JUNE 30 COMMENTARY 2021

Bond Fund

Market Conditions FUND FACTS OBJECTIVE • After experiencing volatility in the first three months of the year, the market Seeks high total investment return stabilized during the second quarter. Two factors contributed to the shift in tone. First, through a combination of current labor market data out of the United States and the rest of the world indicated that the income and capital appreciation economic growth-while still robust-may take longer to fully recover than initially expected. Second, investors appeared to gain confidence in the US Federal Reserve’s (Fed’s) assertion Share class I that the recent spike in inflation is in fact “transitory.” Although inflation numbers have Inception 5/16/1991 indeed been running hot in the past six months, the markets seem assured that supply- Ticker LSBDX chain bottlenecks will ease and inflation will soon return closer to its typical level. While CUSIP 543495840 the Fed has continued to communicate its intention to keep short-term interest rates near zero for an extended period, their “dot-plot” now indicates they forecast two hikes in the Fed Funds Rate in 2023, which signals to the market that they will act to reduce inflation if it does appear to remain persistent. More immediately, the Fed also signaled the possibility that it could begin planning tapering quantitative easing purchases in the near future. • These factors played out in the US Treasury market, where the yield on the ten-year note-which tends to track growth expectations-fell from 1.74% to 1.45% over the course of the quarter. On the other hand, the yield on the two-year note moved from 0.16% to 0.25% in anticipation of eventual tapering. Treasury Inflation Protected Securities (TIPS) outperformed nominal treasury bonds due to the persistent concerns about inflation. • Investment-grade corporate bonds sustained the long stretch of positive performance that began in the wake of the coronavirus-induced lows of March 2020. The combination of better-than-expected corporate earnings, robust economic growth and supportive credit conditions helped fuel investor demand for both risk and yield. As a result, the between corporates and Treasuries closed the quarter near the previous lows achieved in the mid-2000s and late 1990s.* • As was the case with investment-grade corporates, high-yield bonds benefited from the favorable investment environment and investors’ hearty appetite for risk. The absolute yield

CLASS I PERFORMANCE (%) CUMULATIVE TOTAL RETURN AVERAGE ANNUALIZED RETURN 3 MONTH YTD 1 YEAR 3 YEAR 5 YEAR 10 YEAR FUND 4.07 2.77 11.42 4.58 4.53 4.41 BENCHMARK 2.42 -1.96 -0.39 5.95 3.31 3.71 Performance data shown represents past performance and is no guarantee of, and not necessarily indicative of, future results. Investment return and value will vary and you may have a gain or loss when shares are sold. Current performance may be lower or higher than quoted. For most recent month-end performance, visit www.loomissayles.com. Additional share classes may be available for eligible investors. Performance will vary based on the share class. Performance for periods less than one year is cumulative, not annualized. Returns reflect changes in share price and reinvestment of and capital gains, if any. You may not invest directly in an index. Gross expense ratio 0.67% (Class I). Net expense ratio 0.67%. As of the most recent prospectus, the investment advisor has contractually agreed to waive fees and/or reimburse expenses (with certain exceptions) once the expense limitation of the fund has been exceeded. This arrangement is set to expire on 4/30/2022. When an expense limitation has not been exceeded, the fund may have similar expense ratios and/or yields. The Class I inception date is 5/16/1991. Class I shares are only available to certain institutional investors only; minimum initial investment of $100,000.

