AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 1996
REGISTRATION NO. 811-8282
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
[X]
AMENDMENT NO. 6
[X]
(CHECK APPROPRIATE BOX OR BOXES)
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LOOMIS SAYLES INVESTMENT TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
ONE FINANCIAL CENTER, BOSTON, MA 02111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 482-2450
NAME AND ADDRESS
OF AGENT FOR SERVICE COPY TO
- -------------------- -------
SANDRA P. TICHENOR, ESQ. J.B. KITTREDGE, ESQ.
LOOMIS, SAYLES & COMPANY, L.P. ROPES & GRAY
ONE FINANCIAL CENTER ONE INTERNATIONAL PLACE
BOSTON, MA 02111 BOSTON, MA 02110
---------------------------
<PAGE>
EXPLANATORY NOTE
This Amendment No. 6 to the Registration Statement has been filed by
the Registrant pursuant to Section 8(b) of the Investment Company Act of 1940,
as amended. However, beneficial interests in the Registrant have not been and
will not be registered under the Securities Act of 1933, as amended (the "1933
Act"), since such interests have been and will continue to be issued and sold
solely in private transactions that do not involve any "public offering"
within the meaning of Section 4(2) of the 1933 Act. Investments in the
Registrant may only be made by individuals or entities which are "accredited
investors" within the meaning of Regulation D under the 1933 Act. This Amendment
No. 6 to the Registration Statement does not constitute an offer to sell or
the solicitation of an offer to buy any beneficial interests in the Registrant.
<PAGE>
INCORPORATION BY REFERENCE
Parts A and B relating to the California Tax-Free Income Fund, the Core
Growth Fund, the Fixed Income Fund, the Investment Grade Fixed Income Fund,
the Mortgage Securities Fund, the Convertible Bond Fund and the High Yield Fixed
Income Fund are incorporated herein by reference to Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A as filed with the Securities
and Exchange Commission on November 3, 1995.
<PAGE>
Part A. INFORMATION REQUIRED IN A PROSPECTUS--CORE FIXED INCOME FUND.
Item 1. Cover Page
Not applicable. See Paragraph 4 of General Instruction F.
Item 2. Synopsis
Not applicable. See Paragraph 4 of General Instruction F.
Item 3. Condensed Financial Information
Not applicable. See Paragraph 4 of General Instruction F.
Item 4. General Description of Registrant
See the Cover Page and the sections entitled "The Trust"; "Investment
Objective And Policies"; and "More Information About the Fund's
Investments" in the Private Placement Memorandum attached as an
Appendix hereto (the "Private Placement Memorandum").
Item 5. Management of the Fund
See the Cover Page and the sections entitled "The Trust"; "The Fund's
Investment Adviser"; "Fund Expenses"; and "Portfolio Transactions" in
the Private Placement Memorandum.
Item 5A. Management's Discussion of Fund Performance
Not applicable. See Paragraph 4 of General Instruction F.
Item 6. Capital Stock and Other Securities
See the Cover Page and the sections entitled "The Trust"; "How to
Redeem Shares"; and "Dividends, Capital Gain Distributions and Taxes"
in the Private Placement Memorandum.
Item 7. Purchase of Securities Being Offered
See the section entitled "How to Purchase Shares" in the Private
Placement Memorandum.
Item 8. Redemption or Repurchase
See the section entitled "How to Redeem Shares" in the Private
Placement Memorandum.
Item 9. Pending Legal Proceedings
Not applicable.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
LOOMIS SAYLES CORE FIXED INCOME FUND
One Financial Center
Boston, Massachusetts 02111
(617) 482-2450
PRIVATE PLACEMENT MEMORANDUM
April 2, 1996
The Loomis Sayles Investment Trust (the "Trust") is a group of nine
investment pooled funds including the Loomis Sayles Core Fixed Income Fund (the
"Fund"). The other series which are offered by the Trust and which are described
in separate private placement memoranda are:
Loomis Sayles California Tax-Free Income Fund
Loomis Sayles Convertible Bond Fund
Loomis Sayles Core Growth Fund
Loomis Sayles Fixed Income Fund
Loomis Sayles High Yield Fixed Income Fund
Loomis Sayles Intermediate Duration Fixed Income Fund
Loomis Sayles Investment Grade Fixed Income Fund
Loomis Sayles Mortgage Securities Fund
Except for the California Tax-Free Income Fund, the funds are designed
specifically for tax-exempt investors such as pension plans, endowments and
foundations, although other institutions and high net-worth individuals are
eligible to invest. Each of the funds is separately managed and has its own
investment objective and policies. Loomis, Sayles & Company, L.P. ("Loomis
Sayles") is the investment adviser of each of the funds.
This Private Placement Memorandum (the "Memorandum") concisely
describes the information that you should know before investing in the Fund.
Please read it carefully and keep it for future reference. A Statement of
Additional Information dated April 2, 1996 is available free of charge. To
obtain one or to make any inquiries about the Fund, write to Loomis Sayles
Investment Trust, One Financial Center, Boston, Massachusetts 02111 or telephone
(617) 482-2450. The Statement of Additional Information, which contains more
detailed information about the Fund, has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated by reference into this
Memorandum.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE TRANSFERRED OR RESOLD UNLESS SO REGISTERED OR EXEMPT THEREFROM. HOWEVER,
THE SECURITIES ARE REDEEMABLE AS DESCRIBED IN THIS MEMORANDUM. IN CERTAIN CASES
INVESTORS MAY BE REDEEMED "IN KIND" AND RECEIVE PORTFOLIO SECURITIES HELD BY THE
FUND IN LIEU OF CASH UPON REDEMPTION. IN SUCH CASE, AN INVESTOR WILL INCUR COSTS
WHEN THE INVESTOR SELLS THE SECURITIES DISTRIBUTED.
NO OFFERING LITERATURE OR ADVERTISING IN ANY FORM WHATSOEVER SHALL BE
EMPLOYED IN THE OFFERING OF THESE SECURITIES EXCEPT FOR THIS MEMORANDUM AND SUCH
SUPPLEMENTARY INFORMATION PREPARED BY THE FUND AND PRECEDED OR ACCOMPANIED BY
THIS MEMORANDUM. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS OR TO
PROVIDE ANY INFORMATION WITH RESPECT TO THESE SECURITIES EXCEPT SUCH INFORMATION
AS IS CONTAINED IN THIS MEMORANDUM AND IN THE STATEMENT OF ADDITIONAL
INFORMATION. ANY SALES MADE HEREUNDER SHALL NOT UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN MATTERS DISCUSSED HEREIN SINCE
THE DATE HEREOF.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF EXPENSES ............................................ 3
THE TRUST ...................................................... 3
INVESTMENT OBJECTIVE AND POLICIES .............................. 4
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS .................. 5
THE FUND'S INVESTMENT ADVISER .................................. 7
FUND EXPENSES .................................................. 7
PORTFOLIO TRANSACTIONS ......................................... 8
HOW TO PURCHASE SHARES ......................................... 8
HOW TO REDEEM SHARES ........................................... 9
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES ................ 9
<PAGE>
SUMMARY OF EXPENSES
The following information is provided to assist in understanding the
various expenses that an investor in the Fund will bear indirectly. The
information for the Fund is based on estimated annualized expenses for the
Fund's first fiscal year. The information below should not be considered a
representation of past or future expenses, as actual expenses may be greater or
less than those shown. Also, the assumed 5% annual return in the example should
not be considered a representation of investment performance as actual
performance will depend upon the actual investment results of securities held in
the Fund's portfolio.
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as % of offering price) none
Maximum Sales Load Imposed on
Reinvested Dividends (as % of
offering price) none
Deferred Sales Load (as % of original
purchase price or redemption
proceeds as applicable) none
12b-1 Fees none
Redemption Fees none
Exchange Fees none
Annual Operating Expenses After
Expense Reimbursements (as a
percentage of net assets)1:
Management Fees .50%
Other Operating Expenses .15%
Total Operating Expenses .65%
Example
You would pay the following
expenses on a $1,000 investment
assuming a 5% annual return
(with or without a redemption at
the end of each time period):
One Year $6.64
Three Years $20.80
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1 Loomis Sayles has voluntarily undertaken for an indefinite period to waive its
fees and, to the extent necessary, to bear other Fund expenses in order to limit
the Fund's annualized total operating expenses to the percentages of net assets
shown above.
THE TRUST
The Fund is a series of the Trust. The other series are the Loomis
Sayles California Tax-Free Income Fund, the Loomis Sayles Convertible Bond Fund,
the Loomis Sayles Core Growth Fund, the Loomis Sayles Fixed Income Fund, the
Loomis Sayles High Yield Fixed Income Fund, the Loomis Sayles Intermediate
Duration Fixed Income Fund, the Loomis Sayles Investment Grade Fixed Income Fund
and the Loomis Sayles Mortgage Securities Fund. The Trust is a diversified
open-end management investment company organized as a Massachusetts business
trust on December 23, 1993. The Trust is authorized to issue an unlimited number
of full and fractional shares of beneficial interest in multiple series. Shares
entitle shareholders to receive dividends as determined by the Trust's board of
trustees (the "Trustees") and to cast a vote for each share held (with
fractional votes for each fractional share held) at shareholder meetings.
Subject to the restrictions described under "How to Redeem Shares," the shares
are freely transferable. The Trust does not generally hold shareholder meetings
and will do so only when required by law. Shareholders may call meetings to
consider removal of the Trustees.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is high total return through a
combination of current income and capital appreciation.
The Fund seeks to attain its objective by investing its assets
primarily in fixed income securities issued or guaranteed by the U.S. Government
or its agencies, certain types of mortgage-related and asset-backed securities,
and investment grade corporate and sovereign debt obligations. All securities
will be denominated in U.S. dollars.
U.S. Government securities will include obligations issued or
guaranteed by the U.S. Government or its authorities, agencies or
instrumentalities and certificates representing undivided interests in the
interest or principal of U.S. Treasury Securities. U.S. Government securities
will be held for the purpose of maintaining high average portfolio quality,
providing sufficient liquidity and controlling interest rate exposure.
The Fund normally will maintain a significant portion of its assets in
investment grade corporate bonds and mortgage-related securities in order to
provide a high level of current income. Corporate and sovereign debt securities
will be rated at least investment grade by both Standard & Poor's Corporation
(BBB-) and Moody's Investor Service, Inc. (Baa3), or if unrated, determined to
be of comparable quality by Loomis Sayles. In order to attain capital
appreciation, the Fund seeks to identify and select those corporate and
sovereign debt obligations undergoing credit improvement which is likely to
result in a credit rating upgrade. In the event, however, that the credit rating
of a security held by the Fund falls below investment grade (or in the case of
unrated securities, Loomis Sayles determines that the quality of such security
has deteriorated below investment grade), the Fund will not be obligated to
dispose of such security and may continue to hold such security, if in the
opinion of Loomis Sayles, such investment is considered appropriate in such
circumstances. Collateralized mortgage obligations ("CMOs") will be limited to
those with CMO market risk ratings of V-1 to V-4 from Fitch Investors Service,
L.P. ("Fitch"), or CMOs unrated by Fitch that Loomis Sayles has determined to be
of comparable volatility.
Some of the Fund's investment restrictions are "fundamental" and cannot
be changed without a majority vote of the shareholders of the Fund. Such
restrictions include: (1) prohibiting the Fund from making loans; (2)
prohibiting the Fund from purchasing a security (other than U.S. Government
securities) if, as a result, more than 25% of the Fund's total assets (taken at
current value) would be invested in any one industry; (3) prohibiting the Fund
from borrowing money in excess of 10% of its total assets (taken at cost) or 5%
of its total assets (taken at current value), whichever is lower, and from
borrowing any money except as a temporary measure for extraordinary or emergency
purposes; (4) prohibiting the Fund from purchasing any illiquid security
including a security that is not readily marketable if, as a result, more than
15% of the Fund's net assets based on current value would then be invested in
such security. For additional investment restrictions, see the Statement of
Additional Information.
Note: Although authorized to invest in restricted securities, the Fund as a
matter of nonfundamental operating policy currently does not intend to
invest in such securities except Rule 144A securities. Rule 144A
securities are privately offered securities that can be resold only to
certain qualified institutional buyers. Rule 144A securities are treated
as illiquid, unless Loomis Sayles has determined, under guidelines
established by the Trustees, that the particular issue of Rule 144A
securities is liquid.
The investment objective of the Fund is "fundamental" and cannot be
changed without a majority vote of shareholders of the Fund. All investment
policies other than those identified as "fundamental," may be changed by the
Trustees without a vote of Fund shareholders.
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
The net asset value of the Fund's shares will vary as a result of
changes in the value of securities in the Fund's portfolio. The following
describes the securities in which the Fund will principally invest and describes
the risks associated with them. Additional information about the Fund's
investment practices can be found in the Statement of Additional Information.
Fixed Income Securities
The Fund may invest in fixed income securities of any maturity. 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
issuers. Because interest rates vary, it is impossible to predict the income of
the Fund for any particular period.
Fixed income securities are subject to market and credit risk. Market
risk relates to changes in a security's value as a result of changes in interest
rates generally. In general, the values of fixed income securities increase when
prevailing interest rates fall and decrease when interest rates rise. Credit
risk relates to the ability of the issuer to make payments of principal and
interest. Generally, the longer the maturity of a fixed income security, the
greater the fluctuations in its value because of market and credit risk.
U.S. Government Securities
U.S. Government Securities have different kinds of government support.
For example, some U.S. Government Securities, such as U.S. Treasury bonds, are
supported by the full faith and credit of the United States, whereas certain
other U.S. Government Securities issued or guaranteed by federal agencies or
government-sponsored enterprises are not supported by the full faith and credit
of the United States.
Although U.S. Government Securities generally do not involve the credit
risks associated with other types of fixed income securities, the market values
of U.S. Government Securities do go up and down as interest rates change. Thus,
for example, the value of an investment in U.S. Government Securities may fall
during times of rising interest rates. Yields on U.S. Government Securities tend
to be lower than those of other fixed income securities of comparable
maturities.
Some U.S. Government Securities, such as Government National Mortgage
Association Certificates, are known as "mortgage-backed" securities representing
interests in "pools" of mortgage loans secured by residential or commercial real
property. Interest and principal payments on the mortgages underlying
mortgage-backed U.S. Government Securities are passed through to the holders of
the security. If the Fund purchases mortgage-backed securities at a discount or
a premium, the Fund will recognize a gain or loss when the payments of
principal, through prepayment or otherwise, are passed through to the Fund and,
if the payment occurs in a period of falling interest rates, the Fund may not be
able to reinvest the payment at as favorable an interest rate. As a result of
these principal prepayment features, mortgage-backed securities are generally
more volatile investments than many other fixed income securities.
In addition to investing directly in U.S. Government Securities, the
Fund may purchase certificates of accrual or similar instruments ("strips")
evidencing undivided ownership interests in interest payments or principal
payments, or both, in U.S. Treasury Securities. These investment instruments may
be highly volatile.
Zero Coupon Securities
The Fund may invest in "zero coupon" fixed income securities. These
securities accrue interest at a specified rate, but do not pay interest in cash
on a current basis. The Fund is required to distribute the income on zero coupon
securities to Fund shareholders as the income accrues, even though the Fund is
not receiving the income in cash on a current basis. Thus the Fund may have to
sell other investments to obtain cash to make income distributions. The market
value of zero coupon securities is often more volatile than that of non-zero
coupon fixed income securities of comparable quality and maturity.
Collateralized Mortgage Obligations
The Fund may invest in collateralized mortgage obligations ("CMOs"). A
CMO is a limited recourse security backed by a portfolio of mortgages or more
typically by mortgage-backed securities held under an indenture. CMOs may be
issued either by U.S. Government instrumentalities or by non-governmental
entities. The issuer's obligation to make interest and principal payments is
derived from and secured by the underlying portfolio of mortgages or
mortgage-backed 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 or series are generally 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 CMOs
first to mature generally will be retired prior to its maturity. As with other
mortgage-backed securities, the early retirement of a particular class or series
of CMOs held by the Fund could involve the loss of any premium the Fund paid
when it acquired the investment and could result in the Fund's reinvesting the
proceeds at a lower interest rate than the interest rate paid by the retired
CMO. Because of the early retirement feature, CMOs may be more volatile than
many other fixed-income investments. The Fund will invest only in CMOs with
Fitch ratings of V-4 or better or those CMOs unrated by Fitch that Loomis Sayles
has determined to be of comparable volatility. Even CMOs with ratings reflecting
the lowest market risk are likely to experience losses in the event of adverse
changes in market conditions.
When-Issued Securities
The Fund may purchase securities on a "when-issued" basis. This means
that the Fund will enter into a commitment to buy the security before the
security has been issued. The Fund's payment obligation and the interest rate on
the security are determined when the Fund enters into the commitment. The
security is typically delivered to the Fund 15 to 120 days later. No interest
accrues on the security between the time the Fund enters into the commitment and
the time the security is issued. If the value of the security being purchased
falls between the time the Fund commits to buy it and the payment date, the Fund
may sustain a loss. The risk of this loss is in addition to the Fund's risk of
loss on the securities actually in its portfolio at the time. In addition, when
the Fund buys a security on a when-issued basis, it is subject to the risk that
market rates of interest will increase before the time the security is
delivered, with the result that the yield on the security delivered to the Fund
may be lower than the yield available on other comparable securities at the time
of delivery. If the Fund has outstanding obligations to buy when-issued
securities, it will maintain liquid high-grade assets in a segregated account at
its custodian bank in an amount sufficient to satisfy these obligations.
Foreign Securities
The Fund may invest in dollar denominated securities of issuers
organized or headquartered outside the United States ("foreign securities"). The
Fund will not purchase a foreign security (for purposes of this limitation
securities of Canadian issuers publicly traded in the United States will not be
treated as a foreign security) if, as a result, the Fund's total holdings of
foreign securities would exceed 20% of the Fund's total assets. Securities will
principally trade on U.S. exchanges or will be purchased and sold in U.S.
markets.
Although investing in foreign securities may increase the Fund's
diversification and reduce portfolio volatility, foreign securities may present
risks not associated with investments in comparable securities of U.S. issuers.
There may be less information publicly available about a foreign corporate or
government issuer than about a U.S. issuer, and foreign corporate issuers are
not generally subject to accounting, auditing and financial reporting standards
and practices comparable to those in the United States. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable U.S. issuers. With respect to certain foreign countries, there is a
possibility of governmental expropriation of assets, confiscatory taxation,
political or financial instability and diplomatic developments that could affect
the value of investments in those countries. The Fund's receipt of interest on
foreign government securities may depend on the availability of tax or other
revenues to satisfy the issuer's obligations and the remedies of the Fund may be
extremely limited if a foreign government defaults on its obligations. In
addition, the operations and results of foreign issuers and domestic issuers
with operations abroad may be affected by currency exchange rate fluctuations or
exchange control regulations.
THE FUND'S INVESTMENT ADVISER
The Fund's investment adviser is Loomis Sayles, One Financial Center,
Boston, Massachusetts 02111. Founded in 1926, Loomis Sayles is one of the
country's oldest and largest investment firms. Loomis Sayles's sole general
partner is owned by New England Investment Companies, L.P., a publicly traded
limited partnership whose sole general partner is a wholly-owned subsidiary of
New England Mutual Life Insurance Company ("The New England"). The New England
and Metropolitan Life Insurance Company ("Met Life") have entered into an
agreement to merge, with Met Life to be the survivor of the merger. The merger
is conditioned upon, among other things, approval by the policyholders of The
New England and Met Life and receipt of certain regulatory approvals.
It will be required that for a period of three years following the
merger, at least 75% of the board of trustees of the Trust be persons who are
not interested persons of the Trust's investment adviser. It is expected that
upon the closing of the merger, the board of trustees will consist of only one
trustee, and he will not be an interested person of the Trust.
The merger of The New England into Met Life is expected to constitute
an "assignment" of the existing investment advisory agreement between the Fund
and its investment adviser. Under the Investment Company Act of 1940, an
"assignment" will result in the automatic termination of the investment advisory
agreement, effective at the time of the merger. Shareholders of the Fund have
approved a new investment advisory agreement with Loomis Sayles with the same
terms as the current advisory agreement to take effect in the event that the
current advisory agreement is terminated by operation of the Investment Company
Act of 1940 in connection with the merger.
In addition to selecting and reviewing the Fund's investments, Loomis
Sayles provides executive and other personnel for the management of the Fund.
The Trustees supervise Loomis Sayles's conduct of the affairs of the Fund.
The portfolio manager for the Fund will be William F. Camp. Mr. Camp is
a Vice President of Loomis Sayles and joined the firm in 1995. Previously, Mr.
Camp worked as a portfolio manager in the pension department of Kmart
Corporation.
Loomis Sayles acts as the transfer agent and dividend paying agent for
the Fund.
FUND EXPENSES
The Fund pays Loomis Sayles a monthly investment advisory fee. This fee
is at the annual rate of .50% of the Fund's average weekly net assets.
In addition to the investment advisory fee, the Fund pays all expenses
not expressly assumed by Loomis Sayles, including taxes, brokerage commissions,
fees of the Fund's custodian, independent accountants and legal counsel and fees
of the Trustees who are not directors, officers or employees of Loomis Sayles or
its affiliated companies.
Loomis Sayles has voluntarily undertaken for an indefinite period to
waive its fees and, to the extent necessary, to bear other Fund expenses in
order to limit the Fund's annualized total operating expenses to .65% of average
annual net assets.
PORTFOLIO TRANSACTIONS
Loomis Sayles selects brokers and dealers to execute portfolio
transactions for the Fund. Portfolio turnover considerations will not limit
Loomis Sayles's investment discretion in managing the Fund's assets. Although it
is impossible to predict with certainty, it is expected that the portfolio
turnover rate of the Fund will not exceed 75%. The Fund anticipates that its
portfolio turnover rates will vary significantly from time to time depending on
the volatility of economic and market conditions. High portfolio turnover may
involve higher costs such as higher brokerage commissions and higher levels of
taxable gains.
HOW TO PURCHASE SHARES
You may make an initial purchase of shares of the Fund by submitting a
completed subscription agreement (attached hereto as Exhibit A) and payment to
Loomis Sayles.
The minimum initial investment in the Fund is $1 million. Subsequent
investments must be at least $50,000. The Trust reserves the right to waive
these minimums in its sole discretion.
