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LOOMIS SAYLES INVESTMENT TRUST
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A Family of Institutional Mutual Funds
ANNUAL REPORT
December 31, 1997
One Financial Center
Boston, Massachusetts 02111
(617) 482-2450
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LOOMIS SAYLES INVESTMENT TRUST
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[Photo of Daniel J. Fuss]
Daniel J. Fuss
President
DEAR SHAREHOLDERS:
You may recall our mid-year discussion; it's time for an update.
We spoke in June about the world being a peaceful place, providing a friendly
environment for investors of capital. We reviewed our global economy,
surrounded by an ocean of liquidity. We commented on central banks
contemplating their next monetary tactics, without the necessary political and
popular support to carry them through. And we gave a play-by-play on the
antics of mischievous hockey players, who add risk to the market by trying to
wrest incremental return. At the time, I was struck by the truth behind an old
Malaysian saying, "just because the river is quiet does not mean the
crocodiles have left."
In fact, the river turned out to be full of crocodiles. Not only have many of
them surfaced, they chased the hockey players and have been rather hard on
some of the slower moving ones.
The upset in Asia and the brief, but powerful, upset in Latin America forced
many of the hockey players off of the rink. The "yen/dollar carry trade"
effect moderated, but this basic arbitrage between very low interest rates in
Japan and higher rates in the dollar block countries, the United States,
Canada, New Zealand and Australia, continues to attract many investors. While
speculative in nature, this carry trade does lend considerable support to both
the stock and bond markets in North America. "Virtual hedging", where plans
are made to sell stocks when the market declines past a certain point,
apparently continues unabated. This could lead to trouble at some point; so
far, it has not.
Valuations are still relatively tight in the developed world, with not much
return premium being paid for uncertainty. The collapse of the Asian
currencies and markets has created tremendous undervaluation in emerging
markets and Yankee bonds, which are bonds issued by foreign governments, but
sold in the U.S. and denominated in dollars. Risks have escalated, along with
potential returns.
World economic growth prospects are not as encouraging as they were. The
currency and market turmoil is taking its toll. "Disinflation" is now the
optimistic word for product price trends. Thus, the inflationary pressure from
tighter labor markets in North America is being offset by lower product prices
worldwide. Except for Canada and a few minor adjustments in anticipation of
the European Monetary Union, we should not see any meaningful tightening by
central banks as long as the current uncertainty continues.
There is still ample liquidity to meet investment demands. Valuation levels on
U.S. equities seem high, particularly as earnings growth is likely to slow.
Yet lower bond yields provide powerful support and there are some good values
now available in some parts of the world.
Other than not getting too close to the river, as the crocodiles still lurk,
the current environment is still a good one for investing. However, a
heightened sense of caution is in order.
Thanks again for investing with us.
Sincerely,
[/s/ Daniel J. Fuss]
Daniel J. Fuss
President,
Loomis Sayles Investment Trust
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LOOMIS SAYLES CALIFORNIA
TAX-FREE INCOME FUND
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The Loomis Sayles California Tax-Free Income Fund had a solid 1997, returning
7.3%. For the same period, the Fund's benchmark, the Lipper California
Intermediate Municipal Bond Fund Index, was up 7.1%.
The Fund has shortened its average maturity during the year from 6.88 years to
5.68 years. The most attractive sector of the tax-exempt market during the
second half of 1997 was the premium callable securities, offering good yields
to the call dates in 2001-04. These secondary issues also enable the Fund to
maintain a good current yield.
The Fund ended 1997 with an average maturity of 5.68 years and an average
coupon rate of 5.81%. Quality remains high at Aa2 and less than one percent
cash on hand.
Looking into 1998 we would expect to lengthen the Fund's maturity modestly,
and with the flattening of the government yield curve, short and intermediate
corporate issues look attractive on an after-tax basis for the portfolio.
New issues of California tax-exempt securities increased during the fourth
quarter so that there were more offerings available and a better selection of
secondary inventory. In total, new issues of California tax-exempt securities
increased from $24.9 billion to $28 billion, a 12.45% increase, while the
national volume set a new money record and increased from $183.5 billion to
$220 billion, a 19.90% increase. This was less than 1992 and 1993, but those
years had large refundings in their totals. While municipals remained
relatively attractive when their taxable equivalent yields were considered,
real rates, which fell to 4.5% to 5%, were hard for investors to get excited
about, especially with equity markets in their third year of 20 plus percent
performance.
Robert K. Payne is the portfolio manager for the Loomis Sayles California Tax-
Free Income Fund.
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Cumulative Performance
Inception(a) to December 31, 1997
Average Annual Returns (%) - Periods Ended December 31, 1997
Since
1 year Inception
------ ---------
Loomis Sayles California Tax-Free Income Fund 7.3 6.3
Lipper California Intermediate Municipal Bond
Fund Index(b) 7.1 6.2
Lehman Brothers Municipal Bond Index(c) 9.2 7.7
Loomis Sayles Lipper California
California Intermediate Lehman Brothers
Tax-Free Municipal Municipal
Income Fund Bond Fund Index(b) Bond Index(c)
------------- ------------------ ---------------
As of 6/1/95 $10,000 $10,000 $10,000
Period Ended
6/30/95 9,930 9,920 9,910
9/30/95 10,190 10,200 10,200
12/31/95 10,490 10,490 10,620
3/31/96 10,470 10,430 10,490
6/30/96 10,520 10,480 10,570
9/30/96 10,690 10,670 10,810
12/31/96 10,930 10,890 11,090
3/31/97 10,920 10,880 11,060
6/30/97 11,220 11,180 11,450
9/30/97 11,490 11,480 11,790
12/31/97 11,710 11,690 12,110
Cumulative Performance
Registration(a) to December 31, 1997
Total Returns (%) - Period Ended December 31, 1997
Since
Registration
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Loomis Sayles California Tax-Free Income Fund 6.7
Lipper California Intermediate Municipal Bond
Fund Index(b) 7.3
Lehman Brothers Municipal Bond Index(c) 9.5
Loomis Sayles Lipper California
California Intermediate Lehman Brothers
Tax-Free Municipal Municipal
Income Fund Bond Fund Index(b) Bond Index(c)
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As of 3/7/97 $10,000 $10,000 $10,000
Period Ended
3/31/97 9,940 10,000 10,000
6/30/97 10,210 10,280 10,350
9/30/97 10,470 10,530 10,660
12/31/97 10,670 10,730 10,950
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles California Tax-Free Income Fund is June
1, 1995. Shares of the Fund were registered for offer and sale under the
Securities Act of 1933 on March 7, 1997. In accordance with SEC
regulations, performance information is provided for the period beginning
on March 7, 1997 ("Registration"). For the convenience of our long-term
shareholders, performance information is also provided for the period
beginning on June 1, 1995 ("Inception"). Since Lipper California
Intermediate Municipal Bond Fund Index & Lehman Brothers Municipal Bond
Index performance data is not available coincident with the registration
date, comparative performance is presented from March 31, 1997.
(b): Source: Lipper Analytical Services.
(c): Lehman Brothers Municipal Bond Index is computed from prices on
approximately 21,000 bonds consisting of roughly 30% revenue bonds, 30%
government obligation bonds, 27% insured and 13% prerefunded bonds. The
index returns have not been reduced for management and operating expenses
applicable to mutual fund investments. Source: Lehman Brothers.
LOOMIS SAYLES CORE FIXED INCOME FUND
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The Loomis Sayles Core Fixed Income Fund produced a return of 9.2% for
calendar year 1997. For the same time period, the Merrill Lynch Government/
Corporate Bond Index had a return of 9.8%.
The domestic bond market capped off a solid 1997 by extending its rally
through the end of the year. Yields were pushed lower as investors sought
safety from the financial crisis in Southeast Asia. Treasuries were the best
performers as mortgages felt the pressure of increased prepayment risk, and
corporate issues the sting of Asia's financial woes. Certain sectors of the
corporate market, such as Yankee bonds, suffered even more as the fallout from
South Korea's credit rating downgrade put pressure on the entire sector. By
year end, however, the market had begun to differentiate those issuers that
had been unfairly penalized and those with legitimate exposure. In addition to
avoiding the specific pain of owning foreign issuers, the Loomis Sayles Core
Fixed Income Fund found the higher quality, conservative nature of its
securities were better able to weather the general contagion that swept over
the U.S. bond market.
On the domestic front, we see the inflation outlook to be generally positive
and the economy to be in good shape. We believe these factors will continue to
provide solid support for fixed income securities and have positioned the
portfolio with a greater overall exposure to long maturities and a continued
overweighting in investment grade corporate issues. Yield spreads look
attractive and we expect to find excellent opportunities through our
fundamental credit research. We expect to be more selective in the mortgage
sector, however, as lower rates are likely to produce a refinancing wave.
Risks to our scenario include a resurgence of inflation or a deepening and
spreading of problems in Asia.
William F. Camp is the portfolio manager for the Loomis Sayles Core Fixed
Income Fund.
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Cumulative Performance
Inception(a) to December 31, 1997
Average Annual Returns (%) - Periods Ended December 31, 1997
Since
1 year Inception
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Loomis Sayles Core Fixed Income Fund 9.2 8.6
Lipper Corp. A Rated Bond Fund Index(b) 9.4 9.4
Merrill Lynch Government/Corporate Bond Index(c) 9.8 9.6
Loomis Sayles Lipper Corp. Merrill Lynch
Core Fixed A Rated Government/Corporate
Income Fund Bond Fund Index(b) Bond Index(c)
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As of 4/24/96 $10,000 $10,000 $10,000
Period Ended
6/30/96 10,060 10,020 10,040
9/30/96 10,210 10,200 10,210
12/31/96 10,530 10,530 10,530
3/31/97 10,440 10,440 10,450
6/30/97 10,800 10,820 10,820
9/30/97 11,160 11,270 11,260
12/31/97 10,500 11,590 11,610
Cumulative Performance
Registration(a) to December 31, 1997
Total Returns (%) - Period Ended December 31, 1997
Since
Registration
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Loomis Sayles Core Fixed Income Fund 9.1
Lipper Corp. A Rated Bond Fund Index(b) 10.4
Merrill Lynch Government/Corporate Bond Index(c) 10.7
Loomis Sayles Lipper Corp. Merrill Lynch
Core Fixed A Rated Government/Corporate
Income Fund Bond Fund Index(b) Bond Index(c)
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As of 3/7/97 $10,000 $10,000 $10,000
Period Ended
3/31/97 9,990 10,000 10,000
6/30/97 10,250 10,370 10,360
9/30/97 10,590 10,740 10,720
12/31/97 10,910 11,040 11,070
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles Core Fixed Income Fund is April 24,
1996. Shares of the Fund were registered for offer and sale under the
Securities Act of 1933 on March 7, 1997. In accordance with SEC
regulations, performance information is provided for the period beginning
on March 7, 1997 ("Registration"). For the convenience of our long-term
shareholders, performance information is also provided for the period
beginning on April 24, 1996 ("Inception"). Since Lipper Corporate A Rated
Bond Fund Index & Merrill Lynch Government/Corporate Bond Index performance
data is not available coincident with the inception and registration dates,
comparative performance is presented from April 30, 1996 and March 31,
1997, respectively.
(b): Source: Lipper Analytical Services.
(c): The Merrill Lynch Government/Corporate Bond Index is composed of all bonds
that are investment grade (rated Baa or higher by Moody's or BBB or higher
by S&P, if unrated by Moody's). Issues must have at least one year to
maturity. Total return comprises price appreciation/depreciation and income
as a percentage of the original investment. Indices are rebalanced monthly
by market capitalization. Source: Merrill Lynch.
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LOOMIS SAYLES CORE GROWTH FUND
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In October, fears of the impact of stronger competition and weaker demand from
Asia caused stocks, particularly in the technology sector, to sell off. In
November, the focus shifted more to the benefits of low inflation and
declining interest rates, and the market rallied strongly, paced by the giant
stable growth stocks which had been the leaders prior to last July. On the
down side, oil service stocks, which had been market leaders for two years,
began a steep descent as weakening Asian demand and an ill-timed move by Saudi
Arabia to boost output caused oil prices to decline. December showed no strong
direction, and the S&P 500 Index ended the quarter with a 2.9% gain. For the
same period the Loomis Sayles Core Growth Fund returned (4.0%).
The underperformance was once again concentrated in the Technology sector
where concerns about Asia (Teradyne and Lam Research), intensified competition
(Intel), and declining market share (Cabletron) were punished severely in the
market. On the plus side, our relatively aggressive shift into more defensive
issues such as Unilever, Bell South, and AT&T has paid off. While we have
moved to increase the average market capitalizations of our holdings, we
remain under weighted in the twenty largest names in the S&P 500 Index, and
this continued to impact performance adversely in the fourth quarter. Our
reluctance to weight these issues more heavily stems from the fact that as a
group they seem very fully valued relative to often fairly modest growth
prospects. We are also concerned that in many cases top line growth of these
companies has been much slower than earnings growth.
In response to this shift in the environment we have moved to a more defensive
posture. Transactions in the quarter resulted in a near elimination of oil
service and reduced exposure to other energy and technology. On the plus side,
weightings in regional and long distance telephone companies, financial
services, and consumer non-durables were increased. We believe these changes
have meaningfully reduced our exposure to repercussions from the Asian
developments while, at the same time, offering upside potential in their own
right.
Quentin P. Faulkner is the portfolio manager for the Loomis Sayles Core Growth
Fund.
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Cumulative Performance
Inception(a) to December 31, 1997
Average Annual Returns (%) - Periods Ended December 31, 1997
Since
1 year Inception
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Loomis Sayles Core Growth Fund 15.7 14.0
Lipper Growth Fund Index(b) 28.1 21.2
S&P 500 Index(c) 33.4 27.9
Loomis Sayles Lipper S&P
Core Growth 500
Growth Fund Fund Index(b) Index(c)
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As of 10/1/95 $10,000 $10,000 $10,000
Period Ended
12/31/95 10,040 10,240 10,600
3/31/96 10,210 10,700 11,170
6/30/96 10,530 11,060 11,670
9/30/96 10,820 11,370 12,030
12/31/96 11,610 12,030 13,040
3/31/97 11,880 11,990 13,390
6/30/97 13,140 13,890 15,720
9/30/97 13,040 15,550 16,900
12/31/97 13,430 15,410 17,390
Cumulative Performance
Registration(a) to December 31, 1997
Total Returns (%) - Period Ended December 31, 1997
Since
Registration
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Loomis Sayles Core Growth Fund 8.2
Lipper Growth Fund Index(b) 28.5
S&P 500 Index(c) 29.9
Loomis Sayles Lipper S&P
Core Growth 500
Growth Fund Fund Index(b) Index(c)
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As of 3/7/97 $10,000 $10,000 $10,000
Period Ended
3/31/97 9,580 10,000 10,000
6/30/97 10,590 11,580 11,750
9/30/97 11,270 12,770 12,630
12/31/97 10,820 12,850 12,990
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles Core Growth Fund is October 1, 1995.
Shares of the Fund were registered for offer and sale under the Securities
Act of 1933 on March 7, 1997. In accordance with SEC regulations,
performance information is provided for the period beginning on March 7,
1997 ("Registration"). For the convenience of our long-term shareholders,
performance information is also provided for the period beginning on
October 1, 1995 ("Inception"). Since Lipper Growth Fund Index & S&P 500
Index performance data is not available coincident with the registration
date, comparative performance is presented from March 31, 1997.
(b): Source: Lipper Analytical Services.
(c): S&P 500 Index is a capitalization-weighted, total return index comprised of
500 widely held common stocks, representing industrial, utility,
transportation, and financial companies traded on the New York Stock
Exchange, the American Stock Exchange and in the Over-the-Counter market.
The index returns have not been reduced for ongoing management and
operating expenses applicable to mutual fund investments.
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LOOMIS SAYLES FIXED INCOME FUND
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The bond market enjoyed a stellar year in 1997. Despite a surging domestic
economy and historically low unemployment, inflation remained relatively
benign throughout the year. Relative to its peers, the Loomis Sayles Fixed
Income Fund ranked in the top decile (10%) and remained comfortably ahead of
the benchmark Lehman Brothers Government/Corporate Bond Index throughout the
year, posting a twelve month return of 13.4%.
Higher quality corporate issues and longer Treasuries were among the strongest
performers in 1997. This was fueled in part by the Federal Reserve Bank's
decision to stand pat on interest rates for the latter part of the year, as
well as a flight to quality that occurred as a result of the Asian financial
crisis that rocked global markets in mid October. Interest rates declined
sharply across the board, particularly on the long end of the yield curve. The
bellwether 30-year Treasury yield began the year at 6.64%, rose slightly after
an interest rate hike in March, then fell steadily ending the year at 5.92%.
There was a stark contrast between the first and second halves of 1997 for
emerging market debt. What began as a promising year, ended with a thud as
several Southeast Asian countries had their sovereign debt rating downgraded
from investment grade to speculative status. Some bright spots included Latin
American debt such as Argentina and Brazilian Brady bonds, as well as select
Mexican credits. Structural reforms in Southeast Asia have helped in
stabilizing the region, and we believe, the prospects for growth remain
positive. Among corporate issues, industrials had a strong year, boosted by
the Cable/Media and Tobacco sectors.
Concerns of an impending tightening by the Federal Reserve have abated and the
emphasis appears to have shifted towards a more deflationary trend in global
markets. This bodes well for fixed income markets. We believe the Fund remains
well structured for the current environment offering good yield advantage,
call protection, and a moderate degree of international exposure.
