<PAGE>
As filed with the Securities and Exchange Commission on March 3, 1999
Registration Nos. 333-22931 and 811-8282
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. 5 [X]
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 15 [X]
(Check appropriate box or boxes)
---------------------------
LOOMIS SAYLES INVESTMENT TRUST
(Exact name of registrant as specified in charter)
One Financial Center, Boston, MA 02111
(Address of principal executive offices)
Registrant's Telephone Number, Including Area Code: (617) 482-2450
Name and address
of agent for service Copy to
-------------------- -------
Sheila M. Barry, Esq. John M. Loder, Esq.
Loomis, Sayles & Company, L.P. Ropes & Gray
One Financial Center One International Place
Boston, MA 02111 Boston, MA 02110
Approximate date of proposed public offering:
It is proposed that this filing will become effective (check appropriate box):
[_] Immediately upon filing pursuant to paragraph (b)
[_] On _____________ pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] On _____________ pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[_] On _____________ pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
---------------------------
<PAGE>
Loomis Sayles Investment Trust
Cross Reference Sheet Pursuant to Rule 481(a)
Items Required by Form N-1A
PART A
Item No. Registration Statement Caption Caption in Prospectuses
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; The Trust;
Investment Objective and
Policies; and More Information
About the Fund's Investments
5. Management of the Fund Cover Page; The Trust; The
Fund's Investment Adviser;
Fund Expenses; and Portfolio
Transactions
5A. Management's Discussion of Fund Not applicable
Performance
6. Capital Stock and Other Securities Cover Page; The Trust; How to
Redeem Shares; and Dividends,
Capital Gain Distributions and
Taxes; and Other Information
7. Purchase of Securities Being Offered How to Purchase Shares
8. Redemption or Repurchase How to Redeem Shares
<PAGE>
9. Pending Legal Proceedings Not applicable
PART B
Item No. Registration Statement Caption Caption in Statements of
Additional Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not applicable
13. Investment Objectives and Policies Investment Objective, Policies
and Restrictions
14. Management of the Fund Management of the Trust
15. Control Persons and Principal Management of the Trust
Holders of Securities
16. Investment Advisory and Other Investment Advisory and Other
Services Services
17. Brokerage Allocation and Other Portfolio Transactions and
Practices Brokerage
18. Capital Stock and Other Securities How to Redeem Shares
(Prospectus); Redemptions;
Dividends, Capital Gain
Distributions and Taxes
(Prospectus); Income
Dividends, Capital Gain
Distributions and Tax Status;
and Description of the Trust
19. Purchase, Redemption and Pricing of How to Purchase Shares
Securities Being Offered (Prospectus); How to Redeem
Shares (Prospectus);
Redemptions; and Net Asset
Value
<PAGE>
20. Tax Status Dividends, Capital Gain
Distributions and Taxes
(Prospectus); Income
Dividends, Capital Gain
Distributions and Tax Status
21. Underwriters Not applicable
22. Calculations of Performance Data Calculation of Yield and Total
Return; Performance
Comparisons; and Performance
Data
23. Financial Statements Financial Statements
PART C
This Post-Effective Amendment relates solely to the Loomis Sayles Small Cap
Value Fund, a series of Loomis Sayles Investment Trust. Information contained in
the Registrant's Registration Statement relating to any other series of the
Registrant is neither amended nor superseded hereby. The information required to
be included in Part C is set forth under the appropriate Item, so numbered, in
Part C of the Registration Statement.
<PAGE>
Part C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements:
See the section entitled "Financial Highlights" in the
Prospectus.
(b) Exhibits:
1. Agreement and Declaration of Trust.(4)
2. By-Laws.(4)
3. Not applicable.
4. Not applicable.
5a. Investment Advisory Agreement between the Trust and Loomis
Sayles California Tax-Free Income Fund. (1)
5b. Investment Advisory Agreement between the Trust and Loomis
Sayles Core Fixed Income Fund. (1)
5c. Investment Advisory Agreement between the Trust and the
Loomis Sayles Core Growth Fund.(1)
5d. Investment Advisory Agreement between the Trust and Loomis
Sayles Fixed Income Fund.(1)
5e. Investment Advisory Agreement between the Trust and Loomis
Sayles High Yield Fixed Income Fund.(1)
5f. Investment Advisory Agreement between the Trust and Loomis
Sayles Intermediate Duration Fund. (5)
5g. Investment Advisory Agreement between the Trust and Loomis
Sayles Investment Grade Fixed Income Fund.(1)
5h. Form of Investment Advisory Agreement between the Trust and
Loomis Sayles Small Cap Growth Fund. (6)
5i. Form of Investment Advisory Agreement between the Trust and
Loomis Sayles Small Cap Value Fund.