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of the high-yield market (as gauged by the ICE BofA US High Yield Index) finished June at an all-time low of 3.99%, indicating investors’ confidence in market fundamentals and the elevated demand for investments with a meaningful yield advantage over lower-risk investment options.** Leveraged loans, many of which offer yields that adjust upward with prevailing interest rates, also gained ground this quarter. • Securitized assets-including mortgage backed securities (MBS), asset backed securities (ABS) and commercial mortgage backed securities (CMBS)-also posted positive total returns, but as a group they lagged other segments of the given their shorter duration. CMBS generated the strongest total return of the three categories, while ABS and MBS total returns were more muted. Performance • The fund outperformed its benchmark, the Bloomberg Barclays US Government/Credit Index, primarily due to selection. Winners • Within investment grade corporate credit, selected communications, capital goods and insurance names were positive contributors to relative performance. • An allocation to high yield corporate credit was beneficial, aided by consumer non-cyclical, energy and finance company holdings. • Equity markets advanced during the quarter, boosted by positive economic data amidst continued vaccine rollouts and phased Covid re-openings. The fund’s exposure to equities, particularly within the energy and utility sectors, contributed to relative returns. • Securitized markets were modestly additive to performance, led by selected asset-backed securities (ABS). Laggards • Similar to last quarter, we reduced duration (and corresponding interest rate sensitivity) within US Treasurys as part of a larger effort to lower the fund’s overall duration. This was a detractor of performance as longer-dated Treasury yields fell during the period. Outlook • Our fundamental economic outlook remains positive. The reopening is in full swing. We believe we are firmly in a new expansion phase of the credit cycle1 and that US economic growth will lead the charge, with the rest of the world catching up. Corporate profits have been surging and credit fundamentals have been continuing to improve. The macro environment appears positive for risk. Is the US expansion so robust that the Fed’s reaction function shifts toward an earlier lift off for rates? To date, we don’t see evidence of that. Nor have we seen disruption in risk assets from this potentially emerging development. Global yields and demand for risk assets have been well behaved over the recent period. • There remains some concern surrounding the spread of new Covid-19 variants, particularly in cohorts of countries and areas of the US that lag in vaccination rates. However, we do not see evidence, at present, that this will derail the reopening or expansion. We continue to monitor these developments closely. • We anticipate the Fed will likely remain patient and be consistent with its view of recent inflation as transitory. The focus of full employment has remained and should be a driving force in the Fed’s patient approach. We believe jobs will rebound sharply in the coming months and anticipate reaching full employment in late 2022. However, productivity gains related to the Covid shutdown could push this period out further, and we are monitoring this situation as well. Nonetheless, we expect continued indications of Fed tapering this

JUNE 30, 2021 2 One Financial Center Boston, MA 02111 www.loomissayles.com

year and a rate lift-off in 2023. We expect inflation to be higher, but ultimately settle back to within Fed targets. Supply/demand imbalances and supply disruptions should work out over time. We anticipate a steady and healthy rise in US Treasury rates over the coming months. • Given our views, we remain defensive on rates and our portfolio durations are currently positioned shorter than broad market benchmarks. We have been focused on sectors with strong carry and less interest rate sensitivity including securitized assets, convertible securities and high yield corporates, as these can perform well in the expansion phase of the credit cycle. Areas within securitized assets typically offer attractive yield potential with shorter duration profiles. We also believe there is relative value in some sectors which have lagged. Convertibles tend to perform well in recovery and expansion phases of the cycle with a strong corporate profit backdrop. Positive convexity (i.e. a favorable risk/ reward profile in a changing rate environment) has remained an attractive attribute in most markets. • Credit fundamentals have been improving and we anticipate default rates to be lower. We could be on the cusp of a credit upgrade wave. We seek out issuers with strong balance sheets and catalysts to help drive an upgrade where such catalysts have not yet reflected in market pricing. Seeking to identify “rising stars” is a pillar of our issue selection. • Credit markets have been resilient to the earlier rise in interest rates. They remained resilient and spreads narrowed a bit more during the second quarter on strong demand for yield. We suspect this dynamic will likely hold. However, we have taken profits in strong value and reopening picks and have built in a bit more flexibility in portfolios should any disruption in the strong technical backdrop occur. We would look to exploit that dynamic should a disruption take place. • We remain focused on specific risk and issue selection. Best ideas and issue selection drives our investment process. As valuations have risen, we believe sector allocation and bond selection will again be key drivers of potential excess return. • During periods in which the US dollar appreciates relative to foreign currencies, funds that hold non-US-dollar-denominated bonds, foreign currency or foreign currency based derivative securities (“Foreign Currency Exposures”) may realize currency losses in connection with the maturity or sale of certain Foreign Currency Exposures. These losses impact a fund’s ordinary income distributions (to the extent that losses are not offset by realized currency gains within the fund’s fiscal year). A recognized currency loss, in accordance with federal tax rules, decreases the amount of ordinary income a fund has available to distribute, even though non – US –dollar denominated bonds continue to generate income. • Fund officers have analyzed the fund’s current portfolio of investments, realized currency gains and losses, schedule of maturities, and the corresponding amounts of unrealized currency losses that may become realized during the current fiscal year. This analysis is performed regularly to determine how realized currency losses have and will impact periodic ordinary income distributions for the fund. Although there are limited Foreign Currency Exposures held by the funds, based on the most recent quarterly analysis (as of June 30, 2021), realized currency losses during the period ended June 30, 2021 have had a small impact on the May and June ordinary income distributions and could continue to have an impact on the remaining distributions in the 2021 fiscal year. This analysis is based on certain assumptions including, but not limited to, the amount of Foreign Currency Exposures held by the funds’, the level of foreign currency exchange rates, security prices, interest rates, the fund advisers’ ability to manage realized currency losses, and the net asset level of the fund. Changes to these assumptions could materially impact the analysis and the amounts of future fund distributions. Fund officers will continue to monitor these amounts on a regular basis and take the necessary actions required to manage the fund’s distributions to address realized currency losses while seeking to avoid a return of capital distribution. JUNE 30, 2021 3 One Financial Center Boston, MA 02111 www.loomissayles.com