Daniel J. Fuss is the portfolio manager for the Loomis Sayles Fixed Income
Fund.
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Cumulative Performance
Inception(a) to December 31, 1997
Average Annual Returns (%) - Periods Ended December 31, 1997
Since
1 year Inception
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Loomis Sayles Fixed Income Fund 13.4 16.9
Lipper BBB Rated Bond Fund Index(b) 9.9 10.9
Lehman Brothers Gov't./Corp. Bond Index(c) 9.8 10.0
Loomis Sayles Lipper Lehman Brothers
Fixed BBB Rated Gov't/Corp.
Income Fund Bond Fund Index(b) Bond Index(c)
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As of 1/17/95 $10,000 $10,000 $10,000
Period Ended
3/31/95 10,500 10,310 10,300
6/30/95 11,550 11,030 10,970
9/30/95 12,100 11,300 11,180
12/31/95 12,740 11,830 11,700
3/31/96 12,560 11,590 11,430
6/30/96 12,720 11,630 11,480
9/30/96 13,270 11,890 11,680
12/31/96 13,980 12,310 12,040
3/31/97 14,060 12,220 11,940
6/30/97 14,870 12,720 12,370
9/30/97 15,700 13,080 12,800
12/31/97 15,860 13,410 13,210
Cumulative Performance
Registration(a) to December 31, 1997
Total Returns (%) - Period Ended December 31, 1997
Since
Registration
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Loomis Sayles Fixed Income Fund 11.7
Lipper BBB Rated Bond Fund Index(b) 10.7
Lehman Brothers Gov't./Corp. Bond Index(c) 10.7
Loomis Sayles Lipper Lehman Brothers
Fixed BBB Rated Gov't/Corp.
Income Fund Bond Fund Index(b) Bond Index(c)
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As of 3/7/97 $10,000 $10,000 $10,000
Period Ended
3/31/97 9,910 10,000 10,000
6/30/97 10,480 10,410 10,360
9/30/97 11,060 10,800 10,730
12/31/97 11,170 11,070 11,070
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles Fixed Income Fund is January 17, 1995.
Shares of the Fund were registered for offer and sale under the Securities
Act of 1933 on March 7, 1997. In accordance with SEC regulations,
performance information is provided for the period beginning on March 7,
1997 ("Registration"). For the convenience of our long-term shareholders,
performance information is also provided for the period beginning on
January 17, 1995 ("Inception"). Since Lipper BBB Rated Bond Fund Index &
Lehman Brothers Government/ Corporate Bond Index performance data is not
available coincident with the inception and registration dates, comparative
performance is presented from January 31, 1995 and March 31, 1997,
respectively.
(b): Source: Lipper Analytical Services.
(c): Lehman Brothers Government/Corporate Bond Index is a composite of
approximately 5,300 corporate and government issues with at least $100
million outstanding for government issues and $25 million for corporates,
and greater than 1 year maturity. The index returns have not been lowered
for ongoing management and operating expenses applicable to mutual fund
investments. Source: Lehman Brothers.
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LOOMIS SAYLES HIGH YIELD FIXED INCOME FUND
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The high yield market enjoyed its third consecutive year of solid returns.
Despite a record amount of new issuance, demand for high yield issues
continued to be strong throughout 1997. Defaults remained low and yield
spreads narrowed considerably from the beginning of the year. Relative to its
peers, the Loomis Sayles High Yield Fixed Income Fund ranked in the fourth
quartile for the year, stumbling in the last quarter. The Fund under performed
the benchmark, the Merrill Lynch High Yield Bond Index, posting an 8.8% return
for the year.
Within the domestic high yield market, telecommunications/cable issues were
clear outperformers for the year. Allocation to these issues, Rogers
Cablesystems, Nextel Communications, Century Communications, and other well
known corporate issues such as Kmart and Westinghouse, added significant
value to the portfolio over the year. The utility sector also performed well
in 1997 and the Fund benefited from its modest holdings in preferred issues.
Allocation to convertible bonds (24.1% of the portfolio as of 12/31/97)
hampered performance in the last quarter, due to increased volatility in the
equity markets. The Fund's exposure to Yankee issues proved to be a drag on
performance as the Asian financial markets became derailed in late October and
it became apparent that a quick turnaround would be unlikely.
As of 12/31/97, the Fund was diversified across 102 issues, with a
concentration in Yankee issues and the industrial sectors. Despite the most
recent market setback leading to price deterioration in Southeast Asia, and to
a lesser extent in other emerging market issues, we believe the long term
outlook for these positions is positive. The possibility of a Federal Reserve
interest rate cut in 1998 bodes well for the high yield market. As rates move
lower we believe there should be continued demand for higher yielding
securities.
We will continue to look for attractive investment opportunities both
domestically and overseas to maintain the diversity of the Fund while seeking
to maximize total return.
Daniel J. Fuss is the portfolio manager for the Loomis Sayles High Yield Fixed
Income Fund.
<PAGE>
Cumulative Performance
Inception(a) to December 31, 1997
Average Annual Returns (%) - Periods Ended December 31, 1997
Since
1 year Inception
------ ---------
Loomis Sayles High Yield Fixed Income Fund 8.8 10.6
Lipper High Yield Bond Fund Index(b) 12.9 14.2
Merrill Lynch High Yield Bond Index(c) 12.8 14.1
Loomis Sayles
High Yield Lipper Merrill Lynch
Fixed High Yield High Yield
Income Fund Bond Fund Index(b) Bond Index(c)
------------- ------------------ -------------
As of 6/5/96 $10,000 $10,000 $10,000
Period Ended
6/30/96 10,030 10,010 10,060
9/30/96 10,380 10,470 10,450
12/31/96 10,760 10,820 10,860
3/31/97 10,550 11,860 10,980
6/30/97 11,220 11,430 11,500
9/30/97 12,130 12,070 11,880
12/31/97 11,720 12,250 12,190
Cumulative Performance
Registration(a) to December 31, 1997
Total Returns (%) - Period Ended December 31, 1997
Since
Registration
------------
Loomis Sayles High Yield Fixed Income Fund 9.6
Lipper High Yield Bond Fund Index(b) 12.5
Merrill Lynch High Yield Bond Index(c) 11.7
Loomis Sayles
High Yield Lipper Merrill Lynch
Fixed High Yield High Yield
Income Fund Bond Fund Index(b) Bond Index(c)
------------- ------------------ -------------
As of 3/7/97 $10,000 $10,000 $10,000
Period Ended
3/31/97 9,870 10,000 10,000
6/30/97 10,490 10,520 10,480
9/30/97 11,350 11,080 10,890
12/31/97 10,960 11,250 11,170
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles High Yield Fixed Income Fund is June 5,
1996. Shares of the Fund were registered for offer and sale under the
Securities Act of 1933 on March 7, 1997. In accordance with SEC
regulations, performance information is provided for the period beginning
on March 7, 1997 ("Registration"). For the convenience of our long-term
shareholders, performance information is also provided for the period
beginning on June 5, 1996 ("Inception"). Since Lipper High Yield Bond Fund
Index & Merrill Lynch High Yield Bond Index performance data is not
available coincident with the inception and registration dates, comparative
performance is presented from June 30, 1996 and March 31, 1997,
respectively.
(b): Source: Lipper Analytical Services.
(c): The Merrill Lynch High Yield Bond Index consists of issues in the form of
publicly placed non-convertible, coupon-bearing U.S. domestic debt and must
carry a term to maturity of at least one year. Par amounts outstanding must
be no less than $10 million at the start and at the close of the
performance measurement period. Issues must be rated by Standard & Poor's
or by Moody's as less than investment grade (i.e., BBB or Baa) but not in
default (i.e., DD1 or less). The index excludes floating rate debt
equipment trust certificates and Title 11 securities. Source: Merrill
Lynch.
<PAGE>
LOOMIS SAYLES INVESTMENT GRADE FIXED
INCOME FUND
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Although 1997 may long be remembered for the Asian Flu that spread through
global financial markets in late October, we should not lose sight of the fact
that 1997 was a banner year across the board for fixed income markets. The
economy enjoyed the best of both worlds with strong growth, high consumer
demand and very few signs of inflationary pressures. In addition, we also
experienced historically low unemployment. All of this boded well for the
investment grade market which received an additional boost from the flight to
quality that took place following volatility in Southeast Asia.
The Loomis Sayles Investment Grade Fixed Income Fund returned 10.6% for the
year. Over the past three years it has an annualized return of 16.9%, ranking
it second among its peers in the Lipper BBB Rated Bond Fund category. The
Fund's allocation to long Treasuries contributed to its success as yields
declined considerably throughout the year, particularly on the long end of the
yield curve. Among corporate issues, industrials led the way boosted by the
strong performance of the Cable/Media and Tobacco sectors. Yankee issues
slightly under performed in 1997. This underperformance can be attributed to
the uncertainty in Southeast Asia and the subsequent action taken by Moody's
and S&P, downgrading the sovereign debt ratings of Korea, Indonesia, and
Thailand to speculative grade status.
The fears of inflation that persisted throughout 1997 have quickly abated and
discussions have now turned to the possible deflationary effect that might
occur as a result of the turmoil in Southeast Asia and the continued strength
of the U.S. dollar. The Fund's quality profile remains higher than normal as
we wait to see how the situation abroad plays out. While we do not attempt to
place bets on the future direction of interest rates, the Fund's strategy
continues to focus on long, call protected bonds offering good yield
advantage.
Daniel J. Fuss is the portfolio manager for the Loomis Sayles Investment Grade
Fixed Income Fund.
<PAGE>
Cumulative Performance
Inception(a) to December 31, 1997
Average Annual Returns (%) - Periods Ended December 31, 1997
Since
1 year 3 years Inception
------ ------- ---------
Loomis Sayles Investment Grade Fixed Income Fund 10.6 16.9 14.2
Lipper BBB Rated Bond Fund Index(b) 9.9 11.2 9.7
Lehman Brothers Gov't./Corp. Bond Index(c) 9.8 10.4 9.2
Loomis Sayles
Investment Lehman
Grade Lipper Brothers
Fixed BBB Rated Gov't./Corp.
Income Fund Bond Fund Index(b) Bond Index(c)
------------- ------------------ -------------
As of 7/1/94 $10,000 $10,000 $10,000
Period Ended
9/30/94 10,080 10,070 10,050
12/31/94 9,970 10,060 10,090
3/31/95 10,750 10,540 10,590
6/30/95 11,820 11,280 11,280
9/30/95 12,270 11,550 11,490
12/31/95 12,990 12,090 12,030
3/31/96 12,910 11,840 11,750
6/30/96 13,070 11,890 11,800
9/30/96 13,600 11,150 12,010
12/31/96 14,400 12,590 12,380
3/31/97 14,230 12,490 12,270
6/30/97 14,960 12,990 12,710
9/30/97 15,680 13,360 13,160
12/31/97 15,930 13,700 13,580
Cumulative Performance
Registration(a) to December 31, 1997
Total Returns (%) - Period Ended December 31, 1997
Since
Registration
------------
Loomis Sayles Investment Grade Fixed Income Fund 10.1
Lipper BBB Rated Bond Fund Index(b) 10.7
Lehman Brothers Gov't./Corp. Bond Index(c) 10.7
Loomis Sayles
Investment Lehman
Grade Lipper Brothers
Fixed BBB Rated Gov't./Corp.
Income Fund Bond Fund Index(b) Bond Index(c)
------------- ------------------ -------------
As of 3/7/97 $10,000 $10,000 $10,000
Period Ended
3/31/97 9,840 10,000 10,000
6/30/97 10,340 10,410 10,360
9/30/97 10,840 10,800 10,730
12/31/97 11,010 11,070 11,070
Note: Past performance is not predictive of future performance.
(a): Inception date of the Loomis Sayles Investment Grade Fixed Income
Fund is July 1, 1994. Shares of the Fund were registered for offer
and sale under the Securities Act of 1933 on March 7, 1997. In
accordance with SEC regulations, performance information is provided
for the period beginning on March 7, 1997 ("Registration"). For the
convenience of our long-term shareholders, performance information
is also provided for the period beginning on July 1, 1994
("Inception"). Since Lipper BBB Rated Bond Fund Index & Lehman
Brothers Government/Corporate Bond Index performance data is not
available coincident with the registration date, comparative
performance is presented from March 31, 1997.
(b): Source: Lipper Analytical Services.
(c): Lehman Brothers Government/Corporate Bond Index is a composite of
approximately 5,300 corporate and government issues with at least
$100 million outstanding for government issues and $25 million for
corporate, and greater than 1 year maturity. The index returns have
not been lowered for ongoing management and operating expenses
applicable to mutual fund investments. Source: Lehman Brothers.
<PAGE>
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<PAGE>
<TABLE>
LOOMIS SAYLES INVESTMENT TRUST
- -------------------------------------------------------------------------------------------------------
LOOMIS SAYLES CALIFORNIA TAX-FREE INCOME FUND
Portfolio of Investments -- as of December 31, 1997
<CAPTION>
Face
Amount Value (a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Bonds And Notes -- 3.0% of Total Net Assets
Federal Home Loan Mortgage Corp., 8.060%, 7/10/06 ........... $ 500,000 $ 505,390
-----------
TOTAL BONDS AND NOTES (Identified Cost $505,000)............. 505,390
-----------
Municipal Bonds And Notes -- 95.1% of Total Net Assets
Anaheim, California, Public Financing Authority Revenue, 2nd
Series, (FGIC Insured), 5.375%, 10/01/08 .................. 95,000 99,361
California Health Facilities Authority, Series A,
6.750%, 10/01/19 .......................................... 500,000 529,090
California Housing Finance Agency, (MBIA Insured),
5.200%, 8/01/05 ........................................... 245,000 258,174
California Housing Finance Agency, (MBIA Insured),
5.500%, 8/01/17 ........................................... 500,000 516,045
California Housing Finance Agency, (MBIA Insured),
5.850%, 8/01/09 ........................................... 300,000 322,275
California Pollution Control, 5.000%, 4/01/08 ............... 425,000 441,362
California Pollution Control, 5.900%, 6/01/14 ............... 400,000 443,252
California Pollution Control, 6.850%, 12/01/08 .............. 100,000 105,916
California Resource Efficiency Financing, First Resource
Efficiency, (AMBAC Insured), 5.400%, 7/01/04 .............. 150,000 159,588
California State Department Water Resources Systems,
6.000%, 12/01/11 .......................................... 500,000 504,720
California State General Obligation, 5.500%, 6/01/01 ........ 500,000 521,515
California State General Obligation, 6.000%, 10/01/14 ....... 250,000 266,782
California State General Obligation, (FGIC Insured),
5.750%, 8/01/09 ........................................... 95,000 102,702
California State Public Works Board, Community College,
5.200%, 3/01/06 ........................................... 200,000 208,648
California State Public Works Board, Community College,
5.200%, 4/01/07 ........................................... 500,000 520,940
California State Public Works Lease, 5.400%, 4/01/04 ........ 200,000 211,210
California State Water Resources Development,
5.000%, 3/01/01 ........................................... 200,000 200,986
Clovis, California, Unified School District, (FGIC Insured),
Zero Coupon Bond, 8/01/04 ................................. 200,000 151,080
Clovis, California, Unified School District, (FGIC Insured),
10.625%, 8/01/03 .......................................... 200,000 262,496
Corona, California, Single Family, 5.500%, 11/01/10 ......... 400,000 420,312
East Bay California Municipal Utility Water Systems,
6.000%, 6/01/12 ........................................... 500,000 537,430
Los Angeles State Building Authority, Lease Revenue,
5.375%, 5/01/06 ........................................... 300,000 316,800
Los Angeles, California, Wastewater Systems, (FGIC Insured),
5.375%, 11/01/07 .......................................... 450,000 478,170
Los Angeles, California, Water and Power Waterworks Revenue,
6.500%, 11/01/10 .......................................... 350,000 377,622
Mid-Peninsula, California, Regional Open Space,
5.500%, 9/01/07 ........................................... 100,000 103,594
Northern California Power Agency, Public Revenue,
5.250%, 7/01/02 ........................................... 250,000 256,715
Oceanside, California, Water Systems, (AMBAC Insured),
5.650%, 8/01/09 ........................................... 125,000 132,738
Orange County, California, Local Transportation Authority,
5.700%, 2/15/03 ........................................... 125,000 133,081
Riverside, California, Electric Revenue, 4.800%, 10/01/04 ... 100,000 102,883
Riverside, California, Electric Revenue, (MBIA Insured),
5.200%, 10/01/08 .......................................... 230,000 238,593
Sacramento, California, Electric Revenue, 5.250%, 5/15/04 ... 250,000 261,348
Sacramento, California, Power Authority, 6.000%, 7/01/02 .... 500,000 531,200
San Diego, California, Open Space Park Facility, District
One, 5.750%, 1/01/08 ...................................... 250,000 268,527
San Diego, California, Sewer Revenue, (AMBAC Insured),
4.750%, 5/15/06 ........................................... 125,000 127,561
San Diego, California, Unified School District,
6.000%, 7/01/03 ........................................... 100,000 108,765
San Francisco Bay Area Rapid Transit Authority, (FGIC
Insured), 5.450%, 7/01/08 ................................. 200,000 213,028
San Francisco, California, City & County International
Airport Revenue, (AMBAC Insured), 6.200%, 5/01/04 ......... 300,000 328,845
San Francisco, California, City & County Library Facilities,
6.200%, 6/15/08 ........................................... 300,000 320,646
San Francisco, California, City & County Library Facilities,
Series D, 6.100%, 6/15/07 ................................. 250,000 266,628
San Francisco, California, City & County Public Utility Water
Revenue, Series A, 6.375%, 11/01/06 ....................... 500,000 554,525
San Francisco, California, City & County Redevelopment
Project, Series B, 5.200%, 8/01/08 ........................ 250,000 255,385
San Francisco, California, Port Commission, 5.500%, 7/01/04 . 100,000 104,872
San Francisco, California, Public Utilities,
6.000%, 11/01/15 .......................................... 500,000 521,815
San Francisco, California, Sewer Revenue, (AMBAC Insured),
6.000%, 10/01/11 .......................................... 500,000 536,880
San Francisco, California, State Building Authority,
5.000%, 10/01/05 .......................................... 125,000 129,376
San Francisco, California, State Building Authority,
5.125%, 10/01/07 .......................................... 250,000 259,478
San Jose, California, Airport Revenue, (FGIC Insured),
5.875%, 3/01/07 ........................................... 200,000 222,562
Santa Clara Valley, California, Water District Refunding &
Improvements, Series A, (FGIC Insured),5.800%, 2/01/08 .... 100,000 107,681
Santa Clara, California, Electric Revenue, (FGIC Insured),
6.250%, 7/01/13 ........................................... 250,000 267,912
Turlock, California, Irrigation District Revenue,
5.750%, 1/01/18 ........................................... 500,000 516,500
University of California Revenue, Series B, 5.800%, 9/01/07 . 415,000 446,706
University of California Revenue, Series B, 6.500%, 9/01/03 . 300,000 332,094
University of California Revenue, Series C, 5.000%, 9/01/08 . 175,000 179,811
University of California Revenue, Series C, (AMBAC Insured),
4.700%, 9/01/06 ........................................... 200,000 204,254
-----------
TOTAL MUNICIPAL BONDS AND NOTES (Identified Cost $15,449,915) 15,990,479
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST $15,954,915) (b)....... $16,495,869
===========
(a) See Note 1.