6. Not applicable.
<PAGE>
7. Not applicable.
8a. Form of Custodian Agreement.(4)
8b. Form of Letter Agreement between the Trust and State Street
Bank and Trust Company relating to the applicability of the
Custodian Agreement to Loomis Sayles Small Cap Growth Fund
to be filed by amendment.
8c. Form of Letter Agreement between the Trust and State Street
Bank and Trust Company relating to the applicability of the
Custodian Agreement to Loomis Sayles Small Cap Value Fund to
be filed by amendment.
9a. Form of Transfer Agency Agreement.(4)
9b. Form of Letter Agreement between the Trust and State Street
Bank and Trust Company relating to the applicability of the
Transfer Agency and Service Agreement to Loomis Sayles Small
Cap Growth Fund to be filed by amendment.
9c. Form of Letter Agreement between the Trust and State Street
Bank and Trust Company relating to the applicability of the
Transfer Agency and Service Agreement to Loomis Sayles Small
Cap Value Fund to be filed by amendment.
10a. Opinion of Counsel.(2)
10b. Form of Opinion and Consent of Counsel relating to Loomis
Sayles Small Cap Growth Fund to be filed by amendment.
10c. Form of Opinion and Consent of Counsel relating to Loomis
Sayles Small Cap Value Fund to be filed by amendment.
11. Not applicable.
12. Not applicable.
13. Not applicable.
14. Not applicable.
15. Not applicable.
16. Schedule for Computation of Performance Information. (2)
17. Not applicable.
<PAGE>
18. Not applicable.
19. Powers of Attorney.(3)
- --------------------------------------------------------------------------------
(1) Incorporated by reference to the similarly numbered Exhibit to Amendment No.
8 to the Trust's Registration Statement under the Investment Company Act of 1940
filed with the Commission on November 13, 1996.
(2) Incorporated by reference to the similarly numbered Exhibit to the Trust's
Registration Statement under the Securities Act of 1933 filed with the
Commission on March 7, 1997.
(3) Incorporated by reference to the similarly numbered Exhibit to
Post-Effective Amendment No. 1 to the Trust's Registration Statement under the
Securities Act of 1933 filed with the Commission on September 5, 1997.
(4) Incorporated by reference to the similarly numbered Exhibit to
Post-Effective Amendment No. 2 to the Trust's Registration Statement under the
Securities Act of 1933 filed with the Commission on April 21, 1998.
(5) Incorporated by reference to the similarly numbered Exhibit to Amendment No.
13 to the Trust's Registration Statement under the Investment Company Act of
1940 filed with the Commission on November 30, 1998.
(6) Incorporated by reference to the similarly numbered Exhibit to Amendment No.
14 to the Trust's Registration Statement under the Investment Company Act of
1940 filed with the Commission on January 8, 1999.
Item 25. Persons Controlled by or Under Common Control with Registrant
-------------------------------------------------------------
Not applicable.
Item 26. Number of Holders of Securities
-------------------------------
Not applicable.
Item 27. Indemnification
---------------
Article VIII of the Registrant's Agreement and Declaration of Trust
(Exhibit 1 hereto) and Article 4 of the Registrant's By-Laws (Exhibit
2 hereto) provide for indemnification of its trustees and officers.
The effect of these provisions is to provide indemnification for each
of the Registrant's trustees and officers against liabilities and
counsel fees reasonably incurred in connection with the defense of any
legal proceeding in which such trustee or officer may be involved by
reason of being or having been a trustee or officer, except with
respect to any matter as
<PAGE>
to which such trustee or officer shall have been adjudicated not to
have acted in good faith and in the reasonable belief that such
trustee's or officer's action was in the best interest of the
Registrant, and except that no trustee or officer shall be indemnified
against any liability to the Registrant or its shareholders to which
such trustee or officer otherwise would be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such trustee's or officer's
office.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
Loomis Sayles, the investment adviser of the Registrant, provides
investment advice to eighteen series of the Loomis Sayles Funds, six
series of New England Funds Trust I, one series of New England Funds
Trust II, one series of New England Funds Trust III and two series of
New England Zenith Funds, all of which are registered investment
companies, and to other registered investment companies, organizations
and individuals.
The sole general partner of Loomis Sayles is Loomis, Sayles & Company,
Inc., One Financial Center, Boston, Massachusetts 02111.
