by the broker-dealer, and the research and research services provided by the broker-dealer are taken into account. Therefore, Loomis Sayles’ receipt of brokerage and research products or services are factors in Loomis Sayles’ selection of a broker-dealer to execute transactions for client accounts where Loomis Sayles believes that the broker-dealer will provide quality execution of the transactions. Such brokerage and research products or services may be paid for with Loomis Sayles’ own assets or may, in connection with transactions in equity securities effected for client accounts for which Loomis Sayles exercises investment discretion, be paid for with client commissions (i.e. “soft dollars”). For purposes of this soft dollars discussion, the term “commission” includes commissions paid to brokers in connection with transactions effected on an agency basis. Loomis Sayles does not generate soft dollars on fixed income transactions. Loomis Sayles will only acquire research and brokerage products and services with soft dollars if they qualify as eligible products and services under the safe harbor of Section 28(e) of the Securities Exchange Act of 1934. Eligible research services and products that may be acquired by Loomis Sayles are those products and services that may provide advice, analysis or reports that will aid Loomis Sayles in carrying out its investment decision-making responsibilities. Eligible research must reflect the expression of reasoning or knowledge (having inherently intangible and non-physical attributes) and may include the following research items: traditional research reports; discussions with research analysts and corporate executives; seminars or conferences; financial and economic publications that are not targeted to a wide public audience; software that provides analysis of securities portfolios; market research including pre-trade and post-trade analytics; and market data. Eligible brokerage services and products that may be acquired by Loomis Sayles are those services or products that (i) are required to effect securities transactions; (ii) perform functions incidental to securities transactions; or (iii) are services that are required by an applicable self-regulatory organization (“SRO”) or SEC rule(s). The brokerage and research products or services provided to Loomis Sayles by a particular broker-dealer may include both (a) products and services created by such broker-dealer, (b) products and services created by other broker-dealers, and (c) products and services created by a third party (“third-party services”). All soft dollar services are reviewed and approved by Loomis Sayles’ Chief Compliance Officer. If Loomis Sayles receives a particular product or service that both aids it in carrying out its investment decision-making responsibilities (i.e., a “research use”) and provides non-research related uses, Loomis Sayles will make a good faith determination as to the allocation of the cost of such “mixed-use item” between the research and non-research uses, and will only use soft dollars to pay for the portion of the cost relating to its research use. As of the date of this Brochure, there are no mixed-use services being provided to Loomis Sayles. In connection with Loomis Sayles’ use of soft dollars, a client’s account may pay a broker-dealer an amount of commission for effecting a transaction for the client’s account in excess of the amount of commission it or another broker-dealer would have charged for effecting that transaction if Loomis Sayles determines in good faith that the amount of commission is reasonable in relation to the value of the brokerage and research products or services provided by the broker-dealer, viewed in terms of either the particular transaction or Loomis Sayles’ overall responsibilities with respect to the accounts as to which Loomis Sayles exercises investment discretion. Loomis Sayles may use soft dollars to acquire brokerage or research products and services that have potential application to all client accounts or to a certain group of client accounts. However, the products or services may not be used in connection with the management of some of the accounts which paid commissions to the broker-dealer providing the products or services and may be used in connection with the management of other accounts. Furthermore, while some clients do not generate soft dollar commissions, such as Managed Account Program clients, clients with directed brokerage or zero commission arrangements (which may limit or prevent Loomis Sayles from using such clients’ commissions to pay for research and research services), and certain fixed income accounts, they may still benefit from the research provided to Loomis Sayles in connection with other transactions placed for other clients. As a result, certain clients may have more of their commissions directed for research and research services than others. Loomis Sayles’ use of soft dollars to acquire brokerage and research products and services benefits Loomis Sayles by allowing it to obtain such products and services without having to purchase them with its own assets. Loomis Sayles believes that its use of soft dollars also benefits client accounts as described above. Loomis Sayles’ traders are diligent in ensuring that the firm’s average cost per share is appropriate, in consideration of the number and types of securities being purchased and sold and the various services rendered by broker-dealers, and well within recognized industry ranges of $.004-$.04 per share. The total average commission rate in 2018 was approximately $.03 per share. Client Commission Arrangements Loomis Sayles has entered into several client commission arrangements (“CCAs”) (also known as commission sharing arrangements) with some of its key broker-dealer relationships. The execution rates Loomis Sayles has negotiated with such firms vary depending on the type of orders Loomis Sayles executes with the CCAs (i.e. electronic or traditional), but they will generally be between $.004 and $.02 per share. The CCA rate with such firms is consistent across broker-dealers and will generally result in a total cost of no more than $.04 per share. Pursuant to the CCA agreements Loomis Sayles has with these broker-dealers, each firm will pool the research commissions accumulated during a calendar quarter and then, at the direction of Loomis Sayles, pay various broker-dealers and third party services from this pool for the research and research services such firms have provided to Loomis Sayles. These CCAs are deemed to be soft dollar arrangements, and Loomis Sayles and each CCA intends to comply with the applicable requirements of Section 28(e) of the Securities Exchange Act of 1934, as amended, as well as the Commission Guidance Regarding Client Commission Practices under Section 28(e) in the SEC Release No. 34-54165 dated July 18, 2006. Throughout the quarter, the Loomis Sayles’ equity portfolio managers, research analysts and strategists assess a value on the research they have received, which can include without limitation: research and other services, idea generation, models, expert consultants, political and economic analysts, technical analysts, discussions with research analysts and corporate executives, seminars and conferences. Loomis Sayles uses a software system from a third party vendor, CommciseBuy (“Commcise”), that provides integrated commission management and research valuation functionality. Commcise is used to: track the Research that is provided to and consumed by Loomis Sayles’ investment professionals, assess the quality and value of said Research, reconcile the soft dollars generated, track consumption relative to budgets, instruct our CCAs on the payments to our Research providers, and provide an audit trail of Loomis Sayles’ research consumption. The CCAs enable Loomis Sayles to strengthen its relationships with its key broker-dealers, and limit the broker-dealers with whom it trades to those with whom it has FIX connectivity, while still maintaining the research relationships with broker-dealers that provide Loomis Sayles with research and research services. In addition, the ability to unbundle the execution and research components of commissions enables Loomis Sayles to provide greater transparency to its clients in their commission reports. In addition to trading with the CCA broker-dealers discussed above, Loomis Sayles continues to trade with full service broker-dealers and ECNs, ATSs and other electronic systems. As a result of guidance from the UK Financial Conduct Authority, Loomis Sayles pays broker- dealers a “Corporate Access” arrangement fee in hard dollars in connection with the Corporate Access meetings attended by investment team members who manage equity accounts of clients organized in the United Kingdom. Competing Trades Given the many different products that are managed and investment strategies that are used by the Loomis Sayles investment teams, one portfolio manager may be attempting to buy a security for one client account while another portfolio manager is selling the same security for another client. Furthermore, one portfolio manager may sell short a security for one client while a different portfolio manager is selling or purchasing the same security in another client account. While we seek to obtain best price and most favorable execution on all orders, one client may receive or appear to receive a more favorable outcome. When we have orders to buy and sell the same security on the same terms and at the same time, we may consider doing a cross trade among the client accounts that are involved. However, not all clients are permitted to engage in cross trades. The investment teams have discretion over whether and when to effect cross trades between eligible client accounts (upon approval of the firm’s Legal and Compliance Department), and they may choose not to do a cross trade even if the accounts involved are permitted to do them. A Loomis Sayles trader may purchase securities from a broker dealer to which he/she has recently sold the same securities when he/she believes that doing so is consistent with seeking best execution, particularly where the broker dealer is one of a limited number of broker dealers who hold or deal in those securities. Loomis Sayles does not consider the sale and subsequent purchase of the same security from the same dealer to be a cross trade between the client accounts involved so long as they are separate and independent transactions and they are not prearranged (i.e., the Loomis trader cannot ask the dealer to hold on to the securities sold to the dealer in anticipation of the Loomis trader’s purchasing them back at a later time). In addition, Loomis Sayles employs traders at different geographic locations, and may use an affiliate’s trading desk, one generally for transactions in Managed Account Programs and certain other separate account clients, and the others generally for executing transactions for institutional separate account clients. By operating the trading desks in this manner, our clients may forego certain opportunities, including the aggregation of like orders across accounts that trade on different trading desks, which could result in one trading desk competing with another in the market for similar securities. In addition, it is possible that the separate trading desks may be on opposite sides of a trade at the same time, possibly causing certain accounts to pay more or receive less for a security than other accounts. While these trading desks operate in different locations, the desks do have linkages in oversight and reporting lines and are conducted under similar policies and procedures.Finally, Loomis Sayles may agree to provide model delivery to a Program Sponsor concurrently with the trading of Loomis Sayles’ other client accounts. Where such concurrent model delivery results in the Program Sponsor executing its clients’ transactions, such transactions may compete with similar transactions that are directed by Loomis Sayles for its non-Program client accounts in the same or similar Investment Product at the same time, thereby possibly adversely affecting the price, amount or other terms of the trade execution for some or all of the accounts. Any effect of substantially contemporaneous market activities is likely to be most pronounced when the supply or liquidity of the security is limited. Counterparty Risk All counterparties must be approved by the Head of Trading and the Chief Compliance Officer or their designees. In addition, counterparties for transactions in certain derivatives and transactions that involve extended settlement (e.g. 10 or more days) must satisfy the requirements set forth in our Derivatives Counterparty Policies and Procedures. We periodically review all derivative counterparties under a risk-based framework. The extent and timing of these reviews varies based on our assessment of the potential risks associated with the type of trading we conduct with that counterparty. This typically involves an internal analysis of the counterparty’s credit ratings, the spreads on the five-year CDS that are traded on the counterparty, if any, and other factors. While we believe that these measures reduce the risk that a counterparty default will have a major impact on our client accounts, they cannot guarantee that investment losses associated with a major counterparty default will be averted. Managed Account Programs In addition to the broker-dealer selection criteria listed above, Loomis Sayles considers additional factors in order to meet its obligation to seek best execution for Managed Account Program trading. One primary consideration is the nature of the markets for municipal bond and other fixed income markets which requires that trade counterparties have specific trading expertise. Loomis Sayles believes that based on our trading experience over time, best execution is typically provided by third party dealers that make markets in these types of securities. Other considerations for using third party dealers can include less price dispersion, access to inventory, speed of execution and directives from the Participant or Program Sponsor. As a result, due to its concentration of municipal bond and other fixed income investment strategies, Loomis Sayles executes virtually all Managed Account Program transactions through broker-dealers other than the Program Sponsors or their affiliated broker-dealers, where Loomis Sayles believes that such trades would result in the most favorable price and execution under the circumstances, or because of the need to adhere to the restrictions imposed by the Program Sponsor. In such cases, transaction and other fees are generally included in the net price of the security and are in addition to wrap fees paid by the Participant. However, in some situations, trades may be executed with the Program Sponsor (or a broker-dealer designated by the Program Sponsor) for trading that reflects individual activity in a client’s account, such as initial investment positioning, rebalancing due to additions or withdrawals of cash or securities, account liquidations, or other account-specific transactions such as client-directed tax transactions. These trades are limited in nature, and all or nearly all of the transactions in most Managed Account Program accounts will be traded away from the Program Sponsor or its affiliated broker-dealers. The additional fees incurred by Managed Account Program clients when Loomis Sayles executes trades away from the Program Sponsor are discussed in more detail under “Fees and Compensation” above. ]
Where Clients Direct Brokerage
In general, transaction costs, whether in the form of a commission, spread or other compensation, are a client asset and it is Loomis Sayles’ responsibility to seek to apply and utilize that asset so as to achieve the best overall net results when trading for clients, subject to any restrictions clients may have placed on Loomis Sayles’ ability to select brokers. Loomis Sayles believes that its clients are more likely to receive the best results possible on transactions executed for their accounts when it is not limited in selecting the executing brokers. However, Loomis Sayles may accept written instructions from its clients to direct brokerage to a broker (“Directed Broker”) pursuant to commission recapture or other arrangements wherein Loomis Sayles understands that clients may receive cash rebates, expense payments or expense reimbursements, custody, check writing, products, consulting and other services from their Directed Brokers in return for the commissions generated when Loomis Sayles places orders for their accounts with such Directed Brokers. Loomis Sayles is responsible for achieving best execution for its clients. However, Loomis Sayles’ ability to achieve best execution for its clients may be partially or wholly limited by the nature of the Directed Brokerage arrangement a client has instructed Loomis Sayles to follow. The following describes the manner in which transactions for Directed Accounts will be handled, and it provides important information that clients should be aware of generally about Directed Brokerage arrangements:  When feasible and Loomis Sayles believes it is appropriate, Loomis Sayles will block “directed” orders with the orders for the same securities for other Loomis Sayles clients who have not directed Loomis Sayles to use a particular broker, and execute such orders (“blocked order(s)”) with the broker that Loomis Sayles believes will provide the best execution of the blocked order provided that the amount of brokerage a client has requested Loomis Sayles to direct is within the acceptable limits established by Loomis Sayles for the relevant product group, discussed below. When such executing broker is not a client’s Directed Broker, Loomis Sayles may use a “step out” transaction whereby Loomis Sayles instructs the executing broker to “step out” the Direct Brokerage client’s portion of the blocked order to its Directed Broker who will clear, settle and confirm the transaction, and charge the client the commission rate that it has negotiated with the Directed Broker. Generally, there are no additional charges for “step out” transactions.

 More often than not, a client’s Directed Broker is not the broker-dealer Loomis Sayles selects when seeking the best execution of a transaction. As a result, a significant amount of the transactions that are executed in furtherance of a client’s directed brokerage arrangement are executed by the broker-dealer Loomis Sayles believes is providing the best execution of the transaction, and then that broker-dealer is instructed by Loomis Sayles to step out a portion of the transaction to the client’s Directed Broker. Therefore, Loomis Sayles has established the following limitations on the extent to which it will step out client transactions to their Directed Broker(s). An exception to these limitations applies to Managed Account Program accounts that pay a wrap fee to the Program Sponsor, which in part covers the cost of all of the transactions executed for the Managed Account Program account.