(b) At December 31, 1997, the net unrealized appreciation on investments based on cost of
$15,954,915 for federal income tax purposes was as follows: Aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an excess of tax cost over
value were $547,324 and $6,370, respectively, resulting in net unrealized appreciation of
$540,954.
</TABLE>
Key to Abbreviations:
AMBAC: American Municipal Bond Assurance Corporation
FGIC: Federal Guaranty Insurance Corporation
MBIA: Municipal Bond Insurance Association
Largest Holdings by Municipal Classification at December 31, 1997
as a Percentage of Total Net Assets
Revenue 17.4%
General Obligation 17.4%
Water & Sewer 16.2%
Education 10.6%
Electric & Gas 9.9%
Utilities - Other 4.7%
Public Works 4.6%
Health/Hospital 3.1%
Correctional Facilities 3.1%
Government Agencies 3.0%
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
LOOMIS SAYLES CORE FIXED INCOME FUND
Portfolio of Investments -- as of December 31, 1997
<CAPTION>
Face
Amount Value (a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Bonds and Notes -- 96.9% of Total Net Assets
Aerospace -- 1.6%
Lockheed Corp., 9.000%, 1/15/22 ............................. $ 201,000 $ 249,455
-----------
Banking & Finance -- 6.0%
Capital One Bank, 5.950%, 2/15/01 ........................... 250,000 247,217
Chase Manhattan Corp., 7.625%, 1/15/03 ...................... 200,000 211,098
First America Bank Corp., 7.750%, 7/15/04 ................... 150,000 159,974
NCNB Corp., 9.125%, 10/15/01 ................................ 100,000 109,439
Standard Federal Bank, 7.750%, 7/17/06 ...................... 220,000 237,134
-----------
964,862
-----------
Computers -- 2.4%
Seagate Technology, Inc., 7.125%, 3/01/04 ................... 122,000 122,970
Seagate Technology, Inc., 7.370%, 3/01/07 ................... 265,000 268,946
-----------
391,916
---------------
Diversified Operations -- 1.7%
Norfolk Southern Corp., 7.800%, 5/15/27 ..................... 250,000 281,010
-----------
Electronics -- 1.0%
Philips Electronics NV, 8.375%, 9/15/06 ..................... 140,000 155,302
-----------
Entertainment -- 2.2%
Time Warner Entertainment Co., Inc., 7.250%, 9/01/08 ........ 350,000 361,928
-----------
Financial -- 7.7%
A T & T Capital Corp., 6.390%, 1/22/99 ...................... 225,000 225,968
Advanta Corp., 7.000%, 5/01/01 .............................. 100,000 97,080
Ford Motor Credit Co., 8.000%, 6/15/02 ...................... 350,000 372,830
General Motors Acceptance Corp., 5.625%, 2/15/01 ............ 27,000 26,617
General Motors Acceptance Corp., 6.800%, 4/17/01 ............ 200,000 203,200
General Motors Acceptance Corp., 7.125%, 5/01/01 ............ 225,000 230,785
USL Capital Corp., 7.050%, 5/14/01 .......................... 75,000 77,017
-----------
1,233,497
-----------
Food -- Packaged & Miscellaneous -- 1.6%
ConAgra, Inc., 9.750%, 3/01/21 .............................. 200,000 261,828
-----------
Government Agencies -- 6.8%
Federal Home Loan Mortgage Corp., 6.500%, 1/01/27 ........... 122,721 121,532
Federal Home Loan Mortgage Corp., 7.000%, 1/01/12 ........... 113,370 115,306
Federal Home Loan Mortgage Corp., 8.000%, 12/01/26 .......... 111,747 115,710
Federal National Mortgage Association, 7.500%, 1/01/27 ...... 212,624 217,740
Federal National Mortgage Association, 9.500%, 11/01/10 ..... 64,553 68,058
Government National Mortgage Association, 6.500%, 4/15/26 ... 143,797 142,312
Government National Mortgage Association, 8.500%, 4/15/23 ... 135,132 143,535
Government National Mortgage Association, 9.500%, 9/15/20 ... 164,006 177,781
-----------
1,101,974
-----------
Health Care -- Services -- 1.2%
Columbia Healthcare Corp., 6.125%, 12/15/00 ................. 200,000 195,432
-----------
Holding Companies -- Diversified -- 1.5%
ITT Corp., 7.400%, 11/15/25 ................................. 225,000 236,050
-----------
Oil & Gas -- 3.2%
Columbia Gas Systems, Inc., 7.050%, 11/28/07 ................ 257,000 262,523
Saga Petroleum ASA, 7.250%, 9/23/27 ......................... 250,000 260,002
-----------
522,525
-----------
Paper Products -- 2.2%
Boise Cascade Corp., 9.800%, 4/15/03 ........................ 200,000 230,216
Boise Cascade Corp., 9.980%, 3/27/03 ........................ 100,000 115,793
-----------
346,009
-----------
Real Estate Investment Trusts -- 1.6%
Developers Diversified Realty, 6.800%, 7/23/02 .............. 125,000 126,332
Meditrust Corp., 7.375%, 7/15/00 ............................ 125,000 127,544
-----------
253,876
-----------
Securities -- 3.1%
Lehman Brothers Holdings, Inc., 6.125%, 2/01/01 ............. 258,000 256,098
Salomon, Inc., 6.650%, 7/15/01 .............................. 245,000 247,590
-----------
503,688
-----------
U.S. Government -- 49.9%
U.S. Treasury Bonds, 7.250%, 5/15/16 .......................... 1,970,000 2,243,948
U.S. Treasury Notes, 6.375%, 7/15/99 ........................ 1,670,000 1,687,485
U.S. Treasury Notes, 6.375%, 8/15/02 ........................ 1,275,000 1,307,870
U.S. Treasury Notes, 6.500%, 8/15/05 ........................ 600,000 626,064
U.S. Treasury Notes, 7.250%, 8/15/04 ........................ 2,005,000 2,166,964
-----------
8,032,331
-----------
Utilities -- 3.2%
Commonwealth Edison Co., 7.375%, 1/15/04 .................... 210,000 217,858
Gulf States Utilities Co., 6.410%, 8/01/01 .................. 160,000 159,675
System Energy, Inc., 7.280%, 8/01/99 ........................ 140,000 140,798
-----------
518,331
-----------
TOTAL BONDS AND NOTES (Identified Cost $15,263,841).......... 15,610,014
-----------
Short-Term Investment -- 1.0% of Total Net Assets
Repurchase Agreement with State Street Bank and Trust Co.,
dated 12/31/97 at 5.000% to be repurchased at $154,043 on
1/02/98 collateralized by $155,000 U.S. Treasury Note,
5.875%, due 1/31/99 with a value of $159,052 .............. $154,000 $ 154,000
-----------
TOTAL SHORT-TERM INVESTMENT (Identified Cost $154,000) ...... 154,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST $15,417,841) (b) ...... $15,764,014
===========
(a) See Note 1.
(b) At December 31, 1997, the net unrealized appreciation on investments based on cost of
$15,418,357 for federal income tax purposes was as follows: Aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an excess of tax cost over
value were $353,272 and $7,615, respectively, resulting in net unrealized appreciation of
$345,657.
Common Stocks -- 95.3% of Total Net Assets
Aerospace -- 2.6%
Boeing Co. .................................................. 20,850 $ 1,020,347
-----------
Auto & Related -- 2.6%
Chrysler Corp. .............................................. 28,700 1,009,881
-----------
Banks/Savings & Loans -- 5.0%
BankBoston Corp. ............................................ 13,900 1,305,731
Star Banc Corp. ............................................. 10,900 625,388
-----------
1,931,119
-----------
Broadcasting -- 2.6%
CBS Corp. ................................................... 33,700 992,044
-----------
Business Services -- 2.2%
Manpower, Inc. .............................................. 24,000 846,000
-----------
Chemicals -- Specialty -- 2.6%
Monsanto Co. ................................................ 24,000 1,008,000
-----------
Communications Equipment -- 1.5%
Tellabs, Inc. (b) ........................................... 11,000 581,625
-----------
Computer Hardware -- 6.1%
EMC Corp. (b) ............................................... 26,400 724,350
International Business Machines Corp. ....................... 15,600 1,631,175
-----------
2,355,525
-----------
Electrical Equipment -- 2.2%
Rockwell International Corp. (New) .......................... 16,300 851,675
-----------
Electronic Components -- 2.3%
Analog Devices, Inc. (b) .................................... 31,711 877,998
-----------
Entertainment -- 2.8%
Time Warner, Inc. ........................................... 17,500 1,085,000
-----------
Financial Services -- 5.9%
Federal National Mortgage Association ....................... 20,700 1,181,194
Household International, Inc. ............................... 8,600 1,097,037
-----------
2,278,231
-----------
Food -- Packaged & Miscellaneous -- 5.3%
Heinz (H.J.) Co. ............................................ 18,300 929,869
Unilever NV ................................................. 18,000 1,123,875
-----------
2,053,744
-----------
Freight Transportation -- 2.6%
Burlington Northern Santa Fe Corp. .......................... 10,600 985,138
-----------
Health Care -- Drugs -- 8.7%
Pfizer, Inc. ................................................ 17,100 1,275,019
Schering-Plough Corp. ....................................... 15,900 987,787
Warner Lambert Co. .......................................... 8,800 1,091,200
-----------
3,354,006
-----------
Health Care -- Medical Technology -- 2.8%
Medtronic, Inc. ............................................. 20,600 1,077,637
-----------
Insurance -- 6.3%
American International Group, Inc. .......................... 8,800 957,000
Travelers, Inc. ............................................. 27,099 1,459,959
-----------
2,416,959
-----------
Manufacturing -- 2.6%
Minnesota Mining & Manufacturing Co. ........................ 12,300 1,009,369
-----------
Oil & Gas Exploration -- 2.7%
Abacan Resources Corp. (New) (b) ............................ 106,700 166,719
Burlington Resources, Inc. .................................. 12,100 542,231
Ranger Oil Ltd. ............................................. 50,300 345,813
-----------
1,054,763
-----------
Oil -- Drilling Equipment -- 2.3%
Schlumberger Ltd. ........................................... 10,900 877,450
-----------
Oil -- Major Integrated -- 2.4%
USX Marathon Group .......................................... 27,900 941,625
-----------
Retail -- Food & Drug -- 3.9%
CVS Corp. ................................................... 23,300 1,492,656
-----------
Retail -- General -- 2.2%
Dillard's, Inc. ............................................. 23,700 835,425
-----------
Retail -- Specialty -- 2.2%
Circuit City Stores, Inc. ................................... 23,300 828,606
-----------
Telecommunications -- 11.1%
AT&T Corp. .................................................. 19,000 1,163,750
Bell Atlantic Corp. ......................................... 12,600 1,146,600
BellSouth Corp. ............................................. 20,200 1,137,512
Worldcom, Inc. (b) .......................................... 27,900 843,975
-----------
4,291,837
-----------
Textile & Apparel -- 1.8%
Liz Claiborne, Inc. ......................................... 16,300 681,544
-----------
TOTAL COMMON STOCKS (Identified Cost $33,201,092) ........... 36,738,204
-----------
Short-Term Investment -- 7.1% of Total Net Assets
Repurchase Agreement with State Street Bank and Trust Co.,
dated 12/31/97 at 5.000% to be repurchased at $2,744,762
on 1/02/98 collateralized by $2,730,000 U.S. Treasury
Note, 5.875%, due 1/31/99 with a value of $2,801,376 .... $2,744,000 $ 2,744,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $2,744,000)............................. 2,744,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST $35,945,092) (c)..... $39,482,204
===========
(a) See Note 1.
(b) Non-income producing security.