Item 29. Principal Underwriters
----------------------
Not applicable.
Item 30. Location of Accounts and Records
--------------------------------
The following companies maintain possession of the documents required
by the specified rules:
(a) Registrant
Rule 31a-1(b)(4), (9), (10), (11)
Rule 31a-2(a)
(b) State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Rule 31a-1(a)
Rule 31a-1(b)(1), (2), (3), (5), (6), (7), (8)
Rule 31a-2(a)
(c) Loomis, Sayles & Company, L.P.
One Financial Center
Boston, MA 02111
Rule 31a-1(f)
Rule 31a-2(e)
<PAGE>
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
(a) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
(b) The Registrant undertakes, if requested to do so by the holders
of at least 10% of the Registrant's outstanding shares, to call a
meeting of shareholders for the purpose of voting upon the
question of removal of a trustee or trustees and to assist in
communications with other shareholders as required by Section
16(c) of the Investment Company Act of 1940.
(c) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
provisions of the Registrant's Agreement and Declaration of Trust
and By-laws, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
* * * * * * * * * * *
NOTICE
A copy of the Agreement and Declaration of Trust of Loomis Sayles
Investment Trust (the "Trust") is on file with the Secretary of The Commonwealth
of Massachusetts and the Clerk of the City of Boston and notice is hereby given
that this instrument has been executed on behalf of the Trust by an officer of
the Trust as an officer and not individually and the obligations of or arising
out of this instrument are not binding upon any of the Trustees, officers or
shareholders individually but are binding only upon the assets and property of
the Trust.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, in The Commonwealth of Massachusetts, on the
3rd day of March, 1999.
LOOMIS SAYLES INVESTMENT TRUST
By: DANIEL J. FUSS*
---------------------------
Daniel J. Fuss
President
*By: /s/ MARK W. HOLLAND
---------------------------
Mark W. Holland
Attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
DANIEL J. FUSS* President March 3, 1999
- ------------------------ (principal executive
Daniel J. Fuss officer)
MARK W. HOLLAND Treasurer March 3, 1999
- ------------------------ (principal financial
Mark W. Holland and accounting officer)
TIMOTHY J. HUNT* Trustee March 3, 1999
- ------------------------
Timothy J. Hunt
*By: /s/ MARK W. HOLLAND
- ------------------------
Mark W. Holland
Attorney-in-fact
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
LOOMIS SAYLES SMALL CAP VALUE FUND
One Financial Center
Boston, Massachusetts 02111
(888) 226-9699
PROSPECTUS
May 17, 1999
The Loomis Sayles Investment Trust (the "Trust") is a group of nine mutual
funds including the Loomis Sayles Small Cap Value Fund (the "Fund"). The other
series, which are described in separate prospectuses, are:
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
Loomis Sayles Small Cap Growth Fund
Except for the California Tax-Free Income Fund, the funds are designed
specifically for tax-exempt investors such as pension plans, endowments and
foundations, although other institutions and high net-worth individuals are
eligible to invest. Each of the funds is separately managed and has its own
investment objective and policies. Loomis, Sayles & Company, L.P. ("Loomis
Sayles") is the investment adviser of each of the funds.
This Prospectus concisely describes the information that you should know
before investing in the Fund. Please read it carefully and keep it for future
reference. A Statement of Additional Information dated May 17, 1999 is available
free of charge; to obtain a free copy or to make any inquiries about the Fund
write to Loomis Sayles Investment Trust, One Financial Center, Boston,
Massachusetts 02111 or telephone (888) 226-9699. The Statement of Additional
Information, which contains more detailed information about the Fund, has been
filed with the Securities and Exchange Commission (the "SEC") and is
incorporated by reference into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF EXPENSES..........................................................-3-
THE TRUST....................................................................-4-
INVESTMENT OBJECTIVE AND POLICIES............................................-4-
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS................................-4-
THE FUND'S INVESTMENT ADVISER................................................-8-
FUND EXPENSES................................................................-9-
PORTFOLIO TRANSACTIONS.......................................................-9-
HOW TO PURCHASE SHARES.......................................................-9-
HOW TO REDEEM SHARES........................................................-10-
OTHER INFORMATION...........................................................-10-
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES.............................-11-
-2-
<PAGE>
SUMMARY OF EXPENSES
The following information is provided to assist you in understanding the
various costs and expenses that, as an investor in the Fund, you will bear
directly or indirectly. The information is based on estimated expenses for the
Fund's first fiscal year. The information below should not be considered a
representation of past or future expenses, as actual expenses may be greater or
less than those shown. Also, the assumed 5% annual return in the example should
not be considered a representation of investment performance, as actual
performance will depend upon the actual investment results of securities held in
the Fund's portfolio.