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 If a client requires that Loomis Sayles only executes transactions with its Directed Broker, and such client does not permit Loomis Sayles to use “step outs” or if a “step out” is not possible or practical for the particular transaction either due to the type of transaction, the amount of the transaction to be “stepped out”, or the amount of transactions Loomis Sayles has already stepped out for a client account, such client’s orders will generally follow the orders of Loomis Sayles’ other client accounts that are trading in the same securities, at the same time, that have been blocked for execution. Loomis Sayles may rotate trades among these client accounts, if practicable, in accordance with Loomis Sayles’ policy to treat all accounts fairly and equitably over time, under the circumstances. In such instances, Loomis Sayles may or may not achieve best execution.  Depending on the Directed Broker a client has instructed Loomis Sayles to use, the amount of brokerage a client has instructed Loomis Sayles to direct to its Directed Broker, the commission rate and/or fees a client has agreed to pay its Directed Broker, the securities Loomis Sayles is purchasing and selling for the client’s account, and the order in which such clients’ trades are being executed, Loomis Sayles may or may not achieve best execution when it uses a client’s Directed Broker to execute transactions for its account.  Unless explicitly permitted or directed by a client, Loomis Sayles will not negotiate or re- negotiate commission rates with clients’ Directed Brokers. Generally, when Loomis Sayles negotiates commission rates for its non-directed accounts such accounts pay commissions ranging from $.025 to $.04 per share, depending on the nature of the transaction. In 2018, Loomis Sayles achieved an average commission rate of approximately $.03 per share for its client accounts that did not have directed brokerage or commission recapture arrangements.  Clients that require Loomis Sayles to direct 100% of their transactions to their Directed Broker(s) will not be included in the purchase of IPOs or secondary offerings. Conflicts may arise between a client’s interest in receiving best execution on transactions effected for its account and Loomis Sayles’ interest in receiving client referrals from a client’s Directed Broker.

 As a result of the considerations detailed above, directed brokerage accounts may not generate returns equal to those of non-directed accounts.

 As a matter of policy, Loomis Sayles does not accept Directed Brokerage arrangements for fixed income transactions.

In agreeing to satisfy a client’s directions to execute transactions for its account through a Directed Broker, Loomis Sayles understands that it is such client’s responsibility to ensure that: (i) all services provided by the Directed Broker will inure solely to the benefit of the client’s account and any beneficiaries of the account, all expenses paid are proper and permissible expenses of the account, and may properly be provided in consideration for brokerage commissions or other remuneration paid to the Directed Broker; (ii) using the Directed Broker in the manner directed is in the best interests of the client’s account and any beneficiaries of the account, taking into consideration the services provided by the Directed Broker; (iii) its directions will not conflict with any obligations that persons acting for the client’s account may have to the account, its beneficiaries or any third parties, including any fiduciary obligations that persons acting for the account may have to obtain the most favorable price and execution for the account and its beneficiaries; and (iv) persons acting for the client’s account have the requisite power and authority to provide the directions on behalf of the account and have obtained all consents, approvals or authorizations from any beneficiaries of the account and third parties that may be required under applicable law or instruments governing the account. In addition to the above, as investment adviser or subadviser for certain investment company clients, such clients may ask Loomis Sayles to direct brokerage for such clients to certain broker- dealers that have agreed to use a portion of the cost of the commissions related to such brokerage to pay operating expenses of the applicable investment company client(s) to defray that client’s expenses. When satisfying such directions, Loomis Sayles will generally follow the process described above under “Where Clients Direct Brokerage.” As previously mentioned, client directed brokerage arrangements may limit or prevent Loomis Sayles from using such clients’ commission dollars to pay for research and research services, and therefore, certain clients may have more of their commissions directed for research and research services than others.
Aggregation of Orders
When Loomis Sayles believes it is desirable, appropriate and feasible to purchase or sell the same security for a number of client accounts at the same time, Loomis Sayles may (but is not obligated to) aggregate its clients’ orders (“Aggregated Orders”), including orders on behalf of affiliated clients and hedge funds, in a way that seeks to obtain more favorable executions, in terms of the price at which the security is purchased or sold, the cost of the execution of the orders, and the efficiency of the processing of the transactions. Subject to certain exceptions, all client accounts participating in an Aggregated Order, including affiliated clients and hedge funds, will participate at the average price at which the Aggregated Order was executed and will bear a pro rata portion of the execution cost of the Aggregated Order. Orders may be (but are not required to be) added to a block over a reasonable period of time during the trading day without first allocating executed shares if the traders believe that the additional orders are based on the same news item, analyst recommendation or other triggering event that prompted the first order. Although Loomis Sayles believes that the ability to aggregate orders for client accounts will in general benefit its clients as a whole over time, in any particular instance, such aggregation may result in a less favorable price or execution for any particular client than might have been obtained if a particular transaction had been effected on an unaggregated basis. With respect to client accounts that have provided Loomis Sayles with directions to use specific brokers or dealers to execute some or all of their trades, compliance with such directions may in some instances result in such a directed brokerage account not participating in an Aggregated Order. As a result, the directed brokerage account may receive a less favorable price or execution, or incur higher execution costs, in particular transactions than if the directed brokerage account had participated in an Aggregated Order with other client accounts. While the Loomis Sayles’ fixed income products that are managed out of the firm’s Boston office use the Boston fixed income trading desk to execute their client transactions, Loomis Sayles has core fixed income products that are managed and traded out of the firm’s Orinda office, and a separate fixed income trading desk located in the Orinda office used to execute the transactions of these core fixed income products (“Disciplined Alpha”). All of the firm’s compliance policies and procedures, oversight capabilities, research, operations, technology, and other supporting tools are applied to and made available to the Disciplined Alpha investment team. However, the transaction orders for the Disciplined Alpha clients are generally placed in the market separately (i.e., not aggregated with like orders of the Boston fixed income trading desk), and in such instances, each trading desk allocates its executed transactions separately (i.e., not pro-rata among all Boston based and Orinda based clients). In addition, while the investment decisions for Disciplined Alpha clients are made independently by the Disciplined Alpha investment team, their use of the firm’s research, risk management and other investment tools, and the fact that their orders are generally not aggregated and executed with the orders of the Boston fixed income clients, creates the possibility that the like orders of the different offices may compete in the market place when they transact the same security at or about the same time, on the same side of the market. This has the potential to affect the price, amount or other terms of the transaction executions realized by the clients of each office. Any effect of substantially contemporaneous market activities is likely to be more pronounced where the supply or liquidity of the security is limited. In addition, Loomis Sayles Investments Limited (“Loomis Sayles Investments”), a wholly-owned subsidiary of Loomis Sayles headquartered in the United Kingdom, may provide trade recommendations to Loomis Sayles and place trade orders with broker-dealers at Loomis Sayles’ direction for the benefit of Loomis Sayles’ clients. Said trade recommendations and execution services will be primarily in securities that are traded in Europe. The Loomis Sayles global fixed income products and other products that invest in Europe will likely take advantage of Loomis Sayles Investments’ trade recommendations and order placement services. However, not all products that invest in European securities will take advantage of such recommendations and order placement services. Similarly, Loomis Sayles Investments Asia Pte. Ltd. (“Loomis Sayles Asia”), a wholly-owned subsidiary of Loomis Sayles headquartered in Singapore, may provide trade recommendations to Loomis Sayles and place trade orders with broker-dealers at Loomis Sayles Asia’s direction for the benefit of Loomis Sayles’ clients. Said trade recommendations and execution services will be primarily in securities that are traded in Asia. The Loomis Sayles global fixed income products and other products that invest in Asia will likely take advantage of Loomis Sayles Asia’s trade recommendations and order placement services. However, not all products that invest in Asian securities will take advantage of such recommendations and order placement services.
Allocation of Investments or Trading Opportunities
Loomis Sayles makes decisions to recommend, purchase, sell or hold securities for all of its client accounts, based on the specific investment objectives, guidelines, restrictions and circumstances of each account (including, but not limited to, such factors as an account’s existing holdings of the same or similar issuers or sectors, cash position and account size and, in some instances, certain relevant tax considerations) and other relevant factors, which may include but are not limited to, the size of an available purchase or sale opportunity, the availability of other comparable opportunities and Loomis Sayles’ desire to treat its clients’ accounts fairly and equitably over time. The goal of our policies and procedures is to act in good faith and to treat all client accounts in a fair and equitable manner over time, regardless of their strategy or fee arrangements. These policies include those addressing the fair allocation of investment opportunities across client accounts, the best execution of all client transactions, and the voting of proxies, among others. Information regarding investment opportunities is widely disseminated among all appropriate investment professionals responsible for selecting investments to ensure that the accounts for all portfolio management groups have an opportunity to act on the information. The decision on which accounts should participate in an investment opportunity, and in what amount, is based on the type of security or other asset, the present or desired structure of the various portfolios and the nature of the account’s investment objectives. Other factors include risk tolerance, tax status, permitted investment techniques and, for fixed-income accounts, the size of the account, number of bonds available and other practical considerations. As a result, we may have different price limits for buying or selling a security in different accounts. Loomis Sayles’ policy is to allocate purchase opportunities, including securities being offered in private placements, initial public offerings, secondary offerings and other investment opportunities that may have limited availability, and sale opportunities it identifies as being appropriate for particular client accounts, among its clients’ accounts, on a fair and equitable basis over time. Because it is not possible to allocate every purchase or sale opportunity to every client for which the opportunity would be appropriate and desirable, particular clients may not participate in transactions that would be appropriate and desirable for those clients, as a result of Loomis Sayles’ decision to allocate those particular opportunities to other client accounts. Sometimes, however, investment opportunities are in short supply and there are not enough securities available to create a meaningful holding in every account for which the security might be a suitable investment. In these cases, our policies allow us to consider a number of factors in determining what we deem to be a fair and equitable allocation among accounts. We may allocate available securities among accounts with investment objectives most closely aligned to the investment’s attributes. For example, we may choose to allocate a small cap initial public offering among investors in our small cap product, even though the stock might also be suitable for other portfolios with a broader range of holdings. We may also give priority to client portfolios that differ from strategy, model portfolios or benchmark targets to promote consistency among similarly managed portfolios. Allocation priorities vary by type of transaction, but portfolio manager considerations include (but are not limited to) duration, cash, sector, curve position, state and credit rating. Other considerations may include, but are not limited to:  impact of the purchase relative to achieving desired portfolio characteristics  block size relative to portfolio size  the assets of the accounts  whether to avoid having an account hold odd-lot or small positions  diversification within the accounts  the investment objectives of the accounts (including portfolio duration targets, sector allocation, and structure relevant to account benchmark)  liquidity and cash available for investment in each account  the availability of alternative securities which otherwise accomplish the investment objectives of the accounts Clients should understand that, notwithstanding the fact that certain client accounts may have the same portfolio manager and similar investment objectives, investment guidelines, risk tolerances and asset size, there may often be differences in portfolio security composition among such clients’ accounts, especially fixed income client accounts, due in part to the timing of the accounts’ entering the market and the liquidity, pricing and credit opinion (as applicable) of the available securities at such times and, in some cases, the tax sensitivities of the clients. However, Loomis Sayles intends that the portfolio manager of such client accounts will generally seek to manage such accounts in a way that they will generally have similar portfolio characteristics (such as industry and sector weightings, average credit quality and duration, as applicable) where appropriate and feasible. The Loomis Sayles Investment Risk Review process includes reviews of dispersion among accounts. See please register to get more info