Shares of the Fund may be purchased by (i) giving cash, (ii) exchanging
securities on deposit with a custodian acceptable to Loomis Sayles or (iii) a
combination of such securities and cash. Purchase of shares of the Fund in
exchange for securities is subject in each case to the determination by Loomis
Sayles that the securities to be exchanged are acceptable for purchase by the
Fund. In all cases Loomis Sayles reserves the right to reject any particular
investment. Securities accepted by Loomis Sayles in exchange for Fund shares
will be valued in the same manner as the Fund's assets as described below as of
the time of the Fund's next determination of net asset value after such
acceptance. All dividends and subscription or other rights which are reflected
in the market price of accepted securities at the time of valuation become the
property of the Fund and must be delivered to the Fund upon receipt by the
investor from the issuer. A gain or loss for federal income tax purposes would
be realized upon the exchange by an investor that is subject to federal income
taxation, depending upon the investor's basis in the securities tendered. A
shareholder who wishes to purchase shares by exchanging securities should obtain
instructions by calling (617) 482-2450.
Loomis Sayles will not approve the acceptance of securities in exchange
for shares of the Fund unless (1) Loomis Sayles, in its sole discretion,
believes the securities are appropriate investments for the Fund; (2) the
investor represents and agrees that all securities offered to the Fund can be
resold by the Fund without restriction under the Securities Act of 1933, as
amended (the "Securities Act"), or otherwise; and (3) the securities are
eligible to be acquired under the Fund's investment policies and restrictions.
No investor owning 5% or more of the Fund's shares may purchase additional Fund
shares by the exchange of securities.
Upon acceptance of your order, the Trust opens an account for you,
applies the payment to the purchase of full and fractional Fund shares of
beneficial interest and mails a statement of the account confirming the
transaction. After an account has been established, you may send subsequent
investments at any time.
Purchases of shares in the Fund are limited to persons who are
"accredited investors" as defined in Regulation D under the Securities Act and
who have completed and signed a subscription agreement in the form attached
hereto as Exhibit A. The Trust reserves the right to reject any purchase order
for any reason which the Trust in its sole discretion deems appropriate.
Purchasers must be acquiring shares for their own account and for investment
purposes only. Although the Trust does not anticipate that it will do so, the
Trust reserves the right to suspend or change the terms of the offering of its
shares.
The price you pay will be the per share net asset value next calculated
after a proper investment order is received by the Trust. Shares of the Fund are
sold with no sales charge. The net asset value of the Fund's shares is
calculated by dividing the Fund's net assets by the number of shares
outstanding. The Fund intends to calculate net asset value daily and as of the
close of the New York Stock Exchange (the "Exchange") on each day on which an
order for purchase or redemption of the Fund's shares is received and on which
the Exchange is open for unrestricted trading. Portfolio securities are valued
at their market value as more fully described in the Statement of Additional
Information.
HOW TO REDEEM SHARES
The securities offered hereby have not been registered under the
Securities Act or the securities laws of any state and may not be transferred or
resold unless so registered or exempt therefrom. However, the securities are
redeemable.
You can redeem your shares by sending a written request to the Trust.
The written request must include the name of the Fund, your account
number, the exact name(s) in which your shares are registered, and the number of
shares or the dollar amount to be redeemed. All owners of the shares must sign
the written request in the exact names in which the shares are registered and
should indicate any special capacity in which they are signing (such as trustee
or custodian or on behalf of a partnership, corporation or other entity).
The redemption price will be the net asset value per share next
determined after the written redemption request and any necessary special
documentation are received by the Trust in proper form.
Proceeds resulting from a written redemption request will normally be
mailed to you within seven days after receipt of your request in good order. If
you purchased your shares by check and your check was deposited less than
fifteen days prior to the redemption request, the Trust may withhold redemption
proceeds until your check has cleared.
Redemption proceeds may be made in money or in kind, or partly in money
and partly in kind, as determined by the Trust.
The Fund may suspend the right of redemption and may postpone payment
for more than seven days when the Exchange is closed for other than weekends or
holidays, or if permitted by the rules of the SEC when trading on the Exchange
is restricted or during an emergency which makes it impracticable for the Fund
to dispose of its securities or to determine fairly the value of its net assets,
or during any other period permitted by the SEC for the protection of investors.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
Because the Fund is designed primarily for tax-exempt investors such as
pension plans, endowments and foundations, the Fund is not managed with a view
to reducing taxes. The Fund pays any net investment income to shareholders as
dividends annually. The Fund also distributes all of its net realized capital
gains after applying any capital loss carryovers. Any capital gain distributions
are normally made annually in December, but may, to the extent permitted by law,
be made more frequently as deemed advisable by the Trustees. The Trustees may
change the frequency with which the Fund declares or pays dividends.
Your dividends and capital gain distributions will automatically be
reinvested in additional shares of the Fund on the payment date unless you have
elected to receive cash. Dividends and capital gain distributions will be taxed
as described below whether received in cash or in additional shares.
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended (the "Code"). As such, so long as
the Fund distributes all its net investment income and net realized capital
gains to its shareholders on a current basis, the Fund itself does not pay any
federal income or excise tax. The Fund intends to make sufficient distributions
to be relieved of federal taxes.
Income dividends and short-term capital gain distributions are treated
as ordinary income to you whether distributed in cash or additional shares.
Long-term capital gain distributions are treated as long-term capital gains to
you whether distributed in cash or additional shares and regardless of how long
you have held your shares. However, any loss recognized by you on the taxable
disposition of shares held for six months or less will be treated as a long-term
capital loss to the extent of any capital gain distribution you received with
respect to the shares.
The Fund is required to withhold 31% of redemption proceeds, income
dividends and capital gain distributions it pays to you (1) if you do not
provide a correct, certified taxpayer identification number, (2) if the Fund is
notified that you have underreported income in the past, or (3) if you fail to
certify to the Fund that you are not subject to such withholding.
In January of each year, the Trust will send you a statement showing
the federal tax status of dividends and distributions paid to you during the
preceding year.
Note: The foregoing summarizes certain U.S. federal income tax consequences of
investing in the Fund. Before investing, you should consult your own tax
adviser for more information concerning the federal, state and local tax
consequences of investing in, redeeming or exchanging Fund shares.
CUSTODIAN OF ASSETS INVESTMENT ADVISER
State Street Bank and Trust Company Loomis, Sayles & Company, L.P.
Boston, Massachusetts 02102 One Financial Center
Boston, Massachusetts 02111
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS ASSIGNED BY
STANDARD & POOR'S CORPORATION AND
MOODY'S INVESTORS SERVICE, INC.
STANDARD & POOR'S CORPORATION
AAA
This is the highest rating assigned by Standard & Poor's to a debt obligation
and indicates an extremely strong capacity to pay interest and repay principal.
AA
Bonds rated AA also qualify as high quality debt obligations. Capacity to pay
interest and repay principal is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay interest and
repay principal. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to repay principal and pay interest for bonds in this
category than for bonds in higher rated categories.
BB, B, CCC, CC
Bonds rated BB, B, CCC and CC are regarded, on balance, as predominately
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such bonds will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
C
The rating C is reserved for income bonds on which no interest is being paid.
D
Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa
Bonds that are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large, or by an exceptionally stable,
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa
Bonds that are rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there are other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A
Bonds that are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Baa
Bonds that are rated Baa are considered as medium grade obligations; i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present, but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often, the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Should no rating be assigned by Moody's, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not
rated as a matter of policy.
3. There is lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designed by the symbols Aa1, A1,
Baa1, Ba1 and B1, and those with the weakest investment attributes are
designated by the symbols Aa3, A3, Baa3, Ba3 and B3.
<PAGE>
APPENDIX B
DESCRIPTION OF
FITCH CMO V-RATINGS
A Fitch CMO market risk rating is an opinion as to the relative sensitivity of a
security's price and cash flows to changes in interest rates and, where
relevant, other market conditions. INVESTORS SHOULD UNDERSTAND THAT SECURITIES
WITH RATINGS REFLECTING EVEN THE LOWEST MARKET RISK ARE LIKELY TO EXPERIENCE
LOSSES IN THE EVENT OF ADVERSE CHANGES IN MARKET CONDITIONS. Fitch's market risk
ratings are based on information provided to Fitch by sources deemed to be
reliable, however Fitch does not verify the accuracy of this underlying
information. These ratings do not constitute recommendations to purchase, sell
or hold any securities, as they do not comment on the adequacy of market prices
or the suitability of any security for any investor.
V-Rating Representative Distribution Description
V-1 PAC classes with wide prepayment Market Risk: Low
collars, short duration floaters
V-2 and short duration sequential. Securities rated V-1 and V-2
perform consistently across a
range of interest rate scenarios.
These securities exhibit interest
rate risk comparable to short
duration treasuries (1-5 years).
V-3 Medium duration Floater, Short Market Risk: Moderate
duration TAC, Short duration PAC
V-4 II, Long duration PAC I. Securities rated V-3 and V-4 have
relatively consistent performance
across a range of interest rate
scenarios. These securities
experience interest rate risk
comparable to long duration
treasuries (10-30 years).
V-5 PAC classes with narrow collars, Market Risk: Moderate to High
support classes, accrual bonds
V-6 and short duration IO's and
PO's, Z bond's. Securities rated V-5, V-6 and V-7
V-7 experience significant variations
in performance across a range of
interest rate scenarios. These
securities have substantial
excess interest rate risk and in
many instances exhibit negative
convexity. Z bond's with
durations comparable to treasury
zero-coupon issues also fall in
this range.
V-8 Leveraged inverse floaters, long Market Risk: High to Speculative
duration IO's and PO's, super
V-9 PO's, jump Zs. Securities rated V-8, V-9 and
V-10 experience sharp, severe
V-10 variations in performance across
a range of interest rate
scenarios. These securities
exhibit risk characteristics such
as extreme negative convexity,
significant sensitivity to the
direction of interest rate
movements, and highly leveraged
sensitivity to interest rate
indices.
<PAGE>
Exhibit A
LOOMIS SAYLES INVESTMENT TRUST
SUBSCRIPTION AGREEMENT
for
Shares of Beneficial Interest in
the
LOOMIS SAYLES CORE FIXED INCOME FUND
Total Subscription Price: $______________________
SUBSCRIBER INFORMATION:
Name of Subscriber: ______________________________________________________
(hereinafter "SUBSCRIBER")
Social Security Number or ________________________________________________
Taxpayer Identification Number
Person Signing (if different): ___________________________________________
Capacity (if applicable): ________________________________________________
Address: _________________________________________________________________
(Number and Street)
_________________________________________________________________
(City) (State) (Zip Code)
Telephone: _____________________
SUBSCRIBER hereby agrees as follows:
1. SUBSCRIBER hereby subscribes for shares of beneficial interest in the
Loomis Sayles Core Fixed Income Fund (the "Fund"), one of nine series
of the Loomis Sayles Investment Trust (the "Trust") in the dollar
amount set forth above. Upon request of the Trust, SUBSCRIBER shall
wire funds in such amount to:
State Street Bank & Trust Co./Boston MA
ABA# 011000028
Mutual Funds Dept.
TNE Group
Fund #4883-Loomis Sayles Core Fixed Income Fund
Deposit Account #4133-176-0
2. SUBSCRIBER understands and agrees that this subscription for shares of
beneficial interest in the Fund (the "Shares") is ineffective and that
SUBSCRIBER will not become a shareholder of the Fund until (i)
SUBSCRIBER completes all applicable information requested in this
Subscription Agreement, (ii) SUBSCRIBER executes this Subscription
Agreement and delivers it to the Trust, (iii) the Trust accepts the
Subscription Agreement on behalf of the Fund, which acceptance may be
withheld in the Trust's sole discretion, and (iv) the Trust can and has
confirmed that the subscription price has been received in the account
listed in Section 1 above.
3. SUBSCRIBER represents and warrants to the Trust that SUBSCRIBER has
received a copy of the Private Placement Memorandum dated April 2, 1996
(the "Placement Memorandum") relating to the offer for sale by the
Trust of the Shares and has had an opportunity to request a Statement
of Additional Information dated as of April 2, 1996 (the "SAI"), and
has reviewed the Placement Memorandum carefully prior to executing this
Subscription Agreement. SUBSCRIBER acknowledges that SUBSCRIBER had the
opportunity to ask questions of, and receive answers from,
representatives of the Trust concerning terms and conditions of the
Offering and to obtain any additional information necessary to verify
the accuracy of the information contained in the Placement Memorandum
or the SAI. SUBSCRIBER further acknowledges that no person is
authorized to give any information or to make any representation which
is contrary to the information contained in the Placement Memorandum or
the SAI and that, if given or made, any such contrary information or
representation may not be relied upon as having been authorized.
4. SUBSCRIBER understands and acknowledges that, in selling the Shares to
SUBSCRIBER, the Trust is relying on the representations made and
information supplied in this Subscription Agreement to determine that
the sale of the Shares to SUBSCRIBER complies with (or meets the
requirements of any applicable exemption from) the Securities Act of
1933, as amended (the "1933 Act"), and applicable state securities
laws.
5. SUBSCRIBER represents that it is acquiring the Shares subscribed for by
this Subscription Agreement for its own account for investment only and
not with a view to any resale or distribution.
6. SUBSCRIBER represents that it (either alone or together with its
purchaser representative, if any, whose identity has been disclosed to
the Trust) has such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of the
investment represented by the Fund and that SUBSCRIBER is able to bear
the economic risk of this investment including the risk of loss of the
investment.
7. SUBSCRIBER understands that on behalf of the Fund, the Trust will offer
the Shares only to investors which qualify as "accredited investors" as
defined in Regulation D under the 1933 Act. SUBSCRIBER represents that
it qualifies as an "accredited investor" because SUBSCRIBER is
described in the paragraph or paragraphs indicated below: (check one or
more)
[ ] A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with his or her
spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current
year.
[ ] A natural person whose individual net worth, or joint net worth with
his or her spouse, exceeds $1,000,000 at the time of purchase of the
Shares.
[ ] A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii)
of Regulation D of the 1933 Act.
[ ] An organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
Shares offered, with total assets in excess of $5,000,000.
[ ] A private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940, as amended.
[ ] A bank as defined in Section 3(a)(2) of the 1933 Act, or a savings and
loan association or other institution as defined in Section 3(a)(5)(A)
of the 1933 Act, whether acting in its individual or fiduciary
capacity; a broker dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended; an insurance company as
defined in Section 2(13) of the 1933 Act; an investment company
registered under the Investment Company Act of 1940, as amended (the
"1940 Act") or a business development company as defined in Section
2(a)(48) of the 1940 Act; a Small Business Investment Company licensed
by the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of
$5,000,000; an employee benefit plan within the meaning of Title I of
the Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons
that are accredited investors.
[ ] A Trustee or Executive Officer of the Trust whose purchase exceeds
$1,000,000.
[ ] An entity in which all of the equity owners are accredited investors
as defined above.
8. SUBSCRIBER represents that it is a resident of (or, if SUBSCRIBER is an
entity its principal offices are located in) __________________________
(U.S. State)
9. SUBSCRIBER agrees to promptly notify the Trust of any development that
causes any of the representations made or information supplied in this
Subscription Agreement to be untrue at any time.
10. SUBSCRIBER understands that the Shares are not publicly traded and that
there will be no public market for the Shares upon completion of the
Offering.
11. SUBSCRIBER understands and agrees that the Shares are being sold in a
transaction which is exempt from the registration requirements of the
1933 Act and, in certain cases, of state securities laws, and that such
interests will be subject to transfer restrictions under the 1933 Act
and applicable state securities laws and, except to the extent that
redemption is permitted as described in the Placement Memorandum and
the SAI, must be held indefinitely unless subsequently registered under
the 1933 Act and applicable state securities laws or an exemption from
such registration is available. The undersigned further understands and
agrees that the Trust is under no obligation to register such Shares
and that any exemptions are extremely limited.
12. SUBSCRIBER agrees to transfer all or any part of its Shares only in
compliance with all applicable conditions and restrictions contained in
this Subscription Agreement, the Placement Memorandum, the SAI, the
1933 Act and any applicable state securities laws.
13. SUBSCRIBER hereby agrees to be bound by all terms and conditions of
this Subscription Agreement.
14. This Subscription Agreement shall be governed by and construed under
the laws of The Commonwealth of Massachusetts and is intended to take
effect as an instrument under seal and shall be binding on SUBSCRIBER
in accordance with its terms.
15. Please sign this Subscription Agreement exactly as you wish your Shares
to be registered. (The information supplied by you below should conform
to that given on the cover page.)
By signing below, I (we) certify under penalties of perjury (1) that the Social
Security or Taxpayer Identification Number provided above is correct and (2)
that the IRS has never notified me (us) that I (we) am (are) subject to backup
withholding, or has notified me (us) that I (we) am (are) no longer subject to
such backup withholding. (Note: if part (2) of this sentence is not true in your
case, please strike out that part before signing.)
Dated: __________________ Name of SUBSCRIBER: _________________________________
By: _________________________________________________
Name of Person Signing if different from SUBSCRIBER:
_____________________________________________________
(please print or type)
Capacity: ___________________________________________
(please print or type)
Accepted:
LOOMIS SAYLES INVESTMENT TRUST,
on behalf of the Loomis Sayles Core Fixed Income Fund
By: _________________________________________________
Name:
Title:
A copy of the Agreement and Declaration of Trust establishing the Trust
is on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the Fund
named above on behalf of the Trust by officers of the Trust as officers and not
individually and that the obligations of or arising out of this Agreement are
not binding upon any of the Trustees, officers or shareholders individually but
are binding only upon the assets and property belonging to the Series.
<PAGE>
Part A. INFORMATION REQUIRED IN A PROSPECTUS--INTERMEDIATE DURATION
FIXED INCOME FUND.
Item 1. Cover Page
Not applicable. See Paragraph 4 of General Instruction F.
Item 2. Synopsis
Not applicable. See Paragraph 4 of General Instruction F.
Item 3. Condensed Financial Information
Not applicable. See Paragraph 4 of General Instruction F.
Item 4. General Description of Registrant
See the Cover Page and the sections entitled "The Trust"; "Investment
Objective And Policies"; and "More Information About the Fund's
Investments" in the Private Placement Memorandum attached as an
Appendix hereto (the "Private Placement Memorandum").
Item 5. Management of the Fund
See the Cover Page and the sections entitled "The Trust"; "The Fund's
Investment Adviser"; "Fund Expenses"; and "Portfolio Transactions" in
the Private Placement Memorandum.
Item 5A. Management's Discussion of Fund Performance
Not applicable. See Paragraph 4 of General Instruction F.
Item 6. Capital Stock and Other Securities
See the Cover Page and the sections entitled "The Trust"; "How to
Redeem Shares"; and "Dividends, Capital Gain Distributions and Taxes"
in the Private Placement Memorandum.
Item 7. Purchase of Securities Being Offered
See the section entitled "How to Purchase Shares" in the Private
Placement Memorandum.
Item 8. Redemption or Repurchase
See the section entitled "How to Redeem Shares" in the Private
Placement Memorandum.
Item 9. Pending Legal Proceedings
Not applicable.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
LOOMIS SAYLES INTERMEDIATE DURATION FIXED INCOME FUND
One Financial Center
Boston, Massachusetts 02111
(617) 482-2450
PRIVATE PLACEMENT MEMORANDUM
April 2, 1996
The Loomis Sayles Investment Trust (the "Trust") is a group of nine
investment pooled funds including the Loomis Sayles Intermediate Duration Fixed
Income Fund (the "Fund"). The other series which are offered by the Trust and
which are described in separate private placement memoranda are:
Loomis Sayles California Tax-Free Income Fund
Loomis Sayles Convertible Bond Fund
Loomis Sayles Core Fixed Income Fund
Loomis Sayles Core Growth Fund
Loomis Sayles Fixed Income Fund
Loomis Sayles High Yield Fixed Income Fund
Loomis Sayles Investment Grade Fixed Income Fund
Loomis Sayles Mortgage Securities Fund
Except for the California Tax-Free Income Fund, the funds are designed
specifically for tax-exempt investors such as pension plans, endowments and
foundations, although other institutions and high net-worth individuals are
eligible to invest. Each of the funds is separately managed and has its own
investment objective and policies. Loomis, Sayles & Company, L.P. ("Loomis
Sayles") is the investment adviser of each of the funds.
This Private Placement Memorandum (the "Memorandum") concisely
describes the information that you should know before investing in the Fund.
Please read it carefully and keep it for future reference. A Statement of
Additional Information dated April 2, 1996, is available free of charge. To
obtain one or to make any inquiries about the Fund, write to Loomis Sayles
Investment Trust, One Financial Center, Boston, Massachusetts 02111 or telephone
(617) 482-2450. The Statement of Additional Information, which contains more
detailed information about the Fund, has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated by reference into this
Memorandum.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE TRANSFERRED OR RESOLD UNLESS SO REGISTERED OR EXEMPT THEREFROM. HOWEVER,
THE SECURITIES ARE REDEEMABLE AS DESCRIBED IN THIS MEMORANDUM. IN CERTAIN CASES
INVESTORS MAY BE REDEEMED "IN KIND" AND RECEIVE PORTFOLIO SECURITIES HELD BY THE
FUND IN LIEU OF CASH UPON REDEMPTION. IN SUCH CASE, AN INVESTOR WILL INCUR COSTS
WHEN THE INVESTOR SELLS THE SECURITIES DISTRIBUTED.
NO OFFERING LITERATURE OR ADVERTISING IN ANY FORM WHATSOEVER SHALL BE
EMPLOYED IN THE OFFERING OF THESE SECURITIES EXCEPT FOR THIS MEMORANDUM AND SUCH
SUPPLEMENTARY INFORMATION PREPARED BY THE FUND AND PRECEDED OR ACCOMPANIED BY
THIS MEMORANDUM. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS OR TO
PROVIDE ANY INFORMATION WITH RESPECT TO THESE SECURITIES EXCEPT SUCH INFORMATION
AS IS CONTAINED IN THIS MEMORANDUM AND IN THE STATEMENT OF ADDITIONAL
INFORMATION. ANY SALES MADE HEREUNDER SHALL NOT UNDER ANY CIRCUMSTANCES CREATE
AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN MATTERS DISCUSSED HEREIN SINCE
THE DATE HEREOF.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF EXPENSES ........................................... 3
THE TRUST ..................................................... 3
INVESTMENT OBJECTIVE AND POLICIES ............................. 4
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS ................. 5
THE FUND'S INVESTMENT ADVISER ................................. 7
FUND EXPENSES ................................................. 8
PORTFOLIO TRANSACTIONS ........................................ 8
HOW TO PURCHASE SHARES ........................................ 8
HOW TO REDEEM SHARES .......................................... 9
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES ............... 9
<PAGE>
SUMMARY OF EXPENSES
The following information is provided to assist in understanding the
various expenses that an investor in the Fund will bear indirectly. The
information for the Fund is based on estimated annualized expenses for the
Fund's first fiscal year. The information below should not be considered a
representation of past or future expenses, as actual expenses may be greater or
less than those shown. Also, the assumed 5% annual return in the example should
not be considered a representation of investment performance as actual
performance will depend upon the actual investment results of securities held in
the Fund's portfolio.