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on
Purchases (as a percentage of offering price) none
Maximum Sales Load Imposed on
Reinvested Dividends (as a percentage of
offering price) none
Deferred Sales Load (as a percentage of original
purchase price or redemption
proceeds as applicable) none
Redemption Fees (as a percentage of amount redeemed) none
Exchange Fees none
Annual Fund Operating Expenses
(as a percentage of average net assets):
Management Fees 0.75%
12b-1 Fees none
Other Operating Expenses
(after expense limitation)1 0.15%
Total Fund Operating Expenses (after expense
limitation)1 0.90%
Example
You would pay the following expenses on a $1,000
investment assuming a 5% annual return (with or
without a redemption at the end of each time period):
One Year $9
Three Years $29
- ------------------------------
[1 Loomis Sayles has voluntarily undertaken for an indefinite period to limit
the Fund's total Fund operating expenses to the percentage of average net assets
shown above. In the absence of the voluntary expense limitation, Other Operating
Expenses and Total Fund Operating Expenses for the most recent fiscal year would
have been 0.51% and 1.26%, respectively.]
-3-
<PAGE>
THE TRUST
The Fund is a series of the Trust. The Trust is a diversified open-end
management investment company which was organized as a Massachusetts business
trust on December 23, 1993. The Trust is authorized to issue an unlimited number
of full and fractional shares of beneficial interest in multiple series. Shares
are freely transferable and entitle shareholders to receive dividends as
determined by the Trust's board of trustees (the "Trustees") and to cast a vote
for each share held (with a fractional vote for each fractional share held) at
shareholder meetings. The Trust does not generally hold shareholder meetings and
will do so only when required by law. Shareholders may call meetings to consider
removal of the Trustees.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term capital growth from
investments in common stocks or their equivalent.
The Fund seeks to attain its objective by investing primarily in equity
securities of small capitalization companies with good earnings growth potential
that Loomis Sayles believes are undervalued by the market. Under normal market
conditions, the Fund will invest at least 65% of its total assets in equity
securities of companies with market capitalizations that fall within the
capitalization range of the Russell 2000 Index and may invest up to 35% of its
total assets in larger companies. Loomis Sayles seeks to build a core small
capitalization portfolio of stocks of solid companies with reasonable growth
prospects and that are attractively priced in relation to the companies'
earnings with a smaller emphasis on special situations and turnarounds
(companies that have experienced significant business problems but which Loomis
Sayles believes have favorable prospects for recovery), as well as unrecognized
stocks. Current income is not a consideration in selecting the Fund's
investments. The Fund may invest up to 20% of its total assets in securities of
issuers headquartered outside the United States. The Fund may also engage in
foreign currency hedging transactions, real estate investment trusts ("REITs")
and Rule 144A securities, which are described herein (together with their
related risks) under "More Information About the Fund's Investments."
Some of the Fund's investment restrictions are "fundamental" and cannot be
changed without a majority vote of the Fund's shareholders. Such restrictions
include: (1) a restriction prohibiting the Fund from acting as an underwriter;
(2) a restriction prohibiting the Fund from purchasing a security (other than
securities issued or guaranteed by the U.S. Government or its authorities or
instrumentalities "U.S. Government Securities") if, as a result, more than 25%
of the Fund's total assets (taken at current value) would be invested in any one
industry; (3) a restriction prohibiting the Fund from borrowing money in excess
of 10% of its total assets (taken at cost) or 5% of its total assets (taken at
current value), whichever is lower, and from borrowing any money except as a
temporary measure for extraordinary or emergency purposes; (4) a restriction
prohibiting the Fund from investing in oil, gas or other mineral leases, rights
or royalty contracts or in real estate, commodities or commodity contracts; (5)
a restriction prohibiting the Fund from making loans except to the extent
permitted under the Investment Company Act of 1940 (the "1940 Act"); and (6) a
restriction prohibiting the Fund from issuing senior securities. For additional
investment restrictions, see the Statement of Additional Information.
For temporary defensive purposes, the Fund may invest any portion of its
assets in fixed income securities, cash and any other securities deemed
appropriate by Loomis Sayles. The investment objective of the Fund is
"fundamental" and cannot be changed without a majority vote of the Fund's
shareholders. All investment policies other than those that are identified as
"fundamental" may be changed by the Trustees without a vote of the Fund's
shareholders.