oversight” below. When an Aggregated Order cannot be completely filled on the day it is placed in the market for execution, the portion of the Aggregated Order that is filled on any particular day will generally be allocated to each account participating in the Aggregated Order on a pro rata basis relative to the number of securities that were intended to be traded (i.e., trade order size) for each account participating in that Aggregated Order, such accounts will generally participate at the average price at which such partially-filled Aggregated Order was executed and will bear a pro rata portion of the execution cost of the partially-filled Aggregated Order for such day. Notwithstanding the above, a portfolio manager or an appropriate designee thereof and/or a trader may allocate shares/bonds purchased or sold in a manner that is other than pro rata, when a pro rata allocation would be impractical or would lead to an inefficient or undesirable result. Examples of such instances include, but are not limited to, when the portfolio manager, appointed designee thereof and/or trader or their designee determine(s) that it would be appropriate to round off odd- lots or a small number of shares/bonds received by an account pursuant to a pro rata allocation, when the portfolio manager and/or trader determine(s) that it would be appropriate, given the limited number of shares/bonds actually purchased or sold, to fill one or more account(s) completely due the account’s weighting in the security relative to the portfolio manager’s target weighting for the security/sector, when the portfolio manager, appointed designee thereof and/or trader determines that a purchase would have a larger impact on an account relative to other accounts in achieving desired portfolio characteristics, when the portfolio manager is seeking to invest the cash of a new client account or a significant cash add from an existing client account, when the Portfolio Manager is required to sell securities to satisfy a client’s investment restrictions or when the portfolio manager is required to sell securities for a client that is closing its account with Loomis Sayles. Brokerage allocation is handled in the same manner for hedge funds as it is for long-only accounts. We use a number of techniques to perform after-the-fact review of trading in client accounts. These techniques include performance dispersion analysis performed by the Chief Investment Risk Officer and periodic internal audits performed to determine whether our fixed income investment teams are following our trade allocation policies and procedures, and whether there is any evidence of preferential treatment being given to performance fee accounts. We do not, however, routinely review individual transactions in isolation.
Trading Oversight Committee
Loomis Sayles has established a trading oversight committee to oversee and assist in the development and evaluation of various aspects of Loomis Sayles’ trading and brokerage practices. Among other things, the trading oversight committee will establish and review Loomis Sayles’ policies and procedures with respect to such areas as selection of brokers and dealers, receipt and use of products and services provided by brokers and dealers, trade errors and best execution. The trading oversight committee is chaired by the Chief Compliance Officer and reports to Loomis Sayles’ Risk Management Committee and Board of Directors as appropriate and necessary.
Conflicts of Interest
Various parts of this ADV discuss potential conflicts of interest that arise from our business. Conflicts of interest arise as a result of having competing interests in the outcome of a situation. By favoring itself, a related party or another client, Loomis Sayles may fail to act in the best interest of a client. When assessing a potential conflict of interest, Loomis Sayles considers whether it: (1) is likely to make a financial gain, or avoid financial loss, at the expense of the client; (2) has an interest, that is separate and distinct from that of the Client, in the outcome of the service provided to the Client or of a transaction carried out on behalf of the Client; (3) has a financial or other incentive to favor the interest of one client or group of clients over the interests of another client or groups of clients; or (4) receives or will receive, from a person other than the client an inducement in relation to the service provided to the client, in the form of higher fees. We disclose these conflicts due to the fiduciary relationship we have with our investment advisory clients. When acting as a fiduciary, Loomis Sayles owes its investment advisory clients a duty of loyalty. This includes the duty to address, or at minimum disclose, conflicts of interest that may exist between different clients; between the firm and clients; or between our employees and our clients. Where potential conflicts arise from our fiduciary activities, we will take steps to mitigate, or at least disclose, them. Conflicts arising from fiduciary activities that we cannot avoid (or chose not to avoid) are mitigated through written policies that we believe protect the interests of our clients as a whole. Loomis Sayles has adopted numerous policies and procedures that include principles and guidelines for identifying, managing, recording and, where relevant, disclosing existing or potential conflicts and protecting the interests of its clients. Pursuant to these policies and procedures, Loomis Sayles and each of its employees are responsible for (1) identifying actual or potential conflicts of interest (defined below) and reporting them to the Chief Compliance Officer, (2) discussing any questions or concerns about possible conflicts with the Chief Compliance Officer, and (3) managing and mitigating conflicts fairly and in accordance with applicable policies and procedures. By complying with these rules, using robust compliance practices, we believe that we handle these conflicts appropriately. Loomis Sayles has reviewed its business to identify potential conflicts of interest and to establish appropriate policies and procedures to manage those conflicts. Recognizing that it is impossible to anticipate all potential conflicts, the list below provides examples of the identified permanent conflicts of which the firm’s staff is aware, along with a brief explanation of the firm’s arrangements for mitigating and managing the risk of such conflicts:  Sales and Marketing - Employees may use inaccurate and/or misleading materials to attract new clients to or retain existing clients with Loomis Sayles. To manage this potential conflict, Loomis Sayles has implemented Advertising and Marketing Policies and Procedures that are designed to reasonably ensure that all communications to clients, prospective clients and consultants comply with the regulatory requirements applicable to such communications. These procedures set forth the general standards and specific legal requirements that govern the firm’s sales and marketing efforts, and they provide for the legal review of all such communications before they are used with prospective and existing clients of Loomis Sayles. In addition, Loomis Sayles uses an automated review system to process materials for quality control and review by the Loomis Sayles Legal and Compliance Department. Affiliated Trading – Loomis Sayles’ traders could favor Natixis broker-dealers in a way that may not be in the best interest of Loomis Sayles’ clients. To manage this potential conflict, as a policy matter, the Loomis Sayles traders are prohibited from trading with the firm’s affiliated broker-dealers.  Soft Dollars - Loomis Sayles may use clients’ commissions to offset costs that Loomis Sayles would otherwise incur directly such as research, computers, travel expenses, etc. To manage this potential conflict, Loomis Sayles’ soft dollar policies and procedures require all soft dollar services to be Section 28(e) eligible, and the Chief Compliance Officer formally approves all new third-party soft dollar services.  Errors – Loomis Sayles corrects trading errors and investment guideline violations affecting client accounts in a fair and timely manner, and in such a way that the client will not suffer a loss. Ultimately, however, we decide whether an incident is an error that requires compensation. Also, in certain circumstances, correcting an error may require the firm to take ownership of securities in its own error account, and the disposition of those securities may create a gain in the firm’s error account. To manage potential conflicts concerning such errors, we have implemented trade error and investment guideline breach policies and procedures, and the resolution of all such errors has to be approved by the Chief Compliance Officer or designee thereof.

 Relationships with Broker Dealers - Traders could have relationships with broker-dealers that may provide an incentive to trade with such broker-dealers in a manner that is not in our clients’ best interest. To manage this potential conflict, Loomis Sayles has implemented an annual certification requirement whereby traders must disclose any and all personal or familial relationships with broker-dealers which could present the trader or Loomis Sayles with a conflict of interest. In addition, traders are required to acknowledge that they have read, understand and have complied with Loomis Sayles’ policies and procedures with respect to gifts and business entertainment.

 Gifts and Entertainment - Frequent or inappropriate gifts to Loomis Sayles employees from, or lavish entertainment of employees by, or employee affiliations with, vendors, service providers or intermediaries (among others) could prompt questions as to whether recommendations are based on such relationships rather than on the interests of the client. To manage this potential conflict, Loomis Sayles’ Gifts and Entertainment Policies and Procedures govern personal conduct issues such as these, and require certain reporting by employees that is intended to help the Loomis Sayles Legal and Compliance Department identify matters that could give rise to a conflict.

 Allocation of Investment Opportunities - Portfolio managers may allocate investments in a manner that does not treat all clients fairly and equitably. To manage this potential conflict, Loomis Sayles has implemented Trade Aggregation and Allocation Policies and Procedures, pursuant to which, Loomis Sayles’ policy is to allocate purchase and sale opportunities among its clients’ accounts in a fair and equitable manner over time. The Loomis Sayles Legal and Compliance Department utilizes various oversight capabilities to monitor allocations that have the highest degree of risk such as those of the firm’s hedge funds.  Side-By-Side Management - The performance fees paid by the hedge funds may cause their investment teams to give preferential treatment to such funds in terms of the allocation of investment opportunities, or may cause the hedge funds to front-run the trading activities of the long-only accounts. To manage this potential conflict, Loomis Sayles’ policies and procedures identify and address the potential conflicts of interest (e.g., aggregation and allocation of orders, cross trading, pricing of securities, front running, etc.) when managing hedge funds side-by-side with long-only accounts. The Legal and Compliance Department utilizes several daily automated exception reports to oversee the hedge funds’ compliance with such policies and procedures. Finally, external auditors are engaged periodically to conduct an internal audit on the fixed income trade aggregation and allocation processes, with a specific focus on determining whether the hedge funds, other performance fee accounts, and high profile funds are receiving preferential treatment with respect to investment opportunities or front running long-only accounts. They also audit for compliance with trade aggregation and allocation policies and procedures.

 Cross Trading - Loomis Sayles may cross securities among client accounts in a manner which is not in the best interest of all accounts involved. As a policy matter, Loomis Sayles will not knowingly or intentionally effect transactions between client accounts, and the Loomis Sayles Legal and Compliance Department has implemented various automated reports to prevent or detect the crossing of securities among client accounts. Any exceptions to this policy must receive the prior approval of the Loomis Sayles Legal and Compliance Department.

 Allocating Fund Brokerage Based Upon Fund Sales - Loomis traders may direct client transactions to broker-dealers for purposes of rewarding them for selling shares of the Loomis/Natixis funds, and such transactions may not achieve best execution. To manage this potential conflict, Loomis Sayles’ policies and procedures prohibit its traders from directing transactions to broker-dealers in reciprocation for said broker-dealers’ efforts to sell shares of the funds to their clients. Furthermore, as a procedural matter, the Loomis Sayles traders are not provided with broker-dealers’ funds sales activities.

 Personal Trading - Loomis Sayles’ employees may conduct their personal dealings in a manner that is not in the best interests of the clients of Loomis Sayles. To manage this potential conflict, Loomis Sayles has implemented a Code of Ethics (“Code”) which contains restrictions that are designed to avoid apparent and actual conflicts of interest with clients and inadvertent violations of the securities laws as they relate to personal trading. Loomis Sayles employees agree in writing to abide by the Code as a condition of employment. Under the Code, employees carrying out personal securities transactions must generally ensure that they are not (1) benefiting from their personal investments at the expense of any Loomis Sayles client or (2) taking advantage of or “trading on” knowledge of the market impact of client transactions, and the Loomis Sayles Legal and Compliance Department utilized various automated systems to monitor compliance with the Code.  Outside Business Interests - Loomis Sayles’ employees may engage in outside activities that conflict with the best interests of Loomis Sayles and/or its clients. To manage this potential conflict, the Code provides that no employees of Loomis Sayles may serve on the board of directors of any publicly traded company. Additionally, no employee of Loomis Sayles may accept any other service, employment, engagement, connection, association, or affiliation in or with any enterprise, business or otherwise absent prior written approval by the supervisor of said employee and the Loomis Sayles Chief Compliance Officer, or a designee thereof.  Securities Valuation. The fees we charge our own clients and the performance of our products are based upon the value of our clients’ portfolios. Loomis Sayles has the authority to determine the value of securities that are difficult to price (i.e., those that require a fair valuation determination), and in such cases there is an incentive to select a higher price for those securities, when a lower price would be more reasonable. To mitigate that potential conflict, our Securities Pricing Policies and Procedures require our pricing personnel to follow specific steps when determining the fair value of a security, and portfolio managers that own the security in client accounts are not permitted to vote on the fair valuation of the security. Finally, the pricing staff personnel are overseen by our Pricing Committee that is chaired by the firm’s Chief Compliance Officer.

Depending on circumstances, Loomis Sayles may use a number of administrative and organizational arrangements to mitigate any actual or potential conflicts, including: (1) functional independence and separate supervision of relevant employees whose main functions involve carrying out activities or providing services for clients whose interests may conflict, or otherwise representing interests that may conflict. For example, with limited exceptions due to the complexities of the various workflows within the fixed income trading room, the permissioning provided in the firm’s trading and settlements systems is such that only portfolio managers/portfolio specialists can create a trade order; only traders can execute a trade order; and only the operations staff can settle executed trades. These access controls and the separate oversight thereof deter portfolio managers, traders and operations staff from correcting or hiding their errors; and (2) periodic training of employees on potential conflicts of interests and the firm’s mechanisms to mitigate such conflicts.
Investment Management Teams
Loomis Sayles has organized its business into a series of investment teams. Each investment team manages assets in a set of distinct investment styles. Some portfolio managers manage assets across different investment teams. The investment management teams meet regularly to establish parameters for, and to evaluate the composition of, accounts managed in that investment style. The investment professionals associated with the investment platforms take into consideration any internal recommendations made by Loomis Sayles’ research departments regarding the universe of securities followed by the research departments. Each client is assigned to a portfolio manager or team and may be assigned additional client service personnel. The portfolio manager or team (or client service personnel) confers with the client to understand the investment objectives and guidelines for the account. The portfolio manager or team generally has the ultimate discretion to purchase and sell securities for the client’s account and bears primary responsibility for managing the account’s investments in accordance with the objectives and guidelines. In certain circumstances, various accounts for which a portfolio manager or team has responsibility may be related to a single “client relationship.” In general, the number of accounts assigned to any particular portfolio manager, team or client service personnel will depend upon the nature of the accounts and the contractual requirements for the accounts. Client portfolios are reviewed on a continuing basis rather than on an arbitrary, periodic schedule or sequence. With respect to transactions in fixed income securities, traders who are not necessarily members of investment management teams may exercise limited discretion in selecting the issuer, issue and price of securities purchased or sold for client accounts within parameters designated by the portfolio manager or investment management team for the account. The portfolio manager or team takes into consideration any internal recommendations made by Loomis Sayles’ research departments but is not bound by such recommendations.
Supervisory Oversight
The Chief Investment Officer (“CIO”) has supervisory responsibility for the firm’s fixed income investment teams. The Deputy Chief Investment Officer has supervisory responsibility for the firm’s equity investment teams and firm-wide research activities.
Investment Risk Review Committee
Loomis Sayles has established an Investment Risk Review Committee that has responsibility for performing such reviews of Loomis Sayles’ investment management activities as it deems necessary or appropriate to understand the investment management activities of Loomis Sayles’ investment professionals, and to understand the investment philosophy, disciplines, risk management approach and profile, and drivers of current and historical performance of each Loomis Sayles product. These reviews are conducted by the firm’s Chief Investment Risk Officer semi-annually with each product team. The Investment Risk Review Committee seeks to improve the investment management process at Loomis Sayles by encouraging the free exchange of investment ideas, the development of new investment expertise and techniques, and the continuing professional growth and development of the firm’s investment management professionals, and by setting up appropriate forums to challenge the assumptions and decisions made, and themes utilized, by the firm’s investment professionals from time to time. The CIO has full responsibility for the functions of the Investment Risk Review Committee. The Committee generally reviews the performance, attribution, composite dispersion, risk profile and investment activities for each investment style. The Committee reports material investment related risks to the Loomis Sayles Risk Management Committee, the CEO, or Board of Directors, as deemed necessary.
Client Reports
Loomis Sayles generally provides written account reports to separate account clients on either a monthly or quarterly basis. Standard reports include a complete list of account holdings and account performance information. These reports and related account information is also available on the Loomis Sayles website through its eservice platform. Certain clients may receive additional information if required by their advisory agreement. please register to get more info

Amounts Paid by Loomis Sayles
Loomis Sayles pays commissions to certain of its employees to compensate them for new business brought to the firm and for capital additions to existing business. The commissions are generally a specified percentage of revenues received by Loomis Sayles from a new account or from additional capital contributed to an existing account. Commission payments are generally for the first three years of the client relationship and they are paid over this time period. In addition, from time to time Loomis Sayles enters into arrangements with affiliates and unaffiliated third parties for their assistance in referring business to the firm or providing client service to the firm’s clients. Loomis Sayles may pay cash compensation to these third parties, where such cash compensation may be equal to a specified percentage of the advisory fees received by Loomis Sayles from accounts obtained through the third party.
Amounts Received or Paid in Connection with Certain Investment Funds
Loomis Sayles and/or an affiliate may enter into arrangements with affiliates or unaffiliated third parties to pay cash compensation to these parties. These payments may take the form of a set fee or retainer, and/or a specified percentage of advisory and/or incentive fees. In certain instances, Loomis Sayles or an affiliate may rebate a portion of the investment management fee charged to certain foreign investment pools to parties who are instrumental in arranging for investments to be made in such investment pools (or may otherwise rebate a portion of the investment management fee to certain investors in such foreign investment pools).
Other Payments
In certain cases, an affiliate of Loomis Sayles may enter into an arrangement with one or more of its affiliates (including affiliated employees) or an unaffiliated third party for their assistance in referring business to Loomis Sayles or providing client service to Loomis Sayles’ clients. Such affiliate of Loomis Sayles may pay cash compensation to such parties in that connection. Loomis Sayles may or may not be aware of the existence or terms of any such arrangements. However, Loomis Sayles does make payments to certain entities in order to receive performance and database analytics as well as research, and to attend periodic conferences and workshops on investment trends, industry developments and analytical techniques. Entities that receive such payments may also serve as consultants to clients for whom Loomis Sayles provides investment advisory services, and for prospective clients to whom Loomis Sayles may provide such services. Loomis Sayles does not consider such payments to be direct or indirect compensation to any person for client referrals. These arrangements are reviewed annually. please register to get more info