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as % of offering price) none
Maximum Sales Load Imposed on
Reinvested Dividends (as % of
offering price) none
Deferred Sales Load (as % of original
purchase price or redemption
proceeds as applicable) none
12b-1 Fees none
Redemption Fees none
Exchange Fees none
Annual Operating Expenses After
Expense Reimbursements (as a
percentage of net assets)1:
Management Fees .40%
Other Operating Expenses .15%
Total Operating Expenses .55%
Example
You would pay the following
expenses on a $1,000 investment
assuming a 5% annual return
(with or without a redemption at
the end of each time period):
One Year $5.62
Three Years $17.63
- -------------------
1 Loomis Sayles has voluntarily undertaken for an indefinite period to waive its
fees and, to the extent necessary, to bear other Fund expenses in order to limit
the Fund's annualized total operating expenses to the percentages of net assets
shown above.
THE TRUST
The Fund is a series of the Trust. The other series are the Loomis
Sayles California Tax-Free Income Fund, the Loomis Sayles Convertible Bond Fund,
the Loomis Sayles Core Fixed Income Fund, the Loomis Sayles Core Growth Fund,
the Loomis Sayles Fixed Income Fund, the Loomis Sayles High Yield Fixed Income
Fund, the Loomis Sayles Investment Grade Fixed Income Fund and the Loomis Sayles
Mortgage Securities Fund. The Trust is a diversified open-end management
investment company organized as a Massachusetts business trust on December 23,
1993. The Trust is authorized to issue an unlimited number of full and
fractional shares of beneficial interest in multiple series. Shares entitle
shareholders to receive dividends as determined by the Trust's board of trustees
(the "Trustees") and to cast a vote for each share held (with fractional votes
for each fractional share held) at shareholder meetings. Subject to the
restrictions described under "How to Redeem Shares," the shares are freely
transferable. The Trust does not generally hold shareholder meetings and will do
so only when required by law. Shareholders may call meetings to consider removal
of the Trustees.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is above-average total return through a
combination of current income and capital appreciation. Although the Fund may
invest in fixed income securities of any maturity, the weighted average duration
of the portfolio will remain within a band of 2 to 5 years. The concept of
duration is described more fully below.
The Fund will seek to achieve its objective by investing in a
diversified portfolio of debt securities which may include corporate securities,
U.S. Government Securities, "Yankee" securities (U.S. dollar denominated debt
issued by non-U.S. entities), and certain types of mortgage-related and
asset-backed securities. Collateralized mortgage obligations ("CMOs") will be
limited to those with CMO market risk ratings of V-1 to V-4 from Fitch Investors
Service, L.P. ("Fitch"), or CMOs unrated by Fitch that Loomis Sayles has
determined to be of comparable volatility. All securities will be denominated in
U.S. dollars.
The Fund will purchase only securities which have at least an
investment grade rating from either Moody's Investors Service, Inc. (Baa3) or
Standard & Poor's Corporation (BBB-), or if unrated, determined to be of
comparable quality by Loomis Sayles. Some or all of these securities may be
"split-rated securities," i.e., securities that have received an investment
grade rating from one of the nationally recognized rating organizations but have
also received a lower rating from the other nationally recognized rating
organization. Split-rated securities may be subject to some of the risks
described below under "Lower Rated Fixed Income Securities." In the event that
the credit rating of a security held by the Fund falls below investment grade
(or, in the case of unrated securities, Loomis Sayles determines that the
quality of such security has deteriorated below investment grade), the Fund will
not be obligated to dispose of such security and may continue to hold such
security if, in the opinion of Loomis Sayles, such investment is considered
appropriate in the circumstances.
Some of the Fund's investment restrictions are "fundamental" and cannot
be changed without a majority vote of the shareholders of the Fund. Such
restrictions include: (1) prohibiting the Fund from making loans; (2)
prohibiting the Fund from purchasing a security (other than U.S. Government
Securities) if, as a result, more than 25% of the Fund's total assets (taken at
current value) would be invested in any one industry; (3) prohibiting the Fund
from borrowing money in excess of 10% of its total assets (taken at cost) or 5%
of its total assets (taken at current value), whichever is lower, and from
borrowing any money except as a temporary measure for extraordinary or emergency
purposes; (4) prohibiting the Fund from purchasing any illiquid security
including a security that is not readily marketable if, as a result, more than
15% of the Fund's net assets based on current value would then be invested in
such security. For additional investment restrictions, see the Statement of
Additional Information
Note: Although authorized to invest in restricted securities, the Fund as a
matter of nonfundamental operating policy currently does not intend to
invest in such securities except Rule 144A securities. Rule 144A
securities are privately offered securities that can be resold only to
certain qualified institutional buyers. Rule 144A securities are treated
as illiquid, unless Loomis Sayles has determined, under guidelines
established by the Trustees, that the particular issue of Rule 144A
securities is liquid.
The investment objective of the Fund is "fundamental" and cannot be
changed without a majority vote of shareholders of the Fund. All investment
policies other than those identified as "fundamental," may be changed by the
Trustees without a vote of Fund shareholders.
Duration was developed as a more precise alternative to the concept of
"term to maturity". Most debt obligations provide interest payments in addition
to a final payment at maturity. Some obligations also have call provisions.
Depending on the relative magnitude of these payments, the market values of debt
obligations may respond differently to changes in the level and structure of
interest rates. Traditionally, a debt security's "term to maturity" has been
used as a proxy for the sensitivity of the security's price to changes in
interest rates. However, the term to maturity measures only the time until a
debt security provides its final payment, taking no account of the pattern of
the security's payments prior to maturity. Duration is a measure of the expected
life of a fixed income security on a present value basis. Duration takes the
length of the time intervals between the present time and the time that the
interest and principal payments are scheduled or, in the case of a callable
bond, expected to be received, and weights them by the present values of the
cash to be received at each future point in time. For any fixed income security
with interest payments occurring prior to the payment of principal, duration is
always less than maturity. In some cases, duration cannot be calculated with
certainty because certain assumptions have to be factored into the calculation.
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
The net asset value of the Fund's shares will vary as a result of
changes in the value of securities in the Fund's portfolio. The following
describes the securities in which the Fund will principally invest and describes
the risks associated with them. Additional information about the Fund's
investment practices can be found in the Statement of Additional Information.
Fixed Income Securities
The Fund may invest in fixed income securities of any maturity although
the weighted average duration [maturity?] of its investments will remain within
a band of 2 to 5 years. Fixed income securities pay a specified rate of income,
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 issuers. Because interest rates vary, it is impossible to predict the
income of the Fund for any particular period.
Fixed income securities are subject to market and credit risk. Market
risk relates to changes in a security's value as a result of changes in interest
rates generally. In general, the values of fixed income securities increase when
prevailing interest rates fall and decrease when interest rates rise. Credit
risk relates to the ability of the issuer to make payments of principal and
interest. Generally, the longer the maturity of a fixed income security, the
greater the fluctuations in its value because of market and credit risk. In
addition, the net asset value of the Fund's shares will vary as a result of
changes in the value of the securities in the Fund's portfolio.
U.S. Government Securities
U.S. Government Securities have different kinds of government support.
For example, some U.S. Government Securities, such as U.S. Treasury bonds, are
supported by the full faith and credit of the United States, whereas certain
other U.S. Government Securities issued or guaranteed by federal agencies or
government-sponsored enterprises are not supported by the full faith and credit
of the United States.
Although U.S. Government Securities generally do not involve the credit
risks associated with other types of fixed income securities, the market values
of U.S. Government Securities do go up and down as interest rates change. Thus,
for example, the value of an investment in U.S. Government Securities may fall
during times of rising interest rates. Yields on U.S. Government Securities tend
to be lower than those of other fixed income securities of comparable
maturities.
Some U.S. Government Securities, such as Government National Mortgage
Association Certificates, are known as "mortgage-backed" securities representing
interests in "pools" of mortgage loans secured by residential or commercial real
property. Interest and principal payments on the mortgages underlying
mortgage-backed U.S. Government Securities are passed through to the holders of
the security. If the Fund purchases mortgage-backed securities at a discount or
a premium, the Fund will recognize a gain or loss when the payments of
principal, through prepayment or otherwise, are passed through to the Fund and,
if the payment occurs in a period of falling interest rates, the Fund may not be
able to reinvest the payment at as favorable an interest rate. As a result of
these principal prepayment features, mortgage-backed securities are generally
more volatile investments than many other fixed income securities.
In addition to investing directly in U.S. Government Securities, the
Fund may purchase certificates of accrual or similar instruments ("strips")
evidencing undivided ownership interests in interest payments or principal
payments, or both, in U.S. Treasury Securities. These investment instruments may
be highly volatile.
Lower Rated Fixed Income Securities
As indicated above, the Fund may purchase split-rated securities, which
may be subject to some of the risks associated with securities of below
investment grade quality ("lower rated fixed income securities"), also known as
"junk bonds". Lower rated fixed income securities generally provide higher
yields, but are subject to greater credit and market risk than higher quality
fixed income securities. Lower rated fixed income securities are considered
speculative with respect to the ability of the issuer to meet principal and
interest payments. Achievement of the investment objective of a fund investing
in lower rated fixed income securities may be more dependent on the investment
adviser's own credit analysis than is the case with higher quality bonds. The
market for lower rated fixed income securities may be more severely affected
than some other financial markets by economic recession or substantial interest
rate increases. The value and liquidity of lower rated fixed income securities
may be diminished by adverse publicity and investor perceptions. Also,
legislation that limits the tax benefits to issuers or holders of taxable lower
rated fixed income securities or that limits the ability of certain categories
of financial institutions to invest in these securities may adversely affect
market value. In addition, the secondary market may be less liquid for lower
rated fixed income securities. This lack of liquidity at certain times may
affect the values of these securities and may make the valuation and sale of
these securities by the Fund more difficult. Securities in the lowest rating
categories may be in poor standing or in default. Investment grade fixed income
securities rated Baa by Moody's Investors Service, Inc. or BBB by Standard and
Poor's Corporation may share some of the characteristics of lower rated fixed
income securities described above.
Zero Coupon Securities
The Fund may invest in "zero coupon" fixed income securities. These
securities accrue interest at a specified rate, but do not pay interest in cash
on a current basis. The Fund is required to distribute the income on zero coupon
securities to Fund shareholders as the income accrues, even though the Fund is
not receiving the income in cash on a current basis. Thus the Fund may have to
sell other investments to obtain cash to make income distributions. The market
value of zero coupon securities is often more volatile than that of non-zero
coupon fixed income securities of comparable quality and maturity.
Collateralized Mortgage Obligations
The Fund may invest in collateralized mortgage obligations ("CMOs"). A
CMO is a limited recourse security backed by a portfolio of mortgages or more
typically by mortgage-backed securities held under an indenture. CMOs may be
issued either by U.S. Government instrumentalities or by non-governmental
entities. The issuer's obligation to make interest and principal payments is
derived from and secured by the underlying portfolio of mortgages or
mortgage-backed 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 or series are generally 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 CMOs
first to mature generally will be retired prior to its maturity. As with other
mortgage-backed securities, the early retirement of a particular class or series
of CMOs held by the Fund could involve the loss of any premium the Fund paid
when it acquired the investment and could result in the Fund's reinvesting the
proceeds at a lower interest rate than the interest rate paid by the retired
CMO. Because of the early retirement feature, CMOs may be more volatile than
many other fixed-income investments. The Fund will invest only in CMOs with
Fitch ratings of V-4 or better or those CMOs unrated by Fitch that Loomis Sayles
has determined to be of comparable volatility. Even CMOs with ratings reflecting
the lowest market risk are likely to experience losses in the event of adverse
changes in market conditions. The duration of CMOs and other mortgage-related
securities is often difficult to determine because the underlying mortgages may
be subject to early repayment. Thus, the determination of duration will be
dependent on the adviser's assumptions regarding the likelihood and incidence of
prepayment and, to the extent that such assumptions prove to be incorrect, the
duration of a Fund's portfolio, and thus its relative exposure to fluctuation of
interest rates, may be significantly different than intended and may increase
the overall risk of the Fund's portfolio.
When-Issued Securities
The Fund may purchase securities on a "when-issued" basis. This means
that the Fund will enter into a commitment to buy the security before the
security has been issued. The Fund's payment obligation and the interest rate on
the security are determined when the Fund enters into the commitment. The
security is typically delivered to the Fund 15 to 120 days later. No interest
accrues on the security between the time the Fund enters into the commitment and
the time the security is issued. If the value of the security being purchased
falls between the time the Fund commits to buy it and the payment date, the Fund
may sustain a loss. The risk of this loss is in addition to the Fund's risk of
loss on the securities actually in its portfolio at the time. In addition, when
the Fund buys a security on a when-issued basis, it is subject to the risk that
market rates of interest will increase before the time the security is
delivered, with the result that the yield on the security delivered to the Fund
may be lower than the yield available on other comparable securities at the time
of delivery. If the Fund has outstanding obligations to buy when-issued
securities, it will maintain liquid high-grade assets in a segregated account at
its custodian bank in an amount sufficient to satisfy these obligations.
Foreign Securities
The Fund may invest in dollar denominated securities of issuers
organized or headquartered outside the United States ("foreign securities"). The
Fund will not purchase a foreign security (for purposes of this limitation
securities of Canadian issuers publicly traded in the United States will not be
treated as a foreign security) if, as a result, the Fund's total holdings of
foreign securities would exceed 20% of the Fund's total assets.
Although investing in foreign securities may increase the Fund's
diversification and reduce portfolio volatility, foreign securities may present
risks not associated with investments in comparable securities of U.S. issuers.
There may be less information publicly available about a foreign corporate or
government issuer than about a U.S. issuer, and foreign corporate issuers are
not generally subject to accounting, auditing and financial reporting standards
and practices comparable to those in the United States. The securities of some
foreign issuers are less liquid and at times more volatile than securities of
comparable U.S. issuers. Foreign brokerage commissions and securities custody
costs are often higher than in the United States. With respect to certain
foreign countries, there is a possibility of governmental expropriation of
assets, confiscatory taxation, political or financial instability and diplomatic
developments that could affect the value of investments in those countries. The
Fund's receipt of interest on foreign government securities may depend on the
availability of tax or other revenues to satisfy the issuer's obligations and
the remedies of the Fund may be extremely limited if a foreign government
defaults on its obligations. In addition, the operations and results of foreign
issuers and domestic issuers with operations abroad may be affected favorably or
unfavorably by changes in currency exchange rates or exchange control
regulations.
The Fund's investments in foreign securities may include investments in
countries whose economies or securities markets are not yet highly developed.
Special considerations associated with these investments (in addition to the
considerations regarding foreign investments generally) may include, among
others, greater political uncertainties, an economy's dependence on revenues
from particular commodities or on international aid or development assistance,
currency transfer restrictions, highly limited numbers of potential buyers for
such securities and delays and disruptions in securities settlement procedures.
THE FUND'S INVESTMENT ADVISER
The Fund's investment adviser is Loomis Sayles, One Financial Center,
Boston, Massachusetts 02111. Founded in 1926, Loomis Sayles is one of the
country's oldest and largest investment firms. Loomis Sayles's sole general
partner is owned by New England Investment Companies, L.P., a publicly traded
limited partnership whose sole general partner is a wholly-owned subsidiary of
New England Mutual Life Insurance Company ("The New England"). The New England
and Metropolitan Life Insurance Company ("Met Life") have entered into an
agreement to merge, with Met Life to be the survivor of the merger. The merger
is conditioned upon, among other things, approval by the policyholders of The
New England and Met Life and receipt of certain regulatory approvals.
It will be required that for a period of three years following the
merger, at least 75% of the Trustees be persons who are not interested persons
of the Trust's investment adviser. It is expected that upon the closing of the
merger, the board of trustees will consist of only one trustee, and he will not
be an interested person of the Trust.
The merger of The New England into Met Life is expected to constitute
an "assignment" of the existing investment advisory agreement between the Fund
and its investment adviser. Under the Investment Company Act of 1940, an
"assignment" will result in the automatic termination of the investment advisory
agreement, effective at the time of the merger. Shareholders of the Fund have
approved a new investment advisory agreement with Loomis Sayles with the same
terms as the current advisory agreement to take effect in the event that the
current advisory agreement is terminated by operation of the Investment Company
Act of 1940 in connection with the merger.
In addition to selecting and reviewing the Fund's investments, Loomis
Sayles provides executive and other personnel for the management of the Fund.
The Trustees supervise Loomis Sayles's conduct of the affairs of the Fund.
The portfolio manager for the Fund will be Anthony J. Wilkins. Mr.
Wilkins joined Loomis Sayles in 1990 and is a Director and Vice President of the
firm.
Loomis Sayles acts as the transfer agent and dividend paying agent for
the Fund.
FUND EXPENSES
The Fund pays Loomis Sayles a monthly investment advisory fee. This fee
is at the annual rate of .40% of the Fund's average weekly net assets.
In addition to the investment advisory fee, the Fund pays all expenses
not expressly assumed by Loomis Sayles, including taxes, brokerage commissions,
fees of the Fund's custodian, independent accountants and legal counsel and fees
of the Trustees who are not directors, officers or employees of Loomis Sayles or
its affiliated companies.
Loomis Sayles has voluntarily undertaken for an indefinite period to
waive its fees and, to the extent necessary, to bear other Fund expenses in
order to limit the Fund's annualized total operating expenses to .55% of average
annual net assets.
PORTFOLIO TRANSACTIONS
Loomis Sayles selects brokers and dealers to execute portfolio
transactions for the Fund. Portfolio turnover considerations will not limit
Loomis Sayles's investment discretion in managing the Fund's assets. Although it
is impossible to predict with certainty, it is expected that the portfolio
turnover rate of the Fund will not exceed 100%. The Fund anticipates that its
portfolio turnover rates will vary significantly from time to time depending on
the volatility of economic and market conditions. High portfolio turnover may
involve higher costs such as higher brokerage commissions and higher levels of
taxable gains. See "Dividends, Capital Gains Distributions and Taxes" for
information on the tax consequences of investing in the Fund.
HOW TO PURCHASE SHARES
You may make an initial purchase of shares of the Fund by submitting a
completed subscription agreement (attached hereto as Exhibit A) and payment to
Loomis Sayles.
The minimum initial investment in the Fund is $2,000,000. Subsequent
investments must be at least $50,000. The Trust reserves the right to waive
these minimums in its sole discretion.
Shares of the Fund may be purchased by (i) giving cash, (ii) exchanging
securities on deposit with a custodian acceptable to Loomis Sayles or (iii) a
combination of such securities and cash. Purchase of shares of the Fund in
exchange for securities is subject in each case to the determination by Loomis
Sayles that the securities to be exchanged are acceptable for purchase by the
Fund. In all cases Loomis Sayles reserves the right to reject any particular
investment. Securities accepted by Loomis Sayles in exchange for Fund shares
will be valued in the same manner as the Fund's assets as described below as of
the time of the Fund's next determination of net asset value after such
acceptance. All dividends and subscription or other rights which are reflected
in the market price of accepted securities at the time of valuation become the
property of the Fund and must be delivered to the Fund upon receipt by the
investor from the issuer. A gain or loss for federal income tax purposes would
be realized upon the exchange by an investor that is subject to federal income
taxation, depending upon the investor's basis in the securities tendered. A
shareholder who wishes to purchase shares by exchanging securities should obtain
instructions by calling (617) 482-2450.
Loomis Sayles will not approve the acceptance of securities in exchange
for shares of the Fund unless (1) Loomis Sayles, in its sole discretion,
believes the securities are appropriate investments for the Fund; (2) the
investor represents and agrees that all securities offered to the Fund can be
resold by the Fund without restriction under the Securities Act of 1933, as
amended (the "Securities Act"), or otherwise; and (3) the securities are
eligible to be acquired under the Fund's investment policies and restrictions.
No investor owning 5% or more of the Fund's shares may purchase additional Fund
shares by the exchange of securities.
Upon acceptance of your order, the Trust opens an account for you,
applies the payment to the purchase of full and fractional Fund shares of
beneficial interest and mails a statement of the account confirming the
transaction. After an account has been established, you may send subsequent
investments at any time.
Purchases of shares in the Fund are limited to persons who are
"accredited investors" as defined in Regulation D under the Securities Act and
who have completed and signed a subscription agreement in the form attached
hereto as Exhibit A. The Trust reserves the right to reject any purchase order
for any reason which the Trust in its sole discretion deems appropriate.
Purchasers must be acquiring shares for their own account and for investment
purposes only. Although the Trust does not anticipate that it will do so, the
Trust reserves the right to suspend or change the terms of the offering of its
shares.
The price you pay will be the per share net asset value next calculated
after a proper investment order is received by the Trust. Shares of the Fund are
sold with no sales charge. The net asset value of the Fund's shares is
calculated by dividing the Fund's net assets by the number of shares
outstanding. Calculations of net asset value are calculated at least weekly and
as of the close of the New York Stock Exchange (the "Exchange") on each day on
which an order for purchase or redemption of the Fund's shares is received and
on which the Exchange is open for unrestricted trading. Portfolio securities are
valued at their market value as more fully described in the Statement of
Additional Information.
HOW TO REDEEM SHARES
The securities offered hereby have not been registered under the
Securities Act or the securities laws of any state and may not be transferred or
resold unless so registered or exempt therefrom. However, the securities are
redeemable.
You can redeem your shares by sending a written request to the Trust.