MORE INFORMATION ABOUT THE FUND'S INVESTMENTS
The net asset value of the Fund's shares will vary as a result of changes
in the value of securities in the Fund's portfolio. The following describes the
securities in which the Fund will principally invest and the risks associated
with them. Additional information about the Fund's investment practices can be
found in the Statement of Additional Information.
-4-
<PAGE>
Equity Securities
- -----------------
While offering greater potential for long-term growth, equity securities
are more volatile and more risky than some other forms of investment. The Fund's
investments may include securities traded "over-the-counter" as well as those
traded on a securities exchange. Some over-the-counter securities may be more
difficult to sell under some market conditions.
Small Companies
- ---------------
The Fund will generally invest in the securities of companies with smaller
capitalizations. Investments in companies with relatively small capitalizations
may involve greater risk than is usually associated with more established
companies. These companies often have sales and earnings growth rates which
exceed those of companies with larger capitalization. Such growth rates may in
turn be reflected in more rapid share price appreciation. However, companies
with smaller capitalization often have limited product lines, markets or
financial resources and they may be dependent upon a relatively small management
group. The securities may have limited marketability and may be subject to more
abrupt or erratic movements in price than securities of companies with larger
capitalizations or broader market averages. The net asset value of funds that
invest in companies with small capitalizations therefore may fluctuate more
widely than market averages.
Real Estate Investment Trusts
- -----------------------------
The Fund may invest in REITs. REITs involve certain unique risks in
addition to those risks associated with investing in the real estate industry in
general (such as possible declines in the value of real estate, lack of
availability of mortgage funds or extended vacancies of property). Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, are
subject to heavy cash flow dependency, risks of default by borrowers and
self-liquidation. REITs are also subject to the possibilities of failing to
qualify for tax-free pass-though of income under the Internal Revenue code of
1986, as amended (the "Code"), and failing to maintain their exemptions from
registration under the Investment Company Act of 1940.
Investment in REITs involves risk similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than securities of larger
capitalization companies.
When-Issued Securities
- ----------------------
The Fund may purchase securities on a "when-issued" basis. This means that
the Fund will enter into a commitment to buy the security before the security
has been issued. The Fund's payment obligation and the interest rate on the
security are determined when the Fund enters into the commitment. The security
is typically delivered to the Fund 15 to 120 days later. No interest accrues on
the security between the time the Fund enters into the commitment and the time
the security is issued. If the value of the security being purchased falls
between the time a Fund commits to buy it and the payment date, the Fund may
sustain a loss. The risk of this loss is in addition to the Fund's risk of loss
on the securities actually in its portfolio at the time. If the Fund has
outstanding obligations to buy when-issued securities, it will maintain liquid
assets in a segregated account at its custodian bank in an amount sufficient to
satisfy these obligations.
Rule 144A Securities
- --------------------
The Fund may invest in Rule 144A securities, which are privately offered
securities that can be resold only to certain qualified institutional buyers.
Rule 144A securities are treated as illiquid, unless Loomis Sayles has
determined, under guidelines established by the Trust's trustees, that the
particular issue of Rule 144A securities is liquid.
-5-
<PAGE>
Foreign Securities
- ------------------
The Fund may invest in securities principally traded in foreign markets
("foreign securities"). The Fund will not purchase a foreign security if, as a
result, the Fund's total holdings of such foreign securities would exceed 20% of
the Fund's total assets.
Foreign securities may present risks not associated with investments in
comparable securities of U.S. issuers. There may be less information publicly
available about a foreign corporate or governmental issuer than about a U.S.
issuer, and foreign issuers are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the
United States. The securities of some foreign issuers are less liquid and at
times more volatile than securities of comparable U.S. issuers. Foreign
brokerage commissions and securities custody costs are often higher than in the
United States. With respect to certain foreign countries, there is a possibility
of governmental expropriation of assets, confiscatory taxation, political or
financial instability and diplomatic developments that could affect the value of
investments in those countries. The Fund's receipt of interest on foreign
government securities may depend on the availability of tax or other revenues to
satisfy the issuer's obligations. In addition, the remedies of the Fund may be
extremely limited if a foreign issuer defaults on its obligations.
The Fund's investments in foreign securities may include investments in
countries whose economies or securities markets are not yet highly developed.