Loomis Sayles does not maintain physical custody of client assets, but Loomis Sayles and certain of its related persons are deemed to have custody over certain investment pools for which Loomis Sayles or its related persons serve as trustee, general partner, managing member or in a similar capacity. Such investment pools maintain unaffiliated “qualified custodians” and undergo “surprise” audits or, in the alternative, annual audits of their financial statements and the audited financial statements are provided to investors within 120 days of the end of the investment pool’s fiscal year end. Loomis Sayles’ clients generally retain their own custodians and maintain a separate agreement with their custodian governing the custodial services provided. The custody agreements among Loomis Sayles’ clients and the clients’ custodians may authorize Loomis Sayles to withdraw or transfer client funds or securities upon instruction to the custodian. Loomis Sayles does not receive such agreements from its clients or their custodians, and therefore is unaware if they provide Loomis Sayles with the authority described above, and Loomis Sayles will not act on such authority. Loomis Sayles provides separate account clients with account statements that are based on information obtained from its internal accounting system. While Loomis Sayles takes great care in reconciling its information with that of client custodians, there may be some discrepancies. Loomis Sayles urges clients to compare any Loomis Sayles account statements with those of their custodian.
Currency Conversions
If permitted by a client’s investment guidelines, Loomis Sayles may engage in foreign currency exchange transactions with dealers as part of its investment strategy. There are also certain categories of foreign currency exchange transactions which do not involve active investment decisions or trading with third party dealers. Unless specifically directed by a client, repatriations of income and dividends for non-global fixed income accounts generally are converted back to base currency through the client’s custodian in accordance with the custodian’s procedures. Procedures tend to vary among custodians, particularly with respect to execution price, fees and timing and clients should ensure that their custodian’s repatriation program is appropriate for them. Due to the desire to maintain currency exposure, Loomis Sayles’ global fixed income and certain other accounts with a global focus generally do not automatically convert income back to base currency unless directed by the client. A similar process exists for transactions in restricted currencies, which involve converting currency for purchase and sale transactions to comply with local requirements. please register to get more info

Generally, Loomis Sayles’ clients give it investment discretion over assets placed under Loomis Sayles’ management. When Loomis Sayles has investment discretion, it is authorized to make all investment decisions and to direct the execution of all transactions for the client’s account (subject to the investment objectives and guidelines applicable to the account) without consulting with the client in connection with each transaction. Before Loomis Sayles accepts discretionary authority, it must have a signed investment advisory agreement with the client that covers the assets subject to Loomis Sayles’ discretion. While not required, many client contracts include the execution of a power of attorney that specifically authorizes Loomis Sayles to take actions on the client’s behalf. Most clients customize the investment guidelines with respect to their account(s), and may specify, among other things, permissible investments, diversification requirements, quality constraints (in the case of fixed income) and prohibited investments. Certain clients, however, retain Loomis Sayles on a non-discretionary basis (e.g., in certain Managed Account Programs). When Loomis Sayles is retained on a non-discretionary basis, it makes recommendations for the client’s account but all investment decisions are made by the client and account transactions are executed only by the client or otherwise in accordance with the client’s advisory agreement. If the client and Loomis Sayles trade the same security at about the same time, on the same or opposite side of the market, the price, amount or other terms of the trade execution may be affected. Any effect of substantially contemporaneous market activities is likely to be most pronounced where the supply or other liquidity of the security traded is limited. Each client account is governed by the written investment guidelines and restrictions the client provides to Loomis Sayles. The fixed income guideline conventions listed below are applied only in the absence of written direction from a client. Questions regarding these conventions should be directed to the client’s Relationship Manager at Loomis Sayles.
Fixed Income Guideline Conventions
1. US Government Agency Securities – Loomis Sayles has adopted the convention used by Bloomberg Barclays Capital, which includes debt of all federal agencies and government sponsored enterprises, most notably FNMA, FHLB and FHLMC.

2. Securitized Agency and Securitized Credit Securities – Securitized agency securities include securities that have an implied or explicit guarantee by the US Government or government sponsored enterprises. Securitized credit securities include asset-backed securities (ABS), residential mortgage-backed securities (RMBS), commercial mortgage- backed securities (CMBS), collateralized debt obligations (CDO), collateralized loan obligations (CLO) and covered bonds. Securitized agency securities, ABS, RMBS, and CMBS are deemed eligible investments unless specifically prohibited. Certificates issued by equipment trusts, which hold only equipment leased by one obligor with a corporate guarantee, are not considered to be ABS and will be treated as corporate debt.

3. Securitized Agency and Securitized Credit Pools – Each securitized agency and securitized credit pool is classified as a separate issuer for the purposes of calculating issuer restrictions. The shares outstanding of the entire pool, and not the shares outstanding of each individual tranche, will be used to calculate the percentage held of an outstanding issue. 4. Municipal Securities –For the purpose of calculating issuer exposure for municipal securities, Loomis Sayles will use Ultimate Borrower data in Bloomberg, which specifies the name of the entity ultimately responsible for payment of the bonds. 5. Securitized Credit and Securitized Agency Classifications – Loomis Sayles currently relies on Bloomberg and Barclays for the security classification of most asset classes with the exception of securitized assets and bank loans. While Bloomberg does classify securitized assets, it does so at a very high level and not in a way that distinguishes the different asset classes and accompanying risks. Therefore, pursuant to formal policies and procedures, the Loomis Sayles Mortgage and Structured Finance Group will assign a security classification to securitized assets based on the security’s offering document. Any subsequent classification changes to a securitized asset must be reviewed by the Compliance Department to ensure appropriateness. The Securitized Credit classification will include all securitized sectors in the benchmark; provide subcategories for ABS, RMBS, CMBS and CDO/CLO; separate Agency and Non-Agency RMBS into different categories; and combine ABS Home Equity and Non-Agency CMOs into one category under RMBS. Client guidelines and restrictions that prohibit ABS or ABS Home Equity Loan will prohibit the account from purchasing securities in the RMBS categories of Subprime, HELOC and Second Lien Loans. Within RMBS, categories such as Prime or Subprime will be determined based on the balance weighted average FICO scores of the borrowers in the pool, measured at the time of issuance. The FICO ranges that correspond to Prime or Subprime categories are determined in accordance to our policies and procedures, which we believe to be within industry norms. References to Subprime will only relate to RMBS unless specifically stated otherwise in the guidelines.

6. Mortgage Derivatives – Mortgage derivatives will be identified by the research analyst as securities that have the following characteristics: (1) securities with cash flows that are more volatile to prepayments than the underlying collateral; (2) securities with coupons that have more levered sensitivity to changes in rate benchmarks; or (3) other securities that may have characteristics similar to (1) and (2) above that are deemed complex instruments at the discretion of the research analyst. Client guidelines that prohibit high volatility CMOs will be prohibited from purchasing securities flagged as a mortgage derivative.

7. Preferred Stock – Preferred stock is deemed an eligible investment for high yield and full discretion accounts unless specifically prohibited.

8. Convertible Securities – Convertible securities are deemed eligible investments for high yield and full discretion accounts unless specifically prohibited. Securities received due to the conversion of a convertible security are deemed permissible unless specifically prohibited.

9. Supranational Securities – Supranational securities are securities issued by an entity designated or supported by national governments to promote economic reconstruction, development or trade among nations. Examples of supranational entities include International Bank of Reconstruction and Development (“IBRD”) and the European Investment Bank (“EIB”). For purposes of complying with country guideline restrictions, the supranational entity’s headquarters will be used. Therefore, IBRD is classified as a US issuer and EIB is classified as a non-US issuer. 10. Yankee Securities – Yankee securities are US dollar denominated securities issued in the US by foreign domiciled issuers and traded in US markets. Yankee securities, including emerging markets Yankee securities, are deemed eligible investments unless specifically prohibited, so long as they otherwise meet the quality parameters of the guidelines. 11. Foreign Securities – Foreign fixed income securities are all securities that are not denominated in US dollars, including fixed income securities of US issuers denominated in non-US dollars. Securities of foreign issuers that are denominated in US dollars (e.g., Yankee and Eurodollar securities) are not treated as foreign securities. 12. Emerging Market Debt Securities – There is no one definition of an emerging market country as evidenced by the manner in which various institutions (i.e., World Bank, the IMF, JP Morgan, etc.) define such countries. However, credit quality is one objective way to define an emerging market country. Therefore, for purposes of establishing an independent definition for investment guideline purposes, an emerging market country is defined as a country which carries a sovereign quality rating below investment grade by either S&P or Moody’s, or is unrated by both S&P and Moody’s. Thus, an emerging market security is defined as a security which is issued by sovereign or corporate entities domiciled in or denominated in the currency of (with the exception of the Euro) an emerging market country as defined above. As of March 2019, the sovereign quality ratings for Chile, China, Colombia, India, Malaysia, Mexico, Peru, Taiwan and Thailand, among others, are investment grade by both S&P and Moody’s and therefore, securities issued in, domiciled in, or denominated in the currencies of these countries will NOT be considered emerging market securities for purposes of any client investment guidelines and restrictions that either prohibit or limit emerging market securities. (This list will change as ratings change in the future.) Notwithstanding the foregoing, certain funds/separate accounts managed by Loomis Sayles may use a broader and/or more subjective definition of an emerging market security than the above that is more appropriate for their mandates and/or benchmarks, but would not be appropriate to be used for clients that do not provide a definition of an emerging market security in their guidelines.

13. Fixed Income Analytics – Unless otherwise specified, analytics from a third party vendor, Barclays POINT is used for guideline compliance purposes. For securities where Barclays POINT does not provide analytics, or there are serious deficiencies observed in Barclays data, Loomis Sayles will use the analytics from Bloomberg or Yield Book. In situations where the analytics data from a third party vendor source is unavailable, or where Loomis Sayles has learned of material inaccuracies in third party data, Loomis Sayles will attempt to obtain the data from a vendor, or get the vendor to correct its data, and until such time as the data is obtained and corrected, Loomis Sayles will assign analytics to a security based on proprietary model calculations. Convertible and Global TIPS will use Bloomberg as the primary analytics source, and certain derivative securities held in portfolios will use SuperDerivatives as the primary analytics source. (NOTE: Barclay’s POINT will be converting to Bloomberg’s PORT during the second quarter of 2019.) 14. Benchmark Data – Loomis Sayles receives benchmark data from various vendors for use in our compliance system to monitor restrictions that are measured against benchmark data. Due to the timing of when these files are received at Loomis Sayles, the benchmark data is typically loaded on a one day lag. 15. Duration – Unless otherwise specified, effective duration analytics from a third party vendor is used to calculate the average portfolio duration for guideline compliance purposes for accounts other than municipal clients. Modified duration will be used for municipal client accounts. The following instruments held in portfolios will be assigned a duration of “0”: (1) common stocks, ETFs and index instruments; (2) commodity contracts, commodity ETFs, and commodity index contracts; (3) cash; (4) currency derivative contracts, including but not limited to forward currency contracts and currency futures contracts; and (5) any derivatives on (1) and (2). Bank loans held in portfolios will be assigned a duration of “0.1”.

16. Spread Duration – Unless otherwise specified, accounts that limit the spread duration of a portfolio will include Treasury securities and any derivatives on Treasury securities in the spread duration calculation. With the exception of non-German Euro currency based instruments, Treasury securities and any derivatives on Treasury securities will be assigned a spread duration of “0”. Non-German Euro currency based instruments will use the spread duration analytics from a third party vendor. Equity securities will be assigned a spread duration of “0”.

17. Maturity – For accounts that limit the maturity of individual bonds, Loomis Sayles may from time to time invest in bonds that exceed the maturity requirement by a few days or weeks.

18. Industry/Sector Classification – Loomis Sayles utilizes the Bloomberg Barclays Capital industry classifications to determine industry and sector allocations for all fixed income securities except for securitized credit, securitized agency and bank loan securities. Industry classifications will be based on Bloomberg Barclays Level 4 and sector classifications will be based on Bloomberg Barclays Level 3.

19. Bank Loan Classifications – Loomis Sayles currently relies on bank loan offering documents in order to obtain data for new bank loans and it relies on data from a variety of sources (e.g. Bloomberg, EDGAR, company websites, etc.) for data relating to existing bank loans. Updates to credit ratings are obtained from the Moody’s and S&P websites. The Loomis Sayles Bank Loan Team reviews the bank loan classifications on an ongoing basis to ensure that the data remains accurate.

20. Rating Gradation – For purposes of complying with minimum credit quality requirements, the lowest gradation on a rating is permissible (e.g., where guidelines require that an investment be rated at least B, securities rated B- and above are permissible). 21. Rating Agencies – Unless otherwise specified, S&P and Moody’s ratings will be used to determine the credit quality of a security. 22. Split Rated Securities – If a security does not have equivalent ratings from S&P and Moody’s, the higher rating is applied for the purposes of calculating credit quality restrictions. 23. Non-Rated Securities – For purposes of complying with minimum credit quality requirements, if a security is only rated by one agency, a rating of NR by the other rating agencies will not be evaluated (e.g., where guidelines require that an investment be rated at least B, a security rated B/NR is deemed permissible). 24. Weighted Average Quality Calculation – For purposes of calculating the weighted average quality of a portfolio, Loomis Sayles uses a linear rating scale whereby the ratings of various agencies are mapped to numeric equivalents in order to calculate the portfolio’s average quality. This methodology is consistent with the Barclays Capital methodology for calculating average quality for its indices. If the guidelines permit investments in common stocks, the common stocks held in the portfolio will be excluded from the weighted average quality calculation.

25. Downgraded Securities – When a rating agency downgrades a security (“DG Day”), our system will reflect this rating change on the following business day (“DG Day + 1”). Should client notification of downgraded securities be required by the client guidelines, such notification will be based on holdings as of the end of day on DG Day.

26. Cash Ratings – Unless otherwise specified, the currency’s sovereign quality rating will be used to determine the credit quality of cash and cash will be included in applicable quality rating restrictions.

27. Credit Swaps of Investment Grade Securities – For accounts that treat U.S. cash as an investment grade exposure, if the account is below a minimum investment grade quality limit due to non-volitional action (e.g., downgrade or withdrawal), and the guideline applies at the time of purchase, the account will be permitted to sell investment grade securities because the cash proceeds will be allocated to the investment grade bucket and the percentage of investment grade exposure will remain the same. Therefore, a credit swap of one investment grade security for another will be permitted even though the account is out of compliance with the minimum investment grade requirement at the time of the trades

28. Government, Agency, Government Sponsored Entity, and Provincial Security Ratings – If a Government, Agency, Government Sponsored Entity or Provincial security is not rated by S&P or Moody’s, the security’s sovereign quality rating will be used to determine the credit quality of the security.