The written request must include the name of the Fund, your account
number, the exact name(s) in which your shares are registered, and the number of
shares or the dollar amount to be redeemed. All owners of the shares must sign
the written request in the exact names in which the shares are registered and
should indicate any special capacity in which they are signing (such as trustee
or custodian or on behalf of a partnership, corporation or other entity).
The redemption price will be the net asset value per share next
determined after the written redemption request and any necessary special
documentation are received by the Trust in proper form.
Proceeds resulting from a written redemption request will normally be
mailed to you within seven days after receipt of your request in good order. If
you purchased your shares by check and your check was deposited less than
fifteen days prior to the redemption request, the Fund may withhold redemption
proceeds until your check has cleared.
Redemption proceeds may be made in money or in kind, or partly in money
and partly in kind, as determined by the Trust.
The Fund may suspend the right of redemption and may postpone payment
for more than seven days when the Exchange is closed for other than weekends or
holidays, or if permitted by the rules of the SEC when trading on the Exchange
is restricted or during an emergency which makes it impracticable for the Fund
to dispose of its securities or to determine fairly the value of its net assets,
or during any other period permitted by the SEC for the protection of investors.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
Because the Fund is designed primarily for tax-exempt investors such as
pension plans, endowments and foundations, the Fund is not managed with a view
to reducing taxes. The Fund pays any net investment income to shareholders as
dividends monthly. The Fund also distributes all of its net realized capital
gains after applying any capital loss carryovers. Any capital gain distributions
are normally made annually in December, but may, to the extent permitted by law,
be made more frequently as deemed advisable by the Trustees. The Trustees may
change the frequency with which the Fund declares or pays dividends.
Your dividends and capital gain distributions will automatically be
reinvested in additional shares of the Fund on the payment date unless you have
elected to receive cash. Dividends and capital gain distributions will be taxed
as described below whether received in cash or in additional shares.
The Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code of 1986, as amended (the "Code"). As such, so long as
the Fund distributes all its net investment income and net realized capital
gains to its shareholders on a current basis, the Fund itself does not pay any
federal income or excise tax. The Fund intends to make sufficient distributions
to be relieved of federal taxes.
Income dividends and short-term capital gain distributions are treated
as ordinary income to you whether distributed in cash or additional shares.
Long-term capital gain distributions are treated as long-term capital gains to
you whether distributed in cash or additional shares and regardless of how long
you have held your shares. However, any loss recognized by you on the taxable
disposition of shares held for six months or less will be treated as a long-term
capital loss to the extent of any capital gain distribution you received with
respect to the shares.
The Fund is required to withhold 31% of redemption proceeds, income
dividends and capital gain distributions it pays to you (1) if you do not
provide a correct, certified taxpayer identification number, (2) if the Fund is
notified that you have underreported income in the past, or (3) if you fail to
certify to the Fund that you are not subject to such withholding.
In January of each year, the Trust will send you a statement showing
the federal tax status of dividends and distributions paid to you during the
preceding year.
Note: The foregoing summarizes certain U.S. federal income tax consequences of
investing in the Fund. Before investing, you should consult your own tax
adviser for more information concerning the federal, state and local tax
consequences of investing in, redeeming or exchanging Fund shares.
CUSTODIAN OF ASSETS INVESTMENT ADVISER
State Street Bank and Trust Company Loomis, Sayles & Company, L.P.
Boston, Massachusetts 02102 One Financial Center
Boston, Massachusetts 02111
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS ASSIGNED BY
STANDARD & POOR'S CORPORATION AND
MOODY'S INVESTORS SERVICE, INC.
STANDARD & POOR'S CORPORATION
AAA
This is the highest rating assigned by Standard & Poor's to a debt obligation
and indicates an extremely strong capacity to pay interest and repay principal.
AA
Bonds rated AA also qualify as high quality debt obligations. Capacity to pay
interest and repay principal is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A
Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB
Bonds rated BBB are regarded as having an adequate capacity to pay interest and
repay principal. Whereas they normally exhibit adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to repay principal and pay interest for bonds in this
category than for bonds in higher rated categories.
BB, B, CCC, CC
Bonds rated BB, B, CCC and CC are regarded, on balance, as predominately
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and CC the highest degree of speculation. While such bonds will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.
C
The rating C is reserved for income bonds on which no interest is being paid.
D
Bonds rated D are in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S INVESTORS SERVICE, INC.
Aaa
Bonds that are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large, or by an exceptionally stable,
margin, and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa
Bonds that are rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there are other elements present that make the long-term
risks appear somewhat larger than in Aaa securities.
A
Bonds that are rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
Baa
Bonds that are rated Baa are considered as medium grade obligations; i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present, but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and, in fact, have
speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often, the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Should no rating be assigned by Moody's, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not
rated as a matter of policy.
3. There is lack of essential data pertaining to the issue or
issuer.
4. The issue was privately placed in which case the rating is not
published in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's believes
possess the strongest investment attributes are designed by the symbols Aa1, A1,
Baa1, Ba1 and B1, and those with the weakest investment attributes are
designated by the symbols Aa3, A3, Baa3, Ba3 and B3.
<PAGE>
APPENDIX B
DESCRIPTION OF
FITCH CMO V-RATINGS
A Fitch CMO market risk rating is an opinion as to the relative sensitivity of a
security's price and cash flows to changes in interest rates and, where
relevant, other market conditions. INVESTORS SHOULD UNDERSTAND THAT SECURITIES
WITH RATINGS REFLECTING EVEN THE LOWEST MARKET RISK ARE LIKELY TO EXPERIENCE
LOSSES IN THE EVENT OF ADVERSE CHANGES IN MARKET CONDITIONS. Fitch's market risk
ratings are based on information provided to Fitch by sources deemed to be
reliable, however Fitch does not verify the accuracy of this underlying
information. These ratings do not constitute recommendations to purchase, sell
or hold any securities, as they do not comment on the adequacy of market prices
or the suitability of any security for any investor.
V-Rating Representative Distribution Description
V-1 PAC classes with wide prepayment Market Risk: Low
collars, short duration floaters
V-2 and short duration sequential. Securities rated V-1 and V-2
perform consistently across a
range of interest rate scenarios.
These securities exhibit interest
rate risk comparable to short
duration treasuries (1-5 years).
V-3 Medium duration Floater, Short Market Risk: Moderate
duration TAC, Short duration PAC
V-4 II, Long duration PAC I. Securities rated V-3 and V-4 have
relatively consistent performance
across a range of interest rate
scenarios. These securities
experience interest rate risk
comparable to long duration
treasuries (10-30 years).
V-5 PAC classes with narrow collars, Market Risk: Moderate to High
support classes, accrual bonds
V-6 and short duration IO's and Securities rated V-5, V-6 and V-7
PO's, Z bond's. experience significant variations
V-7 in performance across a range of
interest rate scenarios. These
securities have substantial
excess interest rate risk and in
many instances exhibit negative
convexity. Z bond's with
durations comparable to treasury
zero-coupon issues also fall in
this range.
V-8 Leveraged inverse floaters, long Market Risk: High to Speculative
duration IO's and PO's, super
V-9 PO's, jump Zs. Securities rated V-8, V-9 and
V-10 experience sharp, severe
V-10 variations in performance across
a range of interest rate
scenarios. These securities
exhibit risk characteristics such
as extreme negative convexity,
significant sensitivity to the
direction of interest rate
movements, and highly leveraged
sensitivity to interest rate
indices.
<PAGE>
Exhibit A
LOOMIS SAYLES INVESTMENT TRUST
SUBSCRIPTION AGREEMENT
for
Shares of Beneficial Interest in
the
LOOMIS SAYLES INTERMEDIATE DURATION FIXED INCOME FUND
Total Subscription Price: $______________________
SUBSCRIBER INFORMATION:
Name of Subscriber: ______________________________________________________
(hereinafter "SUBSCRIBER")
Social Security Number or ________________________________________________
Taxpayer Identification Number
Person Signing (if different): ___________________________________________
Capacity (if applicable): ________________________________________________
Address: _________________________________________________________________
(Number and Street)
_________________________________________________________________
(City) (State) (Zip Code)
Telephone: _____________________
SUBSCRIBER hereby agrees as follows:
1. SUBSCRIBER hereby subscribes for shares of beneficial interest in the
Loomis Sayles Intermediate Duration Fixed Income Fund (the "Fund"), one
of nine series of the Loomis Sayles Investment Trust (the "Trust") in
the dollar amount set forth above. Upon request of the Trust,
SUBSCRIBER shall wire funds in such amount to:
State Street Bank & Trust Co./Boston MA
ABA# 011000028
Mutual Funds Dept.
TNE Group
Fund #4884-Loomis Sayles Intermediate Duration Fixed Income Fund
Deposit Account #4133-176-0
2. SUBSCRIBER understands and agrees that this subscription for shares of
beneficial interest in the Fund (the "Shares") is ineffective and that
SUBSCRIBER will not become a shareholder of the Fund until (i)
SUBSCRIBER completes all applicable information requested in this
Subscription Agreement, (ii) SUBSCRIBER executes this Subscription
Agreement and delivers it to the Trust, (iii) the Trust accepts the
Subscription Agreement on behalf of the Fund, which acceptance may be
withheld in the Trust's sole discretion, and (iv) the Trust can and has
confirmed that the subscription price has been received in the account
listed in Section 1 above.
3. SUBSCRIBER represents and warrants to the Trust that SUBSCRIBER has
received a copy of the Private Placement Memorandum dated April 2, 1996
(the "Placement Memorandum") relating to the offer for sale by the
Trust of the Shares and has had an opportunity to request a Statement
of Additional Information dated as of April 2, 1996 (the "SAI"), and
has reviewed the Placement Memorandum carefully prior to executing this
Subscription Agreement. SUBSCRIBER acknowledges that SUBSCRIBER had the
opportunity to ask questions of, and receive answers from,
representatives of the Trust concerning terms and conditions of the
Offering and to obtain any additional information necessary to verify
the accuracy of the information contained in the Placement Memorandum
or the SAI. SUBSCRIBER further acknowledges that no person is
authorized to give any information or to make any representation which
is contrary to the information contained in the Placement Memorandum or
the SAI and that, if given or made, any such contrary information or
representation may not be relied upon as having been authorized.
4. SUBSCRIBER understands and acknowledges that, in selling the Shares to
SUBSCRIBER, the Trust is relying on the representations made and
information supplied in this Subscription Agreement to determine that
the sale of the Shares to SUBSCRIBER complies with (or meets the
requirements of any applicable exemption from) the Securities Act of
1933, as amended (the "1933 Act"), and applicable state securities
laws.
5. SUBSCRIBER represents that it is acquiring the Shares subscribed for by
this Subscription Agreement for its own account for investment only and
not with a view to any resale or distribution.
6. SUBSCRIBER represents that it (either alone or together with its
purchaser representative, if any, whose identity has been disclosed to
the Trust) has such knowledge and experience in financial and business
matters to be capable of evaluating the merits and risks of the
investment represented by the Fund and that SUBSCRIBER is able to bear
the economic risk of this investment including the risk of loss of the
investment.
7. SUBSCRIBER understands that on behalf of the Fund, the Trust will offer
the Shares only to investors which qualify as "accredited investors" as
defined in Regulation D under the 1933 Act. SUBSCRIBER represents that
it qualifies as an "accredited investor" because SUBSCRIBER is
described in the paragraph or paragraphs indicated below: (check one or
more)
[ ] A natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with his or her
spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current
year.
[ ] A natural person whose individual net worth, or joint net worth with
his or her spouse, exceeds $1,000,000 at the time of purchase of the
Shares.
[ ] A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii)
of Regulation D of the 1933 Act.
[ ] An organization described in Section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
Shares offered, with total assets in excess of $5,000,000.
[ ] A private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940, as amended.
[ ] A bank as defined in Section 3(a)(2) of the 1933 Act, or a savings and
loan association or other institution as defined in Section 3(a)(5)(A)
of the 1933 Act, whether acting in its individual or fiduciary
capacity; a broker dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended; an insurance company as
defined in Section 2(13) of the 1933 Act; an investment company
registered under the Investment Company Act of 1940, as amended (the
"1940 Act") or a business development company as defined in Section
2(a)(48) of the 1940 Act; a Small Business Investment Company licensed
by the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of
$5,000,000; an employee benefit plan within the meaning of Title I of
the Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of
such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons
that are accredited investors.
[ ] A Trustee or Executive Officer of the Trust whose purchase exceeds
$1,000,000.
[ ] An entity in which all of the equity owners are accredited investors
as defined above.
8. SUBSCRIBER represents that it is a resident of (or, if SUBSCRIBER is an
entity its principal offices are located in) __________________________
(U.S. State)
9. SUBSCRIBER agrees to promptly notify the Trust of any development that
causes any of the representations made or information supplied in this
Subscription Agreement to be untrue at any time.
10. SUBSCRIBER understands that the Shares are not publicly traded and that
there will be no public market for the Shares upon completion of the
Offering.
11. SUBSCRIBER understands and agrees that the Shares are being sold in a
transaction which is exempt from the registration requirements of the
1933 Act and, in certain cases, of state securities laws, and that such
interests will be subject to transfer restrictions under the 1933 Act
and applicable state securities laws and, except to the extent that
redemption is permitted as described in the Placement Memorandum and
the SAI, must be held indefinitely unless subsequently registered under
the 1933 Act and applicable state securities laws or an exemption from
such registration is available. The undersigned further understands and
agrees that the Trust is under no obligation to register such Shares
and that any exemptions are extremely limited.
12. SUBSCRIBER agrees to transfer all or any part of its Shares only in
compliance with all applicable conditions and restrictions contained in
this Subscription Agreement, the Placement Memorandum, the SAI, the
1933 Act and any applicable state securities laws.
13. SUBSCRIBER hereby agrees to be bound by all terms and conditions of
this Subscription Agreement.
14. This Subscription Agreement shall be governed by and construed under
the laws of The Commonwealth of Massachusetts and is intended to take
effect as an instrument under seal and shall be binding on SUBSCRIBER
in accordance with its terms.
15. Please sign this Subscription Agreement exactly as you wish your Shares
to be registered. (The information supplied by you below should conform
to that given on the cover page.)
By signing below, I (we) certify under penalties of perjury (1) that the Social
Security or Taxpayer Identification Number provided above is correct and (2)
that the IRS has never notified me (us) that I (we) am (are) subject to backup
withholding, or has notified me (us) that I (we) am (are) no longer subject to
such backup withholding. (Note: if part (2) of this sentence is not true in your
case, please strike out that part before signing.)
Dated: __________________ Name of SUBSCRIBER: _________________________________
By: _________________________________________________
Name of Person Signing if different from SUBSCRIBER:
_____________________________________________________
(please print or type)
Capacity: ___________________________________________
(please print or type)
Accepted:
LOOMIS SAYLES INVESTMENT TRUST,
on behalf of the Loomis Sayles Intermediate Duration
Fixed Income Fund
By: _________________________________________________
Name:
Title:
A copy of the Agreement and Declaration of Trust establishing the Trust
is on file with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the Fund
named above on behalf of the Trust by officers of the Trust as officers and not
individually and that the obligations of or arising out of this Agreement are
not binding upon any of the Trustees, officers or shareholders individually but
are binding only upon the assets and property belonging to the Series.
<PAGE>
Part B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION--CORE FIXED INCOME FUND.
Item 10. Cover Page
See the Cover Page of the Statement of Additional Information attached
as an Appendix to this Part B of the Registration Statement (the
"Statement of Additional Information").
Item 11. Table of Contents
See the Table of Contents of the Statement of Additional Information.
Item 12. General Information and History
Not applicable.
Item 13. Investment Objectives and Policies
See the section entitled "Investment Objective, Policies and
Restrictions" in the Statement of Additional Information.
Item 14. Management of the Fund
See the section entitled "Management of the Trust" in the Statement of
Additional Information.
Item 15. Control Persons and Principal Holders of Securities
See the section entitled "Management of the Trust" in the Statement of
Additional Information.
Item 16. Investment Advisory and Other Services
See the section entitled "Investment Advisory and Other Services" in
the Statement of Additional Information.
Item 17. Brokerage Allocation and Other Practices
See the section entitled "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
Item 18. Capital Stock and Other Securities
See the sections entitled "Description of the Trust"; "Redemptions";
and "Income Dividends, Capital Gain Distributions and Tax Status" in
the Statement of Additional Information.
Item 19. Purchase, Redemption and Pricing of Securities Being Offered
See the sections entitled "Redemptions"; "Net Asset Value"; and "How
to Buy Shares" in the Statement of Additional Information.
Item 20. Tax Status
See the section entitled "Income Dividends, Capital Gain Distributions
and Tax Status" in the Statement of Additional Information.
Item 21. Underwriters
Not applicable.
Item 22. Calculation of Performance Data
Not applicable.
Item 23. Financial Statements
Not applicable.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
LOOMIS SAYLES CORE FIXED INCOME FUND
STATEMENT OF ADDITIONAL INFORMATION
April 2, 1996
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information relates to the Loomis Sayles Investment Trust Private
Placement Memorandum -- Loomis Sayles Core Fixed Income Fund, dated April 2,
1996, and should be read in conjunction therewith. A copy of the Private
Placement Memorandum may be obtained from Loomis Sayles Investment Trust, One
Financial Center, Boston, Massachusetts 02111.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS .................... 2
MANAGEMENT OF THE TRUST ............................................ 7
INVESTMENT ADVISORY AND OTHER SERVICES ............................. 9
PORTFOLIO TRANSACTIONS AND BROKERAGE ............................... 11
DESCRIPTION OF THE TRUST ........................................... 12
HOW TO BUY SHARES .................................................. 15
NET ASSET VALUE .................................................... 15
REDEMPTIONS ........................................................ 16
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS ........ 16
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The investment objective and policies of the Core Fixed Income Fund
series (the "Fund"), of Loomis Sayles Investment Trust (the "Trust"), are
summarized in the Private Placement Memorandum (the "Memorandum") under
"Investment Objective and Policies" and "More Information About the Fund's
Investments." The investment policies of the Fund set forth in the Memorandum
and in this Statement of Additional Information may be changed by Loomis, Sayles
& Company, L.P. ("Loomis Sayles"), the Fund's investment adviser, subject to
review and approval by the Trust's board of trustees (the "Trustees"), without
shareholder approval except that the investment objective of the Fund as set
forth in the Memorandum and any Fund policy explicitly identified as
"fundamental" may not be changed without the approval of the holders of a
majority of the outstanding shares of the Fund (which means the lesser of (i)
67% of the shares of the Fund represented at a meeting at which 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares).
In addition to its investment objective and policies set forth in the
Memorandum, the following investment restrictions are policies of the Fund (and
those marked with an asterisk are fundamental policies of the Fund):
The Fund will not:
*(1) Act as underwriter, except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
*(2) Invest in oil, gas or other mineral leases, rights or royalty
contracts or in real estate, commodities or commodity contracts.
(This restriction does not prevent the Fund from investing in
issuers that invest or deal in the foregoing types of assets or
from purchasing securities that are secured by real estate.)
*(3) Make loans. (For purposes of this investment restriction, neither
(i) entering into repurchase agreements nor (ii) purchasing bonds,
debentures, commercial paper, corporate notes and similar
evidences of indebtedness, which are a part of an issue to the
public, is considered the making of a loan.)
*(4) Change its classification pursuant to Section 5(b) of the
Investment Company Act of 1940 (the "1940 Act") from a
"diversified" to a "non-diversified" management investment
company.
*(5) Purchase any security (other than U.S. Government Securities) if,
as a result, more than 25% of the Fund's total assets (taken at
current value) would be invested in any one industry (in the
utilities category, gas, electric, water and telephone companies
will be considered as being in separate industries.)
*(6) Borrow money in excess of 10% of its total assets (taken at cost)
or 5% of its total assets (taken at current value), whichever is
lower, nor borrow any money except as a temporary measure for
extraordinary or emergency purposes; however, the Fund's use of
reverse repurchase agreements and "dollar roll" arrangements shall
not constitute borrowing by the Fund for purposes of this
restriction.
*(7) Purchase any illiquid security, including any security that is not
readily marketable, if, as a result, more than 15% of the Fund's
net assets (based on current value) would then be invested in such
securities.
*(8) Issue senior securities. (For the purposes of this restriction
none of the following is deemed to be a senior security: any
pledge, mortgage, hypothecation or other encumbrance of assets;
any borrowing permitted by restriction (6) above; any collateral
arrangements with respect to options, futures contracts and
options on futures contracts and with respect to initial and
variation margin; and the purchase or sale of or entry into
options, forward contracts, futures contracts, options on futures
contracts, swap contracts or any other derivative investments to
the extent that Loomis Sayles determines that the Fund is not
required to treat such investments as senior securities pursuant
to the pronouncements of the Securities and Exchange Commission
(the "SEC") or its staff.)
Although the Fund has no current intention of investing in repurchase
agreements, the Fund intends, based on the views of the staff of the SEC, to
restrict its investments, if any, in repurchase agreements maturing in more than
seven days, together with other investments in illiquid securities, to the
percentage permitted by restriction (7) above.
Although authorized to invest in restricted securities, the Fund, as a
matter of non-fundamental operating policy, currently does not intend to invest
in such securities, except Rule 144A securities.
Portfolio Turnover
Portfolio turnover considerations will not limit Loomis Sayles's
investment discretion in managing the Fund's assets. Although it is impossible
to predict with certainty, it is expected that the annual portfolio turnover
rate for the Fund will not exceed 75%. The Fund anticipates that its portfolio
turnover rates will vary significantly from time to time depending on the
volatility of economic and market conditions. High portfolio turnover rates
involve higher costs such as higher brokerage commissions and higher levels of
taxable gains. See "Portfolio Transactions and Brokerage" for a description of
Loomis Sayles's brokerage practices and "Income Dividends, Capital Gain
Distributions and Tax Status" for more information about the tax consequences of
investing in the Fund.
U.S. Government Securities
U.S. Government Securities include direct obligations of the U.S.