Special considerations associated with these investments (in addition to
considerations regarding foreign investments generally) may include, among
others, greater political uncertainties, an economy's dependence on revenues
from particular commodities or on international aid or development assistance,
currency transfer restrictions, highly limited numbers of potential buyers for
such securities and delays and disruptions in securities settlement procedures.
Since most foreign securities are denominated in foreign currencies or
traded primarily in securities markets in which settlements are made in foreign
currencies, the value of these investments and the net investment income
available for distribution to shareholders of the Fund may be affected favorably
or unfavorably by changes in currency exchange rates, exchange control
regulations, or foreign withholding. Changes in the value relative to the U.S.
dollar of a foreign currency in which the Fund's holdings are denominated will
result in a change in the U.S. dollar value of the Fund's assets and the Fund's
income available for distribution.
In addition, although part of the Fund's income may be received or realized
in foreign currencies, the Fund will be required to compute and distribute its
income in U.S. dollars. Therefore, if the value of a currency relative to the
U.S. dollar declines after the Fund's income has been earned in that currency,
translated into U.S. dollars and declared as a dividend, but before payment of
the dividend, the Fund could be required to liquidate portfolio securities to
pay the dividend. Similarly, if the value of a currency relative to the U.S.
dollar declines between the time the Fund accrues expenses in U.S. dollars and
the time such expenses are paid, the amount of such currency required to be
converted into U.S. dollars will be greater than the equivalent amount in such
currency of such expenses at the time they were incurred.
Foreign Currency Hedging Transactions
- -------------------------------------
The Fund may engage in foreign currency exchange transactions, in
connection with the purchase and sale of foreign securities, 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 are
denominated or quoted. For example, to protect against a change in the foreign
currency exchange rate between the date on which a Fund contracts to purchase or
sell a security and the settlement date for the purchase or sale, or to "lock
in" the equivalent of a dividend or interest payment in another currency, a Fund
might purchase or sell a foreign currency on a spot (that is, cash) basis at the
prevailing spot rate. If conditions warrant, the Funds may also enter into
private contracts to purchase or sell foreign currencies at a future date
("forward contracts"). The Funds might also purchase exchange-listed and
over-the- counter call and put options on foreign currencies. Over-the-counter
currency options are generally less liquid than exchange-listed options, and
will be treated as illiquid assets. The Fund may not be able to dispose of
over-the-counter options readily.
Foreign currency transactions involve costs and may result in losses.
-6-
<PAGE>
Repurchase Agreements
- ---------------------
The Fund may invest in repurchase agreements. In repurchase agreements, a
Fund buys securities from a seller, usually a bank or brokerage firm, with the
understanding that the seller will repurchase the securities at a higher price
at a later date. Such transactions afford an opportunity for a Fund to earn a
return on available cash at minimal market risk, although the Fund may be
subject to various delays and risks of loss if the seller is unable to meet its
obligations to repurchase.
Year 2000
- ---------
Many computer software systems in use today cannot properly process
date-related information from and after January 1, 2000. Should any of the
computer systems employed by the Fund's major service providers fail to process
this type of information properly, that could have a negative impact on the
Fund's operations and the services that are provided to the Fund's shareholders.
Loomis Sayles has advised the Fund that it is reviewing all of its computer
systems with the goal of modifying or replacing such systems prior to January 1,
2000, to the extent necessary to foreclose any such negative impact. In
addition, Loomis Sayles has been advised by the Fund's custodian that it is also
in the process of reviewing its systems with the same goal. As of the date of
this prospectus, the Fund and Loomis Sayles have no reason to believe that these
goals will not be achieved. Similarly, the values of certain of the portfolio
securities held by the Fund may be adversely affected by the inability of the
securities' issuers or of third parties to process this type of information
properly.
THE FUND'S INVESTMENT ADVISER
The Fund's investment adviser is Loomis Sayles, One Financial Center,
Boston, Massachusetts 02111. Founded in 1926, Loomis Sayles is one of the
country's oldest and largest investment firms.
The general partner of Loomis Sayles is a special purpose corporation that
is an indirect wholly-owned subsidiary of Nvest Companies, L.P. ("Nvest
Companies"). Nvest Companies' managing general partner, Nvest Corporation, is a
direct wholly-owned subsidiary of Metropolitan Life Insurance Company ("Met
Life"), a mutual life insurance company. Nvest Companies' advising general
partner, Nvest, L.P., is a publicly traded company listed on the New York Stock
Exchange. Nvest Corporation is the sole general partner of Nvest, L.P.
In addition to selecting and reviewing the Fund's investments, Loomis
Sayles provides executive and other personnel for the management of the Fund.