About Risk securities may carry one or more of the following risks: credit, interest rate (as interest rates rise bond prices usually fall), inflation and liquidity.Below investment grade fixed income securitiesmay be subject to greater risks (including the risk of default) than other fixed income securities.Foreign and emerging market securities may be subject to greater political, economic, environmental, credit, currency and information risks. Foreign securities may be subject to higher volatility than US securities due to varying degrees of regulation and limited liquidity. These risks are magnified in emerging markets.Currency exchange rates between the US dollar and foreign currencies may cause the value of the fund’s investments to decline. Equity securities are volatile and can decline significantly in response to broad market and economic conditions.

Barclays US Government/Credit Index includes securities in the Government and Credit Indices. The Government Index includes Treasurys (i.e., public obligations of the US Treasury that have remaining maturities of more than one year) and agencies (i.e., publicly issued debt of US Government agencies, quasi-federal corporations, and corporate or foreign debt guaranteed by the US Government). The Credit Index includes publicly issued US corporate and foreign and secured notes that meet specified maturity, liquidity, and quality requirements. Indexes are unmanaged and do not incur fees. It is not possible to invest directly in an index. Outlook as presented in this material reflects subjective judgments and assumptions of the portfolio team and does not necessarily reflect the views of Loomis, Sayles & Company, L.P. There is no assurance that developments will transpire as stated. Opinions expressed will evolve as future events unfold. These perspectives are as of the date indicated and may change based on market and other conditions. Actual results may vary. Please refer to the Fund prospectus for a comprehensive discussion of risks. Before investing, consider the fund’s investment objectives, risks, charges, and expenses. Please visit www.loomissayles.com or call 800-633-3330 for a prospectus and a summary prospectus, if available, containing this and other information. Read it carefully. Natixis Distribution, L.P. (fund distributor, member FINRA|SIPC) and Loomis, Sayles & Company L.P. are affiliated. LS Loomis | Sayles is a trademark of Loomis, Sayles & Company, L.P. registered in the US Patent and Trademark Office.

*Source: Ice Data Indices, LLC, ICE BofA US Corporate Index Option-Adjusted Spread [BAMLC0A0CM], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/BAMLC0A0CM, July 1, 2021.

**Source: Ice Data Indices, LLC, ICE BofA US High Yield Index Effective Yield [BAMLH0A0HYM2EY], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/BAMLH0A0HYM2EY, July 1, 2021.

1A credit cycle is a cyclical pattern that follows credit availability and corporate health. 1312972.24.1 JUNE 30, 2021 4