Treasury, as well as securities issued or guaranteed by U.S. Government
agencies, authorities and instrumentalities, including, among others, the
Government National Mortgage Association, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the Federal Housing
Administration, the Resolution Funding Corporation, the Federal Farm Credit
Banks, the Federal Home Loan Bank, the Tennessee Valley Authority, the Student
Loan Marketing Association and the Small Business Administration. More detailed
information about some of these categories of U.S. Government Securities
follows.
o U.S. Treasury Bills - Direct obligations of the United States
Treasury which 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
United States Government.
o U.S. Treasury Notes and Bonds - Direct obligations of the United
States Treasury issued in maturities that vary between one and forty years, with
interest normally payable every six months. They are backed by the full faith
and credit of the United States Government.
o "Ginnie Maes" - Debt securities issued by a mortgage banker or other
mortgagee which represents an interest in a pool of mortgages insured by the
Federal Housing Administration or the Farmer's Home Administration or guaranteed
by the Veterans Administration. The Government National Mortgage Association
("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. An assistant attorney general of
the United States has rendered an opinion that the guarantee by GNMA is a
general obligation of the United States backed by its full faith and credit.
Mortgages included in single family or multi-family residential mortgage pools
backing an issue of Ginnie Maes have a maximum maturity of up to 30 years.
Scheduled payments of principal and interest are made to the registered holders
of Ginnie Maes (such as the Fund) each month. Unscheduled prepayments may be
made by homeowners, or as a result of a default. Prepayments are passed through
to the registered holder of Ginnie Maes along with regular monthly payments of
principal and interest.
o "Fannie Maes" - The Federal National Mortgage Association ("FNMA") is
a government-sponsored corporation owned entirely by private stockholders that
purchases residential mortgages from a list of approved seller/servicers. Fannie
Maes are pass-through securities issued by FNMA that are guaranteed as to timely
payment of principal and interest by FNMA but are not backed by the full faith
and credit of the United States Government.
o "Freddie Macs" - The Federal Home Loan Mortgage Corporation ("FHLMC")
is a corporate instrumentality of the United States Government. 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 Freddie
Macs are not backed by the full faith and credit of the United States
Government.
As described in the Memorandum, U.S. Government Securities 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 fixed-income 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 but will be reflected in the Fund's net
asset value.
When-Issued Securities
As described in the Memorandum, the Fund may enter into agreements with
banks or broker-dealers for the purchase or sale of securities at an agreed-upon
price on a specified future date. Such agreements might be entered into, for
example, when the Fund anticipates a decline in interest rates and is able to
obtain a more advantageous yield by committing currently to purchase securities
to be issued later. When the Fund purchases securities in this manner (i.e. on a
when-issued or delayed-delivery basis), it is required to create a segregated
account with the Trust's custodian and to maintain in that account cash or U.S.
Government Securities in an amount equal to or greater than, on a daily basis,
the amount of the Fund's when-issued or delayed-delivery commitments. The Fund
will make commitments to purchase on a when-issued or delayed-delivery basis
only securities meeting the Fund's investment criteria. The Fund may take
delivery of these securities or, if it is deemed advisable as a matter of
investment strategy, the Fund may sell these securities before the settlement
date. When the time comes to pay for when-issued or delayed-delivery securities,
the Fund will meet its obligations from then available cash flow or the sale of
securities, or from the sale of the when-issued or delayed-delivery securities
themselves (which may have a value greater or less than the Fund's payment
obligation).
Convertible Securities
Convertible securities include corporate bonds, notes or preferred
stocks of U.S. or foreign issuers that can be converted into (that is, exchanged
for) common stocks or other equity securities at a stated price or rate.
Convertible securities also include other securities, such as warrants, that
provide an opportunity for equity participation. Because convertible securities
can be converted into equity securities, their value 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 when the price of the underlying equity security falls, the decline in
the price of the convertible security may sometimes be less substantial than
that of the underlying equity security. Due to the conversion feature,
convertible securities generally yield less than nonconvertible securities of
similar credit quality and maturity. The Fund's investment in convertible
securities may at times include securities that have a mandatory conversion
feature, pursuant to which the securities convert automatically into common
stock at a specified date and conversion ratio, or that are convertible at the
option of the issuer. Because conversion is not at the option of the holder, the
Fund may be required to convert the security into the underlying common stock
even at times when the value of the underlying common stock has declined
substantially.
Zero Coupon Bonds
Zero coupon bonds are debt obligations that do not entitle the holder
to any periodic payments of interest either for the entire life of the
obligations or for an initial period after the issuance of the obligations. Such
bonds are issued and traded at discounts from their face amounts. The amount of
the discount varies depending on such factors as the time remaining until
maturity of the bonds, prevailing interest rates, the liquidity of the security
and the perceived credit quality of the issuer. The market prices of zero coupon
bonds 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 do non-zero coupon bonds having similar maturities and
credit quality. In order to satisfy a requirement for qualification as a
"regulated investment company" under the Internal Revenue Code (the "Code"), the
Fund must distribute each year at least 90% of its net investment income,
including the original issue discount accrued on zero coupon bonds. Because a
fund investing in zero coupon bonds will not on a current basis receive cash
payments from the issuer in respect of accrued original issue discount, the fund
may have to distribute cash obtained from other sources in order to satisfy the
90% distribution requirement under the Code. Such cash might be obtained from
selling other portfolio holdings of the Fund. In some circumstances, such sales
might be necessary in order to satisfy cash distribution requirements even
though investment considerations might otherwise make it undesirable for the
Fund to sell such securities at such time.
Repurchase Agreements
The Fund may enter into repurchase agreements, by which the Fund
purchases a security and obtains a simultaneous commitment from the seller (a
bank or, to the extent permitted by the 1940 Act, a recognized securities
dealer) to repurchase the security at an agreed upon price and date (usually
seven days or less from the date of original purchase). The resale price is in
excess of the purchase price and reflects an agreed upon market rate unrelated
to the coupon rate on the purchased security. Such transactions afford the Fund
the opportunity to earn a return on temporarily available cash at minimal market
risk. Although the underlying security may be a bill, certificate of
indebtedness, note or bond issued by an agency, authority or instrumentality of
the United States Government, the obligation of the seller is not guaranteed by
the U.S. Government and there is a risk that the seller may fail to repurchase
the underlying security. In such event, the Fund would attempt to exercise
rights with respect to the underlying security, including possible disposition
in the market. However, the Fund may be subject to various delays and risks of
loss, including (a) possible declines in the value of the underlying security
during the period while the Fund seeks to enforce its rights thereto and (b)
inability to enforce rights and the expenses involved in attempted enforcement.
Lower Rated Fixed Income Securities
The Fund will purchase securities rated at least BBB- by Standard &
Poor's Corporation ("S&P") and Baa3 by Moody's Investors Service, Inc.
("Moody's"), or if unrated, determined to be of comparable quality by Loomis
Sayles. In the event that the credit rating of a security held by the Fund falls
below investment grade (or, in the case of unrated securities, Loomis Sayles
determines that the quality of such security has deteriorated below investment
grade), the Fund will not be obligated to dispose of such security and may
continue to hold such security if, in the opinion of Loomis Sayles, such
investment is considered appropriate in the circumstances. Securities rated
below investment grade ("lower rated fixed income securities") generally provide
higher yields, but are subject to greater credit and market risk than higher
quality fixed income securities. Lower rated fixed income securities are
considered speculative with respect to the ability of the issuer to meet
principal and interest payments. Achievement of the investment objective of a
fund investing in lower rated fixed income securities may be more dependent on
the investment adviser's own credit analysis than is the case with higher
quality bonds. The market for lower rated fixed income securities may be more
severely affected than some other financial markets by economic recession or
substantial interest rate increases. The value and liquidity of lower rated
fixed income securities may be diminished by adverse publicity and investor
perceptions. Also, legislation that limits the tax benefits to issuers or
holders of lower rated fixed income securities or that limits the ability of
certain categories of financial institutions to invest in these securities may
adversely affect market value. In addition, the secondary market may be less
liquid for lower rated fixed income securities. This lack of liquidity at
certain times may affect the values of these securities and may make the
valuation and sale of these securities by the Fund more difficult. Securities of
below investment grade quality are commonly referred to as "junk bonds."
Securities in the lowest rating categories may be in poor standing or in
default. Investment grade fixed income securities rated BBB by S&P or Baa by
Moody's may share some of the characteristics described above.
Rule 144A Securities
The Fund may purchase Rule 144A securities. These are privately offered
securities that can be resold only to certain qualified institutional buyers.
Rule 144A securities are treated as illiquid, unless Loomis Sayles has
determined, under guidelines established by the Trustees, that the particular
issue of Rule 144A securities is liquid. Under the guidelines, Loomis Sayles
considers such factors as: (1) the frequency of trades and quotes for a
security; (2) the number of dealers willing to purchase or sell the security and
the number of other potential purchasers; (3) dealer undertakings to make a
market in the security; and (4) the nature of the security and the nature of
marketplace trades therefor.
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
DANIEL J. FUSS (61)* -- President and Trustee. Executive Vice President and
Director, Loomis Sayles.
MARK W. HOLLAND (45)* -- Secretary, Treasurer and Trustee. Vice
President-Finance and Administration, Loomis Sayles.
TIMOTHY J. HUNT (64) -- Trustee. 4 Dennett Road, Marblehead, Massachusetts.
Retired. Formerly, Vice President and Director of Fixed Income
Research, Loomis Sayles.
ROBERT J. BLANDING (48) -- Vice President. 595 Fifth Street West, Sonoma,
California. President and Chairman, Loomis Sayles.
WILLIAM F. CAMP (34) -- Vice President. 1533 North Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles. Portfolio Manager, Kmart
Corporation.
WILLIAM J. DRISCOLL (35) -- Vice President. Vice President, Loomis Sayles;
formerly, Vice President, Merrill Lynch.
QUENTIN P. FAULKNER (57) -- Vice President. Vice President, Loomis Sayles.
KATHLEEN C. GAFFNEY (33) -- Vice President. Vice President, Loomis Sayles.
KENT P. NEWMARK (56) -- Vice President. Two Embarcadero Center, San
Francisco, California. Vice President and Director, Loomis Sayles.
ROBERT K. PAYNE (52) -- Vice President. Two Embarcadero Center, San Francisco,
California. Vice President, Loomis Sayles.
ANTHONY J. WILKINS (54) -- Vice President. Vice President, Loomis Sayles.
- ---------------
* A Trustee deemed an "interested person" of the Trust, as defined by the 1940
Act.
Previous positions during the past five years with Loomis Sayles are
omitted, if not materially different from the positions listed.
Except as indicated above, the address of each trustee and officer of
the Trust affiliated with Loomis Sayles is One Financial Center, Boston,
Massachusetts 02111. The Trust pays no compensation to its officers or to the
Trustees listed above who are interested persons of the Trust. Each trustee who
is not affiliated with Loomis Sayles will be compensated at the rate of $10,000
per annum. No trustee will receive compensation from any other investment
company which is advised by Loomis Sayles or its affiliates or which holds
itself out to investors as being related to the Trust. No current trustee
received any compensation from the Trust for the fiscal year ended December 31,
1995.
As of the date hereof, the Trustees and officers as a group owned less
than 1% of the outstanding shares of the Fund.
As described in the Memorandum under "The Fund's Investment Adviser,"
The New England Mutual Life Insurance Company ("The New England"), Loomis
Sayles's ultimate parent, and Metropolitan Life Insurance Company ("Met Life")
have entered into an agreement to merge, with Met Life to be the survivor of the
merger. The merger is conditioned upon, among other things, approval by the
policyholders of The New England and Met Life and receipt of certain regulatory
approvals. It will be required that for a period of three years following the
merger, at least 75% of the board of trustees of the Trust be persons who are
not interested persons of the Trust's investment adviser. Accordingly, it is
expected that Messrs. Fuss and Holland will resign as trustees upon the closing
of the merger and that Mr. Hunt will become the sole trustee.
INVESTMENT ADVISORY AND OTHER SERVICES
Advisory Agreement. Loomis Sayles serves as investment adviser to the
Fund under an advisory agreement with the Trust dated February 6, 1996. Under
the advisory agreement, Loomis Sayles manages the investment and reinvestment of
the assets of the Fund and generally administers its affairs, subject to
supervision by the Trustees. Loomis Sayles furnishes, at its own expense, all
necessary office space, office supplies, facilities and equipment, services of
executive and other personnel of the Fund and certain administrative services.
For these services, the advisory agreement provides that the Fund shall pay
Loomis Sayles a monthly investment advisory fee as stated in the Memorandum
under "Fund Expenses".
Under the advisory agreement, if the total ordinary business expenses
of the Fund or the Trust as a whole for any fiscal year exceed the lowest
applicable limitation (based on percentage of average net assets or income)
prescribed by any state in which the shares of the Fund or the Trust are
qualified for sale, Loomis Sayles shall pay such excess. Presently, neither the
Fund nor the Trust as a whole is subject to any such expense limitation.
As described in the Memorandum, Loomis Sayles has voluntarily
undertaken for an indefinite period to waive its fees and, to the extent
necessary, to bear other Fund expenses in order to limit the Fund's annualized
total operating expenses. These arrangements may be modified or terminated by
Loomis Sayles at any time, subject to prior notice to shareholders.
The advisory agreement provides that it will continue in effect for two
years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the Trustees or by vote of a
majority of the outstanding voting securities of the Fund and (ii) by vote of a
majority of the Trustees who are not "interested persons" of the Trust or Loomis
Sayles, as that term is defined in the 1940 Act, cast in person at a meeting
called for the purpose of voting on such approval. Any amendment to the advisory
agreement must be approved by vote of a majority of the outstanding voting
securities of the Fund and by vote of a majority of the trustees who are not
interested persons, cast in person at a meeting called for the purpose of voting
on such approval.
The agreement may be terminated without penalty by vote of the Trustees
or by vote of a majority of the outstanding voting securities of the Fund, upon
sixty days' written notice to Loomis Sayles, or by Loomis Sayles upon ninety
days' written notice to the Trust, and terminates automatically in the event of
its assignment, as that term is defined in the 1940 Act. In addition, the
agreement will automatically terminate if the Trust or the Fund shall at any
time be required by Loomis Sayles to eliminate all reference to the words
"Loomis" or "Sayles" in the name of the Trust or the Fund, unless the
continuance of the agreement after such change of name is approved by a majority
of the outstanding voting securities of the Fund and by a majority of the
Trustees who are not interested persons of the Trust or Loomis Sayles, cast in
person at a meeting called for the purpose of voting on such approval.
The advisory agreement provides that Loomis Sayles shall not be subject
to any liability in connection with the performance of its services thereunder
in the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
Loomis Sayles acts as investment adviser to the nine series of the
Loomis Sayles Funds, each a series of a registered open-end diversified
management investment company. Loomis Sayles acts as sub-adviser to the New
England Star Advisers Fund, the New England Value Fund, the New England Capital
Growth Fund, the New England Balanced Fund and the New England Strategic Income
Fund, each a series of New England Funds Trust I, which is a registered open-end
management investment company. Loomis Sayles also acts as sub-adviser to the New
England Equity Income Fund, a series of New England Funds Trust III, which is a
registered open-end management investment company. In addition, Loomis Sayles
acts as sub-advisor to the Avanti Growth Series, the Balanced Series and the
Small Cap Series of New England Zenith Funds, which is also a registered
open-end management investment company. Loomis Sayles also provides investment
advice to numerous other corporate and fiduciary clients.
Loomis Sayles's sole general partner is Loomis Sayles & Company, Inc.,
which is a wholly-owned subsidiary of New England Investment Companies, L.P.
("NEIC"). NEIC's sole general partner is New England Investment Companies, Inc.,
which is a wholly-owned subsidiary of The New England. The New England and Met
Life have entered into an agreement to merge, with Met Life to be the survivor
of the merger.
Officers and trustees of the Trust who hold positions with Loomis
Sayles are listed under "Management of the Trust" in this Statement of
Additional Information. Certain officers and trustees of the Trust also serve as
officers, directors and trustees of other investment companies and clients
advised by Loomis Sayles. The other investment companies and clients sometimes
invest in securities in which the Fund also invests. If the Fund and such other
investment companies or clients desire to buy or sell the same portfolio
securities at the same time, purchases and sales may be allocated, to the extent
practicable, on a pro rata basis in proportion to the amounts desired to be
purchased or sold for each. It is recognized that in some cases the practices
described in this paragraph could have a detrimental effect on the price or
amount of the securities which the Fund purchases or sells. In other cases,
however, it is believed that these practices may benefit the Fund. It is the
opinion of the Trustees that the desirability of retaining Loomis Sayles as
investment adviser for the Fund outweighs the disadvantages, if any, which might
result from these practices.
Loomis Sayles acts as the transfer agent and dividend paying agent for
the Fund. Loomis Sayles currently receives no additional compensation for such
services.
Custodial Arrangements. State Street Bank and Trust Company ("State
Street Bank"), Boston, Massachusetts 02102, is the Trust's custodian. As such,
State Street Bank holds in safekeeping certificated securities and cash
belonging to the Fund and, in such capacity, is the registered owner of
securities held in book entry form belonging to the Fund. Upon instruction,
State Street Bank receives and delivers cash and securities of the Fund in
connection with Fund transactions and collects all dividends and other
distributions made with respect to Fund portfolio securities.
Independent Accountants. The Fund's independent accountants are Coopers
& Lybrand, L.L.P. ("Coopers & Lybrand"), One Post Office Square, Boston,
Massachusetts 02110. Coopers & Lybrand conducts an annual audit of the Trust's
financial statements, assists in the preparation of the Fund's federal and state
income tax returns and consults with the Fund as to matters of accounting and
federal and state income taxation.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In placing orders for the purchase and sale of portfolio securities for
the Fund, Loomis Sayles always seeks the best price and execution. Transactions
are carried out through broker-dealers who make the primary market for
securities unless, in the judgment of Loomis Sayles, a more favorable price can
be obtained by carrying out such transactions through other brokers or dealers.
Loomis Sayles selects only brokers or dealers which it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates,
which, when combined with the quality of the foregoing services, will produce
the best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid for a transaction.
However, the Fund will only pay commissions that Loomis Sayles believes to be
competitive with generally prevailing rates. Loomis Sayles will use 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 will evaluate the
overall reasonableness of brokerage commissions paid on transactions by
reference to such data. In making such evaluation, all factors affecting
liquidity and execution of the order, as well as the amount of the capital
commitment by the broker in connection with the order, are taken into account.
The Fund will not pay a broker a commission at a higher rate than otherwise
available for the same transaction in recognition of the value of research
services provided by the broker or in recognition of the value of any other
services provided by the broker which do not contribute to the best price and
execution of the transaction.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Loomis Sayles believes will provide the best price and
execution for a transaction. These research services include not only a wide
variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and projections,
asset allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although it
is not possible to assign an exact dollar value to these services, they may, to
the extent used, tend to reduce Loomis Sayles's expenses. Such services may be
used by Loomis Sayles in servicing other client accounts and in some cases may
not be used with respect to the Fund. Receipt of services or products other than
research from brokers is not a factor in the selection of brokers.
DESCRIPTION OF THE TRUST
The Trust, registered with the SEC as a diversified open-end management
investment company, is organized as a Massachusetts business trust under the
laws of The Commonwealth of Massachusetts by an Agreement and Declaration of
Trust (the "Declaration of Trust") dated December 23, 1993.
The Declaration of Trust currently permits the Trustees to issue an
unlimited number of full and fractional shares of each series. Each share of the
Fund represents an equal proportionate interest in the Fund with each other
share of the Fund and is entitled to a proportionate interest in the dividends
and distributions from the Fund. The shares of the Fund do not have any
preemptive rights. Upon termination of the Fund, whether pursuant to liquidation
of the Trust or otherwise, shareholders of the Fund are entitled to share pro
rata in the net assets of the Fund available for distribution to shareholders.
The Declaration of Trust also permits the Trustees to charge shareholders
directly for custodial, transfer agency and servicing expenses.
The assets received by the Fund for the issue or sale of its shares and
all income, earnings, profits, losses and proceeds therefrom, subject only to
the rights of creditors, are allocated to, and constitute the underlying assets
of, the Fund. The underlying assets are segregated and are charged with the
expenses with respect to the Fund and with a share of the general expenses of
the Trust. Any general expenses of the Trust that are not readily identifiable
as belonging to the Fund are allocated by or under the direction of the Trustees
in such manner as the Trustees determine to be fair and equitable. While the
expenses of the Trust are allocated to the separate books of account of the
Fund, certain expenses may be legally chargeable against the assets of all
series.
The Declaration of Trust also permits the Trustees, without shareholder
approval, to issue shares of the Trust in one or more series, and to subdivide
any series of shares into various classes of shares with such dividend
preferences and other rights as the Trustees may designate. While the Trustees
have no current intention to subdivide any series of shares into classes, it is
intended to allow them to provide for an equitable allocation of the impact of
any future regulatory requirements which might affect various classes of
shareholders differently, or to permit shares of a series to be distributed
through more than one distribution channel, with the costs of the particular
means of distribution (or costs of related services) to be borne by the
shareholders who purchase through that means of distribution. The Trustees may
also, without shareholder approval, establish one or more additional separate
portfolios for investments in the Trust or merge two or more existing
portfolios. Shareholders' investments in such an additional or merged portfolio
would be evidenced by a separate series of shares (i.e., a new "Fund").
The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust or the Fund, however, may be terminated at any time by vote of
at least two-thirds of the outstanding shares of the Trust or the Fund,
respectively. The Declaration of Trust further provides that the Trustees may
also terminate the Trust or the Fund upon written notice to the shareholders. As
a matter of policy, however, the Trustees will not terminate the Trust or the
Fund without submitting the matter to a vote of the shareholders of the Trust or
the Fund.
Voting Rights
As summarized in the Memorandum, shareholders are entitled to one vote
for each full share held (with fractional votes for each fractional share held)
and may vote (to the extent provided in the Declaration of Trust) in the
election of Trustees and the termination of the Trust and on other matters
submitted to the vote of shareholders.
The Declaration of Trust provides that on any matter submitted to a
vote of all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a particular
series or sub-series would be adversely affected by the vote, in which case a
separate vote of that series or sub-series shall also be required to decide the
question. Also, a separate vote for each series or sub-series shall be held
whenever required by the 1940 Act or any rule thereunder. Rule 18f-2 under the
1940 Act provides in effect that a class shall be deemed to be affected by a
matter unless it is clear that the interests of each class in the matter are
substantially identical or that the matter does not affect any interest of such
class. On matters exclusively affecting an individual series, only shareholders
of that series are entitled to vote. Consistent with the current position of the
SEC, shareholders of all series vote together, irrespective of series, on the
election of Trustees and the selection of the Trust's independent accountants,
but shareholders of each series vote separately on other matters requiring
shareholder approval, such as certain changes in investment policies of that
series or the approval of the investment advisory agreement relating to that
series. Voting rights are not cumulative.