29. Non-Rated Securities with Government Guarantee – If a security is not rated by S&P or Moody’s, but is guaranteed by the United States or another sovereign, the sovereign quality rating will be used to determine the credit quality of the security, and the security will be deemed permissible for accounts that prohibit non-rated securities. 30. Expected Ratings – For purposes of determining guideline compliance for new issues, the expected rating(s) provided by S&P, Moody’s and/or Fitch for a security will be used until the actual rating(s) is published on Bloomberg, for a maximum of 30 days. If the actual rating has not been published after 30 days, Loomis Sayles will change the rating to NR on its systems for guideline compliance testing purposes. 31. Commingled Funds – Investments in commingled funds will follow the guidelines specified in the commingled fund’s offering memorandum or prospectus and statement of additional information, and will not be subject to the client guidelines with the exception of the credit quality, duration, country and currency restrictions, if any. In applying these restrictions, the credit quality, duration, country and currency of the commingled fund will be used and not the credit qualities, durations, countries and currencies of the underlying instruments in the commingled fund. 32. Forward Foreign Currency Transactions – If an account permits the use of non-dollar securities, unless otherwise specified, the account may enter into forward foreign currency transactions to hedge against non-dollar exposure.

33. Rule 144A Securities – Rule 144A Securities are deemed eligible investments for all accounts that qualify as a Qualified Institutional Buyer (“QIB”) unless specifically prohibited. Rule 144A securities will be deemed as private placement and restricted securities.

34. Reg S Securities – Reg S securities are deemed eligible investments for all foreign accounts unless specifically prohibited. Reg S securities that have been seasoned to trade in the U.S. are deemed eligible investments for all U.S. accounts unless specifically prohibited. Eligible Reg S investments will not be deemed as private placement or restricted securities.

35. TBA Mortgage Securities – TBA mortgage securities (“TBAs”) are eligible investments unless the client’s investment guidelines prohibit such instruments. A TBA represents a contract for the purchase or sale of mortgage-backed securities to be delivered at a future agreed upon date, where the specific pool numbers or the number of pools that will be delivered to fulfill the trade obligation or terms of the contract are unknown at the time of the trade. Selling TBAs for forward settlement will be permitted when an account holds existing specified mortgage pools that have the same US Agency, coupon rate and maturity as the TBA. This strategy will not be considered a short sale if the aggregate exposure of the US Agency specified pools and short US Agency TBA position is positive on a net basis.

36. Tracking Error – Unless otherwise specified, in order to monitor compliance with a portfolio’s tracking error objectives, Loomis Sayles will monitor a portfolio’s estimated tracking error, as derived by a third party vendor within the target range specified by the client. The target tracking error is not intended to reduce investment efficiency and Loomis Sayles bears no obligation or responsibility to take any investment actions solely for this purpose of satisfying tracking error objectives. Unless otherwise specified, Loomis Sayles will measure tracking error using an ex-post calculation. 37. Accrued Income – Loomis Sayles will include accrued income in its definition of market value for purposes of complying with guideline exposure limits. Accrued income is defined as fixed income accruals and equity dividends receivable. 38. Structured Notes – Unless explicitly prohibited, accounts may invest in structured notes (e.g. currency linked notes, credit linked notes, credit risk linked notes, etc.) where the underlying reference instrument or pool is a permissible investment in the client guidelines. Structured notes, such as credit risk linked notes where the underlying instrument is not a derivative and the offering memorandum has designated the instrument as indebtedness for U.S. federal tax purposes will be treated as debt and not a derivative for the purposes of complying with client guidelines. Structured notes where the underlying is a derivative or is levered, or the offering memorandum characterizes the instrument as a derivative for U.S. federal tax purposes will be treated as a derivative for guideline compliance purposes.

39. Currency Linked Notes – Currency linked notes are deemed eligible investments for accounts that permit non-dollar exposure, unless specifically prohibited.

40. Pre-refunded Municipal Securities – Municipal securities that are pre-refunded, or escrowed to maturity, will be assigned a AAA/Aaa rating in our compliance system for purposes of complying with client rating restrictions.

41. Swaptions and Interest Rate Swaps – Loomis Sayles uses a third party vendor, SuperDerivatives for swaption and interest rate swap security analysis.

42. Hybrid Securities – Hybrid securities are deemed an eligible investment for an account unless specifically prohibited.

43. Selling Below a Guideline Limit – An account that has guideline language such as “under normal conditions” or similar language will be permitted to sell securities which would breach a minimum guideline requirement if such action is necessary due to a material withdrawal from the account, an exceptionally volatile market or in the case of a security being sold across all accounts due to credit concerns.

44. Cash Withdrawals/Redemptions – When selling securities to raise cash for an account withdrawal or redemption, Loomis Sayles may take the withdrawal/redemption amount into consideration in the denominator for compliance testing purposes because the cash will the leave the account on settlement date. For example, as an account with a market value of $100 million dollars sells securities to raise cash to meet a $10 million withdrawal, it may use a denominator of $90 million to calculate compliance limits. This action may result in the account selling securities below certain minimum investment restrictions. However, the account will be in compliance with the restrictions on the redemption settlement date. 45. Social Restrictions – Loomis Sayles receives data from a third party vendor, MSCI, to assist in complying with client guidelines relating to certain social restrictions, such as prohibitions on issuers of tobacco, alcohol, gaming, etc. Issuers that are on such social restriction screens are identified based on the percent of direct operating revenue that is derived from the prohibited activity (i.e., tobacco, alcohol, gaming, etc.) Absent client direction, Loomis Sayles will prohibit securities of any issuer that generates any operating revenue from the prohibited activity from being purchased in accounts with such guidelines. 46. Human Rights, Environmental, and Labor Restrictions – Loomis Sayles receives data from a third party vendor, MSCI, to assist in complying with client guidelines relating to Human Rights, Environmental, and Labor guideline restrictions. MSCI applies a ‘severity score’ to each issuer in their coverage universe ranging from 0 for “most severe” to 10 for “no ties to Human Rights, Environmental, and/or Labor violations”. Absent client direction, Loomis Sayles considers an issuer to be a violator if its severity score is 0, and will not purchase any security of issuers with such classifications for clients that prohibit investments in issuers that violate Human Rights, Environmental, and/or Labor Rights factors.

47. Commercial Paper – Commercial paper is deemed an eligible investment for accounts that permit corporate debt exposure unless specifically prohibited.

48. Leverage / Security Purchase Obligations – Loomis Sayles will only purchase securities for a client account if such account has sufficient cash and/or cash equivalents to pay for the securities. An account will not be considered leveraged provided it can cover its security purchase obligations with cash and/or cash equivalents in an amount equal to the cost of the securities. Cash equivalent assets include the following:

a. Custodian STIF; b. Time Deposits, Certificates of Deposits, Bankers’ Acceptances; c. Repurchase Agreements collateralized by US Treasury securities; d. Commercial Paper with a credit quality of A1/P1 or better; e. US Government, Agency and corporate obligations with a maturity of less than one year with a credit quality of A3 or A- or better by Moody’s or S&P; f. Asset Backed Securities, Commercial Mortgage Backed Securities and Mortgage Backed Securities with an effective duration of not longer than 1 year and an expected average life of not longer than 5 years and a credit quality of A3 or A- or better by Moody’s or S&P; and g. Floating rate securities of the issuers listed above that reset at least annually and have a credit quality of A or better.

49. Leverage/Forward Obligations – Loomis Sayles will only invest in derivatives instruments that are permitted by a client’s guidelines. Certain derivatives and TBAs have the ability to create leverage in a client’s portfolio due to the forward obligations they create. There are numerous definitions of leverage (e.g., custodian, accounting, physical, etc.), and as many different methods for calculating leverage. Loomis Sayles’ procedures provide that when an account enters into a forward obligation it shall maintain liquid and unencumbered assets to cover its obligations according to the following guidelines: (1) credit default swap protection sold by the account, uncovered (naked), written call and put options, and all non-derivative instruments with forward obligations will be covered with cash and High Quality Liquid Assets (defined as liquid and unencumbered obligations rated at least A- by S&P, A3 by Moody’s, or A- by Fitch), equal to 100% of the notional amount or the delta adjusted notional amount in the case of options, (2) credit default swap protection bought by the account (short position) will be covered with cash, cash equivalent assets and other High Quality Liquid Assets equal to the mark-to- market obligation of the swap plus the net present value of the total premiums to be paid for such swap for a rolling forward 12 month period, (3) purchases of call and put options and written call and put options used for hedging purposes will require no cover, and (4) all other derivatives not addressed above will be covered with cash, cash equivalent assets and other High Quality Liquid Assets equal to the mark-to-market obligation of the derivative plus any premium and an additional amount in order to establish an additional cushion, as determined by Loomis Sayles in its discretion. The collateral held by a counterparty or agent thereof may be taken into consideration when determining the cover guidelines described above. Forward currency transactions used to hedge an account back to its base currency will be covered by the underlying securities being hedged by such forwards. In addition, derivatives that are used to hedge a portfolio’s duration to a hedged benchmark as required by a client’s investment management agreement are exempt from the cover requirements described above.

An account’s guideline that prohibits leverage will not preclude Loomis Sayles from using permissible derivatives provided that the forward obligations created by said derivatives are covered as described above in the account for risk management purposes. It should be noted that covering forward obligations with High Quality Liquid Assets as described above involves more risk than covering said obligations with cash only, since High Quality Liquid Assets have their own risk.

An account that specifically permits leverage will not be required to cover its obligations as described above as long as it is able to meet its required collateral and margin requirements with its counterparties.

Finally, the process followed for all regulatory funds (e.g. 1940 Act Mutual Funds, Undertakings for the Collective Investment of Transferable Securities (“UCITS”), etc.) is consistent with the applicable regulatory guidance and requirements set forth in this area. please register to get more info

Loomis Sayles’ Proxy Voting Policies and Procedures
Loomis Sayles will vote proxies of the securities held in its clients’ portfolios in accordance with its fiduciary duty on behalf of each client that has delegated proxy voting authority to Loomis Sayles as investment adviser. Loomis Sayles has adopted and implemented Proxy Voting Policies and Procedures (“Proxy Voting Procedures”) to ensure that, where it has voting authority, proxy matters are handled in the best interests of clients, in accordance with Loomis Sayles’ fiduciary duty, and all applicable law and regulations. The Proxy Voting Procedures are intended to support good corporate governance, including those corporate practices that address environmental and social issues (“ESG Matters”), in all cases with the objective of protecting shareholder interests and maximizing shareholder value. The Proxy Voting Procedures are designed and implemented in a way that is reasonably expected to ensure that proxy matters are conducted in the best interests of clients. When considering the best interests of clients, Loomis Sayles has determined that this means the best investment interest of its clients as shareholders of the issuer. To protect its clients’ best interests, Loomis Sayles has integrated the consideration of ESG Matters into its investment process. The Proxy Voting Procedures are intended to reflect the impact of these factors in cases where they are material to the growth and sustainability of an issuer. Loomis Sayles has established its Proxy Voting Procedures to assist it in making its proxy voting decisions with a view toward enhancing the value of its clients’ interests in an issuer over the period during which it expects its clients to hold their investments. The Proxy Voting Procedures “”direct the Proxy Committee on how to vote on the most common proxy proposals. Topics covered include director nominees, proxy contest defenses, ratifying auditors, tender offer defenses, governance provisions, capital structure, executive and director compensation, incorporation domiciles, mergers, acquisitions and corporate restructurings, and ESG Matters. A copy of the Proxy Voting Procedures is available upon request by calling 1-800-343-2029, by writing to Loomis Sayles or via the internet at https://www.loomissayles.com/internet/internetdata.nsf/files/ProxyManual.pdf/$file/ProxyManua l.pdf. Loomis Sayles utilizes the services of third parties (“Proxy Voting Services”) to provide research, analysis and voting recommendations and to administer the process of voting proxies for those accounts and funds for which Loomis Sayles has voting authority. All issues presented for shareholder vote will be considered under the oversight of the Loomis Sayles Proxy Committee and, when necessary, the investment professional(s) responsible for an account holding the security. Loomis Sayles will generally follow the Proxy Voting Procedures with input from the Proxy Voting Service(s), unless the Proxy Committee determines that the client’s best interests are served by voting otherwise. In addition to reviewing the Proxy Voting Services’ recommendations and directing the Proxy Voting Services on how to vote, the Proxy Committee also: (1) develops, authorizes, implements and updates the firm’s Proxy Voting Procedures; (2) oversees the voting process; (3) engages and oversees third-party vendors, including the Proxy Voting Services; and (4) develops and modifies the firm’s policies and procedures, as appropriate or necessary. Loomis Sayles has established several policies and procedures to ensure that proxy votes are voted in its clients’ best interests and are not affected by any possible conflicts of interest. First, except in certain limited instances, Loomis Sayles votes in accordance with its pre-determined policies set forth in the Proxy Voting Procedures. Second, where the Proxy Voting Procedures allow for discretion, Loomis Sayles will generally consider the recommendations of the Proxy Voting Service in making its voting decisions. However, if the Proxy Committee determines that the Proxy Voting Service’s recommendation is not in the best interests of the firm’s clients, then the Proxy Committee may use its discretion to vote against the Proxy Voting Service’s recommendation, but only after taking the following steps: (1) conducting a review for any material conflict of interest Loomis Sayles may have; and (2) if any material conflict is found to exist, excluding anyone at Loomis Sayles who is subject to that conflict of interest from participating in the voting decision in any way. However, if deemed necessary or appropriate by the Proxy Committee after full disclosure of any conflict, that person may provide information, opinions or recommendations on any proposal to the Proxy Committee. In such event, prior to directing any vote, the Proxy Committee will make reasonable efforts to obtain and consider opinions and recommendations from or about the opposing position. There may be instances where Loomis Sayles is not able to vote proxies on a client’s behalf, including, but not limited to circumstances where ballot delivery instructions have not been processed by a client’s custodian, where the Proxy Voting Service has not received a ballot for a client’s account, where local market restrictions are in place or proxy materials are not available in English, or under other circumstances beyond Loomis Sayles’ control. Clients that wish to make a specific direction with respect to any proxy proposal may do so in writing addressed to their Relationship Manager with sufficient advance notice prior to an issuer’s voting deadline. Clients may also address questions about a specific proxy solicitation or make a request for a voting history report to their Relationship Manager. Clients of Loomis Sayles’ mutual funds may obtain the voting history of their fund (or other Loomis Sayles funds) by accessing Loomis Sayles’ website. Clients that do not provide voting discretion to Loomis Sayles will receive any proxy solicitation materials resulting from their account holdings directly from the issuer or its agent. please register to get more info

Not applicable Privacy Policy A- 1 Appendix
FIXED INCOME SECURITIES, PRACTICES AND CERTAIN RISKS
Following is a description of certain fixed income securities and practices, and the associated risks, in which the Loomis Sayles Fixed Income strategies may invest, subject to each strategy’s objective and the specific investment guidelines applicable to each client.
Debt Securities
Debt securities are used by issuers to borrow money. The issuer usually pays a fixed, variable or floating rate of interest and must repay the amount borrowed at the maturity of the security. Some debt securities, such as zero-coupon securities, do not pay interest but are sold at a discount from their face values. Debt securities include corporate bonds, government securities and mortgage- and other asset-backed securities. Debt securities include a broad array of short-, medium- and long-term obligations issued by the U.S. or foreign governments, government or international agencies and instrumentalities, and corporate issuers of various types. Some debt securities represent uncollateralized obligations of their issuers; in other cases, the securities may be backed by specific assets (such as mortgages or other receivables) that have been set aside as collateral for the issuer’s obligation. Debt securities generally involve an obligation of the issuer to pay interest or dividends on either a current basis or at the maturity of the securities, as well as the obligation to repay the principal amount of the security at maturity.