(c) At December 31, 1997, the net unrealized appreciation on investments based on cost of
$35,946,518 for federal income tax purposes was as follows: Aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an excess of tax cost over
value were $4,859,065 and $1,323,379, respectively, resulting in net unrealized appreciation of
$3,535,686.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- --------------------------------------------------------------------------------
<TABLE>
LOOMIS SAYLES FIXED INCOME FUND
Portfolio of Investments -- as of December 31, 1997
<CAPTION>
Face
Amount Value (a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds And Notes -- 89.9% of Total Net Assets
NON CONVERTIBLE BONDS -- 80.7%
Canadian -- 19.2%
Canadian Government, Zero Coupon Bond, 6/01/22 ......... CAD 2,500,000 $ 407,635
Canadian Government, Zero Coupon Bond, 6/01/25 ......... CAD 61,460,000 8,424,112
Province of Alberta, 5.930%, 9/16/16 ................... CAD 1,200,000 846,688
Province of British Columbia, Zero Coupon Bond,
8/23/13 .............................................. CAD 11,700,000 3,107,883
Province of British Columbia, Zero Coupon Bond,
9/08/23 .............................................. CAD 3,300,000 472,214
Province of British Columbia, Zero Coupon Bond,
8/23/24 .............................................. CAD 8,500,000 1,134,880
Province of British Columbia, Zero Coupon Bond,
11/19/27 ............................................. CAD 8,150,000 899,548
Province of British Columbia, 8.000%, 9/08/23 .......... CAD 3,300,000 2,832,497
Province of Manitoba, 6.500%, 9/22/17 .................. CAD 5,075,000 3,716,801
Province of Manitoba, 7.750%, 12/22/25 ................. CAD 5,295,000 4,487,254
Province of Ontario, Zero Coupon Bond, 7/13/22 ......... CAD 12,200,000 1,817,664
Province of Saskatchewan, Zero Coupon Bond,
4/10/14 .............................................. CAD 5,000,000 1,276,023
Province of Saskatchewan, 8.750%, 5/30/25 .............. CAD 1,950,000 1,807,337
Province of Saskatchewan (Certificate of Deposit),
Zero Coupon Bond, 2/04/22 ............................ CAD 10,000,000 1,549,981
Province of Saskatchewan (Certificate of Deposit),
Zero Coupon Bond, 5/30/25 ............................ CAD 2,425,000 304,599
Rogers Cablesystems Ltd., 9.650%, 1/15/14 .............. CAD 250,000 188,937
-----------
33,274,053
-----------
Communications -- 0.6%
Arch Communications Group, Inc., Zero Coupon Bond,
3/15/08 (step to 10.875% on 3/15/01) (b) ........... 1,600,000 984,000
-----------
Computers -- 1.5%
Apple Computer, Inc., 6.500%, 2/15/04 ................ 1,325,000 1,099,750
Digital Equipment Corp., 7.750%, 4/01/23 ............. 1,500,000 1,508,670
Streamlogic Corp., 14.000%, 10/07/98 (c) (d) ......... 28,333 8,500
-----------
2,616,920
-----------
Electronics -- 0.3%
Westinghouse Electric Corp., 7.875%, 9/01/23 ......... 500,000 500,955
-----------
Entertainment -- 3.5%
Time Warner Entertainment Co., 7.570%, 2/01/24 ....... 3,125,000 3,269,219
Time Warner Entertainment Co., 8.050%, 1/15/16 ....... 2,550,000 2,754,408
-----------
6,023,627
-----------
Food & Beverage -- 0.9%
Borden, Inc., 7.875%, 2/15/23 ........................ 1,500,000 1,509,270
-----------
Foreign Government/Agency -- 8.2%
Escom, 11.000%, 6/01/08 .............................. ZAR 2,500,000 433,345
Petroleos Mexicanos, 9.500%, 9/15/27 ................. USD 1,350,000 1,326,375
Petroleos Mexicanos, Medium Term,
8.625%, 12/01/23 (e) ............................... USD 250,000 235,000
Republic of Argentina, 9.750%, 9/19/27 ............... USD 500,000 478,000
Republic of Brazil, 10.125%, 5/15/27 ................. USD 4,277,000 4,009,688
Republic of Brazil C Bond, 8.000%, 4/15/14 (f) ....... USD 5,045,651 3,960,836
Republic of South Africa, 12.000%, 2/28/05 ........... ZAR 10,500,000 1,992,359
Republic of South Africa, 12.500%, 12/21/06 .......... ZAR 2,500,000 477,499
Republic of Venezuela, 9.250%, 9/15/27 ............... USD 1,500,000 1,337,250
-----------
14,250,352
-----------
Foreign Issuer -- 6.8%
Bangko Sentral Pilipinas, 8.600%, 6/15/27 ............ 1,250,000 996,750
Bangkok Bank Public Co. Ltd., 8.375%, 1/15/27 (e) .... 2,600,000 1,638,000
Export Import Bank of Korea, 6.375%, 2/15/06 ......... 500,000 380,000
Korea Electric Power Corp., 6.750%, 8/01/27 .......... 500,000 395,000
Philippine Long Distance Telephone Co.,
8.350%, 3/06/17 .................................... 250,000 206,875
Pindo Deli Finance Mauritius Ltd.,
10.875%, 10/01/27 (e) .............................. 2,000,000 1,600,000
Pindo Deli Finance Mauritius Ltd.,
11.750%, 10/01/17 (e) .............................. 1,500,000 1,290,000
Quezon Power Philippines Co., 8.860%, 6/15/17 ........ 500,000 423,300
Samsung Electronics Co. Ltd.,
7.700%, 10/01/27 (e) ............................... 2,000,000 1,380,000
Samsung Electronics Co. Ltd., 8.500%, 11/01/02 ....... 1,000,000 850,000
Tata Electric Co., 8.500%, 8/19/17 (e) ............... 2,000,000 1,783,320
Total Access Communication Public Co. Ltd., 7.625%,
11/04/01 (e) ....................................... 500,000 260,000
Total Access Communication Public Co. Ltd., 8.375%,
11/04/06 (e) ....................................... 1,250,000 625,000
-----------
11,828,245
-----------
Government Agencies -- 4.1%
Federal National Mortgage Association, Zero Coupon
Bond, 10/29/07 ....................................... NZD 9,750,000 2,832,201
Federal National Mortgage Association,
6.000%, 11/25/08 (f) ................................. USD 1,244,990 1,173,789
International Bank of Reconstruction & Development,
Zero Coupon Bond, 8/20/07 ............................ NZD 8,750,000 2,567,624
International Bank of Reconstruction & Development,
8.000%, 5/23/07 ...................................... NZD 1,000,000 594,722
-----------
7,168,336
-----------
Home Builders -- 0.6%
Pulte Corp., 7.625%, 10/15/17 ........................ 1,000,000 1,030,800
-----------
Insurance -- 0.2%
Sun Life Canada US Capital Trust I,
8.526%, 5/29/49 (e) ................................ 250,000 276,010
-----------
Metals -- 0.1%
Midland Ross Corp., 6.000%, 2/15/07 .................. 121,000 99,111
-----------
Oil & Gas -- 2.4%
NGC Corporation Capital Trust I, 8.316%, 6/01/27 ..... 500,000 569,045
Seagull Energy Corp., 7.500%, 9/15/27 ................ 3,500,000 3,624,915
-----------
4,193,960
-----------
Paper Products -- 0.9%
Champion International, 7.350%, 11/01/25 ............. 1,450,000 1,495,716
-----------
Real Estate -- Investment Trusts -- 1.7%
First Industrial, 7.500%, 12/01/17 ................... 3,000,000 3,034,800
-----------
Restaurants -- 0.3%
Flagstar Corp., 11.250%, 11/01/04 (c) (d) ............ 1,500,000 600,000
-----------
Retail -- General -- 3.5%
Dillon Read Structured Finance Corp.,
6.660%, 8/15/10 .................................... 216,434 198,479
Dillon Read Structured Finance Corp.,
8.550%, 8/15/19 .................................... 500,000 491,250
K Mart Corp., 7.950%, 2/01/23 ........................ 1,250,000 1,207,812
K Mart Pass Thru, 9.350%, 1/02/20 .................... 1,000,000 1,060,510
K Mart Pass Thru, 9.780%, 1/05/20 .................... 500,000 551,135
Penn Traffic Co., 9.625%, 4/15/05 .................... 2,750,000 1,739,375
Woolworth Corp., 8.500%, 1/15/22 ..................... 725,000 816,060
-----------
6,064,621
-----------
Steel -- 0.5%
Geneva Steel Co., 9.500%, 1/15/04 .................... 1,000,000 840,000
-----------
Taxable Municipal -- 0.3%
Orange County, California Pension Obligation, Zero
Coupon Bond, 9/01/16 ............................... 2,000,000 538,860
-----------
Telecommunications -- 6.0%
Hyperion Telecommunications, Inc., Zero Coupon Bond,
4/15/03 (step to 13.000% on 4/15/01) (b) ........... 750,000 549,375
Nextel Communications, Inc., Zero Coupon Bond,
8/15/04 (step to 9.750% on 2/15/99) (b) ............ 700,000 623,000
Nextel Communications, Inc., Zero Coupon Bond,
9/15/07 (step to 10.650% on 9/15/02) (b) (e) ....... 850,000 537,625
RCN Corp., Zero Coupon Bond, 10/15/07 (step to 11.125%
on 10/15/02) (b) (e) ............................... 750,000 470,625
TCI Communications, Inc., 7.875%, 8/01/13 ............ 1,200,000 1,290,684
TCI Communications, Inc., 7.875%, 2/15/26 ............ 6,400,000 6,928,448
-----------
10,399,757
-----------
Textile & Apparel -- 1.5%
Fruit of the Loom, Inc., 7.375%, 11/15/23 ............ 500,000 475,070
Kellwood Co., 7.625%, 10/15/17 ....................... 2,000,000 2,051,140
Phillips Van Heusen Corp., 7.750%, 11/15/23 .......... 50,000 48,992
-----------
2,575,202
-----------
Tobacco -- 7.4%
Loews Corp., 7.000%, 10/15/23 ........................ 500,000 486,790
Philip Morris Cos., Inc., 7.750%, 1/15/27 ............ 5,800,000 6,263,652
RJR Nabisco, Inc., 7.625%, 9/15/03 ................... 3,425,000 3,500,761
RJR Nabisco, Inc., 9.250%, 8/15/13 ................... 2,250,000 2,524,612
-----------
12,775,815
-----------
Transportation -- 0.6%
American President Companies Ltd., 7.125%,
11/15/03 ........................................... 1,000,000 971,250
-----------
U.S. Government -- 8.2%
U.S. Treasury Bonds, 6.000%, 2/15/26 ................. 8,350,000 8,339,562
U.S. Treasury Bonds, 6.250%, 8/15/23 ................. 5,620,000 5,788,600
-----------
14,128,162
-----------
Utilities -- 1.4%
AES Corp., 8.875%, 11/01/27 (e) ...................... 1,000,000 957,500
Boston Edison Co., 7.800%, 3/15/23 ................... 500,000 524,788
GGIB Funding Corp., 7.430%, 1/15/11 .................. 946,248 953,799
-----------
2,436,087
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $132,691,587) ..................... 139,615,909
-----------
CONVERTIBLE BONDS -- 9.2%
Auto & Related -- 0.3%
Exide Corp., 2.900%, 12/15/05 (e) .................... 800,000 511,000
-----------
Broadcasting -- 0.2%
Comcast Corp., 1.125%, 4/15/07 ....................... 550,000 354,750
-----------
Canadian -- 0.1%
Rogers Communications, Inc., 2.000%, 11/26/05 ........ 250,000 149,063
-----------
Commercial Services -- 0.0%
Molten Metal Technology, Inc.,
5.500%, 5/01/06 (c) ................................ 550,000 5,500
-----------
Computers -- 0.4%
Cray Research, Inc., 6.125%, 2/01/11 ................. 463,000 368,085
Maxtor Corp., 5.750%, 3/01/12 ........................ 407,000 284,900
-----------
652,985
-----------
Electronics -- 0.6%
Cirrus Logic, Inc., 6.000%, 12/15/03 (e) ............. 200,000 154,250
Richardson Electronics Ltd., 7.250%, 12/15/06 ........ 300,000 246,000
Zenith Corp., 6.250%, 4/01/11 ........................ 1,121,000 655,785
-----------
1,056,035
-----------
Environmental Services -- 1.3%
Air & Water Technologies Corp., 8.000%, 5/15/15 ...... 375,000 292,969
Ogden Corp., 5.750%, 10/20/02 ........................ 500,000 476,250
Ogden Corp., 6.000%, 6/01/02 ......................... 250,000 228,437
Thermo TerraTech, Inc., 4.625%, 5/01/03 (e) .......... 1,500,000 1,335,000
-----------
2,332,656
-----------
Foreign Issuer -- 1.7%
Advanced Agro Public Co., 3.500%, 6/17/01 ............ 125,000 100,000
Bangkok Bank Public Co. Ltd., 3.250%, 3/03/04 ........ 500,000 162,500
Banpu Public Co., 2.750%, 4/10/03 .................... 1,455,000 931,200
Burns, Philp, 5.500%, 4/30/04 ........................ 1,000,000 590,000
Empresas ICA Sociedad, 5.000%, 3/15/04 ............... 250,000 197,187
Foreign Issuer -- continued
Loxley Public Co., 2.500%, 4/04/01 ................... 700,000 350,000
Samsung Co., 0.250%, 6/26/06 ......................... 450,000 360,000
Siam Commercial Bank Public Co.,
3.250%, 1/24/04 .................................... 225,000 65,250
Ssangyong Oil Refining Co., Inc.,
3.000%, 12/31/04 ................................... 250,000 92,918
Total Access Communication Public Co. Ltd., 2.000%,
5/31/06 ............................................ 400,000 172,000
-----------
3,021,055
-----------
Home Builders -- 0.2%
Schuler Homes, Inc., 6.500%, 1/15/03 ................. 400,000 344,000
-----------
Oil & Gas -- 0.1%
Houston Industries, Inc., 6.000%, 3/15/12 ............ 250,000 227,500
-----------
Pharmaceutical -- 0.4%
Glycomed, Inc., 7.500%, 1/01/03 ...................... 300,000 276,000
NABI, Inc., 6.500%, 2/01/03 .......................... 525,000 391,781
-----------
667,781
-----------
Publishing -- 0.3%
Scholastic Corp., 5.000%, 8/15/05 (e) ................ 500,000 438,125
-----------
Real Estate Investment Trusts -- 1.5%
Federal Realty Investors Trust, 5.250%, 10/28/03 ..... 1,750,000 1,627,500
Meditrust Corp., 7.500%, 3/01/01 ..................... 150,000 181,313
Rockefeller Properties, Zero Coupon Bond,
12/31/00 ........................................... 650,000 466,375
Sizeler Property Investors, Inc., 8.000%, 7/15/03 .... 250,000 240,000
-----------
2,515,188
-----------
Restaurants -- 1.6%
Boston Chicken, Inc., Zero Coupon Bond, 6/01/15 ...... 500,000 73,125
Boston Chicken, Inc., 4.500%, 2/01/04 ................ 750,000 367,500
Einstein/Noah Bagel Corp., 7.250%, 6/01/04 ........... 750,000 517,500
Shoney's, Inc., Zero Coupon Bond, 4/11/04 ............ 4,089,000 1,676,490
TPI Enterprises, Inc., 8.250%, 7/15/02 ............... 100,000 82,000
-----------
2,716,615
-----------
Telecommunications -- 0.1%
Broadband Technologies, Inc., 5.000%, 5/15/01 ........ 350,000 231,000
-----------
Textile & Apparel -- 0.3%
Dixie Yarns, Inc., 7.000%, 5/15/12 ................... 200,000 176,500
Fieldcrest Cannon, Inc., 6.000%, 3/15/12 ............. 440,000 356,400
-----------
532,900
-----------
Trucking & Leasing -- 0.1%
Worldway Corp., 6.250%, 4/15/11 ...................... 250,000 182,500
-----------
TOTAL CONVERTIBLE BONDS
(Identified Cost $18,717,855) ...................... 15,938,653
-----------
TOTAL BONDS AND NOTES
(Identified Cost $151,409,442) ..................... 155,554,562
-----------
Shares
- -----------------------------------------------------------------------------------------------------------
Common Stocks -- 0.0% of Total Net Assets
Telecommunications -- 0.0%
Nextel Communications, Inc. (g) ...................... 1,084 28,184
-----------
TOTAL COMMON STOCKS
(Identified Cost $17,492) .......................... 28,184
-----------
Preferred Stocks -- 2.2% of Total Net Assets
Building Materials -- 0.3%
Owens Corning, 6.500% ................................ 10,000 490,000
-----------
Chemicals -- Major -- 0.0%
E.I. du Pont DeNemours & Co., $3.50 .................. 250 16,625
-----------
Computers -- 0.2%
Unisys Corp., $3.75 .................................. 9,000 405,562
-----------
Metals -- 0.0%
Aluminum Company of America, $3.75 ................... 100 7,163
-----------
Restaurants -- 0.0%
Flagstar Corp., $2.25 (c) (d) ........................ 61,250 23,275
-----------
Utilities -- 1.7%
Arizona Public Service Co., $2.40 .................... 460 17,250
Central Louisiana Electric, Inc., 4.750% ............. 850 69,700
Del Marva Power & Light Co., 4.000% .................. 434 27,668
Entergy Louisiana, Inc., 4.440% ...................... 830 53,120
Entergy New Orleans, Inc., 4.360% .................... 90 5,771
Entergy New Orleans, Inc., 4.750% .................... 2,876 200,960
Jersey Central Power & Light Co., 4.000% ............. 300 18,075
MDU Resources Group, Inc., 5.100% .................... 1,080 96,930
Nevada Power Co., 4.700% ............................. 11,600 216,050
Niagara Mohawk Power Corp., 3.600% ................... 100 4,650
Niagara Mohawk Power Corp., 3.900% ................... 100 5,100
Niagara Mohawk Power Corp., 4.400% ................... 5,000 230,000
Niagara Mohawk Power Corp., 4.850% ................... 2,850 186,675
Niagara Mohawk Power Corp., 6.500% ................... 5,000 111,875
Niagara Mohawk Power Corp., 7.525% ................... 57,131 1,453,270
Niagara Mohawk Power Corp., 8.375% ................... 500 12,625
Northern States Power Co., $4.11 ..................... 100 6,750
Public Service Electric & Gas Co., 4.180% ............ 1,950 139,428
-----------
2,855,897
-----------
TOTAL PREFERRED STOCKS
(Identified Cost $3,176,292) ....................... 3,798,522
-----------
Short-Term Investment -- 1.1% of Total Net Assets
Repurchase Agreement with State Street Bank and Trust
Co., dated 12/31/97 at 5.000% to be repurchased at
$1,929,536 on 1/02/98 collateralized by $1,920,000
U.S. Treasury Note, 5.875%, due 1/31/99 with a value
of $1,970,198 ........................................ $ 1,929,000 $ 1,929,000
------------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $1,929,000) ......................... 1,929,000
------------
TOTAL INVESTMENTS --
(IDENTIFIED COST $156,532,226) (h) ................... $161,310,268
============
(a) See Note 1.
(b) Step Bond: Coupon is zero or below market rate for an initial period and then increases at a
specified date and rate.
(c) Company in Chapter 11 Bankruptcy.
(d) Security in default.
(e) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
(f) All or a portion of income may be received as additional securities.
(g) Non-income producing security.
(h) At December 31, 1997, the net unrealized appreciation on investments based on cost of
$156,532,226 for federal income tax purposes was as follows: Aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an excess of tax cost over
value were $12,690,140 and $7,912,098, respectively, resulting in net unrealized appreciation of
$4,778,042.
Key to Abbreviations:
CAD = Canadian Dollar USD = United States Dollar
NZD = New Zealand Dollar ZAR = South African Rand
See accompanying notes to financial statements.