There will normally be no meetings of shareholders for the purpose of
electing Trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of Trustees at such time as
less than a majority of the Trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the board of trustees,
less than two-thirds of the Trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders. In
addition, Trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for that purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the Trustees shall continue to hold office
and may appoint successor Trustees.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
(i) to change the Trust's name or to cure technical problems in the Declaration
of Trust, (ii) to establish, change or eliminate the par value of any shares
(currently all shares have no par value) and (iii) to issue shares of the Trust
in one or more series, and to subdivide any series of shares into various
classes of shares with such dividend preferences and other rights as the
trustees may designate.
Shareholder and Trustee Liability
Under Massachusetts law shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund of
which they are shareholders. However, the Declaration of Trust disclaims
shareholder liability for acts or obligations of each fund and requires that
notice of such disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the Trustees. The Declaration of Trust
provides for indemnification out of fund property for all loss and expense of
any shareholder held personally liable for the obligations of the Fund. Thus,
the risk of a shareholder incurring financial loss on account of shareholder
liability is considered remote since it is limited to circumstances in which the
disclaimer is inoperative and the Fund itself would be unable to meet its
obligations.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. The By-Laws of the Trust provide for indemnification by the Trust of
the trustees and officers of the Trust except with respect to any matter as to
which any such person did not act in good faith in the reasonable belief that
such action was in or not opposed to the best interests of the Trust. No officer
or Trustee may be indemnified against any liability to the Trust or the Trust's
shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
HOW TO BUY SHARES
The procedures for purchasing shares of the Fund and for determining
the offering price of such shares are summarized in the Memorandum under "How to
Purchase Shares."
NET ASSET VALUE
The net asset value of the shares of the Fund is determined by dividing
the Fund's total net assets (the excess of its assets over its liabilities) by
the total number of shares of the Fund outstanding and rounding to the nearest
cent. The Fund intends to make such determination daily and as of the close of
regular trading on the New York Stock Exchange (the "Exchange") on any day on
which an order for purchase or redemption of the Fund's shares is received and
on which the Exchange is open for unrestricted trading. During the twelve months
following the date of this Statement of Additional Information, the Exchange is
expected to be closed on the following weekdays: Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, Christmas Day as observed, New Year's Day if
observed, President's Day and Good Friday. Long-term debt securities are valued
by a pricing service, which determines valuations of normal institutional-size
trading units of long-term debt securities. Such valuations are determined using
methods based on market transactions for comparable securities and on various
relationships among securities that are generally recognized by institutional
traders. Other securities for which current market quotations are not readily
available (including restricted securities, if any) and all other assets are
taken at fair value as determined in good faith by the Trustees, although the
actual calculations may be made by persons acting pursuant to the direction of
the Trustees.
Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of regular trading on the
Exchange. Occasionally, events affecting the value of foreign securities not
traded on a U.S. exchange may occur between the completion of substantial
trading of such securities for the day and the close of regular trading on the
New York Stock Exchange, which events will not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of the
Fund's portfolio securities occur during such period, then these securities will
be valued at their fair value as determined in good faith or in accordance with
procedures approved by the Trustees.
REDEMPTIONS
The procedures for redemption of Fund shares are summarized in the
Memorandum under "How to Redeem Shares."
The redemption price will be the net asset value per share next
determined after the redemption request and any necessary special documentation
are received by the Trust in proper form. Proceeds resulting from a written
redemption request will normally be mailed to you within seven days after
receipt of your request in good order. In those cases where you have recently
purchased your shares by check and your check was received less than fifteen
days prior to the redemption request, the Fund may withhold redemption proceeds
until your check has cleared.
The Fund will normally redeem shares for cash; however, the Fund
reserves the right to pay the redemption price wholly or partly in kind if the
Trustees determine it to be advisable in the interest of the remaining
shareholders. If portfolio securities are distributed in lieu of cash, the
shareholder will normally incur brokerage commissions upon subsequent
disposition of any such securities.
A redemption constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a long- or short-term capital gain or
loss. See "Income Dividends, Capital Gain Distributions and Tax Status."
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
As described in the Memorandum under "Dividends, Capital Gain
Distributions and Taxes," it is the policy of the Fund to pay its shareholders
annually, as dividends, substantially all of the Fund's net income and to
distribute to its shareholders annually substantially all net realized capital
gains, if any, after offset by any capital loss carryovers.
Income dividends and capital gain distributions are payable in full and
fractional shares of the Fund based upon the net asset value determined as of
the close of regular trading on the Exchange on the record date for each
dividend or distribution. Shareholders, however, may elect to receive their
income dividends or capital gain distributions, or both, in cash. The election
may be made at any time by submitting a written request directly to the Trust.
In order for an election to be in effect for any dividend or distribution, it
must be received by the Trust on or before the record date for such dividend or
distribution.
As required by federal law, information concerning the federal tax
status of distributions from the Fund will be furnished to each shareholder for
each calendar year on or before January 31 of the succeeding year.
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order so to qualify, the Fund must, among
other things: (i) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, gains from the sale
of securities or foreign currencies, or other income derived with respect to its
business of investing in such stock, securities or currencies; (ii) derive less
than 30% of its gross income from gains from the sale or other disposition of
securities held for less than three months; (iii) distribute each year at least
90% of its dividend, interest and certain other income; and (iv) at the end of
each fiscal quarter hold at least 50% of the value of its total assets in cash,
cash items, U.S. government securities, securities of other regulated investment
companies, and other securities that represent, with respect to each issuer, no
more than 5% of the value of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and no more than 25% of the value of its total
assets in the securities (other than those of the U.S. Government or other
regulated investment companies) of any one issuer or of two or more issuers that
the Fund controls and that are engaged in the same, similar or related trades or
businesses. To the extent the Fund qualifies for treatment as a regulated
investment company, it will not be subject to federal income tax on income paid
to its shareholders in the form of dividends or capital gain distributions.
A nondeductible excise tax will be imposed at the rate of 4% on the
excess, if any, of the Fund's "required distribution" over its actual
distributions in any calendar year. Generally, the "required distribution" is
98% of the Fund's ordinary income for the calendar year plus 98% of its capital
gain net income realized during the one-year period ending on October 31 (or
December 31, if the Fund is permitted to so elect and so elects) plus
undistributed amounts from prior years. The Fund intends to make distributions
sufficient to avoid imposition of the excise tax. Dividends and distributions
declared by the Fund during October, November or December to shareholders of
record on a date in any such month and paid by the Fund during the following
January will be treated for federal tax purposes as paid by the Fund and
received by shareholders on December 31 of the year in which declared.
Dividends and distributions on Fund shares received shortly after their
purchase, although economically a return of capital, are subject to federal
income taxes as described above to the extent the dividends and distributions do
not exceed the Fund's current and accumulated earnings and profits.
Redemptions and exchanges of the Fund's shares are taxable events and,
accordingly, shareholders may realize gains and losses on these transactions. If
shares have been held for more than one year, gain or loss realized will
generally be long-term capital gain or loss, and will otherwise be short-term
capital gain or loss. However, if a shareholder sells Fund shares at a loss
within six months after purchasing the shares, the loss will be treated as a
long-term capital loss to the extent of any long-term capital gain distributions
received by the shareholder. Furthermore, all or a portion of any loss will be
disallowed on the taxable disposition of Fund shares if the shareholder acquires
other shares of the Fund within 30 days before or after the disposition.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and the regulations thereunder currently in effect. For
the complete provisions, reference should be made to the pertinent Code sections
and regulations. The Code and regulations are subject to change by legislative
or administrative action, respectively.
Dividends and distributions also may be subject to state and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state or local taxes.
The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty).
<PAGE>
Part B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION --
INTERMEDIATE DURATION FIXED INCOME FUND.
Item 10. Cover Page
See the Cover Page of the Statement of Additional Information attached
as an Appendix to this Part B of the Registration Statement (the
"Statement of Additional Information").
Item 11. Table of Contents
See the Table of Contents of the Statement of Additional Information.
Item 12. General Information and History
Not applicable.
Item 13. Investment Objectives and Policies
See the section entitled "Investment Objective, Policies and
Restrictions" in the Statement of Additional Information.
Item 14. Management of the Fund
See the section entitled "Management of the Trust" in the Statement of
Additional Information.
Item 15. Control Persons and Principal Holders of Securities
See the section entitled "Management of the Trust" in the Statement of
Additional Information.
Item 16. Investment Advisory and Other Services
See the section entitled "Investment Advisory and Other Services" in
the Statement of Additional Information.
Item 17. Brokerage Allocation and Other Practices
See the section entitled "Portfolio Transactions and Brokerage" in the
Statement of Additional Information.
Item 18. Capital Stock and Other Securities
See the sections entitled "Description of the Trust"; "Redemptions";
and "Income Dividends, Capital Gain Distributions and Tax Status" in
the Statement of Additional Information.
Item 19. Purchase, Redemption and Pricing of Securities Being Offered
See the sections entitled "Redemptions"; "Net Asset Value"; and "How to
Buy Shares" in the Statement of Additional Information.
Item 20. Tax Status
See the section entitled "Income Dividends, Capital Gain Distributions
and Tax Status" in the Statement of Additional Information.
Item 21. Underwriters
Not applicable.
Item 22. Calculation of Performance Data
Not applicable.
Item 23. Financial Statements
Not applicable.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
LOOMIS SAYLES INTERMEDIATE DURATION FIXED INCOME FUND
STATEMENT OF ADDITIONAL INFORMATION
April 2, 1996
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information relates to the Loomis Sayles Investment Trust Private
Placement Memorandum -- Loomis Sayles Intermediate Duration Fixed Income Fund,
dated April 2, 1996, and should be read in conjunction therewith. A copy of the
Private Placement Memorandum may be obtained from Loomis Sayles Investment
Trust, One Financial Center, Boston, Massachusetts 02111.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS ......................... 2
MANAGEMENT OF THE TRUST ................................................. 7
INVESTMENT ADVISORY AND OTHER SERVICES .................................. 8
PORTFOLIO TRANSACTIONS AND BROKERAGE .................................... 11
DESCRIPTION OF THE TRUST ................................................ 11
HOW TO BUY SHARES ....................................................... 14
NET ASSET VALUE ......................................................... 14
REDEMPTIONS ............................................................. 15
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS ............. 15
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The investment objective and policies of the Intermediate Duration Fixed
Income Fund series (the "Fund"), of Loomis Sayles Investment Trust (the
"Trust"), are summarized in the Private Placement Memorandum (the "Memorandum")
under "Investment Objective and Policies" and "More Information About the Fund's
Investments." The investment policies of the Fund set forth in the Memorandum
and in this Statement of Additional Information may be changed by Loomis Sayles
& Company, L.P. ("Loomis Sayles"), the Fund's investment adviser, subject to
review and approval by the Trust's board of trustees (the "Trustees"), without
shareholder approval except that the investment objective of the Fund as set
forth in the Memorandum and any Fund policy explicitly identified as
"fundamental" may not be changed without the approval of the holders of a
majority of the outstanding shares of the Fund (which means the lesser of (i)
67% of the shares of the Fund represented at a meeting at which 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares).
In addition to its investment objective and policies set forth in the
Memorandum, the following investment restrictions are policies of the Fund (and
those marked with an asterisk are fundamental policies of the Fund):
The Fund will not:
*(1) Act as underwriter, except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
*(2) Invest in oil, gas or other mineral leases, rights or royalty
contracts or in real estate, commodities or commodity contracts. (This
restriction does not prevent the Fund from investing in issuers that
invest or deal in the foregoing types of assets or from purchasing
securities that are secured by real estate.)
*(3) Make loans. (For purposes of this investment restriction, neither
(i) entering into repurchase agreements nor (ii) purchasing bonds,
debentures, commercial paper, corporate notes and similar evidences of
indebtedness, which are a part of an issue to the public, is
considered the making of a loan.)
*(4) Change its classification pursuant to Section 5(b) of the Investment
Company Act of 1940 (the "1940 Act") from a "diversified" to
"non-diversified" management investment company.
*(5) Purchase any security (other than U.S. Government Securities) if, as a
result, more than 25% of the Fund's total assets (taken at current
value) would be invested in any one industry (in the utilities
category, gas, electric, water and telephone companies will be
considered as being in separate industries.)
*(6) Borrow money in excess of 10% of its total assets (taken at cost) or
5% of its total assets (taken at current value), whichever is lower,
nor borrow any money except as a temporary measure for extraordinary
or emergency purposes; however, the Fund's use of reverse repurchase
agreements and "dollar roll" arrangements shall not constitute
borrowing by the Fund for purposes of this restriction.
*(7) Purchase any illiquid security, including any security that is not
readily marketable, if, as a result, more than 15% of the Fund's net
assets (based on current value) would then be invested in such
securities.
*(8) Issue senior securities. (For the purposes of this restriction none of
the following is deemed to be a senior security: any pledge, mortgage,
hypothecation or other encumbrance of assets; any borrowing permitted
by restriction (6) above; any collateral arrangements with respect to
options, futures contracts and options on futures contracts and with
respect to initial and variation margin; and the purchase or sale of
or entry into options, forward contracts, futures contracts, options
on futures contracts, swap contracts or any other derivative
investments to the extent that Loomis Sayles determines that the Fund
is not required to treat such investments as senior securities
pursuant to the pronouncements of the Securities and Exchange
Commission (the "SEC") or its staff.)
Although the Fund has no current intention of investing in repurchase
agreements, the Fund intends, based on the views of the staff of the SEC, to
restrict its investments, if any, in repurchase agreements maturing in more than
seven days, together with other investments in illiquid securities, to the
percentage permitted by restriction (7) above.
Although authorized to invest in restricted securities, the Fund, as a
matter of non-fundamental operating policy, currently does not intend to invest
in such securities, except Rule 144A securities.
Portfolio Turnover
Portfolio turnover considerations will not limit Loomis Sayles's investment
discretion in managing the Fund's assets. Although it is impossible to predict
with certainty, it is expected that the annual portfolio turnover rate for the
Fund will not exceed 100%. The Fund anticipates that its portfolio turnover
rates will vary significantly from time to time depending on the volatility of
economic and market conditions. High portfolio turnover rates involve higher
costs such as higher brokerage commissions and higher levels of taxable gain.
See "Portfolio Transactions and Brokerage" for a description of Loomis Sayles's
brokerage practices and "Income Dividends, Capital Gain Distributions and Tax
Status" for more information about the tax consequences of investing in the
Fund.
U.S. Government Securities
U.S. Government Securities include direct obligations of the U.S. Treasury,
as well as securities issued or guaranteed by U.S. Government agencies,
authorities and instrumentalities, including, among others, the Government
National Mortgage Association, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association, the Federal Housing Administration, the
Resolution Funding Corporation, the Federal Farm Credit Banks, the Federal Home
Loan Bank, the Tennessee Valley Authority, the Student Loan Marketing
Association and the Small Business Administration. More detailed information
about some of these categories of U.S. Government Securities follows.
o U.S. Treasury Bills - Direct obligations of the United States Treasury
which 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
United States Government.
o U.S. Treasury Notes and Bonds - Direct obligations of the United States
Treasury issued in maturities that vary between one and forty years, with
interest normally payable every six months. They are backed by the full faith
and credit of the United States Government.
o "Ginnie Maes" - Debt securities issued by a mortgage banker or other
mortgagee which represents an interest in a pool of mortgages insured by the
Federal Housing Administration or the Farmer's Home Administration or guaranteed
by the Veterans Administration. The Government National Mortgage Association
("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. An assistant attorney general of
the United States has rendered an opinion that the guarantee by GNMA is a
general obligation of the United States backed by its full faith and credit.
Mortgages included in single family or multi-family residential mortgage pools
backing an issue of Ginnie Maes have a maximum maturity of up to 30 years.
Scheduled payments of principal and interest are made to the registered holders
of Ginnie Maes (such as the Fund) each month. Unscheduled prepayments may be
made by homeowners, or as a result of a default. Prepayments are passed through
to the registered holder of Ginnie Maes along with regular monthly payments of
principal and interest.
o "Fannie Maes" - The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private stockholders that
purchases residential mortgages from a list of approved seller/servicers. Fannie
Maes are pass-through securities issued by FNMA that are guaranteed as to timely
payment of principal and interest by FNMA but are not backed by the full faith
and credit of the United States Government.
o "Freddie Macs" - The Federal Home Loan Mortgage Corporation ("FHLMC") is
a corporate instrumentality of the United States Government. 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 Freddie
Macs are not backed by the full faith and credit of the United States
Government.
As described in the Memorandum, U.S. Government Securities 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 fixed-income 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 but will be reflected in the Fund's net asset value.
When-Issued Securities
As described in the Memorandum, the Fund may enter into agreements with
banks or broker-dealers for the purchase or sale of securities at an agreed-upon
price on a specified future date. Such agreements might be entered into, for
example, when the Fund anticipates a decline in interest rates and is able to
obtain a more advantageous yield by committing currently to purchase securities
to be issued later. When the Fund purchases securities in this manner (i.e. on a
when-issued or delayed-delivery basis), it is required to create a segregated
account with the Trust's custodian and to maintain in that account cash or U.S.
Government Securities in an amount equal to or greater than, on a daily basis,
the amount of the Fund's when-issued or delayed-delivery commitments. The Fund
will make commitments to purchase on a when-issued or delayed-delivery basis
only securities meeting the Fund's investment criteria. The Fund may take
delivery of these securities or, if it is deemed advisable as a matter of
investment strategy, the Fund may sell these securities before the settlement
date. When the time comes to pay for when-issued or delayed-delivery securities,
the Fund will meet its obligations from then available cash flow or the sale of
securities, or from the sale of the when-issued or delayed-delivery securities
themselves (which may have a value greater or less than the Fund's payment
obligation).
Convertible Securities
Convertible securities include corporate bonds, notes or preferred stocks
of U.S. or foreign issuers that can be converted into (that is, exchanged for)
common stocks or other equity securities at a stated price or rate. Convertible
securities also include other securities, such as warrants, that provide an
opportunity for equity participation. Because convertible securities can be
converted into equity securities, their value 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 when the price of the underlying equity security falls, the decline in
the price of the convertible security may sometimes be less substantial than
that of the underlying equity security. Due to the conversion feature,
convertible securities generally yield less than nonconvertible securities of
similar credit quality and maturity. The Fund's investment in convertible
securities may at times include securities that have a mandatory conversion
feature, pursuant to which the securities convert automatically into common
stock at a specified date and conversion ratio, or that are convertible at the
option of the issuer. Because conversion is not at the option of the holder, the
Fund may be required to convert the security into the underlying common stock
even at times when the value of the underlying common stock has declined
substantially.
Zero Coupon Bonds
Zero coupon bonds are debt obligations that do not entitle the holder to
any periodic payments of interest either for the entire life of the obligations
or for an initial period after the issuance of the obligations. Such bonds are
issued and traded at discounts from their face amounts. The amount of the
discount varies depending on such factors as the time remaining until maturity
of the bonds, prevailing interest rates, the liquidity of the security and the
perceived credit quality of the issuer. The market prices of zero coupon bonds
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 do non-zero coupon bonds having similar maturities and
credit quality. In order to satisfy a requirement for qualification as a
"regulated investment company" under the Internal Revenue Code (the "Code"), the
Fund must distribute each year at least 90% of its net investment income,
including the original issue discount accrued on zero coupon bonds. Because a
fund investing in zero coupon bonds will not on a current basis receive cash
payments from the issuer in respect of accrued original issue discount, the fund
may have to distribute cash obtained from other sources in order to satisfy the
90% distribution requirement under the Code. Such cash might be obtained from
selling other portfolio holdings of the Fund. In some circumstances, such sales
might be necessary in order to satisfy cash distribution requirements even
though investment considerations might otherwise make it undesirable for the
Fund to sell such securities at such time.
Repurchase Agreements
The Fund may enter into repurchase agreements, by which the Fund purchases
a security and obtains a simultaneous commitment from the seller (a bank or, to
the extent permitted by the 1940 Act, a recognized securities dealer) to
repurchase the security at an agreed upon price and date (usually seven days or
less from the date of original purchase). The resale price is in excess of the
purchase price and reflects an agreed upon market rate unrelated to the coupon
rate on the purchased security. Such transactions afford the Fund the
opportunity to earn a return on temporarily available cash at minimal market
risk. Although the underlying security may be a bill, certificate of
indebtedness, note or bond issued by an agency, authority or instrumentality of
the United States Government, the obligation of the seller is not guaranteed by
the U.S. Government and there is a risk that the seller may fail to repurchase
the underlying security. In such event, the Fund would attempt to exercise
rights with respect to the underlying security, including possible disposition
in the market. However, the Fund may be subject to various delays and risks of
loss, including (a) possible declines in the value of the underlying security
during the period while the Fund seeks to enforce its rights thereto and (b)
inability to enforce rights and the expenses involved in attempted enforcement.
Rule 144A Securities
The Fund may purchase Rule 144A securities. These are privately offered
securities that can be resold only to certain qualified institutional buyers.
Rule 144A securities are treated as illiquid, unless Loomis Sayles has
determined, under guidelines established by the Trustees, that the particular
issue of Rule 144A securities is liquid. Under the guidelines, Loomis Sayles
considers such factors as: (1) the frequency of trades and quotes for a
security; (2) the number of dealers willing to purchase or sell the security and
the number of other potential purchasers; (3) dealer undertakings to make a
market in the security; and (4) the nature of the security and the nature of
marketplace trades therefor.
MANAGEMENT OF THE TRUST
The trustees and officers of the Trust and their principal occupations
during the past five years are as follows:
DANIEL J. FUSS (61)* -- President and Trustee. Executive Vice President and
Director, Loomis Sayles.
MARK W. HOLLAND (45)* -- Secretary, Treasurer and Trustee. Vice
President-Finance and Administration, Loomis Sayles.
TIMOTHY J. HUNT (64) -- Trustee. 4 Dennett Road, Marblehead, Massachusetts.
Retired. Formerly, Vice President and Director of Fixed Income Research,
Loomis Sayles.
ROBERT J. BLANDING (48) -- Vice President. 595 Fifth Street West, Sonoma,
California. President and Chairman, Loomis Sayles.