The Board of Trustees supervises Loomis Sayles's conduct of the affairs of the
Fund.
Jeffrey C. Petherick and Mary C. Champagne, each a Vice President of Loomis
Sayles, have served as the portfolio managers of the Small Cap Value Fund since
its commencement of operations.
FUND EXPENSES
The Fund pays Loomis Sayles a monthly investment advisory fee. This fee is
paid at the annual rate of 0.75% of the Fund's average daily net assets.
In addition to the investment advisory fee, the Fund pays all expenses not
expressly assumed by Loomis Sayles, including taxes, brokerage commissions, fees
of the Fund's custodian, independent accountants and legal counsel and fees of
the Trustees who are not directors, officers or employees of Loomis Sayles or
its affiliated companies.
Loomis Sayles has voluntarily undertaken for an indefinite period to waive
its fees and, to the extent necessary, to bear other Fund expenses in order to
limit the Fund's total operating expenses to the annual rate of 0.90% of average
daily net assets.
-7-
<PAGE>
PORTFOLIO TRANSACTIONS
Loomis Sayles selects brokers and dealers to execute portfolio transactions
for the Fund. Portfolio turnover considerations will not limit Loomis Sayles's
investment discretion in managing the Fund's assets. The Fund anticipates that
its portfolio turnover rates will vary significantly from time to time depending
on the volatility of economic and market conditions. High portfolio turnover may
result in higher costs such as higher brokerage commissions and higher levels of
taxable gains. Portfolio turnover rates for the life of the Fund are set forth
above under the headings "Financial Highlights" and "Prior Performance." See
"Dividends, Capital Gain Distributions and Taxes" for information on the tax
consequences of investing in the Fund. Although it is not possible to predict
the portfolio turnover rate with certainty, Loomis Sayles does not expect the
Fund's portfolio turnover rate to exceed 200% for its initial fiscal year.
HOW TO PURCHASE SHARES
You may make an initial purchase of shares of the Fund by submitting a
completed application form and payment to Loomis Sayles. The minimum initial
investment in the Fund is $3,000,000. Subsequent investments must be at least
$50,000. The Trust reserves the right to waive these minimums in its sole
discretion.
Shares of the Fund may be purchased by exchange of (i) cash, (ii)
securities on deposit with a custodian acceptable to Loomis Sayles or (iii) a
combination of such securities and cash. Purchase of shares of the Fund in
exchange for securities is subject in each case to the determination by Loomis
Sayles that the securities to be exchanged are acceptable for purchase by the
Fund. Securities accepted by Loomis Sayles in exchange for Fund shares will be
valued in the same manner as the Fund's assets, as described below, as of the
time of the Fund's next determination of net asset value after such acceptance.
All dividends and subscription or other rights which are reflected in the market
price of accepted securities at the time of valuation become the property of the
Fund and must be delivered to the Fund upon receipt by the investor from the
issuer. A gain or loss for federal income tax purposes would be realized upon
the exchange of any securities tendered. A shareholder who wishes to purchase
shares by exchanging securities should obtain instructions by calling (888)
226-9699.
Loomis Sayles will not approve the acceptance of securities in exchange for
shares of the Fund unless (1) Loomis Sayles, in its sole discretion, believes
the securities are appropriate investments for the Fund; (2) the investor
represents and agrees that all securities offered to the Fund can be resold by
the Fund without restriction under the 1933 Act or otherwise; and (3) the
securities are eligible to be acquired under the Fund's investment policies and
restrictions. No investor owning 5% or more of the Fund's shares may purchase
additional Fund shares by the exchange of securities.
Upon acceptance of your order, the Trust opens an account for you, applies
the payment to the purchase of full and fractional Fund shares and mails a
statement of the account confirming the transaction. After an account has been
established, you may send subsequent investments at any time.
The Trust reserves the right to reject any purchase order for any reason
which the Trust in its sole discretion deems appropriate. Although the Trust
does not anticipate that it will do so, the Trust reserves the right to suspend
or change the terms of the offering of its shares.
The price you pay will be the per share net asset value next calculated
after a proper investment order is received by the Trust. Shares of the Fund are
sold without any sales charge. The net asset value of the Fund's shares is
calculated by dividing the Fund's net assets by the number of shares
outstanding. Net asset value is calculated at least weekly and as of the close
of the New York Stock Exchange (the "Exchange") on each day on which an order
for purchase or redemption of Fund shares is received and on which the Exchange
is open for unrestricted trading. Portfolio securities are valued at their
market value as more fully described in the Statement of Additional Information.