Risks. Debt securities are subject to market risk and credit risk. Credit risk relates to the ability of the issuer to make payments of principal and interest and includes the risk of default. Sometimes, an issuer may make these payments from money raised through a variety of sources, including, with respect to issuers of municipal securities, (i) the issuer’s general taxing power, (ii) a specific type of tax, such as a property tax, or (iii) a particular facility or project such as a highway. The ability of an issuer to make these payments could be affected by general economic conditions, issues specific to the issuer, litigation, legislation or other political events, the bankruptcy of the issuer, war, natural disasters, terrorism or other major events. U.S. government securities generally are not perceived to involve the credit risks associated with other types of fixed-income securities; as a result, the yields available from U.S. government securities generally are lower than the yields available from corporate and municipal debt securities. Market risk is the risk that the value of the security will fall because of changes in market rates of interest. Generally, the value of debt securities falls when market rates of interest are rising. Some debt securities also involve prepayment or call risk. This is the risk that the issuer will repay an account the principal on the security before it is due, thus depriving the account of a favorable stream of future interest payments.

Because interest rates vary, it is impossible to predict the income of an account that invests in debt securities for any particular period.
Adjustable Rate Mortgage Securities (“ARM”)

An ARM, like a traditional mortgage security, is an interest in a pool of mortgage loans that provides investors with payments consisting of both principal and interest, as mortgage loans in the underlying mortgage pool are paid off by the borrowers. ARMs have interest rates that are reset at periodic intervals, usually by reference to some interest rate index or market interest rate. Although the rate adjustment feature may act as a buffer to reduce sharp changes in the value of adjustable rate securities, these securities are still subject to changes in value based on changes in market interest rates or changes in the issuer’s creditworthiness. Since the interest rates are reset only periodically, changes in the interest rate on ARMs may lag behind changes in prevailing market interest rates. Also, some ARMs (or the underlying mortgages) are subject to caps or floors that limit the maximum change in interest rate during a specified period or over the life of the security. As a result, changes in the interest rate on an ARM may not fully reflect changes in prevailing market interest rates during certain periods. Because of the resetting of interest rates, ARMs are less likely than non-adjustable rate securities of comparable quality and maturity to increase significantly in value when market interest rates fall. A- 2 An account will not benefit from increases in interest rates to the extent that interest rates rise to the point where they cause the current coupon of the underlying ARM to exceed a cap rate for a particular mortgage. See “Mortgage-Related Securities” for more information on the risks involved in ARMs.
Asset-Backed Securities
The securitization techniques used to develop mortgage securities are also being applied to a broad range of other assets. Mortgage-backed securities are a type of asset-backed security. Through the use of trusts and special purpose vehicles, assets, such as automobile and credit card receivables, are being securitized in pass-through structures similar to mortgage pass-through structures or in a pay-through structure similar to a collateralized mortgage obligation (“CMO”) structure (described below). Generally, the issuers of asset-backed bonds, notes or pass-through certificates are special purpose entities and do not have any significant assets other than the receivables securing such obligations. In general, the collateral supporting asset-backed securities is of shorter maturity than mortgage loans. Instruments backed by pools of receivables are similar to mortgage-backed securities in that they are subject to unscheduled prepayments of principal prior to maturity. When the obligations are prepaid, an account will ordinarily reinvest the prepaid amounts in securities, the yields of which reflect interest rates prevailing at the time. Therefore, an account’s ability to maintain a portfolio that includes high-yielding asset-backed securities will be adversely affected to the extent that prepayments of principal must be reinvested in securities that have lower yields than the prepaid obligations. Moreover, prepayments of securities purchased at a premium could result in a realized loss. The value of some mortgage-backed or asset-backed securities in which an account invests may be particularly sensitive to changes in prevailing interest rates, and the ability of an account to successfully utilize these instruments may depend in part upon the ability of Loomis Sayles to forecast interest rates and other economic factors correctly. Asset- backed securities involve risks similar to those described in the section “Mortgage-Related Securities.” Some accounts may also invest in residual interests in asset-backed securities, which is the excess cash flow remaining after making required payments on the securities and paying related administrative expenses. The total amount of residual cash flow resulting from a particular issue of asset-backed securities depends in part on the characteristics of the underlying assets, the coupon rate on the securities, prevailing interest rates, the amount of the administrative expenses and the actual performance experience on the underlying assets (among them the amount and timing of losses, leasing and disposition activity).
Bank Loans

Bank loans include senior secured and unsecured floating rate loans made by banks and other financial institutions to corporate customers. Typically, these loans hold the most senior position in a borrower’s capital structure, may be secured by the borrower’s assets and have interest rates that reset frequently. These loans generally will not be rated investment-grade by the rating agencies. Economic downturns generally lead to higher non-payment and default rates and a senior loan could lose a substantial part of its value prior to a default. However, as compared to “junk” bonds (as defined below), senior floating rate loans are typically senior in the capital structure and are often secured by collateral of the borrower. An account’s investments in loans are subject to credit risk, and even secured bank loans may not be adequately collateralized. The interest rates on many bank loans reset frequently, and therefore investors are subject to the risk that the return will be less than anticipated when the investment was first made. Most bank loans, like most investment-grade bonds, are not traded on any national securities exchange. Bank loans generally have less liquidity than investment-grade bonds and there may be less public information available about them. An account may participate in the primary syndicate for a bank loan or it may also purchase loans from other lenders (sometimes referred to as loan assignments). An account may also acquire a participation interest in another lender’s portion of the senior loan. Large loans to corporations or governments may be shared or syndicated among several lenders, usually banks. An account may participate in such syndicates, or can buy part of a loan, becoming a direct lender. Participation interests involve special types of risk, including liquidity risk and the risks of being a lender. If an account purchases a participation interest, it may only be able to enforce its rights through the lender, and may assume the credit risk of the lender in addition to the credit risk of the borrower. A- 3
Loans, Loan Participations and Assignments
An account may invest in direct debt instruments, which are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates (loans and loan participations), to suppliers of goods or services (trade claims or other receivables), or to other parties. Purchasers of loans and other forms of direct indebtedness depend primarily upon the creditworthiness of the borrower for payment of principal and interest. Direct debt instruments may not be rated by any nationally recognized rating agency. Loans that are fully secured offer an account more protections than an unsecured loan in the event of non-payment of scheduled interest or principal. However, there is no assurance that the liquidation of collateral from a secured loan would satisfy the borrower’s obligation, or that the collateral can be liquidated. Indebtedness of borrowers whose creditworthiness is poor involves substantially greater risks, and may be highly speculative. Borrowers that are in bankruptcy or restructuring may never pay off their indebtedness, or may pay only a small fraction of the amount owed.

When investing in a loan participation, an account typically will have the right to receive payments only from the lender to the extent the lender receives payments from the borrower, and not from the borrower itself. Likewise, an account typically will be able to enforce its rights only through the lender, and not directly against the borrower. As a result, an account will assume the credit risk of both the borrower and the lender that is selling the participation.

Investments in loans through direct assignment of a financial institution’s interests with respect to a loan may involve additional risks to an account. For example, if the loan is foreclosed, an account could become part owner of any collateral, and would bear the costs and liabilities associated with owning and disposing of the collateral. In addition, it is conceivable that under emerging legal theories of lender liability, an account could be held liable as a co-lender. In the case of loan participations, direct debt instruments may also involve a risk of insolvency of the lending bank or other intermediary. Direct debt instruments that are not in the form of securities may offer less legal protection to an account in the event of fraud or misrepresentation. In the absence of definitive regulatory guidance, an account may rely on Loomis Sayles’ research to attempt to avoid situations where fraud or misrepresentation could adversely affect an account.

A loan is often administered by a bank or other financial institution that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. Unless, under the terms of the loan or other indebtedness, an account has direct recourse against the borrower, it may have to rely on the agent to apply appropriate credit remedies against a borrower.
Second Lien Loans

Second lien loans are subject to the same risks associated with investment in senior loans and non- investment grade bonds. However, second lien loans are second in right of payment to senior loans and therefore are subject to additional risk that the cash flow of the borrower and any property securing the loan may be insufficient to meet scheduled payments after giving effect to the senior secured obligations of the borrower. Second lien loans are expected to have greater price volatility than senior loans and may be less liquid. There is also a possibility that originators will not be able to sell participations in second lien loans, which would create greater credit risk exposure.
Other Secured Loans
Secured loans other than senior loans and second lien loans are subject to the same risks associated with investment in senior loans, second lien loans and non-investment grade bonds. However, such loans may rank lower in right of payment than any outstanding senior loans and second lien loans of the borrower and, therefore, are subject to additional risk that the cash flow of the borrower and any property securing the loan may be insufficient to meet scheduled payments after giving effect to the higher ranking secured obligations of the borrower. Lower ranking secured loans are expected to have greater price volatility than senior loans and second lien loans and may be less liquid. There is also a possibility that originators will not be able to sell participations in lower ranking secured loans, which would create greater credit risk exposure. A- 4
Unsecured Loans
Unsecured loans are subject to the same risks associated with investment in senior loans, second lien loans, other secured loans and non-investment grade bonds. However, because unsecured loans have lower priority in right of payment to any higher ranking obligations of the borrower and are not backed by a security interest in any specific collateral, they are subject to additional risk that the cash flow of the borrower and available assets may be insufficient to meet scheduled payments after giving effect to any higher ranking obligations of the borrower. Unsecured loans are expected to have greater price volatility than senior loans, second lien loans and other secured loans and may be less liquid. There is also a possibility that originators will not be able to sell participations in unsecured loans, which would create greater credit risk exposure.
Bank Obligations

Certain accounts may invest in the obligations of U.S. and non-U.S. banks and their respective branches. Bank obligations include certificates of deposit, commercial paper, unsecured bank promissory notes, banker’s acceptances, time deposits and other debt obligations. Bank obligations may be general obligations of the parent bank or may be limited to the issuing branch by the terms of the specific obligation or by government regulation. The activities of U.S. and most foreign banks are subject to comprehensive regulations, which are often subject to frequent change. The enactment of new legislation or regulations, as well as changes in the interpretation and enforcement of current laws, may affect the manner of operations and profitability of domestic and foreign banks. Significant developments in the U.S. banking industry have included increase competition from other types of financial institutions, increased acquisition activity and geographic expansion. Banks may be particularly susceptible to certain economic factors, such as interest rate changes and adverse developments in the real estate markets. Fiscal and monetary policy and general economic cycles can affect the availability and cost of funds, loan demand and asset quality and thereby impact the earnings and financial conditions of banks.
Funding Agreements

An account may invest in Guaranteed Investment Contracts (“GICs”) and similar funding agreements. In connection with these investments, an account makes cash contributions to a deposit fund of an insurance company’s general account. The insurance company then credits to an account on a monthly basis guaranteed interest, which is based on an index (such as LIBOR). The funding agreements provide that this guaranteed interest will not be less than a certain minimum rate. The purchase price paid for an accounting agreement become part of the general assets of the insurance company. Generally, funding agreements are not assignable or transferable without the permission of the issuing company, and an active secondary market in some funding agreements does not currently exist.
Collateralized Mortgage Obligations

CMOs are securities backed by a portfolio of mortgages or mortgage securities held under indentures. CMOs may be issued either by government instrumentalities or by non-governmental entities. CMOs are not direct obligations of the U.S. government. The issuer’s obligation to make interest and principal payments is secured by the underlying portfolio of mortgages or mortgage securities. CMOs are issued with a number of classes or series which have different maturities and which may represent interests in some or all of the interest or principal on the underlying collateral or a combination thereof. CMOs of different classes generally are retired in sequence as the underlying mortgage loans in the mortgage pool are repaid. In the event of sufficient early prepayments on such mortgages, the class or series of CMO first to mature generally will be retired prior to its maturity. Thus, the early retirement of a particular class or series of CMO held by an account would have the same effect as the prepayment of mortgages underlying a mortgage pass-through security. CMOs and other asset-backed and mortgage-backed securities may be considered derivative securities. CMOs involve risks similar to those described in the section “Mortgage-Related Securities.”
Convertible Securities
Convertible securities include corporate bonds, notes or preferred stocks of U.S. or foreign issuers that can be converted into (exchanged for) common stocks or other equity securities. Convertible securities A- 5 also include other securities, such as warrants, that provide an opportunity for equity participation. Since convertible securities may be converted into equity securities, their values will normally vary in some proportion with those of the underlying equity securities. Convertible securities usually provide a higher yield than the underlying equity, however, so that the price decline of a convertible security may sometimes be less substantial than that of the underlying equity security. Convertible securities generally are subject to the same risks as non-convertible fixed-income securities, but usually provide a lower yield than comparable fixed- income securities. Many convertible securities are relatively illiquid.
Fixed-Income Securities

Fixed-income securities pay a specified rate of interest or dividends, or a rate that is adjusted periodically by reference to some specified index or market rate. Fixed-income securities include securities issued by federal, state, local and foreign governments and related agencies, and by a wide range of private or corporate issuers. Fixed-income securities include, among others, bonds, debentures, notes, bills and commercial paper. Because interest rates vary, it is impossible to predict the income of an account for any particular period. In addition, the prices of fixed-income securities generally vary inversely with changes in interest rates. Prices of fixed-income securities may also be affected by items related to a particular issue or to the debt markets generally.