WILLIAM F. CAMP (34) -- Vice President. 1533 North Woodward, Bloomfield Hills,
Michigan. Vice President, Loomis Sayles. Portfolio Manager, Kmart
Corporation.
WILLIAM J. DRISCOLL (35)-- Vice President. Vice President, Loomis Sayles;
formerly, Vice President, Merrill Lynch.
QUENTIN P. FAULKNER (57) -- Vice President. Vice President, Loomis Sayles.
KATHLEEN C. GAFFNEY (33) -- Vice President. Vice President, Loomis Sayles.
KENT P. NEWMARK (56) -- Vice President. Two Embarcadero Center, San Francisco,
California. Vice President and Director, Loomis Sayles.
ROBERT K. PAYNE (52) -- Vice President. Two Embarcadero Center, San Francisco,
California. Vice President, Loomis Sayles.
ANTHONY J. WILKINS (54) -- Vice President. Vice President, Loomis Sayles.
- ----------------------------
* A Trustee deemed an "interested person" of the Trust, as defined by the 1940
Act.
Previous positions during the past five years with Loomis Sayles are
omitted, if not materially different from the positions listed.
Except as indicated above, the address of each trustee and officer of the
Trust affiliated with Loomis Sayles is One Financial Center, Boston,
Massachusetts 02111. The Trust pays no compensation to its officers or to the
Trustees listed above who are interested persons of the Trust. Each trustee who
is not affiliated with Loomis Sayles will be compensated at the rate of $10,000
per annum. No trustee will receive compensation from any other investment
company which is advised by Loomis Sayles or its affiliates or which holds
itself out to investors as being related to the Trust. No current trustee
received any compensation from the Trust for the fiscal year ended December 31,
1995.
As of the date hereof, the Trustees and officers as a group owned less than
1% of the outstanding shares of the Fund.
As described in the Memorandum under "The Fund's Investment Adviser," The
New England Mutual Life Insurance Company ("The New England"), Loomis Sayles's
ultimate parent, and Metropolitan Life Insurance Company ("Met Life") have
entered into an agreement to merge, with Met Life to be the survivor of the
merger. The merger is conditioned upon, among other things, approval by the
policyholders of The New England and Met Life and receipt of certain regulatory
approvals. It will be required that for a period of three years following the
merger, at least 75% of the board of trustees of the Trust be persons who are
not interested persons of the Trust's investment adviser. Accordingly, it is
expected that Messrs. Fuss and Holland will resign as trustees upon closing of
the merger and that Mr. Hunt will become the sole trustee.
INVESTMENT ADVISORY AND OTHER SERVICES
Advisory Agreement. Loomis Sayles serves as investment adviser to the Fund
under an advisory agreement with the Trust dated February 6, 1996. Under the
advisory agreement, Loomis Sayles manages the investment and reinvestment of the
assets of the Fund and generally administers its affairs, subject to supervision
by the Trustees. Loomis Sayles furnishes, at its own expense, all necessary
office space, office supplies, facilities and equipment, services of executive
and other personnel of the Fund and certain administrative services. For these
services, the advisory agreement provides that the Fund shall pay Loomis Sayles
a monthly investment advisory fee as stated in the Memorandum under "Fund
Expenses".
Under the advisory agreement, if the total ordinary business expenses of
the Fund or the Trust as a whole for any fiscal year exceed the lowest
applicable limitation (based on percentage of average net assets or income)
prescribed by any state in which the shares of the Fund or the Trust are
qualified for sale, Loomis Sayles shall pay such excess. Presently, neither the
Fund nor the Trust as a whole is subject to any such expense limitation.
As described in the Memorandum, Loomis Sayles has voluntarily undertaken
for an indefinite period to waive its fees and, to the extent necessary, to bear
other Fund expenses in order to limit the Fund's annualized total operating
expenses. These arrangements may be modified or terminated by Loomis Sayles at
any time, subject to prior notice to shareholders.
The advisory agreement provides that it will continue in effect for two
years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the Trustees or by vote of a
majority of the outstanding voting securities of the Fund and (ii) by vote of a
majority of the Trustees who are not "interested persons" of the Trust or Loomis
Sayles, as that term is defined in the 1940 Act, cast in person at a meeting
called for the purpose of voting on such approval. Any amendment to the advisory
agreement must be approved by vote of a majority of the outstanding voting
securities of the Fund and by vote of a majority of the trustees who are not
interested persons, cast in person at a meeting called for the purpose of voting
on such approval.
The agreement may be terminated without penalty by vote of the Trustees or
by vote of a majority of the outstanding voting securities of the Fund, upon
sixty days' written notice to Loomis Sayles, or by Loomis Sayles upon ninety
days' written notice to the Trust, and terminates automatically in the event of
its assignment, as that term is defined in the 1940 Act. In addition, the
agreement will automatically terminate if the Trust or the Fund shall at any
time be required by Loomis Sayles to eliminate all reference to the words
"Loomis" or "Sayles" in the name of the Trust or the Fund, unless the
continuance of the agreement after such change of name is approved by a majority
of the outstanding voting securities of the Fund and by a majority of the
Trustees who are not interested persons of the Trust or Loomis Sayles, cast in
person at a meeting called for the purpose of voting on such approval.
The advisory agreement provides that Loomis Sayles shall not be subject to
any liability in connection with the performance of its services thereunder in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
Loomis Sayles acts as investment adviser to the nine series of the Loomis
Sayles Funds, each a series of a registered open-end diversified management
investment company. Loomis Sayles acts as sub-adviser to the New England Star
Advisers Fund, the New England Value Fund, the New England Capital Growth Fund,
the New England Balanced Fund and the New England Strategic Income Fund, each a
series of New England Funds Trust I, which is a registered open-end management
investment company. Loomis Sayles also acts as sub-adviser to the New England
Equity Income Fund, a series of New England Funds Trust III, which is a
registered open-end management investment company. In addition, Loomis Sayles
acts as sub-advisor to the Avanti Growth Series, the Balanced Series and the
Small Cap Series of New England Zenith Funds, which is also a registered
open-end management investment company. Loomis Sayles also provides investment
advice to numerous other corporate and fiduciary clients.
Loomis Sayles's sole general partner is Loomis Sayles & Company, Inc.,
which is a wholly-owned subsidiary of New England Investment Companies, L.P.
("NEIC"). NEIC's sole general partner is New England Investment Companies, Inc.,
which is a wholly-owned subsidiary of The New England. The New England and Met
Life have entered into an agreement to merge, with Met Life to be the survivor
of the merger.
Officers and trustees of the Trust who hold positions with Loomis & Sayles
are listed under "Management of the Trust" in this Statement of Additional
Information. Certain officers and trustees of the Trust also serve as officers,
directors and trustees of other investment companies and clients advised by
Loomis Sayles. The other investment companies and clients sometimes invest in
securities in which the Fund also invests. If the Fund and such other investment
companies or clients desire to buy or sell the same portfolio securities at the
same time, purchases and sales may be allocated, to the extent practicable, on a
pro rata basis in proportion to the amounts desired to be purchased or sold for
each. It is recognized that in some cases the practices described in this
paragraph could have a detrimental effect on the price or amount of the
securities which the Fund purchases or sells. In other cases, however, it is
believed that these practices may benefit the Fund. It is the opinion of the
Trustees that the desirability of retaining Loomis Sayles as investment adviser
for the Fund outweighs the disadvantages, if any, which might result from these
practices.
Loomis Sayles acts as the transfer agent and dividend paying agent for the
Fund. Loomis Sayles currently receives no additional compensation for such
services.
Custodial Arrangements. State Street Bank and Trust Company ("State Street
Bank"), Boston, Massachusetts 02102, is the Trust's custodian. As such, State
Street Bank holds in safekeeping certificated securities and cash belonging to
the Fund and, in such capacity, is the registered owner of securities held in
book entry form belonging to the Fund. Upon instruction, State Street Bank
receives and delivers cash and securities of the Fund in connection with Fund
transactions and collects all dividends and other distributions made with
respect to Fund portfolio securities.
Independent Accountants. The Fund's independent accountants are Coopers &
Lybrand, L.L.P. ("Coopers & Lybrand"), One Post Office Square, Boston,
Massachusetts 02110. Coopers & Lybrand conducts an annual audit of the Trust's
financial statements, assists in the preparation of the Fund's federal and state
income tax returns and consults with the Fund as to matters of accounting and
federal and state income taxation.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In placing orders for the purchase and sale of portfolio securities for the
Fund, Loomis Sayles always seeks the best price and execution. Transactions are
carried out through broker-dealers who make the primary market for securities
unless, in the judgment of Loomis Sayles, a more favorable price can be obtained
by carrying out such transactions through other brokers or dealers.
Loomis Sayles selects only brokers or dealers which it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates,
which, when combined with the quality of the foregoing services, will produce
the best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid for a transaction.
However, the Fund will only pay commissions that Loomis Sayles believes to be
competitive with generally prevailing rates. Loomis Sayles will use 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 will evaluate the
overall reasonableness of brokerage commissions paid on transactions by
reference to such data. In making such evaluation, all factors affecting
liquidity and execution of the order, as well as the amount of the capital
commitment by the broker in connection with the order, are taken into account.
The Fund will not pay a broker a commission at a higher rate than otherwise
available for the same transaction in recognition of the value of research
services provided by the broker or in recognition of the value of any other
services provided by the broker which do not contribute to the best price and
execution of the transaction.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Loomis Sayles believes will provide the best price and
execution for a transaction. These research services include not only a wide
variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and projections,
asset allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although it
is not possible to assign an exact dollar value to these services, they may, to
the extent used, tend to reduce Loomis Sayles's expenses. Such services may be
used by Loomis Sayles in servicing other client accounts and in some cases may
not be used with respect to the Fund. Receipt of services or products other than
research from brokers is not a factor in the selection of brokers.
DESCRIPTION OF THE TRUST
The Trust, registered with the SEC as a diversified open-end management
investment company, is organized as a Massachusetts business trust under the
laws of The Commonwealth of Massachusetts by an Agreement and Declaration of
Trust (the "Declaration of Trust") dated December 23, 1993.
The Declaration of Trust currently permits the Trustees to issue an
unlimited number of full and fractional shares of each series. Each share of the
Fund represents an equal proportionate interest in the Fund with each other
share of the Fund and is entitled to a proportionate interest in the dividends
and distributions from the Fund. The shares of the Fund do not have any
preemptive rights. Upon termination of the Fund, whether pursuant to liquidation
of the Trust or otherwise, shareholders of the Fund are entitled to share pro
rata in the net assets of the Fund available for distribution to shareholders.
The Declaration of Trust also permits the Trustees to charge shareholders
directly for custodial, transfer agency and servicing expenses.
The assets received by the Fund for the issue or sale of its shares and all
income, earnings, profits, losses and proceeds therefrom, subject only to the
rights of creditors, are allocated to, and constitute the underlying assets of,
the Fund. The underlying assets are segregated and are charged with the expenses
with respect to the Fund and with a share of the general expenses of the Trust.
Any general expenses of the Trust that are not readily identifiable as belonging
to the Fund are allocated by or under the direction of the Trustees in such
manner as the Trustees determine to be fair and equitable. While the expenses of
the Trust are allocated to the separate books of account of the Fund, certain
expenses may be legally chargeable against the assets of all series.
The Declaration of Trust also permits the Trustees, without shareholder
approval, to issue shares of the Trust in one or more series, and to subdivide
any series of shares into various classes of shares with such dividend
preferences and other rights as the Trustees may designate. While the Trustees
have no current intention to subdivide any series of shares into classes, it is
intended to allow them to provide for an equitable allocation of the impact of
any future regulatory requirements which might affect various classes of
shareholders differently, or to permit shares of a series to be distributed
through more than one distribution channel, with the costs of the particular
means of distribution (or costs of related services) to be borne by the
shareholders who purchase through that means of distribution. The Trustees may
also, without shareholder approval, establish one or more additional separate
portfolios for investments in the Trust or merge two or more existing
portfolios. Shareholders' investments in such an additional or merged portfolio
would be evidenced by a separate series of shares (i.e., a new "Fund").
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust or the Fund, however, may be terminated at any time by vote of at
least two-thirds of the outstanding shares of the Trust or the Fund,
respectively. The Declaration of Trust further provides that the Trustees may
also terminate the Trust or the Fund upon written notice to the shareholders. As
a matter of policy, however, the Trustees will not terminate the Trust or the
Fund without submitting the matter to a vote of the shareholders of the Trust or
the Fund.
Voting Rights
As summarized in the Memorandum, shareholders are entitled to one vote for
each full share held (with fractional votes for each fractional share held) and
may vote (to the extent provided in the Declaration of Trust) in the election of
Trustees and the termination of the Trust and on other matters submitted to the
vote of shareholders.
The Declaration of Trust provides that on any matter submitted to a vote of
all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a particular
series or sub-series would be adversely affected by the vote, in which case a
separate vote of that series or sub-series shall also be required to decide the
question. Also, a separate vote for each series or sub-series shall be held
whenever required by the 1940 Act or any rule thereunder. Rule 18f-2 under the
1940 Act provides in effect that a class shall be deemed to be affected by a
matter unless it is clear that the interests of each class in the matter are
substantially identical or that the matter does not affect any interest of such
class. On matters exclusively affecting an individual series, only shareholders
of that series are entitled to vote. Consistent with the current position of the
SEC, shareholders of all series vote together, irrespective of series, on the
election of Trustees and the selection of the Trust's independent accountants,
but shareholders of each series vote separately on other matters requiring
shareholder approval, such as certain changes in investment policies of that
series or the approval of the investment advisory agreement relating to that
series. Voting rights are not cumulative.
There will normally be no meetings of shareholders for the purpose of
electing Trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of Trustees at such time as
less than a majority of the Trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the board of trustees,
less than two-thirds of the Trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders. In
addition, Trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for that purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustees, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the Trustees shall continue to hold office and
may appoint successor Trustees.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
(i) to change the Trust's name or to cure technical problems in the Declaration
of Trust, (ii) to establish, change or eliminate the par value of any shares
(currently all shares have no par value) and (iii) to issue shares of the Trust
in one or more series, and to subdivide any series of shares into various
classes of shares with such dividend preferences and other rights as the
trustees may designate.
Shareholder and Trustee Liability
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Fund of which they are
shareholders. However, the Declaration of Trust disclaims shareholder liability
for acts or obligations of each fund and requires that notice of such disclaimer
be given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. The Declaration of Trust provides for indemnification
out of fund property for all loss and expense of any shareholder held personally
liable for the obligations of the Fund. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is considered
remote since it is limited to circumstances in which the disclaimer is
inoperative and the Fund itself would be unable to meet its obligations.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office. The By-Laws of the Trust provide for indemnification by the Trust of
the trustees and officers of the Trust except with respect to any matter as to
which any such person did not act in good faith in the reasonable belief that
such action was in or not opposed to the best interests of the Trust. No officer
or Trustee may be indemnified against any liability to the Trust or the Trust's
shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
HOW TO BUY SHARES
The procedures for purchasing shares of the Fund and for determining the
offering price of such shares are summarized in the Memorandum under "How to
Purchase Shares."
NET ASSET VALUE
The net asset value of the shares of the Fund is determined by dividing the
Fund's total net assets (the excess of its assets over its liabilities) by the
total number of shares of the Fund outstanding and rounding to the nearest cent.
Such determination is made weekly and as of the close of regular trading on the
New York Stock Exchange (the "Exchange") on any day on which an order for
purchase or redemption of the Fund's shares is received and on which the
Exchange is open for unrestricted trading. During the twelve months following
the date of this Statement of Additional Information, the Exchange is expected
to be closed on the following weekdays: Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, Christmas Day as observed, New Year's Day if observed,
President's Day and Good Friday. Long-term debt securities are valued by a
pricing service, which determines valuations of normal institutional-size
trading units of long-term debt securities. Such valuations are determined using
methods based on market transactions for comparable securities and on various
relationships among securities that are generally recognized by institutional
traders. Other securities for which current market quotations are not readily
available (including restricted securities, if any) and all other assets are
taken at fair value as determined in good faith by the Trustees, although the
actual calculations may be made by persons acting pursuant to the direction of
the Trustees.
Generally, trading in foreign securities markets is substantially completed
each day at various times prior to the close of regular trading on the Exchange.
Occasionally, events affecting the value of foreign securities not traded on a
U.S. exchange may occur between the completion of substantial trading of such
securities for the day and the close of regular trading on the New York Stock
Exchange, which events will not be reflected in the computation of the Fund's
net asset value. If events materially affecting the value of the Fund's
portfolio securities occur during such period, then these securities will be
valued at their fair value as determined in good faith or in accordance with
procedures approved by the Trustees.
REDEMPTIONS
The procedures for redemption of Fund shares are summarized in the
Memorandum under "How to Redeem Shares."
The redemption price will be the net asset value per share next determined
after the redemption request and any necessary special documentation are
received by the Trust in proper form. Proceeds resulting from a written
redemption request will normally be mailed to you within seven days after
receipt of your request in good order. In those cases where you have recently
purchased your shares by check and your check was received less than fifteen
days prior to the redemption request, the Fund may withhold redemption proceeds
until your check has cleared.
The Fund will normally redeem shares for cash; however, the Fund reserves
the right to pay the redemption price wholly or partly in kind if the Trustees
determine it to be advisable in the interest of the remaining shareholders. If
portfolio securities are distributed in lieu of cash, the shareholder will
normally incur brokerage commissions upon subsequent disposition of any such
securities.
A redemption constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a long- or short-term capital gain or
loss. See "Income Dividends, Capital Gain Distributions and Tax Status."
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
As described in the Memorandum under "Dividends, Capital Gain Distributions
and Taxes," it is the policy of the Fund to pay its shareholders monthly, as
dividends, substantially all of the Fund's net income and to distribute to its
shareholders annually substantially all net realized capital gains, if any,
after offset by any capital loss carryovers.
Income dividends and capital gain distributions are payable in full and
fractional shares of the Fund based upon the net asset value determined as of
the close of regular trading on the Exchange on the record date for each
dividend or distribution. Shareholders, however, may elect to receive their
income dividends or capital gain distributions, or both, in cash. The election
may be made at any time by submitting a written request directly to the Trust.
In order for an election to be in effect for any dividend or distribution, it
must be received by the Trust on or before the record date for such dividend or
distribution.
As required by federal law, information concerning the federal tax status
of distributions from the Fund will be furnished to each shareholder for each
calendar year on or before January 31 of the succeeding year.
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Code. In order so to qualify, the Fund must, among
other things: (i) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, gains from the sale
of securities or foreign currencies, or other income derived with respect to its
business of investing in such stock, securities or currencies; (ii) derive less
than 30% of its gross income from gains from the sale or other disposition of
securities held for less than three months; (iii) distribute each year at least
90% of its dividend, interest and certain other income; and (iv) at the end of
each fiscal quarter hold at least 50% of the value of its total assets in cash,
cash items, U.S. government securities, securities of other regulated investment
companies, and other securities that represent, with respect to each issuer, no
more than 5% of the value of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and no more than 25% of the value of its total
assets in the securities (other than those of the U.S. Government or other
regulated investment companies) of any one issuer or of two or more issuers that
the Fund controls and that are engaged in the same, similar or related trades or
businesses. To the extent the Fund qualifies for treatment as a regulated
investment company, it will not be subject to federal income tax on income paid
to its shareholders in the form of dividends or capital gain distributions.
A nondeductible excise tax will be imposed at the rate of 4% on the excess,
if any, of the Fund's "required distribution" over its actual distributions in
any calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
realized during the one-year period ending on October 31 (or December 31, if the
Fund is permitted to so elect and so elects) plus undistributed amounts from
prior years. The Fund intends to make distributions sufficient to avoid
imposition of the excise tax. Dividends and distributions declared by the Fund
during October, November or December to shareholders of record on a date in any
such month and paid by the Fund during the following January will be treated for
federal tax purposes as paid by the Fund and received by shareholders on
December 31 of the year in which declared.
Dividends and distributions on Fund shares received shortly after their
purchase, although economically a return of capital, are subject to federal
income taxes as described above to the extent the dividends and distributions do
not exceed the Fund's current and accumulated earnings and profits.
Redemptions and exchanges of the Fund's shares are taxable events and,
accordingly, shareholders may realize gains and losses on these transactions. If
shares have been held for more than one year, gain or loss realized will
generally be long-term capital gain or loss, and will otherwise be short-term
capital gain or loss. However, if a shareholder sells Fund shares at a loss
within six months after purchasing the shares, the loss will be treated as a
long-term capital loss to the extent of any long-term capital gain distributions
received by the shareholder. Furthermore, all or a portion of any loss will be
disallowed on the taxable disposition of Fund shares if the shareholder acquires
other shares of the Fund within 30 days before or after the disposition.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and the regulations thereunder currently in effect. For
the complete provisions, reference should be made to the pertinent Code sections
and regulations. The Code and regulations are subject to change by legislative
or administrative action, respectively.
Dividends and distributions also may be subject to state and local taxes.
Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, state or local taxes.
The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty).
<PAGE>
Part C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements:
Not applicable.
(b) Exhibits:
1. Agreement and Declaration of Trust of Loomis Sayles
Investment Trust (the "Trust") dated December 23, 1993
incorporated by reference to the original registration
statement on Form N-1A (File No. 811-8282) filed on January
11, 1994 (the "Registration Statement").
2. By-Laws of the Trust incorporated by reference to the
Registration Statement filed on January 11, 1994.
3. Not applicable.
4. Not applicable.
5a. Investment Advisory Agreement between the Trust and Loomis
Sayles & Company, L.P. ("Loomis Sayles") for each of the
Loomis Sayles Investment Grade Fixed Income Fund and the
Loomis Sayles Fixed Income Fund incorporated by reference to
the Registration Statement filed on January 11, 1994.
5b. Investment Advisory Agreement between the Trust and Loomis
Sayles for the Loomis Sayles California Tax-Free Income Fund
incorporated by reference to Amendment No. 1 to the
Registration Statement filed on December 13, 1994.
5c. Investment Advisory Agreement between the Trust and Loomis
Sayles for the Loomis Sayles Mortgage Securities Fund
incorporated by reference to Amendment No. 2 to the
Registration Statement filed on February 1, 1995.