</TABLE>
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- --------------------------------------------------------------------------------
LOOMIS SAYLES HIGH YIELD FIXED INCOME FUND
Portfolio of Investments -- as of December 31, 1997
<TABLE>
<CAPTION>
Face
Amount Value (a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds And Notes -- 89.8% of Total Net Assets
NON CONVERTIBLE BONDS -- 65.7%
Broadcasting -- 0.8%
CBS, Inc., 7.125%, 11/01/23 .......................... $ 250,000 $ 226,825
-----------
Canadian -- 7.3%
Call-Net Enterprises, Inc., Zero Coupon Bond, 8/15/07
(step to 9.270% on 8/15/02) (b) .................... USD 250,000 169,375
Clearnet Communications, Inc., Zero Coupon Bond,
8/13/07 (step to 11.750% on 8/13/02) (b) ........... CAD 2,000,000 892,201
International Semi-Tech Corp., Zero Coupon Bond,
8/15/03 (step to 11.500% on 8/15/00) (b) ........... USD 1,000,000 360,000
Microcell Telecommunications, Inc., Zero Coupon Bond,
10/15/07 (step to 11.125% on 10/15/02) (b) (c) ..... CAD 710,000 275,743
Rogers Cablesystems Ltd., 9.650%, 1/15/14 ............ CAD 200,000 151,149
Rogers Communications, Inc., 8.875%, 7/15/07 ......... USD 250,000 250,000
-----------
2,098,468
-----------
Communications -- 5.5%
Arch Communications Group, Inc., Zero Coupon Bond, 3/15/
08 (step to 10.875% on 3/15/01) (b) ................ 1,425,000 876,375
Century Communications Corp., Zero Coupon Bond,
3/15/03 ............................................ 1,125,000 720,000
-----------
1,596,375
-----------
Computers -- 1.7%
Apple Computer, Inc., 6.500%, 2/15/04 ................ 600,000 498,000
-----------
Electronics -- 1.4%
Westinghouse Electric Corp., 7.875%, 9/01/23 ......... 400,000 400,764
-----------
Food & Beverage -- 2.3%
Borden, Inc., 7.875%, 2/15/23 ........................ 670,000 674,141
-----------
Foreign Government/Agency -- 15.7%
Petroleos Mexicanos, Medium Term,
8.625%, 12/01/23 (c) ............................... 500,000 470,000
Republic of Argentina, 9.750%, 9/19/27 ............... 250,000 239,000
Republic of Brazil, 10.125%, 5/15/27 ................. 1,200,000 1,125,000
Republic of Brazil C Bond, 8.000%, 4/15/14 (d) ....... 570,130 447,552
Republic of Ecuador, 6.688%, 2/27/15 (d) (e) ......... 546,780 336,981
Republic of Panama, 3.750%, 7/17/14 (step to 4.000% on
7/17/98) (b) ....................................... 150,000 115,687
Republic of Panama, 8.875%, 9/30/27 .................. 250,000 231,875
Republic of Peru, 3.250%, 3/07/17 (step to 3.750% on 3/
07/99) (b) ......................................... 1,500,000 888,750
Republic of Venezuela, 9.250%, 9/15/27 ............... 750,000 668,625
-----------
4,523,470
-----------
Foreign Issuer -- 19.1%
Bangko Sentral Pilipinas, 8.600%, 6/15/27 ............ 500,000 398,700
Bangkok Bank Public Co. Ltd., 8.250%, 3/15/16 (c) .... 250,000 192,357
Bangkok Bank Public Co. Ltd., 8.375%, 1/15/27 (c) .... 450,000 283,500
Export Import Bank of Korea, 6.375%, 2/15/06 ......... 700,000 532,000
Hyundai Motor Co. Ltd., 7.600%, 7/15/07 (c) .......... 500,000 355,000
Industrial Finance Corp. of Thailand,
7.375%, 1/14/07 (c) ................................ 250,000 194,847
Korea Development Bank, 6.625%, 11/21/03 ............. 250,000 196,375
Murrin Murrin Holdings Property Ltd.,
9.375%, 8/31/07 (c) ................................ 150,000 148,500
Philippine Long Distance Telephone Co.,
8.350%, 3/06/17 .................................... 250,000 206,875
Pindo Deli Finance Mauritius Ltd.,
10.875%, 10/01/27 (c) .............................. 750,000 600,000
Pycsa Panama SA, 10.280%, 12/15/12 (c) ............... 125,000 118,538
Quezon Power Philippines Co., 8.860%, 6/15/17 ........ 500,000 423,300
Samsung Electronics Co. Ltd., 8.500%, 11/01/02 ....... 500,000 425,000
Siam Commercial Bank Public Co.,
7.500%, 3/15/06 (c) ................................ 300,000 225,000
TFM SA de CV, Zero Coupon Bond, 6/15/09 (step to 11.750%
on 6/15/02) (b) (c) ................................ 1,000,000 620,000
Tjiwi Kimia Finance Mauritius Ltd., 10.000%,
8/01/04 (c) ........................................ 300,000 251,250
Total Access Communication Public Co. Ltd., 7.625%,
11/04/01 (c) ....................................... 375,000 195,000
Total Access Communication Public Co. Ltd., 8.375%,
11/04/06 (c) ....................................... 300,000 150,000
-----------
5,516,242
-----------
Metals -- 0.3%
Midland Ross Corp., 6.000%, 2/15/07 .................. 113,000 92,558
-----------
Restaurants -- 0.5%
Flagstar Corp., 11.250%, 11/01/04 (f) (g) ............ 350,000 140,000
-----------
Retail -- General -- 4.3%
K Mart Corp., 7.950%, 2/01/23 ........................ 1,000,000 966,250
K Mart Pass Thru, 8.540%, 1/02/15 .................... 157,660 159,107
Penn Traffic Co., 9.625%, 4/15/05 .................... 175,000 110,688
-----------
1,236,045
-----------
Telecommunications -- 5.1%
Hyperion Telecommunications, Inc., Zero Coupon Bond,
4/15/03 (step to 13.000% on 4/15/01) (b) ........... 250,000 183,125
Intercel, Inc., Zero Coupon Bond, 2/01/06 (step to
12.000% on 2/01/01) (b) ............................ 1,200,000 900,000
Nextel Communications, Inc., Zero Coupon Bond,
8/15/04 (step to 9.750% on 2/15/99) (b) ............ 300,000 267,000
Nextel Communications, Inc., Zero Coupon Bond,
9/15/07 (step to 10.650% on 9/15/02) (b) (c) ....... 175,000 110,688
-----------
1,460,813
-----------
Textile & Apparel -- 1.7%
Phillips Van Heusen Corp., 7.750%, 11/15/23 .......... 500,000 489,920
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $19,059,131) ...................... 18,953,621
-----------
CONVERTIBLE BONDS -- 24.1%
Auto & Related -- 1.3%
Exide Corp., 2.900%, 12/15/05 (c) .................... 600,000 383,250
-----------
Broadcasting -- 1.7%
Comcast Corp., 1.125%, 4/15/07 ....................... 750,000 483,750
-----------
Commercial Services -- 0.0%
Molten Metal Technology, Inc., 5.500%, 5/01/06 (f) ... 300,000 3,000
-----------
Computers -- 1.1%
Apple Computer, Inc., 6.000%, 6/01/01 ................ 50,000 40,250
Cray Research, Inc., 6.125%, 2/01/11 ................. 200,000 159,000
Maxtor Corp., 5.750%, 3/01/12 ........................ 120,000 84,000
Telxon Corp., 5.750%, 1/01/03 ........................ 25,000 26,406
-----------
309,656
-----------
Electronics -- 2.1%
Cirrus Logic, Inc., 6.000%, 12/15/03 (c) ............. 500,000 385,625
LTX Corp., 7.250%, 4/15/11 ........................... 50,000 28,750
Richardson Electronics Ltd., 7.250%, 12/15/06 ........ 100,000 82,000
Zenith Corp., 6.250%, 4/01/11 ........................ 166,000 97,110
-----------
593,485
-----------
Environmental Services -- 0.5%
Air & Water Technologies Corp., 8.000%, 5/15/15 ...... 175,000 136,719
-----------
Foreign Issuer -- 6.6%
Advanced Agro Public Co., 3.500%, 6/17/01 ............ 575,000 460,000
Ashanti Capital, 5.500%, 3/15/03 ..................... 200,000 149,250
Bangkok Bank Public Co. Ltd., 3.250%, 3/03/04 ........ 450,000 146,250
Banpu Public Co., 2.750%, 4/10/03 .................... 150,000 96,000
Empresas ICA Sociedad, 5.000%, 3/15/04 ............... 400,000 315,500
Loxley Public Co., 2.500%, 4/04/01 ................... 200,000 100,000
Samsung Electronics Co. Ltd., Zero Coupon Bond,
12/31/07 ........................................... 250,000 174,167
Sappi BVI Finance, 7.500%, 8/01/02 ................... 200,000 187,000
Siam Commercial Bank Public Co., 3.250%, 1/24/04 ..... 850,000 246,500
Total Access Communication Public Co. Ltd., 2.000%,
5/31/06 ............................................ 100,000 43,000
-----------
1,917,667
-----------
Health Care -- Services -- 0.1%
Physicians Resource Group, Inc., 6.000%, 12/01/01 (c) 50,000 38,063
-----------
Home Builders -- 0.5%
Schuler Homes, Inc., 6.500%, 1/15/03 ................. 175,000 150,500
-----------
Metals -- 0.5%
Battle Mountain Gold Co., 6.000%, 1/04/05 ............ 200,000 136,000
-----------
Miscellaneous -- 0.7%
Veterinary Centers of America, Inc., 5.250%, 5/01/06 . 295,000 215,350
-----------
Pharmaceutical -- 1.6%
Glycomed, Inc., 7.500%, 1/01/03 ...................... 50,000 46,000
NABI, Inc., 6.500%, 2/01/03 .......................... 575,000 429,094
-----------
475,094
-----------
Restaurants -- 4.3%
Boston Chicken, Inc., Zero Coupon Bond, 6/01/15 ...... 1,000,000 146,250
Boston Chicken, Inc., 4.500%, 2/01/04 ................ 500,000 245,000
Boston Chicken, Inc., 7.750%, 5/01/04 ................ 250,000 157,500
Einstein/Noah Bagel Corp., 7.250%, 6/01/04 ........... 125,000 86,250
Shoney's, Inc., Zero Coupon Bond, 4/11/04 ............ 1,200,000 492,000
TPI Enterprises, Inc., 8.250%, 7/15/02 ............... 150,000 123,000
-----------
1,250,000
-----------
Retail -- Specialty -- 1.5%
Bell Sports Corp., 4.250%, 11/15/00 .................. 275,000 233,062
CML Group, Inc., 5.500%, 1/15/03 ..................... 145,000 108,750
Jacobson Stores, Inc., 6.750%, 12/15/11 .............. 100,000 84,250
-----------
426,062
-----------
Telecommunications -- 1.0%
Broadband Technologies, Inc., 5.000%, 5/15/01 ........ 415,000 273,900
-----------
Textile & Apparel -- 0.5%
Converse, Inc., 7.000%, 6/01/04 ...................... 125,000 71,562
Dixie Yarns, Inc., 7.000%, 5/15/12 ................... 65,000 57,363
-----------
128,925
-----------
Trucking & Leasing -- 0.1%
Worldway Corp., 6.250%, 4/15/11 ...................... 50,000 36,500
-----------
TOTAL CONVERTIBLE BONDS
(Identified Cost $8,094,969) ......................... 6,957,921
-----------
TOTAL BONDS AND NOTES
(Identified Cost $27,154,100) ........................ 25,911,542
-----------
Common Stocks -- 3.8% of Total Net Assets
Foreign Issuer -- 0.2%
Siam Commercial Bank Public Co. ...................... 52,000 59,397
-----------
Real Estate Investment Trusts -- 0.9%
Associated Estates Realty Corp. ...................... 8,500 201,344
Berkshire Realty Co., Inc. ........................... 4,500 54,000
-----------
255,344
-----------
Telecommunications -- 0.0%
Nextel Communications, Inc. (h) ...................... 464 12,064
-----------
Utilities -- 2.7%
Eastern Utilities Associates ......................... 29,800 782,250
-----------
TOTAL COMMON STOCKS
(Identified Cost $985,064) ......................... 1,109,055
-----------
-----------
Preferred Stocks -- 4.3% of Total Net Assets
Metals -- 1.3%
Bethlehem Steel Corp., $3.50 (c) ..................... 9,000 373,500
-----------
Oil & Gas -- 0.8%
Kelley Oil & Gas, $2.625 ............................. 750 16,500
McDermott, Inc., $2.20 ............................... 5,500 209,000
-----------
225,500
-----------
Telecommunications -- 1.7%
Hyperion Telecommunications, Inc. 12.875% (d) ........ 500 503,750
-----------
Utilities -- 0.5%
Niagara Mohawk Power Corp., 3.600% ................... 1,350 62,775
Niagara Mohawk Power Corp., 4.100% ................... 700 39,550
Niagara Mohawk Power Corp., 7.525% ................... 1,695 43,117
-----------
145,442
-----------
TOTAL PREFERRED STOCKS
(Identified Cost $1,132,844) ....................... 1,248,192
-----------
Short-Term Investment -- 6.7% of Total Net Assets
Repurchase Agreement with State Street Bank and Trust
Co., dated 12/31/97 at 5.000% to be repurchased at
$1,931,537 on 1/02/98 collateralized by $1,920,000
U.S. Treasury Note, 5.875%,
due 1/31/99 with a value of $1,970,198 ............. $1,931,000 $ 1,931,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $1,931,000) ....................... 1,931,000
-----------
TOTAL INVESTMENTS -- (IDENTIFIED COST $31,203,008) (i) $30,199,789
===========
(a) See Note 1.
(b) Step Bond: Coupon is zero or below market rate for an initial period and then increases at a
specified date and rate.
(c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
(d) All or a portion of income may be received as additional securities.
(e) Floating Rate Bond: Coupon is six month London Interbank Overnight Rate (LIBOR) plus .8125%.
(f) Company in Chapter 11 Bankruptcy.
(g) Security in default.
(h) Non-income producing security.
(i) At December 31, 1997, the net unrealized depreciation on investments based on cost of
$31,202,304 for federal income tax purposes was as follows: Aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an excess of tax cost over
value were $1,420,785 and $2,423,300, respectively, resulting in net unrealized depreciation of
$1,002,515.