Investment-Grade Fixed-Income Securities. To be considered investment-grade quality, at least one of the three major rating agencies (Fitch, Moody’s or S&P) must have rated the security in one of its respective top four rating categories at the time an account acquires the security or, if the security is unrated, Loomis Sayles must have determined it to be of comparable quality.

Below Investment-Grade Fixed-Income Securities. Below investment-grade fixed-income securities (commonly referred to as “junk bonds”) are rated below investment-grade quality. To be considered below investment-grade quality, none [Chris Gootkind comment: None, or no more than one?] of the three major rating agencies (Fitch’s, Moody’s and S&P) may have rated the security in one of its respective top four rating categories at the time an account acquires the security or, if the security is unrated, Loomis Sayles must have determined it to be of comparable quality.

Below investment-grade fixed-income securities are subject to greater credit risk and market risk than higher-quality fixed-income securities. Below investment-grade fixed-income securities are considered predominantly speculative with respect to the ability of the issuer to make timely principal and interest payments. If an account invests in lower-quality fixed-income securities, an account’s achievement of its objective may be more dependent on Loomis Sayles’ own credit analysis than is the case with accounts that invest in higher-quality fixed-income securities. The market for below investment-grade fixed-income securities may be more severely affected than some other financial markets by economic recession or substantial interest rate increases, by changing public perceptions of this market, or by legislation that limits the ability of certain categories of financial institutions to invest in these securities. In addition, the secondary market may be less liquid for below investment-grade fixed-income securities. This lack of liquidity at certain times may affect the values of these securities and may make the evaluation and sale of these securities more difficult. Below investment-grade fixed-income securities may be in poor standing or in default and typically have speculative characteristics.

An account may continue to hold fixed-income securities that are downgraded in quality subsequent to their purchase if Loomis Sayles believes it would be advantageous to do so.
Inflation-Linked and Inflation-Indexed Securities
Inflation-linked securities are fixed-income securities whose principal value is adjusted periodically according to the rate of inflation. The principal amount of these securities increases with increases in the price index used as a reference value for the securities. In addition, the amounts payable as coupon interest payments increase when the price index increases because the interest amount is calculated by multiplying the principal amount (as adjusted) by a fixed coupon rate. A- 6 Although inflation-linked securities protect their holders from long-term inflationary trends, short- term increases in inflation may result in a decline in value. The values of inflation-linked securities generally fluctuate in response to changes to real interest rates, which are in turn tied to the relationship between nominal interest rates and the rate of inflation. If inflation were to rise at a rate faster than nominal interest rates, real interest rates might decline, leading to an increase in value of the inflation-linked securities. In contrast, if nominal interest rates increased at a faster rate than inflation, real interest rate might rise, leading to a decrease in the value of inflation-linked securities. If inflation is lower than expected during a period an account holds inflation-linked securities, the account may earn less on such securities than on a conventional security. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in inflation-linked securities may not be protected to the extent that the increase is not reflected in the price index used as a reference for the securities. There can be no assurance that the price index used for an inflation-linked security will accurately measure the real rate of inflation in the prices of goods and services. Inflation-linked and inflation-indexed securities include Treasury Inflation-Protected Securities issued by the U.S. government (see the section “U.S. Government Securities” for additional information), but also may include securities issued by state, local and non-U.S. governments and corporations and supranational entities.
Mortgage Dollar Rolls

A dollar roll involves the sale of a security by an account and its agreement to repurchase the
instrument at a specified time and price, and may be considered a form of borrowing for some purposes. An account will designate on its records or segregate with its custodian bank assets determined to be liquid in an amount sufficient to meet its obligations under the transactions. A dollar roll involves potential risks of loss that are different from those related to the securities underlying the transactions. An account may be required to purchase securities at a higher price than may otherwise be available on the open market. Since the counterparty in the transaction is required to deliver a similar, but not identical, security to the account, the security that the account is required to buy under the dollar roll may be worth less than an identical security. There is no assurance that an account’s use of the cash that it receives from a dollar roll will provide a return that exceeds borrowing costs.
Mortgage-Related Securities

Mortgage-related securities include Government National Mortgage Association (“GNMA”) or Federal National Mortgage Association (“FNMA”) certificates, which differ from traditional debt securities. Among the major differences are that interest and principal payments are made more frequently, usually monthly, and that principal may be prepaid at any time because the underlying mortgage loans generally may be prepaid at any time. As a result, if an account purchases these assets at a premium, a faster-than-expected prepayment rate will tend to reduce yield to maturity, and a slower-than-expected prepayment rate may have the opposite effect of increasing yield to maturity. If an account purchases mortgage-related securities at a discount, faster-than-expected prepayments will tend to increase, and slower-than-expected prepayments tend to reduce, yield to maturity. Prepayments, and resulting amounts available for reinvestment by an account, are likely to be greater during a period of declining interest rates and, as a result, are likely to be reinvested at lower interest rates. Accelerated prepayments on securities purchased at a premium may result in a loss of principal if the premium has not been fully amortized at the time of prepayment. Although these securities will decrease in value as a result of increases in interest rates generally, they are likely to appreciate less than other fixed-income securities when interest rates decline because of the risk of prepayments. In addition, an increase in interest rates would also increase the inherent volatility of an account by increasing the average life of the account’s portfolio securities. The value of some mortgage-backed or asset-backed securities in which an account invests may be particularly sensitive to changes in prevailing interest rates, and the ability of an account to successfully utilize these instruments may depend in part upon the ability of Loomis Sayles to forecast interest rates and other economic factors correctly. The risk of non-payment is greater for mortgage-related securities that are backed by mortgage pools that contain “subprime” or “Alt-A” loans (loans made to borrowers with weakened credit histories, less documentation or with a lower capacity to make timely payments on their loans), but a level of risk exists for all loans. Market factors adversely affecting mortgage loan repayments may include a general economic downturn, high unemployment, a general slowdown in the real estate market, a drop in the market prices of real estate or an increase in interest rates resulting in higher mortgage payments by holders of A- 7 adjustable-rate mortgages. Securities issued by the GNMA and the FNMA and similar issuers may also be exposed to risks described in the section “U.S. Government Securities.”
Pay-in-Kind Securities
Pay-in-kind securities pay dividends or interest in the form of additional securities of the issuer, rather than in cash. These securities are usually issued and traded at a discount from their face amounts. The amount of the discount varies depending on various factors, such as the time remaining until maturity of the securities, prevailing interest rates, the liquidity of the security and the perceived credit quality of the issuer. The market prices of pay-in-kind securities generally are more volatile than the market prices of securities that pay interest periodically and are likely to respond to changes in interest rates to a greater degree than are other types of securities having similar maturities and credit quality.
Rule 144A Securities and Section 4(a)(2) Commercial Paper

Rule 144A securities are privately offered securities that can be resold only to certain qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). An account may also purchase commercial paper issued under Section 4(a)(2) of the Securities Act. Investing in Rule 144A securities and Section 4(a)(2) commercial paper could have the effect of increasing the level of an account’s illiquidity to the extent that qualified institutional buyers become, for a time, uninterested in purchasing these securities. Loomis Sayles will make a determination as to whether any Rule 144A security or Section 4(a)(2) commercial paper is to be treated as liquid or illiquid.
Step-Coupon Securities

Step-coupon securities trade at a discount from their face value and pay coupon interest. The coupon rate is low for an initial period and then increases to a higher coupon rate thereafter. Market values of these types of securities generally fluctuate in response to changes in interest rates to a greater degree than conventional interest-paying securities of comparable term and quality. Under many market conditions, investments in such securities may be illiquid, making it difficult for an account to dispose of them or determine their current value.
“Stripped” Securities

Stripped securities are usually structured with two or more classes that receive different proportions of the interest and principal distribution on a pool of U.S. government or foreign government securities or mortgage assets. In some cases, one class will receive all of the interest (the interest-only or “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). Stripped securities commonly have greater market volatility than other types of fixed-income securities. In the case of stripped mortgage securities, if the underlying mortgage assets experience greater than anticipated payments of principal, an account may fail to recoup fully its investments in IOs. Stripped securities may be considered derivative securities, discussed in the section “Derivative Instruments.”
Structured Notes

These instruments are debt obligations issued by industrial corporations, financial institutions or governmental or international agencies. Traditional debt obligations typically obligate the issuer to repay the principal plus a specified rate of interest. Structured notes, by contrast, obligate the issuer to pay amounts of principal or interest that are determined by reference to changes in some external factor or factors, or the principal and interest rate may vary from the stated rate because of changes in these factors. For example, the issuer’s obligations could be determined by reference to changes in the value of a commodity (such as gold or oil) or commodity index, a foreign currency, an index of securities (such as the S&P 500® Index) or an interest rate (such as the U.S. Treasury bill rate). In some cases, the issuer’s obligations are determined by reference to changes over time in the difference (or “spread”) between two or more external factors (such as the U.S. prime lending rate and the total return of the stock market in a particular country, as measured by a stock index). In some cases, the issuer’s obligations may fluctuate inversely with changes in an external factor or factors (for example, if the U.S. prime lending rate goes up, the issuer’s interest payment obligations are reduced). In some A- 8 cases, the issuer’s obligations may be determined by some multiple of the change in an external factor or factors (for example, three times the change in the U.S. Treasury bill rate). In some cases, the issuer’s obligations remain fixed (as with a traditional debt instrument) so long as an external factor or factors do not change by more than the specified amount (for example, if the value of a stock index does not exceed some specified maximum), but if the external factor or factors change by more than the specified amount, the issuer’s obligations may be sharply reduced. Structured notes can serve many different purposes in the management of an account. For example, they can be used to increase an account’s exposure to changes in the value of assets that the account would not ordinarily purchase directly (such as commodities or stocks traded in a market that is not open to U.S. investors). They can also be used to hedge the risks associated with other investments an account holds. For example, if a structured note has an interest rate that fluctuates inversely with general changes in a country’s stock market index, the value of the structured note would generally move in the opposite direction to the value of holdings of stocks in that market, thus moderating the effect of stock market movements on the value of an account’s portfolio as a whole.

Risks. Structured notes involve special risks. As with any debt obligation, structured notes involve the risk that the issuer will become insolvent or otherwise default on its payment obligations. This risk is in addition to the risk that the issuer’s obligations (and thus the value of an account’s investment) will be reduced because of adverse changes in the external factor or factors to which the obligations are linked. The value of structured notes will in many cases be more volatile (that is, will change more rapidly or severely) than the value of traditional debt instruments. Volatility will be especially high if the issuer’s obligations are determined by reference to some multiple of the change in the external factor or factors. Many structured notes have limited or no liquidity, so that an account would be unable to dispose of the investment prior to maturity. As with all investments, successful use of structured notes depends in significant part on the accuracy of Loomis Sayles’ analysis of the issuer’s creditworthiness and financial prospects, and of Loomis Sayles’ forecast as to changes in relevant economic and financial market conditions and factors. In instances where the issuer of a structured note is a foreign entity, the usual risks associated with investments in foreign securities (described below) apply. Structured notes may be considered derivative securities.
Tax-Exempt Securities

Tax-exempt securities (“Tax-Exempt Securities”) refers to debt securities, the interest from which is, in the opinion of bond counsel to the issuer (or on the basis of other authority believed by the respective account’s portfolio manager to be reliable), exempt from U.S. federal income tax. Tax-Exempt Securities include debt obligations issued by or on behalf of states, territories and possessions of the United States and their political subdivisions (for example, counties, cities, towns, villages and school districts) and authorities to obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, schools, streets and water and sewer works. Other public purposes for which certain Tax-Exempt Securities may be issued include the refunding of outstanding obligations, obtaining funds for federal operating expenses, or obtaining funds to lend to public or private institutions for the construction of facilities such as educational, hospital and housing facilities. In addition, certain types of private activity bonds have been or may be issued by public authorities or on behalf of state or local governmental units to finance privately operated housing facilities, sports facilities, convention or trade facilities, air or water pollution control facilities and certain local facilities for water supply, gas, electricity or sewage or solid waste disposal. Such obligations are included within the term “Tax-Exempt Securities” if the interest paid thereon, is, in the opinion of bond counsel to the issuer (or on the basis of other authority believed by an account’s portfolio manager to be reliable), exempt from U.S. federal income taxation. There are variations in the quality of Tax-Exempt Securities, both within a particular classification and between classifications, depending on numerous factors. The two principal classifications of tax-exempt bonds are general obligation bonds and limited obligation (or revenue) bonds. General obligation bonds are obligations involving the credit of an issuer possessing taxing power and are payable from the issuer’s general unrestricted revenues and not from any particular fund or source. The characteristics and method of enforcement of general obligation bonds vary according to the law applicable to the particular issuer, and payment may be dependent upon an appropriation A- 9 by the issuer’s legislative body. Limited obligation bonds are payable only from the revenues derived from a particular facility or class of facilities, or in some cases from the proceeds of a special excise or other specific revenue source such as the user of the facility. Tax-exempt private activity bonds are in most cases revenue bonds and generally are not payable from the unrestricted revenues of the issuer. The credit and quality of such bonds are usually directly related to the credit standing of the corporate user of the facilities. Principal and interest on such bonds are the responsibilities of the corporate user (and any guarantor). The yields on Tax-Exempt Securities are dependent on a variety of factors, including general money market conditions, the financial condition of the issuer, general conditions of the Tax-Exempt Securities market, the size of a particular offering, the maturity of the obligation and the rating of the issue. Further, information about the financial condition of an issuer of tax-exempt bonds may not be as extensive as that made available by corporations whose securities are publicly traded. The ratings of Moody’s and S&P represent their opinions as to the quality of the Tax-Exempt Securities which they undertake to rate. It should be emphasized, however, that ratings are general and are not absolute standards of quality. Consequently, Tax- Exempt Securities with the same maturity, interest rate and rating may have different yields while Tax-Exempt Securities of the same maturity and interest rate with different ratings may have the same yield. Subsequent to its purchase by an account, an issue of Tax-Exempt Securities or other investments may cease to be rated or the rating may be reduced below the minimum rating required for purchase by an account. Neither event may require the elimination of an investment from an account, but Loomis Sayles will consider such an event as part of its normal, ongoing review of all the account’s portfolio securities.