5d. Investment Advisory Agreement between the Trust and Loomis
Sayles for the Loomis Sayles Core Growth Fund incorporated
by reference to Amendment No. 4 to the Registration
Statement filed on September 18, 1995.
5e. Investment Advisory Agreement between the Trust and Loomis
Sayles for the Loomis Sayles Convertible Bond Fund
incorporated by reference to Amendment No. 5 to the
Registration Statement filed on November 3, 1995.
5f. Investment Advisory Agreement between the Trust and Loomis
Sayles for the Loomis Sayles High Yield Fixed Income Fund
incorporated by reference to Amendment No. 5 to the
Registration Statement filed on November 3, 1995.
5g. Investment Advisory Agreement between the Trust and Loomis
Sayles for the Loomis Sayles Core Fixed Income Fund filed
herewith.
5h. Investment Advisory Agreement between the Trust and Loomis
Sayles for the Loomis Sayles Intermediate Duration Fixed
Income Fund filed herewith.
6. Not applicable. See Paragraph 4 of General Instruction F.
7. Not applicable.
8. Form of Custodian Agreement between the Trust and State
Street Bank and Trust Company ("State Street") incorporated
by reference to the Registration Statement filed on January
11, 1994.
9. Not applicable.
10. Not applicable. See Paragraph 4 of General Instruction F.
11. Not applicable. See Paragraph 4 of General Instruction F.
12. Not applicable. See Paragraph 4 of General Instruction F.
13. Not applicable.
14. Not applicable.
15. Not applicable.
16. Not applicable.
17. Not applicable.
18. Not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record Holders
Title of Series (as of February 1, 1996)
--------------- ------------------------
California Tax-Free Income Fund 20
Convertible Bond Fund 1
Core Fixed Income Fund 0
Core Growth Fund 4
Fixed Income Fund 14
High Yield Fixed Income Fund 1
Intermediate Duration Fixed Income Fund 0
Investment Grade Fixed Income Fund 5
Mortgage Securities Fund 2
Item 27. Indemnification
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto) and Article 4 of the Registrant's By-Laws (Exhibit
2 hereto) provide for indemnification of its trustees and officers.
The effect of these provisions is to provide indemnification for each
of the Registrant's trustees and officers against liabilities and
counsel fees reasonably incurred in connection with the defense of any
legal proceeding in which such trustee or officer may be involved by
reason of being or having been a trustee or officer, except with
respect to any matter as to which such trustee or officer shall have
been adjudicated not to have acted in good faith and in the reasonable
belief that such trustee's or officer's action was in the best
interest of the Registrant, and except that no trustee or officer
shall be indemnified against any liability to the Registrant or its
shareholders to which such trustee or officer otherwise would be
subject by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such
trustee's or officer's office.
Item 28. Business and Other Connections of Investment Adviser
Loomis Sayles, the investment adviser of the Registrant, provides
investment advice to nine series of the Loomis Sayles Funds, five
series of New England Funds Trust I, one series of New England Funds
Trust III, three series of New England Zenith Funds, all of which are
registered investment companies, and to other organizations and
individuals.
The sole general partner of Loomis Sayles is Loomis Sayles & Company,
Inc., One Financial Center, Boston, Massachusetts 02111.
Item 29. Principal Underwriters
Not applicable.
Item 30. Location of Accounts and Records
The following companies maintain possession of the documents required
by the specified rules:
(a) Registrant
Rule 31a-1(b)(4), (9), (10), (11)
Rule 31a-2(a)
(b) State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Rule 31a-1(a)
Rule 31a-1(b)(1), (2), (3), (5), (6), (7), (8)
Rule 31a-2(a)
(c) Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
Rule 31a-1(f)
Rule 31a-2(e)
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
<PAGE>
* * * * * * * * * * *
NOTICE
A copy of the Agreement and Declaration of Trust of Loomis Sayles
Investment Trust (the "Trust") is on file with the Secretary of The Commonwealth
of Massachusetts and the Clerk of the City of Boston and notice is hereby given
that this instrument has been executed on behalf of the Trust by an officer of
the Trust as an officer and not individually and the obligations of or arising
out of this instrument are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets and property of
the Trust.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment No. 6 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston, in The Commonwealth of Massachusetts on this 2d day of April,
1996.
LOOMIS SAYLES INVESTMENT TRUST
By: /s/ Daniel J. Fuss
--------------------------
Daniel J. Fuss
President
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
Index to Exhibits
Exhibit No. Description Sequential Page No.
- ----------- ----------- -------------------
5g Investment Advisory Agreement between the Trust
and Loomis Sayles for the Loomis Sayles Core Fixed
Income Fund
5h Investment Advisory Agreement between the Trust
and Loomis Sayles for the Loomis Sayles
Intermediate Duration Fixed Income Fund
<PAGE>
Exhibit 5g
ADVISORY AGREEMENT
AGREEMENT made this 6th day of February, 1996 by and between Loomis
Sayles Investment Trust, a Massachusetts business trust (the "Trust"), with
respect to its Loomis Sayles Core Fixed Income Fund series (the "Series"), and
Loomis, Sayles & Company, L.P., a Delaware limited partnership (the "Adviser").
WITNESSETH:
WHEREAS, the Trust and the Adviser wish to enter into an agreement
setting forth the terms upon which the Adviser will perform certain services for
the Series;
NOW THEREFORE, in consideration of the premises and covenants
hereinafter contained, the parties agree as follows:
1. The Trust hereby employs the Adviser to manage the investment and
reinvestment of the assets belonging to the Series of Shares of the Trust (the
"Series") and to perform the other services herein set forth, subject to the
supervision and control of the Board of Trustees of the Trust. The Adviser
hereby accepts such employment and agrees, at its own expense, to render the
services and to assume the obligations herein set forth, for the compensation
herein provided. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
2. In carrying out its obligations to manage the investment and
reinvestment of the assets belonging to the Series, the Adviser shall:
(a) obtain and evaluate such economic, statistical and
financial data and information and undertake such additional investment
research as it shall believe necessary or advisable for the management
of the investment and reinvestment of the assets belonging to the
Series in accordance with the Series' investment objective and
policies;
(b) take such steps as are necessary to implement the
investment policies of the Series by purchase and sale of securities,
including the placing of orders for such purchase and sale; and
(c) regularly report to the Board of Trustees with respect to
the implementation of the investment policies of the Series.
3. All activities in connection with the management of the affairs of
the Series undertaken by the Adviser pursuant to this Agreement shall at all
times be subject to the supervision and control of the Board of Trustees, any
duly constituted committee thereof or any officer of the Trust acting pursuant
to like authority.
4. In addition to performing at its expense the obligations set forth
in section 2 hereof, the Adviser shall furnish to the Trust at the Adviser's own
expense or pay the expenses of the Trust for the following:
(a) office space in such place or places as may be agreed upon
from time to time, and all necessary office supplies, facilities and
equipment;
(b) necessary executive and other personnel for managing the
affairs of the Series (exclusive of those related to and to be
performed under contract for custodial, transfer, dividend and plan
agency services by the entity or entities, if any, selected to perform
such services and exclusive of any managerial functions described in
section 5); and
(c) compensation, if any, of Trustees of the Trust who are
directors, officers or employees of the Adviser or any affiliated
person (other than a registered investment company) of the Adviser.
5. Except as the Adviser may otherwise agree from time to time, nothing
in section 4 hereof shall require the Adviser to bear, or to reimburse the Trust
for:
(a) any of the costs of printing and mailing the items
referred to in sub-section (n) of this section 5;
(b) any of the costs of preparing, printing and distributing
sales literature;
(c) compensation of Trustees of the Trust who are not
directors, officers or employees of the Adviser or of any affiliated
person (other than a registered investment company) of the Adviser;
(d) registration, filing and other fees in connection with
requirements of regulatory authorities;
(e) the charges and expenses of the custodian appointed by the
Trust for custodial, paying agent, transfer agent and plan agent
services;
(f) charges and expenses of independent accountants retained
by the Trust;
(g) charges and expenses of any transfer agents and registrars
appointed by the Trust;
(h) brokers' commissions and issue and transfer taxes
chargeable to the Trust in connection with securities transactions to
which the Trust is a party;
(i) taxes and fees payable by the Trust to Federal, State or
other governmental agencies;
(j) any cost of certificates representing shares of the
Series;
(k) legal fees and expenses in connection with the affairs of
the Trust including registering and qualifying its shares with Federal
and State regulatory authorities;
(l) expenses of meetings of shareholders and Trustees of the
Trust; and
(m) interest, including interest on borrowings by the Trust;
(n) the cost of services, including services of counsel,
required in connection with the preparation of the Trust's registration
statements and prospectuses, including amendments and revisions
thereto, annual, semiannual and other periodic reports of the Trust,
and notices and proxy solicitation material furnished to shareholders
of the Trust or regulatory authorities; and
(o) the Trust's expenses of bookkeeping, accounting, auditing
and financial reporting, including related clerical expenses.
6. The services of the Adviser to the Trust hereunder are not to be
deemed exclusive and the Adviser shall be free to render similar services to
others, so long as its services hereunder are not impaired thereby.
7. As full compensation for all services rendered, facilities furnished
and expenses borne by the Adviser hereunder, the Trust shall pay the Adviser
compensation at the annual rate of .5% or such lesser rate as the adviser may
agree to from time to time. Such compensation shall be payable monthly in
arrears or at such other intervals, not less frequently than quarterly, as the
Board of Trustees of the Trust may from time to time determine and specify in
writing to the Adviser. The Adviser hereby acknowledges that the Trust's
obligation to pay such compensation is binding only on the assets and property
belonging to the Series.
8. If the total of all ordinary business expenses of the Series or the
Trust as a whole (including investment advisory fees but excluding taxes,
portfolio brokerage commissions) for any fiscal year exceeds the lowest
applicable percentage of average net assets or income limitations prescribed by
any state in which shares of the Series are qualified for sale, the Adviser
shall pay any such excess. Solely for purposes of applying such limitations in
accordance with the foregoing sentence, the Series and the Trust shall each be
deemed to be a separate fund subject to such limitations. Should the applicable
state limitation provisions fail to specify how the average net assets of the
Trust or belonging to the Series are to be calculated, that figure shall be
calculated by reference to the average daily net assets of the Trust or the
Series, as the case may be.
9. It is understood that any of the shareholders, Trustees, officers,
employees and agents of the Trust may be a partner, shareholder, director,
officer, employee or agent of, or be otherwise interested in the Adviser, any
affiliated person of the Adviser, any organization in which the Adviser may have
an interest or any organization which may have an interest in the Adviser; that
the Adviser, any such affiliated person or any such organization may have an
interest in the Trust; and that the existence of any such dual interest shall
not saffect the validity hereof or of any transactions hereunder except as
otherwise provided in the Agreement and Declaration of Trust of the Trust and
the Partnership Agreement of the Adviser, respectively, or by specific
provisions of applicable law.
10. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, this Agreement shall continue
in effect for two years from the date of execution, and from year to
year thereafter so long as such continuance is specifically approved at
least annually (i) by the Board of Trustees of the Trust or by vote of
a majority of the outstanding voting securities of the Series, and (ii)
by vote of a majority of the Trustees of the Trust who are not
interested persons of the Trust or the Adviser, cast in person at a
meeting called for the purpose of voting on such approval;
(b) this Agreement may at any time be terminated on sixty
days' written notice to the Adviser either by vote of the Board of
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Series;
(c) this Agreement shall automatically terminate in the event
of its assignment;
(d) this Agreement may be terminated by the Adviser on ninety
days' written notice to the Trust;
(e) if the Adviser requires the Trust or the Series to change
its name so as to eliminate all references to the words "Loomis" or
"Sayles," then this Agreement shall automatically terminate at the time
of such change unless the continuance of this Agreement after such
change shall have been specifically approved by vote of a majority of
the outstanding voting securities of the Series and by vote of a
majority of the Trustees of the Trust who are not interested persons of
the Trust or the Adviser, cast in person at a meeting called for the
purpose of voting on such approval.
Termination of this Agreement pursuant to this section 10 shall be
without payment of any penalty.
11. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved by vote of a majority of the outstanding voting securities of the
Series and by vote of a majority of the Trustees of the Trust who are not
interested persons of the Trust or the Adviser, cast in person at a meeting
called for the purpose of voting on such approval.
12. For the purpose of this Agreement, the terms "vote of a majority of
the outstanding voting securities," "interested person," "affiliated person" and
"assignment" shall have their respective meanings defined in the Investment
Company Act of 1940 and the rules and regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act. References in this Agreement to any assets, property or
liabilities "belonging to" the Series shall have the meaning defined in the
Trust's Agreement and Declaration of Trust and By-Laws as amended from time to
time.
13. In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Adviser, or reckless disregard of its obligations
and duties hereunder, the Adviser shall not be subject to any liability to the
Trust, to any shareholder of the Trust or to any other person, firm or
organization, for any act or omission in the course of, or connected with,
rendering services hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
LOOMIS SAYLES INVESTMENT TRUST,
on behalf of its
LOOMIS SAYLES CORE FIXED INCOME FUND
series
By: /s/ Daniel J. Fuss
-----------------------------
Daniel J. Fuss
President
LOOMIS, SAYLES & COMPANY, L.P.
By: /s/ Mark W. Holland
-----------------------------
Mark W. Holland
Vice President
A copy of the Agreement and Declaration of Trust establishing the Trust
is on file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the
Trust's Loomis Sayles Core Fixed Income Series on behalf of the Trust by
officers of the Trust as officers and not individually and that the obligations
of or arising out of this Agreement are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon the assets and
property belonging to the Series.
Exhibit 5h
ADVISORY AGREEMENT
AGREEMENT made this 6th day of February, 1996 by and between Loomis
Sayles Investment Trust, a Massachusetts business trust (the "Trust"), with
respect to its Loomis Sayles Intermediate Fixed Income Fund series (the
"Series"), and Loomis, Sayles & Company, L.P., a Delaware limited partnership
(the "Adviser").
WITNESSETH:
WHEREAS, the Trust and the Adviser wish to enter into an agreement
setting forth the terms upon which the Adviser will perform certain services for
the Series;
NOW THEREFORE, in consideration of the premises and covenants
hereinafter contained, the parties agree as follows:
1. The Trust hereby employs the Adviser to manage the investment and
reinvestment of the assets belonging to the Series of Shares of the Trust (the
"Series") and to perform the other services herein set forth, subject to the
supervision and control of the Board of Trustees of the Trust. The Adviser
hereby accepts such employment and agrees, at its own expense, to render the
services and to assume the obligations herein set forth, for the compensation
herein provided. The Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
2. In carrying out its obligations to manage the investment and
reinvestment of the assets belonging to the Series, the Adviser shall:
(a) obtain and evaluate such economic, statistical and
financial data and information and undertake such additional investment
research as it shall believe necessary or advisable for the management
of the investment and reinvestment of the assets belonging to the
Series in accordance with the Series' investment objective and
policies;
(b) take such steps as are necessary to implement the
investment policies of the Series by purchase and sale of securities,
including the placing of orders for such purchase and sale; and
(c) regularly report to the Board of Trustees with respect to
the implementation of the investment policies of the Series.
3. All activities in connection with the management of the affairs of
the Series undertaken by the Adviser pursuant to this Agreement shall at all
times be subject to the supervision and control of the Board of Trustees, any
duly constituted committee thereof or any officer of the Trust acting pursuant
to like authority.
4. In addition to performing at its expense the obligations set forth
in section 2 hereof, the Adviser shall furnish to the Trust at the Adviser's own
expense or pay the expenses of the Trust for the following:
(a) office space in such place or places as may be agreed upon
from time to time, and all necessary office supplies, facilities and
equipment;
(b) necessary executive and other personnel for managing the
affairs of the Series (exclusive of those related to and to be
performed under contract for custodial, transfer, dividend and plan
agency services by the entity or entities, if any, selected to perform
such services and exclusive of any managerial functions described in
section 5); and
(c) compensation, if any, of Trustees of the Trust who are
directors, officers or employees of the Adviser or any affiliated
person (other than a registered investment company) of the Adviser.
5. Except as the Adviser may otherwise agree from time to time, nothing
in section 4 hereof shall require the Adviser to bear, or to reimburse the Trust
for:
(a) any of the costs of printing and mailing the items
referred to in sub-section (n) of this section 5;
(b) any of the costs of preparing, printing and distributing
sales literature;
(c) compensation of Trustees of the Trust who are not
directors, officers or employees of the Adviser or of any affiliated
person (other than a registered investment company) of the Adviser;
(d) registration, filing and other fees in connection with
requirements of regulatory authorities;
(e) the charges and expenses of the custodian appointed by the
Trust for custodial, paying agent, transfer agent and plan agent
services;
(f) charges and expenses of independent accountants retained
by the Trust;
(g) charges and expenses of any transfer agents and registrars
appointed by the Trust;
(h) brokers' commissions and issue and transfer taxes
chargeable to the Trust in connection with securities transactions to
which the Trust is a party;
(i) taxes and fees payable by the Trust to Federal, State or
other governmental agencies;
(j) any cost of certificates representing shares of the
Series;
(k) legal fees and expenses in connection with the affairs of
the Trust including registering and qualifying its shares with Federal
and State regulatory authorities;
(l) expenses of meetings of shareholders and Trustees of the
Trust; and
(m) interest, including interest on borrowings by the Trust;
(n) the cost of services, including services of counsel,
required in connection with the preparation of the Trust's registration
statements and prospectuses, including amendments and revisions
thereto, annual, semiannual and other periodic reports of the Trust,
and notices and proxy solicitation material furnished to shareholders
of the Trust or regulatory authorities; and
(o) the Trust's expenses of bookkeeping, accounting, auditing
and financial reporting, including related clerical expenses.
6. The services of the Adviser to the Trust hereunder are not to be
deemed exclusive and the Adviser shall be free to render similar services to
others, so long as its services hereunder are not impaired thereby.
7. As full compensation for all services rendered, facilities furnished
and expenses borne by the Adviser hereunder, the Trust shall pay the Adviser
compensation at the annual rate of .4% or such lesser rate as the adviser may
agree to from time to time. Such compensation shall be payable monthly in
arrears or at such other intervals, not less frequently than quarterly, as the
Board of Trustees of the Trust may from time to time determine and specify in
writing to the Adviser. The Adviser hereby acknowledges that the Trust's
obligation to pay such compensation is binding only on the assets and property
belonging to the Series.
8. If the total of all ordinary business expenses of the Series or the
Trust as a whole (including investment advisory fees but excluding taxes,
portfolio brokerage commissions) for any fiscal year exceeds the lowest
applicable percentage of average net assets or income limitations prescribed by
any state in which shares of the Series are qualified for sale, the Adviser
shall pay any such excess. Solely for purposes of applying such limitations in
accordance with the foregoing sentence, the Series and the Trust shall each be
deemed to be a separate fund subject to such limitations. Should the applicable
state limitation provisions fail to specify how the average net assets of the
Trust or belonging to the Series are to be calculated, that figure shall be
calculated by reference to the average daily net assets of the Trust or the
Series, as the case may be.
9. It is understood that any of the shareholders, Trustees, officers,
employees and agents of the Trust may be a partner, shareholder, director,
officer, employee or agent of, or be otherwise interested in the Adviser, any
affiliated person of the Adviser, any organization in which the Adviser may have
an interest or any organization which may have an interest in the Adviser; that
the Adviser, any such affiliated person or any such organization may have an
interest in the Trust; and that the existence of any such dual interest shall
not saffect the validity hereof or of any transactions hereunder except as
otherwise provided in the Agreement and Declaration of Trust of the Trust and
the Partnership Agreement of the Adviser, respectively, or by specific
provisions of applicable law.
10. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, this Agreement shall continue
in effect for two years from the date of execution, and from year to
year thereafter so long as such continuance is specifically approved at
least annually (i) by the Board of Trustees of the Trust or by vote of
a majority of the outstanding voting securities of the Series, and (ii)
by vote of a majority of the Trustees of the Trust who are not
interested persons of the Trust or the Adviser, cast in person at a
meeting called for the purpose of voting on such approval;
(b) this Agreement may at any time be terminated on sixty
days' written notice to the Adviser either by vote of the Board of
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Series;
(c) this Agreement shall automatically terminate in the event
of its assignment;
(d) this Agreement may be terminated by the Adviser on ninety
days' written notice to the Trust;
(e) if the Adviser requires the Trust or the Series to change
its name so as to eliminate all references to the words "Loomis" or
"Sayles," then this Agreement shall automatically terminate at the time
of such change unless the continuance of this Agreement after such
change shall have been specifically approved by vote of a majority of
the outstanding voting securities of the Series and by vote of a
majority of the Trustees of the Trust who are not interested persons of
the Trust or the Adviser, cast in person at a meeting called for the
purpose of voting on such approval.
Termination of this Agreement pursuant to this section 10 shall be
without payment of any penalty.
11. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved by vote of a majority of the outstanding voting securities of the
Series and by vote of a majority of the Trustees of the Trust who are not
interested persons of the Trust or the Adviser, cast in person at a meeting
called for the purpose of voting on such approval.
12. For the purpose of this Agreement, the terms "vote of a majority of
the outstanding voting securities," "interested person," "affiliated person" and
"assignment" shall have their respective meanings defined in the Investment
Company Act of 1940 and the rules and regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act. References in this Agreement to any assets, property or
liabilities "belonging to" the Series shall have the meaning defined in the
Trust's Agreement and Declaration of Trust and By-Laws as amended from time to
time.
13. In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Adviser, or reckless disregard of its obligations
and duties hereunder, the Adviser shall not be subject to any liability to the
Trust, to any shareholder of the Trust or to any other person, firm or
organization, for any act or omission in the course of, or connected with,
rendering services hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
LOOMIS SAYLES INVESTMENT TRUST,
on behalf of its
LOOMIS SAYLES Intermediate Fixed Income
Fund series
By: /s/ Daniel J. Fuss
------------------------------
Daniel J. Fuss
President
LOOMIS, SAYLES & COMPANY, L.P.
By: /s/ Mark W. Holland
------------------------------
Mark W. Holland
Vice President
A copy of the Agreement and Declaration of Trust establishing the Trust
is on file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the
Trust's Loomis Sayles Intermediate Fixed Income Series on behalf of the Trust by
officers of the Trust as officers and not individually and that the obligations
of or arising out of this Agreement are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon the assets and
property belonging to the Series.