Key to Abbreviations:
CAD = Canadian Dollar
USD = United States Dollar
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
LOOMIS SAYLES INVESTMENT TRUST
- -----------------------------------------------------------------------------------------------------------
LOOMIS SAYLES INVESTMENT GRADE FIXED INCOME FUND
Portfolio of Investments -- as of December 31, 1997
<CAPTION>
Face
Amount Value (a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bonds And Notes -- 94.4% of Total Net Assets
NON-CONVERTIBLE BONDS -- 87.1%
Airlines -- 0.6%
United Airlines Pass Thru, 7.870%, 1/30/19 ........... $ 500,000 $ 539,035
-----------
Banking & Finance -- 1.9%
First Union Institutional Trust, 7.850%, 1/01/27 ..... 1,000,000 1,034,350
First Union Institutional Trust, 8.040%, 12/01/26 .... 500,000 532,274
-----------
1,566,624
-----------
Canadian -- 19.3%
Canadian Government, Zero Coupon Bond, 6/01/21 ....... CAD 750,000 129,947
Canadian Government, Zero Coupon Bond, 6/01/25 ....... CAD 29,050,000 3,981,784
MacMillan Bloedel, 7.700%, 2/15/26 ................... USD 305,000 316,608
Ontario Hydro, 8.900%, 8/18/22 ....................... CAD 1,175,000 1,092,490
Province of Alberta, 5.930%, 9/16/16 ................. CAD 750,000 529,180
Province of British Columbia, Zero Coupon Bond,
8/23/13 ............................................ CAD 5,000,000 1,328,155
Province of British Columbia, Zero Coupon Bond,
6/09/14 ............................................ CAD 1,000,000 252,266
Province of British Columbia, Zero Coupon Bond,
9/05/20 ............................................ CAD 3,300,000 563,913
Province of British Columbia, Zero Coupon Bond,
6/09/22 ............................................ CAD 4,000,000 612,715
Province of British Columbia, Zero Coupon Bond,
8/19/22 ............................................ CAD 4,195,000 634,952
Province of British Columbia, Zero Coupon Bond,
11/19/27 ........................................... CAD 1,500,000 165,561
Province of British Columbia, 8.000%, 9/08/23 ........ CAD 750,000 643,749
Province of Manitoba, 6.500%, 9/22/17 ................ CAD 1,825,000 1,336,584
Province of Manitoba, 7.750%, 12/22/25 ............... CAD 3,100,000 2,627,098
Province of Saskatchewan, Zero Coupon Bond,
4/10/14 ............................................ CAD 2,500,000 638,011
Province of Saskatchewan, 8.750%, 5/30/25 ............ CAD 1,250,000 1,158,550
-----------
16,011,563
-----------
Communications -- 0.4%
Arch Communications Group, Inc., Zero Coupon Bond, 3/
15/08 (step to 10.875% on 3/15/01) (b) ............. 575,000 353,625
-----------
Computers -- 0.4%
Apple Computer, Inc., 6.500%, 2/15/04 ................ 100,000 83,000
Seagate Technology, Inc., 7.875%, 3/01/17 ............ 200,000 208,024
Streamlogic Corp., 14.000%, 10/07/98 (c) (d) ......... 5,440 1,632
-----------
292,656
-----------
Electronics -- 0.3%
Pioneer Standard Electronics, Inc., 8.500%, 8/01/06 .. 250,000 264,896
-----------
Entertainment -- 3.4%
Time Warner Entertainment Co., 7.570%, 2/01/24 ....... 2,300,000 2,406,145
Time Warner Entertainment Co., 8.050%, 1/15/16 ....... 365,000 394,258
-----------
2,800,403
-----------
Food & Beverage -- 0.2%
Borden, Inc., 7.875%, 2/15/23 ........................ 200,000 201,236
-----------
Foreign Government/Agency -- 7.5%
Government of Poland, 4.000%, 10/27/14 (step to 5.000%
on 10/27/98) (b) ................................... USD 1,650,000 1,425,270
Republic of Brazil, 10.125%, 5/15/27 ................. USD 1,300,000 1,218,750
Republic of Brazil C Bond, 8.000%, 4/15/14 (e) ....... USD 2,850,650 2,237,760
Republic of South Africa, 8.375%, 10/17/06 ........... USD 100,000 102,354
Republic of South Africa, 12.000%, 2/28/05 ........... ZAR 4,250,000 806,431
Republic of South Africa, 12.500%, 12/21/06 .......... ZAR 2,350,000 448,850
-----------
6,239,415
-----------
Foreign Issuer -- 5.3%
Bangkok Bank Public Co. Ltd., 8.375%,
1/15/27 (f) ........................................ 2,250,000 1,417,500
Industrial Finance Corp. of Thailand, 6.875%,
4/01/03 (f) ........................................ 575,000 487,634
Pan Pacific Industrial Investment Plc, Zero Coupon
Bond, 4/28/07 (f) .................................. 825,000 246,799
Perez Companc SA, 8.125%, 7/15/07 (f) ................ 350,000 336,875
Pindo Deli Finance Mauritius Ltd., 10.875%,
10/01/27 (f) ....................................... 100,000 80,000
Samsung Electronics Co. Ltd., 7.700%,
10/01/27 (f) ....................................... 1,250,000 862,500
Tata Electric Co., 8.500%, 8/19/17 (f) ............... 1,000,000 891,660
Total Access Communication Public Co. Ltd., 8.375%,
11/04/06 (f) ....................................... 150,000 75,000
-----------
4,397,968
-----------
Government Agencies -- 5.2%
Federal National Mortgage Association, Zero Coupon
Bond, 10/29/07 ..................................... NZD 5,700,000 $ 1,655,748
Federal National Mortgage Association,
6.000%, 11/25/08 (e) ............................... USD 933,742 880,342
International Bank of Reconstruction & Development,
Zero Coupon Bond, 8/20/07 .......................... NZD 2,900,000 850,984
International Bank of Reconstruction & Development,
8.000%, 5/23/07 .................................... NZD 1,505,000 895,057
-----------
4,282,131
-----------
Home Builders -- 3.6%
Pulte Corp., 7.000%, 12/15/03 ........................ 188,000 191,435
Pulte Corp., 7.300%, 10/24/05 ........................ 200,000 205,418
Pulte Corp., 7.625%, 10/15/17 ........................ 2,500,000 2,577,000
-----------
2,973,853
-----------
Insurance -- 0.3%
Sun Life Canada US Capital Trust I, 8.526%,
5/29/49 (f) ........................................ 250,000 276,010
-----------
Oil & Gas -- 2.4%
Mitchell Energy and Development Corp., 6.750%,
2/15/04 ............................................ 300,000 296,568
NGC Corporation Capital Trust I, 8.316%, 6/01/27 ..... 100,000 113,809
Seagull Energy Corp., 7.500%, 9/15/27 ................ 1,500,000 1,553,535
-----------
1,963,912
-----------
Paper Products -- 4.3%
Champion International, 7.350%, 11/01/25 ............. 950,000 979,952
Georgia Pacific Corp., 7.375%, 12/01/25 .............. 1,800,000 1,833,966
Mead Corp., 7.125%, 8/01/25 .......................... 250,000 244,642
Westvaco Corp., 7.000%, 8/15/23 ...................... 500,000 498,410
-----------
3,556,970
-----------
Real Estate Investment Trusts -- 4.3%
Camden Property Trust, 7.000%, 11/15/06 .............. 500,000 507,390
First Industrial, 7.500%, 12/01/17 ................... 2,500,000 2,529,000
Trinet Corporate Realty Trust, Inc., 7.700%, 7/15/17 .. 500,000 511,385
-----------
3,547,775
-----------
Retail -- General -- 1.0%
Dillon Read Structured Finance Corp.,
8.375%, 8/15/15 .................................... 300,000 294,000
Woolworth Corp., 8.500%, 1/15/22 ..................... 500,000 562,800
-----------
856,800
-----------
Taxable Municipal -- 0.8%
Orange County, California Pension Obligation, Zero
Coupon Bond, 9/01/16 ............................... 2,500,000 673,575
-----------
Telecommunications -- 4.7%
TCI Communications, Inc., 7.875%, 8/01/13 ............ 100,000 107,557
TCI Communications, Inc., 7.875%, 2/15/26 ............ 3,470,000 3,756,518
-----------
3,864,075
-----------
Textile & Apparel -- 2.2%
Burlington Industries, Inc., 7.250%, 8/01/27 ......... 250,000 262,798
Fruit of the Loom, Inc., 7.375%, 11/15/23 ............ 550,000 522,577
Kellwood Co., 7.625%, 10/15/17 ....................... 1,000,000 1,025,570
-----------
1,810,945
-----------
Tobacco -- 7.5%
Loews Corp., 7.000%, 10/15/23 ........................ 250,000 243,395
Philip Morris Cos., Inc., 7.750%, 1/15/27 ............ 2,850,000 3,077,829
RJR Nabisco, Inc., 7.625%, 9/15/03 ................... 900,000 919,908
RJR Nabisco, Inc., 8.750%, 8/15/05 ................... 150,000 161,840
RJR Nabisco, Inc., 9.250%, 8/15/13 ................... 1,650,000 1,851,382
-----------
6,254,354
-----------
Transportation -- 0.7%
American President Companies Ltd.,
7.125%, 11/15/03 ................................... 500,000 485,625
American President Companies Ltd.,
8.000%, 1/15/24 .................................... 100,000 100,416
-----------
586,041
-----------
U.S. Government -- 8.7%
U.S. Treasury Bonds, 6.000%, 2/15/26 ................. 6,550,000 6,541,812
U.S. Treasury Strips, Zero Coupon Bond, 8/15/20 ...... 2,500,000 641,475
-----------
7,183,287
-----------
Utilities -- 2.1%
Boston Edison Co., 7.800%, 3/15/23 ................... 250,000 262,394
Comed Financing II, 8.500%, 1/15/27 .................. 1,000,000 1,070,760
Commonwealth Edison Co., 4.750%, 12/01/11 ............ 143,000 116,409
GGIB Funding Corp., 7.430%, 1/15/11 .................. 300,910 303,312
-----------
1,752,875
-----------
TOTAL NON-CONVERTIBLE BONDS
(Identified Cost $68,755,725) ...................... 72,250,024
-----------
CONVERTIBLE BONDS -- 7.3%
Chemicals -- Major -- 0.2%
FMC Corp., 6.750%, 1/16/05 ........................... 170,000 153,000
-----------
Computers -- 0.1%
Maxtor Corp., 5.750%, 3/01/12 ........................ 150,000 105,000
-----------
Electronics -- 0.1%
Richardson Electronics Ltd., 7.250%, 12/15/06 ........ 50,000 41,000
Zenith Corp., 6.250%, 4/01/11 ........................ 71,000 41,535
-----------
82,535
-----------
Environmental Services -- 2.3%
Ogden Corp., 5.750%, 10/20/02 ........................ 600,000 571,500
Thermo TerraTech, Inc., 4.625%, 5/01/03 (f) .......... 1,500,000 1,335,000
-----------
1,906,500
-----------
Foreign Issuer -- 2.2%
Bangkok Bank Public Co. Ltd., 3.250%, 3/03/04 ........ 400,000 130,000
Banpu Public Co., 2.750%, 4/10/03 .................... 500,000 320,000
Burns, Philp, 5.500%, 4/30/04 ........................ 590,000 348,100
Empresas ICA Sociedad, 5.000%, 3/15/04 ............... 100,000 78,875
Loxley Public Co., 2.500%, 4/04/01 ................... 1,150,000 575,000
Samsung Co., 0.250%, 6/26/06 ......................... 245,000 196,000
Samsung Display Devices, 0.250%, 3/12/06 ............. 150,000 122,250
Siam Commercial Bank Public Co., 3.250%, 1/24/04 ..... 100,000 29,000
Ssangyong Oil Refining Co., Inc., 3.000%, 12/31/04 ... 100,000 37,167
-----------
1,836,392
-----------
Oil & Gas -- 0.3%
Houston Industries, Inc., 6.000%, 3/15/12 ............ 285,000 259,350
-----------
Pharmaceutical -- 0.1%
NABI, Inc., 6.500%, 2/01/03 .......................... 100,000 74,625
-----------
Publishing -- 0.5%
Scholastic Corp., 5.000%, 8/15/05 (f) ................ 440,000 385,550
-----------
Real Estate Investment Trusts -- 0.9%
Federal Realty Investors Trust, 5.250%, 10/28/03 ..... 835,000 776,550
-----------
Restaurants -- 0.3%
Shoney's, Inc., Zero Coupon Bond, 4/11/04 ............ 525,000 215,250
-----------
Retail -- Specialty -- 0.0%
CML Group, Inc., 5.500%, 1/15/03 ..................... 50,000 37,500
-----------
Trucking & Leasing -- 0.3%
Builders Transportation, Inc., 6.500%, 5/01/11 (d) ... 129,000 63,210
Worldway Corp., 6.250%, 4/15/11 ...................... 250,000 182,500
-----------
245,710
-----------
TOTAL CONVERTIBLE BONDS
(Identified Cost $7,363,832) ....................... 6,077,962
-----------
TOTAL BONDS AND NOTES
(Identified Cost $76,119,557) ...................... 78,327,986
-----------
Preferred Stocks -- 1.8% of Total Net Assets
Chemicals -- Major -- 0.2%
E.I. du Pont DeNemours & Co., $3.50 .................. 2,150 142,975
-----------
Metals -- 0.3%
Aluminum Company of America, $3.75 ................... 3,350 239,944
-----------
Utilities -- 1.3%
Arizona Public Service Co., $2.36 .................... 246 9,225
Arizona Public Service Co., $2.40 .................... 263 9,862
Central Louisiana Electric, Inc., 4.750% ............. 850 69,700
Connecticut Light & Power Co., $2.00 ................. 8,895 217,927
Connecticut Light & Power Co., $2.20 ................. 263 7,233
Dayton Power & Light Co., 3.750% ..................... 701 39,957
Del Marva Power & Light Co., 4.000% .................. 350 22,312
Illinois Power Co., 4.080% ........................... 400 14,000
Illinois Power Co., 4.200% ........................... 100 3,625
Jersey Central Power & Light Co., 4.000% ............. 2,860 172,315
MDU Resources Group, Inc., 5.100% .................... 1,080 96,930
Niagara Mohawk Power Corp., 7.525% ................... 1,000 25,437
Niagara Mohawk Power Corp., 9.500% ................... 200 5,213
Northern Indiana Public Service Co., 4.250% .......... 2,060 135,960
Northern States Power Co., $4.08 ..................... 50 3,413
Northern States Power Co., $4.10 ..................... 100 6,894
Public Service Electric & Gas Co., 4.080% ............ 300 21,300
San Diego Gas & Electric Co., 4.500% ................. 100 1,590
Southern California Edison Co., 4.240% ............... 5,700 105,806
Southern California Edison Co., 4.320% ............... 8,080 143,420
-----------
1,112,119
-----------
TOTAL PREFERRED STOCKS
(Identified Cost $1,314,552) ........................ 1,495,038
-----------
Short-Term Investment -- 2.0% of Total Net Assets
Repurchase Agreement with State Street Bank and Trust
Co., dated 12/31/97 at 5.000% to be repurchased at
$1,682,467 on 1/02/98 collateralized by $1,675,000
U.S. Treasury Note, 5.875%,
due 1/31/99 with a value of $1,718,793 ............... $ 1,682,000 $ 1,682,000
-----------
TOTAL SHORT-TERM INVESTMENT
(Identified Cost $1,682,000) ....................... 1,682,000
-----------
TOTAL INVESTMENTS --
(IDENTIFIED COST $79,116,109) (g) ................... $81,505,024
===========
(a) See Note 1.
(b) Step Bond: Coupon is zero or below market rate for an initial period and then increases at a
specified date and rate.
(c) Company in Chapter 11 Bankruptcy.
(d) Security in default.
(e) All or a portion of income may be received as additional securities.
(f) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally to qualified
institutional buyers.
(g) At December 31, 1997, the net unrealized appreciation on investments based on cost of
$79,116,109 for federal income tax purposes was as follows: Aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an excess of tax cost over
value were $5,663,953 and $3,275,038, respectively, resulting in net unrealized appreciation of
$2,388,915.
Key to Abbreviations:
CAD = Canadian Dollar USD = United States Dollar
NZD = New Zealand Dollar ZAR = South African Rand
See accompanying notes to financial statements.
</TABLE>
<PAGE>
[THIS PAGE LEFT INTENTIONALLY BLANK]
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- -------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997
California Tax-
Free Income
Fund
----------------
ASSETS
Investments at value:
Securities ............................................. $16,495,869
Repurchase agreements .................................. 0
-----------
Total investments ........................................ 16,495,869
Cash ..................................................... 50,059
Receivable for:
Shares of the Fund sold ................................ 0
Dividends and interest -- net .......................... 255,213
Due from the adviser (Note 3) ............................ 67,997
Other assets (Note 1I) ................................... 0
-----------
16,869,138
-----------
LIABILITIES
Payable for:
Securities purchased ................................... 0
Shares of the Fund redeemed ............................ 0
Accrued expenses:
Management fees (Note 3) ............................... 20,946
Trustees' fees (Note 3B) ............................... 357
Accounting and administration (Note 3A) ................ 1,334
Other expenses ......................................... 24,718
-----------
47,355
-----------
NET ASSETS ................................................. $16,821,783
===========
Net Assets consist of:
Capital paid in ........................................ 16,286,790
Undistributed (or Distributions in excess of) net
investment income .................................... 6,408
Accumulated net realized gain (loss) ................... (12,369)
Unrealized appreciation (depreciation) on investments
and foreign currency -- net .......................... 540,954
-----------
NET ASSETS ................................................. $16,821,783
===========
Shares of beneficial interest outstanding, no par value .... 1,615,222
===========
Computation of offering price:
Net asset value and redemption price per share
(Net assets / shares of beneficial interest outstanding) . $ 10.41
Identified cost of investments ............................. $15,954,915
===========
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- --------------------------------------------------------------------------------
Investment
Core Core Fixed High Yield Grade
Fixed Income Growth Income Fixed Income Fixed Income
Fund Fund Fund Fund Fund
----------- ----------- ------------ ----------- -----------
$15,610,014 $36,738,204 $159,381,268 $28,268,789 $79,823,024
154,000 2,744,000 1,929,000 1,931,000 1,682,000
----------- ----------- ------------ ----------- -----------
15,764,014 39,482,204 161,310,268 30,199,789 81,505,024
250 195 247 657 799
0 0 10,000,000 0 138,134
312,686 38,339 2,908,458 525,068 1,397,730
63,136 61,253 61,652 60,749 65,897
7,965 0 0 0 0
----------- ----------- ------------ ----------- -----------
16,148,051 39,581,991 174,280,625 30,786,263 83,107,584
----------- ----------- ------------ ----------- -----------
0 962,291 791,016 1,845,000 0
0 527 190,026 0 27,090
16,715 49,227 199,529 44,711 79,009
357 357 357 357 357
856 3,290 11,883 2,430 6,013
20,224 22,732 39,738 21,761 31,167
----------- ----------- ------------ ----------- -----------
38,152 1,038,424 1,232,549 1,914,259 143,636
----------- ----------- ------------ ----------- -----------
$16,109,899 $38,543,567 $173,048,076 $28,872,004 $82,963,948
=========== =========== ============ =========== ===========
15,764,013 35,029,380 167,010,763 29,594,894 80,053,056
0 0 (8,315) 704 166,580
(287) (22,925) 1,273,994 279,763 361,316
346,173 3,537,112 4,771,634 (1,003,357) 2,382,996
----------- ----------- ------------ ----------- -----------
$16,109,899 $38,543,567 $173,048,076 $28,872,004 $82,963,948
=========== =========== ============ =========== ===========
1,511,557 3,143,589 13,740,601 2,874,494 6,879,092
=========== =========== ============ =========== ===========
$ 10.66 $ 12.26 $ 12.59 $ 10.04 $ 12.06
$15,417,841 $35,945,092 $156,532,226 $31,203,008 $79,116,109
=========== =========== ============ =========== ===========
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1997
California Tax-
Free Income
Fund
---------------
INVESTMENT INCOME
Dividends* ................................................. $ 0
Interest ................................................... 817,538
----------
817,538
----------
Expenses
Management fees (Note 3) ................................. 77,450
Trustees' fees and expenses (Note 3B) .................... 1,424
Accounting and administrative fees (Note 3A) ............. 10,983
Custodian ................................................ 45,134
Transfer agent ........................................... 19,435
Audit and tax services ................................... 15,643
Legal .................................................... 7,909
Printing ................................................. 2,201
Registration ............................................. 35,475
Amortization of organization expenses (Note 1I) .......... 0
Miscellaneous ............................................ 2,347
----------
218,001
----------
Less expenses waived and reimbursed by the investment
adviser (Note 3) ....................................... (117,260)
----------
Net investment income ...................................... 716,797
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Realized gain (loss) on investments and foreign currency
-- net ................................................. 20,418
Unrealized appreciation (depreciation) on investments and
foreign currency -- net ................................ 367,627
----------
Net gain (loss) on investments and foreign currency
transactions ............................................. 388,045
----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS ........ $1,104,842
==========
* Net of foreign withholding taxes of $5,004, $982, and $576 for the Core
Growth, Fixed Income, and High Yield Fixed Income Funds, respectively.