Tax-Exempt Securities are subject to the provisions of bankruptcy, insolvency and other laws affecting the rights and remedies of creditors, such as the federal Bankruptcy Code, and laws, if any, which may be enacted by Congress or the state legislatures extending the time for payment of principal or interest, or both, or imposing other constraints upon enforcement of such obligations. There is also the possibility that as a result of litigation or other conditions, the power or ability of issuers to meet their obligations for the payment of interest and principal on their Tax-Exempt Securities may be materially affected or that their obligations may be found to be invalid and unenforceable. Such litigation or conditions may from time to time have the effect of introducing uncertainties in the market for tax-exempt bonds or certain segments thereof, or materially affecting the credit risk with respect to particular bonds. Adverse economic, legal or political developments might affect all or a substantial portion of an account’s Tax-Exempt Securities in the same manner.

From time to time, proposals have been introduced before Congress for the purpose of restricting or eliminating the U.S. federal income tax exemption for interest on debt obligations issued by states and their political subdivisions and similar proposals may well be introduced in the future. If such a proposal were enacted, the availability of Tax-Exempt Securities for investment by an account and the value of such account’s portfolio securities could be materially affected.

All debt securities, including tax-exempt bonds, are subject to credit and market risk. Generally, for any given change in the level of interest rates, prices for longer maturity issues tend to fluctuate more than prices for shorter maturity issues.
U.S. Government Securities

U.S. Treasury Bills - Direct obligations of the U.S. Treasury that are issued in maturities of one year or less. No interest is paid on Treasury bills; instead, they are issued at a discount and repaid at full face value when they mature. They are backed by the full faith and credit of the U.S. government. U.S. Treasury Notes and Bonds - Direct obligations of the U.S. Treasury issued in maturities that vary between one and thirty years, with interest normally payable every six months. These obligations are backed by the full faith and credit of the U.S. government. Treasury Inflation-Protected Securities (“TIPS”) – Fixed-income securities whose principal value is periodically adjusted according to the rate of inflation. The interest rate on TIPS is fixed at issuance, but over the life of the bond this interest may be paid on an increasing or decreasing principal value that has been adjusted for inflation. Although repayment of the original bond principal upon maturity is guaranteed, the market value of TIPS is not guaranteed, and will fluctuate. A- 10 “Ginnie Maes” - Debt securities issued by a mortgage banker or other mortgagee which represent an interest in a pool of mortgages insured by the Federal Housing Administration or the Rural Housing Service or guaranteed by the Veterans Administration. The GNMA guarantees the timely payment of principal and interest when such payments are due, whether or not these amounts are collected by the issuer of these certificates on the underlying mortgages. It is generally understood that a guarantee by GNMA is backed by the full faith and credit of the United States. Mortgages included in single family or multi-family residential mortgage pools backing an issue of Ginnie Maes have a maximum maturity of 30 years. Scheduled payments of principal and interest are made to the registered holders of Ginnie Maes (such as an account) each month. Unscheduled prepayments may be made by homeowners, or as a result of a default. Prepayments are passed through to the registered holder (such as a client account, which would reinvest any prepayments) of Ginnie Maes along with regular monthly payments of principal and interest.

“Fannie Maes” - The FNMA is a government-sponsored corporation currently under conservatorship that purchases residential mortgages from a list of approved seller/servicers, including banks, credit unions and other retail financial institutions . Fannie Maes are pass-through securities issued by FNMA that are guaranteed as to timely payment of principal and interest by FNMA, but these obligations are not backed by the full faith and credit of the U.S. government.

“Freddie Macs” - The Federal Home Loan Mortgage Corporation (“FHLMC”) is a corporate instrumentality of the U.S. government also under conservatorship. Freddie Macs are participation certificates issued by FHLMC that represent an interest in residential mortgages from FHLMC’s National Portfolio. FHLMC guarantees the timely payment of interest and ultimate collection of principal, but these obligations are not backed by the full faith and credit of the U.S. government.

Risks. U.S. government securities generally do not involve the credit risks associated with investments in other types of fixed-income securities, although, as a result, the yields available from U.S. government securities are generally lower than the yields available from corporate fixed-income securities. Like other debt securities, however, the values of U.S. government securities change as interest rates fluctuate. Fluctuations in the value of portfolio securities will not affect interest income on existing portfolio securities. Because the magnitude of these fluctuations will generally be greater at times when an account’s average maturity is longer, under certain market conditions an account may, for temporary defensive purposes, accept lower current income from short-term investments rather than investing in higher yielding long-term securities. Securities such as those issued by Fannie Mae and Freddie Mac are guaranteed as to the payment of principal and interest by the relevant entity (e.g., FNMA or FHLMC) but have not been backed by the full faith and credit of the U.S. government. Instead, they have been supported only by the discretionary authority of the U.S. government to purchase the agency’s obligations. An event affecting the guaranteeing entity could adversely affect the payment of principal or interest or both on the security, and therefore, these types of securities should be considered to be riskier than U.S. government securities.

S&P downgraded its long-term sovereign credit rating on the United States from “AAA” to “AA+” on August 5, 2011. The downgrade by S&P and other possible downgrades in the future may result in increased volatility or liquidity risk, higher interest rates and lower prices for U.S. government securities and increased costs for all kinds of debt.

In September 2008, the U.S. Treasury Department placed FNMA and FHLMC into conservatorship. The companies remain in conservatorship, and the effect that this conservatorship will have on the companies’ debt and equity securities is unclear. Although the U.S. government has provided financial support to FNMA and FHLMC, there can be no assurance that it will support these or other government-sponsored enterprises in the future. In addition, any such government support may benefit the holders of only certain classes of an issuer’s securities. The values of TIPS generally fluctuate in response to changes in real interest rates, which are in turn tied to the relationship between nominal interest rates and the rate of inflation. If inflation were to rise at a faster rate than nominal interest rates, real interest rates might decline, leading to an increase in value of TIPS. In contrast, if nominal interest rates increased at a faster rate than inflation, real interest rates might rise, leading A- 11 to a decrease in value of TIPS. If inflation is lower than expected during the period an account holds TIPS, the account may earn less on the TIPS than on a conventional bond. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in TIPS may not be protected to the extent that the increase is not reflected in the bonds’ inflation measure. There can be no assurance that the inflation index for TIPS will accurately measure the real rate of inflation in the prices of goods and services. See the section “Mortgage-Related Securities” for additional information on these securities.
Zero Coupon Securities

An account may invest in zero coupon securities, which are debt obligations that do not entitle the holder to any periodic payments of interest either for the life of the obligation or for an initial period after the issuance of the obligation; the holder generally is entitled to receive the par value of the security at maturity. These securities are issued and traded at a discount from their face amounts. The amount of the discount varies depending on such factors as the time remaining until maturity of the securities, prevailing interest rates, the liquidity of the security, and the perceived credit quality of the issuer. The market prices of zero coupon securities generally are more volatile than the market prices of securities that pay interest periodically and are likely to respond to changes in interest rates to a greater degree than are other types of securities having similar maturities and credit quality.
Variable and Floating Rate Instruments

Variable and floating rate instruments may include variable amount master demand notes that permit the indebtedness thereunder to vary in addition to providing for periodic adjustments in the interest rate. These also include leveraged inverse floating rate debt instruments, or “inverse floaters”. The interest rate of an inverse floater resets in the opposite direction from the market rate of interest on a security or interest to which it is related. An inverse floater may be considered to be leveraged to the extent that its interest rate varies by a magnitude that exceeds the magnitude of the change in the index rate of interest, and is subject to many of the same risks as derivatives. The higher degree of leverage inherent in inverse floaters is associated with greater volatility in their market values. Certain of these investments may be illiquid. The absence of an active secondary market with respect to these investments could make it difficult for an account to dispose of a variable or floating rate note if the issuer defaulted on its payment obligation or during periods that an account is not entitled to exercise its demand rights, and an account could, for these or other reasons, suffer a loss with respect to such instruments.
Collateralized Debt Obligations

An account may invest in collateralized debt obligations (“CDOs”), which includes collateralized bond obligations (“CBOs”), collateralized loan obligations (“CLOs”) and other similarly structured securities. CBOs and CLOs are types of asset-backed securities. A CBO is a trust which is backed by a diversified pool of high risk, below investment grade fixed income securities. A CLO is a trust typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. CDOs may charge management fees and administrative expenses.

For both CBOs and CLOs, the cash flows from the trust are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the “equity” tranche which bears the bulk of defaults from the bonds or loans in the trust and serves to protect the other, more senior tranches from default in all but the most severe circumstances. Since it is partially protected from defaults, a senior tranche from a CBO trust or CLO trust typically has higher ratings and lower yields than their underlying securities, and can be rated investment grade. Despite the protection from the equity tranche, CBO or CLO tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults, as well as aversion to CBO or CLO securities as a class. The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the CDO in which an account invests. Normally, CBOs, CLOs and other CDOs are privately offered A- 12 and sold, and thus are not registered under the securities laws. As a result, investments in CDOs may be characterized by an account as illiquid securities, however an active dealer market may exist for CDOs allowing a CDO to qualify for Rule 144A transactions. In addition to the normal risks associated with fixed income securities discussed elsewhere (e.g., interest rate risk and default risk), CDOs carry additional risks including, but are not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) classes of a CDO that are subordinate to other classes; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results.
Equity Securities

Equity securities are securities that represent an ownership interest (or the right to acquire such an interest) in a company and may include common and preferred stocks, securities exercisable for, or convertible into, common or preferred stocks, such as warrants, convertible debt securities and convertible preferred stock, and other equity-like interests in an entity. Equity securities may take the form of stock in a corporation, limited partnership interests, interests in limited liability companies, depositary receipts, real estate investment trusts (“REITs”) or other trusts and other similar securities. Common stocks represent an equity or ownership interest in an issuer. Preferred stocks represent an equity or ownership interest in an issuer that pays dividends at a specified rate and that has precedence over common stock in the payment of dividends. In the event that an issuer is liquidated or declares bankruptcy, the claims of owners of bonds and other debt securities take precedence over holders of preferred stock, whose claims take precedence over the claims of those who own common stock.

While offering greater potential for long-term growth, equity securities generally are more volatile and more risky than some other forms of investment, particularly debt securities. The value of an account’s investment in equity securities may decrease, potentially by a significant amount. An account may invest in equity securities of companies with relatively small market capitalizations. Securities of such companies may be more volatile than the securities of larger, more established companies and the broad equity market indices. See the section “Small Capitalization Companies” under “Equity Securities, Practices and Certain Risks.” An account’s investments may include securities traded “over-the-counter” (“OTC”) as well as those traded on a securities exchange. Some securities, particularly OTC securities, may be more difficult to sell under some market conditions.
Preferred Stock

Preferred stock pays dividends at a specified rate and generally has preference over common stock in the payment of dividends and the liquidation of the issuer’s assets, but is junior to the debt securities of the issuer in those same respects. Unlike interest payments on debt securities, dividends on preferred stock are generally payable at the discretion of the issuer’s board of directors. Shareholders may suffer a loss of value if dividends are not paid. The market prices of preferred stocks are subject to changes in interest rates and are more sensitive to changes in the issuer’s creditworthiness than are the prices of debt securities. Under normal circumstances, preferred stock does not carry voting rights.
REITs

REITs are pooled investment vehicles that invest primarily in either real estate or real estate-related loans. REITs involve certain unique risks in addition to those risks associated with investing in the real estate industry in general (such as possible declines in the value of real estate, lack of availability of mortgage funds or extended vacancies of property). Equity REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs may be affected by the quality of any credit extended. REITs are dependent upon management skills, are not diversified and are subject to heavy cash flow dependency, risks of default by borrowers and self-liquidation. REITs are also subject to the possibilities of failing to qualify for tax-free pass-through of income under the Code and failing to maintain their exemptions from registration under the Investment Company Act of 1940, as amended. REITs (especially mortgage REITs) are also subject to interest rate risks, including prepayment risk. When interest rates decline, the value of a REIT’s investment in fixed rate obligations can be expected to rise. A- 13 Conversely, when interest rates rise, the value of a REIT’s investment in fixed rate obligations can be expected to decline. If the REIT invests in adjustable rate mortgage loans the interest rates on which are reset periodically, yields on a REIT’s investments in such loans will gradually align themselves to reflect changes in market interest rates. This causes the value of such investments to fluctuate less dramatically in response to interest rate fluctuations than would investments in fixed rate obligations. REITs may have limited financial resources, may trade less frequently and in limited volume and may be subject to more abrupt or erratic price movements than more widely held securities.
Warrants and Rights

A warrant is an instrument that gives the holder a right to purchase a given number of shares of a particular security at a specified price until a stated expiration date. Buying a warrant generally can provide a greater potential for profit or loss than an investment of equivalent amounts in the underlying common stock. The market value of a warrant does not necessarily move with the value of the underlying securities. If a holder does not sell the warrant, it risks the loss of its entire investment if the market price of the underlying security does not, before the expiration date, exceed the exercise price of the warrant. Investment in warrants is a speculative activity. Warrants pay no dividends and confer no rights (other than the right to purchase the underlying securities) with respect to the assets of the issuer. A right is a privilege granted to existing shareholders of a corporation to subscribe for shares of a new issue of common stock before it is issued. Rights normally have a short life, usually two to four weeks, are often freely transferable and entitle the holder to buy the new common stock at a lower price than the public offering price.

Low exercise price call warrants are equity call warrants with an exercise price that is very low relative to the market price of the underlying instrument at the time of issue. Low exercise price call warrants are typically used to gain exposure to stocks in difficult to access local markets. The warrants typically have a strike price set such that the value of the warrants will be identical to the price of the underlying stock. The value of the warrants is correlated with the value of the underlying stock price and therefore, the risk and return profile of the warrants is similar to owning the underlying securities. In addition, the owner of the warrant is subject to the risk that the issuer of the warrant (i.e., the counterparty) will default on its obligations under the warrant. The warrants have no voting rights. Dividends issued to the warrant issuer by the underlying company will generally be distributed to the warrant holders, please register to get more info