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- -----------------------------------------------------------------------------
Investment
Core Core Fixed High Yield Grade
Fixed Income Growth Income Fixed Income Fixed Income
Fund Fund Fund Fund Fund
- -------------- ------------ ----------- ------------ ------------
$ 0 $ 418,649 $ 373,312 $ 124,243 $ 94,088
619,238 74,365 9,068,854 1,867,273 4,503,902
--------- ---------- ----------- ----------- ----------
619,238 493,014 9,442,166 1,991,516 4,597,990
--------- ---------- ----------- ----------- ----------
44,126 162,506 574,496 125,297 244,179
1,424 1,424 1,424 1,424 1,424
6,091 15,789 47,585 11,953 27,462
38,347 36,910 87,788 41,518 64,885
9,056 10,750 15,754 7,446 14,114
10,003 13,573 15,622 10,200 15,623
6,721 6,721 9,232 6,721 6,721
1,105 5,474 15,525 3,641 8,258
37,962 34,312 37,370 34,834 36,213
2,409 0 0 0 0
2,347 2,540 2,540 951 2,540
--------- ---------- ----------- ----------- ----------
159,591 289,999 807,336 243,985 421,419
--------- ---------- ----------- ----------- ----------
(102,202) (78,709) (60,854) (88,172) (85,697)
--------- ---------- ----------- ----------- ----------
561,849 281,724 8,695,684 1,835,703 4,262,268
--------- ---------- ----------- ----------- ----------
38,487 3,075,110 2,909,561 1,091,157 1,023,968
257,800 601,974 1,883,711 (1,050,300) 704,886
--------- ---------- ----------- ----------- ----------
296,287 3,677,084 4,793,272 40,857 1,728,854
--------- ---------- ----------- ----------- ----------
$ 858,136 $3,958,808 $13,488,956 $ 1,876,560 $5,991,122
========= ========== =========== =========== ==========
See accompanying notes to financial statements.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
California Tax-Free Income Fund
------------------------------------
Year Ended Year Ended
----------------- -----------------
December 31, 1997 December 31, 1996
----------------- -----------------
FROM OPERATIONS
Net investment income .................... $ 716,797 $ 485,327
Net realized gain (loss) on investments
and foreign currency -- net ............ 20,418 12,506
Unrealized appreciation (depreciation) on
investments and foreign currency -- net 367,627 (7,191)
----------- -----------
Increase (decrease) in net assets from
operations ............................. 1,104,842 490,642
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income .................... (719,537) (476,675)
Net realized gain on investments ......... (41,370) (6,098)
----------- -----------
Total distributions .................... (760,907) (482,773)
----------- -----------
FROM CAPITAL SHARES TRANSACTIONS
Proceeds from the sale of shares ......... 3,727,583 5,559,420
Net asset value of shares issued in connection
with the reinvestment of:
Dividends from net investment income ... 118,898 91,383
Distributions from net realized gain on
investments .......................... 8,267 1,043
----------- -----------
3,854,748 5,651,846
Cost of shares redeemed .................. (836,438) (80,000)
----------- -----------
Increase (decrease) in net assets derived
from capital share transactions ........ 3,018,310 5,571,846
----------- -----------
Total increase (decrease) in net assets 3,362,245 5,579,715
NET ASSETS
Beginning of period ...................... 13,459,538 7,879,823
----------- -----------
End of period ............................ $16,821,783 $13,459,538
=========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of period ...................... $ 9,074 $ 422
=========== ===========
End of period ............................ $ 6,408 $ 9,074
=========== ===========
NUMBER OF SHARES OF THE FUND:
Issued from the sale of shares ........... 364,171 549,758
Issued in connection with the reinvestment of:
Dividends from net investment income ... 11,591 9,033
Distributions from net realized gain on
investments .......................... 795 102
----------- -----------
376,557 558,893
Redeemed ................................. (82,667) (7,835)
----------- -----------
Net change ............................... 293,890 551,058
=========== ===========
*Commencement of operations on April 24, 1996.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
LOOMIS SAYLES INVESTMENT TRUST
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Core Fixed Income Fund Core Growth Fund
- -------------------------------------------------------- -------------------------------------------------
Year Ended For the Period Ended Year Ended Year Ended
- --------------------------- ---------------------- --------------------- ---------------------
December 31, 1997 December 31, 1996* December 31, 1997 December 31, 1996
- --------------------------- ---------------------- --------------------- ---------------------
<S> <C> <C> <C>
$ 561,849 $ 236,276 $ 281,724 $ 198,013
38,487 (3,622) 3,075,110 (334,718)
257,800 88,373 601,974 2,755,618
----------- ----------- ----------- -----------
858,136 321,027 3,958,808 2,618,913
----------- ----------- ----------- -----------
(560,414) (234,245) (284,442) (198,587)
(38,618) 0 (2,620,841) 0
----------- ----------- ----------- -----------
(599,032) (234,245) (2,905,283) (198,587)
----------- ----------- ----------- -----------
9,230,953 5,949,773 12,883,954 14,625,426
561,173 234,245 284,442 198,587
37,859 0 2,620,841 0
----------- ----------- ----------- -----------
9,829,985 6,184,018 15,789,237 14,824,013
(250,000) 0 (205,235) (2,947,260)
----------- ----------- ----------- -----------
9,579,985 6,184,018 15,584,002 11,876,753
----------- ----------- ----------- -----------
9,839,089 6,270,800 16,637,527 14,297,079
6,270,810 10 21,906,040 7,608,961
----------- ----------- ----------- -----------
$16,109,899 $ 6,270,810 $38,543,567 $21,906,040
=========== =========== =========== ===========
$ 2,031 $ 0 $ 1,831 $ 2,329
=========== =========== =========== ===========
$ 0 $ 2,031 $ 0 $ 1,831
=========== =========== =========== ===========
860,234 595,456 1,009,708 1,419,291
52,693 22,965 23,613 17,046
3,555 0 217,859 0
----------- ----------- ----------- -----------
916,482 618,421 1,251,180 1,436,337
(23,346) 0 (15,943) (287,257)
----------- ----------- ----------- -----------
893,136 618,421 1,235,237 1,149,080
=========== =========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS -- continued
Fixed Income Fund
------------------------------------
Year Ended Year Ended
----------------- -----------------
December 31, 1997 December 31, 1996
----------------- -----------------
FROM OPERATIONS
Net investment income .................... $ 8,695,684 $ 7,872,003
Net realized gain (loss) on investments
and foreign currency -- net ............ 2,909,561 3,866,845
Unrealized appreciation (depreciation) on
investments and foreign currency -- net 1,883,711 (950,519)
------------ -----------
Increase in net assets from operations ... 13,488,956 10,788,329
------------ -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income .................... (8,861,805) (7,817,191)
Net realized gain on investments ......... (3,350,264) (2,382,970)
------------ -----------
Total distributions .................... (12,212,069) (10,200,161)
------------ -----------
FROM CAPITAL SHARES TRANSACTIONS
Proceeds from the sale of shares ......... 86,055,071 59,500,558
Net asset value of shares issued in connection
with the reinvestment of:
Dividends from net investment income ... 8,742,552 6,322,412
Distributions from net realized gain on
investments .......................... 3,225,211 2,076,057
------------- ------------
98,022,834 67,899,027
Cost of shares redeemed .................. (17,997,654) (35,072,997)
------------- ------------
Increase (decrease) in net assets derived
from capital share transactions ........ 80,025,180 32,826,030
------------- ------------
Total increase (decrease) in net assets 81,302,067 33,414,198
NET ASSETS
Beginning of Period ...................... 91,746,009 58,331,811
------------ -----------
End of Period ............................ $173,048,076 $91,746,009
============ ===========
UNDISTRIBUTED NET INVESTMENT INCOME
Beginning of Period ...................... $ 241,283 $ 36,669
============ ===========
End of Period ............................ $ (8,315) $ 241,283
============ ===========
NUMBER OF SHARES OF THE FUND:
Issued from the sale of shares ........... 6,599,478 4,931,492
Issued in connection with the reinvestment of:
Dividends from net investment income ... 694,846 521,906
Distributions from net realized gain on
investments .......................... 252,204 171,575
------------ -----------
7,546,528 5,624,973
Redeemed ................................. (1,401,398) (2,859,895)
------------ -----------
Net change ............................... 6,145,130 2,765,078
============ ===========
*Commencement of operations on June 5, 1996.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
LOOMIS SAYLES INVESTMENT TRUST
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
High Yield Fixed Income Fund Investment Grade Fixed Income Fund
------------------------------------------------ ---------------------------------------------
Year Ended For the Period Ended Year Ended Year Ended
----------------- -------------------- ----------------- -----------------
December 31, 1997 December 31, 1996* December 31, 1997 December 31, 1996
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
$ 1,835,703 $ 160,475 $ 4,262,268 $ 2,262,850
1,091,157 13,644 1,023,968 978,367
(1,050,300) 46,943 704,886 214,006
----------- ---------- ----------- -----------
1,876,560 221,062 5,991,122 3,455,223
----------- ---------- ----------- -----------
(1,834,725) (160,804) (4,113,289) (2,263,848)
(811,668) (13,677) (884,327) (705,324)
----------- ---------- ----------- -----------
(2,646,393) (174,481) (4,997,616) (2,969,172)
----------- ---------- ----------- -----------
23,895,000 2,879,339 28,180,818 27,581,022
1,839,981 160,804 3,202,235 1,438,020
806,445 13,677 704,748 534,572
----------- ---------- ----------- -----------
26,541,426 3,053,820 32,087,801 29,553,614
0 0 (1,869,109) (103,745)
----------- ---------- ----------- -----------
26,541,426 3,053,820 30,218,692 29,449,869
----------- ---------- ----------- -----------
25,771,593 3,100,401 31,212,198 29,935,920
3,100,411 10 51,751,750 21,815,830
----------- ---------- ----------- -----------
$28,872,004 $3,100,411 $82,963,948 $51,751,750
=========== ========== =========== ===========
$ 0 $ 0 $ 43,660 $ (19,837)
=========== ========== =========== ===========
$ 704 $ 0 $ 166,580 $ 43,660
=========== ========== =========== ===========
2,304,814 287,934 2,322,895 2,335,474
183,995 15,765 269,640 124,548
80,644 1,341 58,314 44,998
----------- ---------- ----------- -----------
2,569,453 305,040 2,650,849 2,505,020
0 0 (154,352) (8,853)
----------- ---------- ----------- -----------
2,569,453 305,040 2,496,497 2,496,167
=========== ========== =========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
LOOMIS SAYLES INVESTMENT TRUST
- ------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Year Ended December 31,
<CAPTION>
California Tax-Free Income Fund
-----------------------------------------------
1997 1996 1995*
---- ---- -----
<S> <C> <C> <C>
Net asset value, beginning of period ........................ $ 10.19 $ 10.23 $ 10.00
------- ------- -------
Income from investment operations -
Net investment income (loss) .............................. 0.47 0.46 0.26
Net realized and unrealized gain (loss) on investments .... 0.25 (0.04) 0.23
------- ------- -------
Total from investment operations ........................ 0.72 0.42 0.49
------- ------- -------
Less distributions -
Dividends from net investment income ...................... (0.47) (0.45) (0.26)
Distributions from net realized capital gains ............. (0.03) (0.01) 0.00
------- ------- -------
Total distributions ..................................... (0.50) (0.46) (0.26)
------- ------- -------
Net asset value, end of period .............................. $ 10.41 $ 10.19 $ 10.23
======= ======= =======
Total return (%)(a)(c) ...................................... 7.3 4.1 4.9
Net assets, end of period (000) ............................. $16,822 $13,460 $ 7,880
Ratio of operating expenses to average
net assets (%)(b)(d) ...................................... 0.65 0.65 0.65
Ratio of net investment income to average
net assets (%)(b) ......................................... 4.62 4.58 5.30
Portfolio turnover rate (%)(a) .............................. 23.5 17.5 18.4
Average commission rate (e) ................................. -- -- --
The ratios of expenses to average net assets without giving
effect to the voluntary expense limitations described in
Note 3 to the Financial Statements would have been (%)(b) 1.41 1.26 1.62
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net
investment income per share would have been: .............. $ 0.39 $ 0.40 $ 0.22
* Commencement of operations on June 1, 1995.
+ Commencement of operations on April 24, 1996.
++ Commencement of operations on October 1, 1995.
(a) Periods less than one year are not annualized.
(b) Annualized for periods less than one year.
(c) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other
operating expenses.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this
reimbursement the Fund's ratio of operating expenses would have been higher.
(e) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average
commission rate per share for trades upon which commissions are charged. This rate generally does not
reflect mark-ups, mark-downs or spreads on shares traded on a principal basis.
</TABLE>
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- -----------------------------------------------------------------------------
Core Fixed Income Fund Core Growth Fund
- -------------------------- -----------------------------------------
1997 1996+ 1997 1996 1995++
- ------- ------ ------- ------- -------
$ 10.14 $10.00 $ 11.48 $ 10.02 $10.00
- ------- ------ ------- ------- ------
0.39 0.40 0.10 0.10 0.02
0.55 0.13 1.68 1.47 0.02
- ------- ------ ------- ------- ------
0.94 0.53 1.78 1.57 0.04
- ------- ------ ------- ------- ------
(0.39) (0.39) (0.10) (0.11) (0.02)
(0.03) 0.00 (0.90) 0.00 0.00
- ------- ------ ------- ------- ------
(0.42) (0.39) (1.00) (0.11) (0.02)
- ------- ------ ------- ------- ------
$ 10.66 $10.14 $ 12.26 $ 11.48 $10.02
======= ====== ======= ======= ======
9.2 5.3 15.7 15.6 0.4
$16,110 $6,271 $38,544 $21,906 $7,609
0.65 0.65 0.65 0.65 0.65
6.34 6.21 0.87 1.10 1.36
59.4 33.8 108.8 96.5 22.4
-- -- $0.0591 $0.0278 --
1.80 1.46 0.89 0.89 1.43
$ 0.32 $ 0.35 $ 0.07 $ 0.08 $ 0.01
+ Commencement of operations on April 24, 1996.
++ Commencement of operations on October 1, 1995.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
LOOMIS SAYLES INVESTMENT TRUST
- ------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - continued
Year Ended December 31,
<CAPTION>
Fixed Income Fund
--------------------------------------------------
1997 1996 1995*
-------- ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period ..................... $ 12.08 $ 12.08 $ 10.00
-------- ------- -------
Income from investment operations -
Net investment income (loss) ........................... 0.72 0.91 0.53
Net realized and unrealized gain (loss) on investments . 0.89 0.27 2.21
-------- ------- -------
Total from investment operations ..................... 1.61 1.18 2.74
-------- ------- -------
Less distributions -
Dividends from net investment income ................... (0.75) (0.90) (0.52)
Distributions from net realized capital gains .......... (0.35) (0.28) (0.14)
-------- ------- -------
Total distributions .................................. (1.10) (1.18) (0.66)
-------- ------- -------
Net asset value, end of period ........................... $ 12.59 $ 12.08 $ 12.08
======== ======= =======
Total return (%)(a)(c) ................................... 13.4 9.8 27.4
Net assets, end of period (000) .......................... $173,048 $91,746 $58,332
Ratio of operating expenses to average net assets
(%)(b)(d) .............................................. 0.65 0.62 0.75
Ratio of net investment income to average net assets
(%)(b) ................................................. 7.56 7.97 8.15
Portfolio turnover rate (%)(a) ........................... 41.3 90.4 76.0
The ratios of expenses to average net assets without
giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements would
have been (%)(b) ....................................... 0.70 0.62 0.83
Without giving effect to the voluntary expense limitations
described in Note 3 to the Financial Statements net
investment income per share would have been: ........... $ 0.72 $ 0.91 $ 0.52
* Commencement of operations on January 17, 1995.
+ Commencement of operations on June 5, 1996.
++ Commencement of operations on July 1, 1994.
(a) Periods less than one year are not annualized.
(b) Annualized for periods less than one year.
(c) Total returns would have been lower had the adviser not reduced its advisory fees and/or borne other
operating expenses.
(d) The adviser has agreed to reimburse a portion of the Fund's expenses during the period. Without this
reimbursement the Fund's ratio of operating expenses would have been higher.
</TABLE>
<PAGE>
<TABLE>
LOOMIS SAYLES INVESTMENT TRUST
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
High Yield
Fixed Income Fund Investment Grade Fixed Income Fund
- --------------------------------------- -----------------------------------------------------------------------------
1997 1996+ 1997 1996 1995 1994++
------- ------ ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
$ 10.16 $10.00 $ 11.81 $ 11.56 $ 9.57 $10.00
------- ------ ------- ------- ------- ------
0.70 0.56 0.83 0.80 0.75 0.41
0.20 0.21 0.37 0.40 2.05 (0.43)
------- ------ ------- ------- ------- ------
0.90 0.77 1.20 1.20 2.80 (0.02)
------- ------ ------- ------- ------- ------
(0.71) (0.56) (0.81) (0.79) (0.76) (0.41)
(0.31) (0.05) (0.14) (0.16) (0.05) 0.00
------- ------ ------- ------- ------- ------
(1.02) (0.61) (0.95) (0.95) (0.81) (0.41)
------- ------ ------- ------- ------- ------
$ 10.04 $10.16 $ 12.06 $ 11.81 $ 11.56 $ 9.57
======= ====== ======= ======= ======= ======
8.8 7.7 10.6 10.9 30.3 (0.3)
$28,872 $3,100 $82,964 $51,752 $21,816 $4,649
0.75 0.75 0.55 0.55 0.55 0.55
8.82 9.42 6.97 7.27 7.61 8.18
94.3 9.1 58.3 73.8 21.6 112.0
1.17 2.73 0.69 0.70 0.94 1.55
$ 0.67 $ 0.44 $ 0.81 $ 0.78 $ 0.71 $ 0.36
+ Commencement of operations on June 5, 1996.
++ Commencement of operations on July 1, 1994.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. Loomis Sayles Investment Trust (the "Trust") consists of eight no-load
mutual funds (the "Funds").
The Trust was organized as a Massachusetts business trust under the laws of
the Commonwealth of Massachusetts on December 23, 1993. The Trust is a
diversified, open-end management investment company registered with the
Securities and Exchange Commission under the Investment Company Act of 1940,
as amended (the "1940 Act"), the interests in which were registered for offer
and sale, effective March 7, 1997, under the Securities Act of 1933, as
amended (the "1933 Act"). The Trust is authorized to issue an unlimited number
of full and fractional shares of beneficial interest in multiple series.
Each Fund is separately managed and has its own investment objective and
policies. Loomis, Sayles & Company, L.P. ("Loomis Sayles") is the investment
adviser of each fund.
The Trust consists of the following Funds:*
Loomis Sayles California Tax-Free Income 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 Intermediate Duration Fixed Income Fund**
Loomis Sayles Investment Grade Fixed Income Fund
* An additional series of the Trust has not been registered for offer and sale
under the 1933 Act and the information contained in this report does not
relate to that series.
** On January 28, 1998, Loomis Sayles Intermediate Duration Fixed Income Fund
commenced investment operations.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. The following summarizes the
significant accounting policies of the Loomis Sayles Investment Trust Funds:
A. SECURITY VALUATION -- Long term debt securities for which quotations are
readily available are valued by a pricing service, as approved by the Board of
Trustees, which generally uses the most recent bid prices in the principal
market in which such securities are normally traded. Municipal debt securities
are valued by a pricing service, as approved by the Board of Trustees, which
generally uses a computerized matrix system or dealer supplied quotations that
consider market transactions for comparable securities. Equity securities for
which quotations are readily available are valued at their last sale price on
the exchange where primarily traded or, if there is no reported sale during
the day, at the closing bid price. Short-term securities with a remaining
maturity of 60 days or less are valued at amortized cost, which approximates
market value. Other securities for which quotations are not readily available
(including restricted securities, if any) are valued primarily using dealer
supplied quotations or at their fair values as determined in good faith under
the general supervision of the Board of Trustees.
B. REPURCHASE AGREEMENTS -- The Funds engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Funds
take possession of an underlying debt obligation subject to an obligation of
the seller to repurchase, and the Funds to resell, the obligation at an
agreed-upon price and time. This arrangement results in a fixed rate of return
that is not subject to market fluctuations during the Funds' holding period.
The Funds, through their custodian, receive delivery of the underlying
securities collateralizing repurchase agreements. It is the funds' policy that
the market value of the collateral be at least equal to 102% of the repurchase
price. These securities are marked-to-market daily. Loomis Sayles is
responsible for determining that the value of the collateral is at all times
at least equal to 102% of the repurchase price. In connection with
transactions in repurchase agreements, if the seller defaults and the value of
the collateral declines or if the seller enters into insolvency proceedings,
realization of the collateral by the Funds may be delayed or limited.
C. FOREIGN CURRENCY TRANSLATION -- The books and records of each of the Funds
(including those Funds that invest in foreign securities) are maintained in
U.S. dollars. The value of securities, currencies and other assets and
liabilities denominated in currencies other than U.S. dollars is translated
into U.S. dollars based upon foreign exchange rates prevailing at the end of
the period. Purchases and sales of investment securities are translated at
contractual currency exchange rates established at the time of the trade.
Income and expenses are translated at prevailing exchange rates on the
respective dates of such transactions.
The results of operations resulting from changes in foreign exchange rates on
investments are not isolated from fluctuations arising from changes in market
prices of securities held. All such fluctuations are included with net
realized and unrealized gain or loss from investments.
Net realized and unrealized gains and losses on foreign currency transactions
represent foreign exchange gains and losses from the sale of short-term
securities and holdings of foreign currencies, foreign currency gains and
losses between trade dates and settlement dates on investment securities
transactions, sales and maturities of forward foreign currency contracts, and
the difference between the amounts of daily interest accruals on the books of
the Funds and the amounts actually received resulting from changes in exchange
rates on the payable date.
Certain Funds use foreign currency contracts to facilitate transactions in
foreign-denominated securities. Losses may arise from changes in the value of
the foreign currency or if the counterparties do not perform under the
contracts' terms. The U.S. dollar value of foreign currency contracts is
determined using contractual currency exchange rates established at the time
of each trade. The cost of the foreign currency contracts is included in the
cost basis of the associated investment.
D. FORWARD FOREIGN CURRENCY CONTRACTS -- Each Fund that may invest in foreign
securities may enter into forward foreign currency contracts, which are
agreements between two parties to buy and sell currencies at a set price on a
future date, to protect the value of specific portfolio positions or in
anticipation of changes in relative values of currencies in which current or
future fund portfolio holdings will be denominated.
Forward currency contracts are valued at the forward currency exchange rate
and marked-to-market daily. The change in market value is recorded as
unrealized appreciation (depreciation) on foreign currency transactions in the
Funds' Statements of Assets and Liabilities. Realized gains (losses) at the
close of a contract are recorded as realized gain (loss) on foreign currency
transactions in the Funds' Statements of Operations.
The use of forward foreign exchange contracts does not eliminate fluctuations
in the underlying price of the Fund's investment securities, but does
establish a rate of exchange that can be achieved in the future. Although
forward foreign currency exchange contracts limit the risk of loss due to a
decline in the value of hedged currency, they also limit any potential gain
that might result should the value of the currency increase. In addition, the
Funds could be exposed to additional risks if the counterparties to the
contracts are unable to meet the terms of their contracts. At December 31,
1997 there were no open forward foreign exchange contracts.
E. SECURITY TRANSACTIONS, RELATED INVESTMENT INCOME AND EXPENSES -- Security
transactions are accounted for on the trade date (the date the buy or sell is
executed). Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Interest income is increased by the
accretion of discount. Discounts on zero coupon bonds, original issues, step
bonds and payment in kind bonds are accreted according to the effective
interest method. Interest income on the California Tax-Free Income Fund is
reduced by the amortization of premium. Premiums are amortized using the yield
to maturity method. In determining net gain or loss on securities sold, the
cost of securities are determined on the identified cost basis.
Most expenses of the Trust are directly attributed to a particular fund.
Expenses which cannot be directly attributed are apportioned between funds in
the Trust.
F. WHEN-ISSUED SECURITIES -- Delivery and payment for securities purchased on
a when-issued or delayed delivery basis can take place one month or more after
the date of the transactions. The price of the underlying securities and the
date when the securities will be delivered and paid for are fixed at the time
the transaction is negotiated. Losses may arise due to changes in the market
value of the underlying securities or if the counterparty does not perform
under the contract. Each Fund instructs the custodian to segregate assets in a
separate account with a current value at least equal to the amount of its
when-issued purchase commitments. At December 31, 1997, the Funds had no such
commitments.
G. FEDERAL INCOME TAXES -- Each Fund is a separate entity for federal income
tax purposes. Each Fund intends to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies, and to distribute
to its shareholders all of its net investment income and any net realized
capital gains. Accordingly, no provision for federal income tax or excise tax
has been made.
H. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The California Tax-Free
Income and the Investment Grade Fixed Income Funds pay their net investment
income monthly. The Core Fixed Income, Core Growth, Fixed Income and High
Yield Fixed Income Funds pay their net investment income to shareholders
annually. Distributions from net realized capital gains, if any, are declared
and paid on an annual basis by all of the Funds. Income and capital gain
distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These differences,
which may result in reclassifications to the Fund's capital accounts to
reflect income and gains available for distribution, are primarily due to
differing treatments for foreign currency transactions, deferred losses due to
wash sales and excise tax regulations. Some of these classifications may
include temporary book and tax basis differences that will reverse in
subsequent periods.
I. ORGANIZATION EXPENSE -- In 1996, costs approximating $11,970 were incurred
in connection with the organization of the Core Fixed Income Fund. These costs
were paid by the Fund and are being amortized over 60 months.
2. PURCHASES AND SALES OF SECURITIES -- (excluding short-term investments)
for each Fund for the period ended December 31, 1997 were as follows:
Purchases
------------------------------------
U.S. Government Other
--------------- -----
California Tax-Free Income Fund ......... $ 505,000 $ 6,306,089
Core Fixed Income Fund .................. 10,721,310 3,717,433
Core Growth Fund ........................ 0 45,961,159
Fixed Income Fund ....................... 24,318,333 85,809,650
High Yield Fixed Income Fund ............ 4,270,781 38,562,399
Investment Grade Fixed Income Fund ...... 13,516,284 48,064,541
Sales
--------------------------------
U.S. Government Other
--------------- -----
California Tax-Free Income Fund ......... $ 500,000 $ 2,995,474
Core Fixed Income Fund .................. 4,059,499 1,095,304
Core Growth Fund ........................ 0 33,934,737
Fixed Income Fund ....................... 8,152,157 38,822,502
High Yield Fixed Income Fund ............ 4,201,031 14,087,944
Investment Grade Fixed Income Fund ...... 14,512,471 20,233,505
3. MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES -- During the
period ended December 31, 1997, the Funds incurred management fees payable to
Loomis Sayles. Certain officers and employees of Loomis Sayles are also
officers or Trustees of the Trust. Loomis Sayles' general partner is
indirectly owned by New England Investment Companies, L.P., a publicly-traded
limited partnership whose general partner is indirectly owned by
Metropolitan Life Insurance Company. Separate management agreements for each
Fund in effect during the period ended December 31, 1997 provided for fees at
the following annual percentage rate of each Fund's average daily net assets:
Fund Annual Percentage Rate
---- ----------------------
California Tax-Free Income Fund ............. 0.50%
Core Fixed Income Fund ...................... 0.50%
Core Growth Fund ............................ 0.50%
Fixed Income Fund ........................... 0.50%
High Yield Fixed Income Fund ................ 0.60%
Investment Grade Fixed Income Fund .......... 0.40%
Loomis Sayles voluntarily agreed, for an indefinite period, to reduce its
advisory fees and/or bear other expenses, to the extent necessary to limit the
total operating expenses of the Funds to the following percentage rate of each
of the Fund's average annual net assets:
Amount Fund
Waived/ Percentage
Fund Reimbursed Rate
---- ---------- ----
California Tax-Free Income Fund .................. $117,260 0.65%
Core Fixed Income Fund ........................... 102,202 0.65%
Core Growth Fund ................................. 78,709 0.65%
Fixed Income Fund ................................ 60,854 0.65%
High Yield Fixed Income Fund ..................... 88,172 0.75%
Investment Grade Fixed Income Fund ............... 85,697 0.55%
Loomis Sayles may change or terminate these voluntary agreements at any time,
but the relevant prospectus would be supplemented at the time to describe the
change.
A. OTHER EXPENSES -- Through May 31, 1997, Loomis Sayles performed certain
administrative, accounting and other services for the Trust. For the period
ended May 31, 1997, these expenses amounted to $39,429 for the six Loomis
Sayles Investment Trust Funds and are shown separately in the financial
statements as accounting and administrative fees. Effective June 1, 1997, the
Trust contracted with State Street Bank and Trust Company ("State Street") to
perform these services for the Trust.
B. TRUSTEES FEES AND EXPENSES -- The Trust does not pay any compensation
directly to its officers or Trustees who are directors, officers or employees
of Loomis Sayles, The New England or their affiliates. Each independent
Trustee is compensated by the Trust at the rate of $10,000 per annum, plus
travel expenses for each meeting attended. These expenses are allocated evenly
among the Funds in the Trust.
4. RISKS: CREDIT -- The High Yield Fixed Income Funds will invest at least
65%, the Fixed Income may invest up to 35%, and the Investment Grade Fixed
Income may invest up to 10% of its total net assets in securities offering
high current income, which generally will be in the lower rating categories of
recognized rating agencies. These securities are regarded as predominantly
speculative with respect to the capacity to pay interest and repay principal
in accordance with the terms of the obligations and will generally involve
more credit risk than securities in the higher-rated categories. In addition,
the trading market for high yield securities may be relatively less liquid
than the market for higher-rated securities.
5. CONCENTRATION -- The California Tax-Free Income Fund primarily invests in
debt obligations issued by the State of California, its political
subdivisions, agencies and public authorities to obtain funds for various
public purposes. The Fund is more susceptible to factors adversely affecting
issuers of California municipal securities than is a municipal bond fund that
does not concentrate its investments in the securities of issuers of a single
state.
6. FOREIGN SECURITIES -- Each Fund (except the California Tax-Free Income
Fund) may purchase securities of foreign issuers. Investing in securities of
foreign companies and foreign governments involves special risks and
considerations not typically associated with investing in U.S. companies and
securities of the U.S. government. These risks include revaluation of
currencies and the risk of appropriation. Moreover, the markets for securities
of many foreign companies and foreign governments may be less liquid, and the
prices of such securities may be more volatile than those securities of
comparable U.S. companies and the U.S. government.
1997 U.S. TAX AND DISTRIBUTION INFORMATION TO SHAREHOLDERS (UNAUDITED)
A. CAPITAL GAINS DISTRIBUTIONS -- Pursuant to Internal Revenue Section
852(b), the distributions set forth below have been designated as capital
gains distributions for the fiscal year ended December 31, 1997:
28% Rate 20% Rate
Gain Amount Gain Amount
----------- -----------
California Tax-Free Income Fund .................. $ 19,664 $ 17,287
Core Fixed Income Fund ........................... 8,734 0
Core Growth Fund ................................. 1,034,703 693,667
Fixed Income Fund ................................ 1,886,396 771,996
High Yield Fixed Income Fund ..................... 83,515 0
Investment Grade Fixed Income Fund ............... 247,871 442,492
On August 5, 1997, the Taxpayer Relief Act (the "Act") of 1997 was enacted.
Under the Act, the maximum capital gain rate for individuals on net gains from
investment activities was reduced from 28% to 20% (10% for persons taxed at a
15% rate) depending on both the holding period of the investment and the date
the investment was sold. Capital gains realized from transactions that do not
meet the prescribed transition and holding period rules of the Act will
continue to be taxed at a maximum rate of 28%.
B. CORPORATE DIVIDENDS RECEIVED DEDUCTION -- For the fiscal year ended
December 31, 1997, 31. 99% of the ordinary dividends distributed by the Core
Growth Fund, 3.83% by the Fixed Income Fund, 4.30% by the High Yield Fixed
Income Fund, and 2.18% by the Investment Grade Fixed Income Fund, qualify for
the dividends received deduction for corporate shareholders.
C. INCOME DERIVED FROM TREASURY OBLIGATIONS -- Of the ordinary dividends
distributed during the fiscal year, the percentages as indicated below by
Fund, by obligation type, was derived from U.S. government, or its agencies.
Income earned on these obligations may be exempt from state income tax as
applicable:
High Investment
California Yield Grade
Tax-Free Core Fixed Fixed Fixed Fixed
Income Income Income Income Income
Fund Fund Fund Fund Fund
---- ---- ---- ---- ----
U.S Treasury Obligations (a) . 0.00% 25.21% 2.11% 0.20% 2.90%
Other Direct U.S.
Government Obligations (b) . 0.00 0.00 0.00 0.00 0.00
Other Indirect U.S.
Government Obligations (c) . 53.55 12.93 1.82 0.00 2.40
----- ----- ---- ---- ----
Total U.S. Government Income . 53.55% 38.14% 3.93% 0.20% 5.30%
(a) Treasury obligations include bills, notes and bonds.
(b) Other Direct U.S. Government Obligations includes Federal Farm Credit and
Federal Home Loan Banks.
(c) Other Indirect U.S. Government Obligations include Federal Home Loan
Mortgage Corporation, Federal National Mortgage Corporation and Government
National Mortgage Association.
D. EXEMPT INTEREST DIVIDENDS -- Of the dividends paid by the California Tax-
Free Income Fund from net investment income for the taxable year ended
December 31, 1997, 91.66% constituted exempt interest dividends for Federal
income tax purposes.
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustee of the
Loomis Sayles Investment Trust Funds:
We have audited the accompanying statements of assets and liabilities of
the Loomis Sayles Investment Trust Funds (consisting of the Loomis Sayles
California Tax-Free Income Fund, Core Growth Fund, Core Fixed Income Fund,
Fixed Income Fund, High Yield Fixed Income Fund, and Investment Grade Fixed
Income Fund) (collectively, the "Funds"), including the schedules of portfolio
investments, as of December 31, 1997 and the related statements of operations,
statements of changes in net assets and financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1997 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
the Loomis Sayles Investment Trust Funds as of December 31, 1997, the results
of their operations, the changes in their net assets and the financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
February 23, 1998
<PAGE>
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<PAGE>
=========================================================================
LOOMIS SAYLES INVESTMENT TRUST
=========================================================================
TRUSTEE
Timothy J. Hunt
OFFICERS
PRESIDENT
Daniel J. Fuss
EXECUTIVE VICE PRESIDENT TREASURER
Robert J. Blanding Mark W. Holland
VICE PRESIDENTS ASSISTANT TREASURER
William F. Camp Nicholas H. Palmerino
William J. Driscoll
Quentin P. Faulkner SECRETARY AND
Kathleen C. Gaffney COMPLIANCE OFFICER
Jeffrey L. Meade Sheila M. Barry
Robert K. Payne
Mari J. Sugahara ASSISTANT SECRETARIES
Anthony J. Wilkins Margaret W. Chambers
Laurie M. Gallagher
Bonnie S. Thompson
<PAGE>
================================================================================
LOOMIS SAYLES INVESTMENT TRUST
================================================================================
For Information about:
o Establishing an account
o Account procedures and status
o Exchanges
o Shareholder services
Phone 888-226-9699 (toll free)
INVESTMENT ADVISER
Loomis Sayles & Company, L.P. o One Financial Center o Boston, MA 02111
TRANSFER AND DIVIDEND PAYING AGENT AND CUSTODIAN OF ASSETS
State Street Bank and Trust Company o Boston, MA 02102
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. o One Post Office Square o Boston, MA 02109
This report has been prepared for the shareholders of the Funds and
is not authorized for distribution to prospective investors in the
Funds unless it is accompanied or preceded by an effective
prospectus.