-8-
<PAGE>
HOW TO REDEEM SHARES
You can redeem your shares by sending a written request to the Trust.
The written request must include the name of the Fund, your account number,
the exact name(s) in which your shares are registered, and the number of shares
or the dollar amount to be redeemed. All owners of the shares must sign the
written request in the exact names in which the shares are registered and should
indicate any special capacity in which they are signing (such as trustee or
custodian or on behalf of a partnership, corporation or other entity).
The redemption price will be the net asset value per share next determined
after the written redemption request is received by the Trust in proper form.
The Trust usually requires additional documentation for the sale of shares by a
corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Trust by calling (888) 226-9699 for details.
Proceeds resulting from a written redemption request will normally be
mailed to you within seven days after receipt of your request in good order. If
you purchased your shares by check and your check was deposited less than
fifteen days prior to the redemption request, the Trust may withhold redemption
proceeds until your check has cleared.
Redemption proceeds may be made in money or in kind, or partly in money and
partly in kind, as determined by the Trust.
The Fund may suspend the right of redemption and may postpone payment for
more than seven days when the Exchange is closed for other than weekends or
holidays, or if permitted by the rules of the SEC when trading on the Exchange
is restricted or during an emergency which makes it impracticable for the Fund
to dispose of its securities or to determine fairly the value of its net assets,
or during any other period permitted by the SEC for the protection of investors.
OTHER INFORMATION
The Board of Trustees may, without shareholder approval, divide the Trust's
shares of beneficial interest into multiple series. The Trust is currently
divided into eight series, including the Fund and the other funds listed on the
cover of this Prospectus.
The Fund's investment performance may from time to time be included in
advertisements about the Fund.
Total return for the Fund is measured by comparing the value of an
investment in the Fund at the beginning of the relevant period to the redemption
value of the investment in the Fund at the end of the period (assuming immediate
reinvestment of any dividends or capital gain distributions).
All data are based on the Fund's past investment results and do not predict
future performance. Investment performance, which will vary, is based on many
factors, including market conditions, the composition of the Fund's portfolio
and the Fund's operating expenses. Investment performance also often reflects
the risks associated with the Fund's investment objectives and policies. These
factors should be considered when comparing the Fund's investment results with
those of other mutual funds and other investment vehicles. Quotations of
investment performance for any period when an expense limitation was in effect
will be greater than if the limitation had not been in effect.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
Because the Fund is designed primarily for tax-exempt investors such as
pension plans, endowments and foundations, the Fund is not managed with a view
to reducing taxes. The Fund pays any net investment income to shareholders as
dividends annually. Any capital gain distributions are normally made annually in
December, but may, to the extent permitted by law, be made more frequently as
deemed advisable by the Trustees. The Fund distributes all of its net realized
capital gains after applying any capital loss carryovers. The Trustees may
change the frequency with which the Fund declares or pays dividends.
-9-
<PAGE>
Your dividends and capital gain distributions will automatically be
reinvested in additional shares of the Fund on the payment date unless you have
elected to receive cash. Dividends and capital gain distributions will be taxed
as described below whether received in cash or in additional shares.
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended. As such, so long as the Fund
distributes substantially all its net investment income and net realized capital
gains to its shareholders on a current basis, the Fund itself does not pay any
federal income or excise tax. The Fund intends to make sufficient distributions
to be relieved of federal taxes.
Income dividends and short-term capital gain distributions are treated as
ordinary income to you whether distributed in cash or additional shares.
Distributions designated by the Fund as deriving from net gains on securities
held for more than one year will be taxable as such (generally at a 20% rate for
noncorporate shareholders) whether distributed in cash or additional shares and
regardless of how long you have held your shares.
A dividend or distribution made shortly after the purchase of shares of the
Fund by a shareholder, although in effect a return of capital to that particular
shareholder, would be taxable to him or her as described above. If a shareholder
held shares six months or less and during that period received a distribution of
net capital gains, any loss realized on the sale of such shares during such
six-month period would be a long-term capital loss to the extent of such
distribution.
A portion of any dividend from the Fund is expected to be eligible for the
dividends-received deduction for corporate shareholders.
The Trust will send you an annual statement showing the federal tax status
of dividends and distributions paid to you during the preceding year.
The Fund is required to withhold 31% of redemption proceeds, income
dividends and capital gain distributions it pays to you (1) if you do not
provide a correct, certified taxpayer identification number, (2) if the Fund is
notified that you have underreported income in the past, or (3) if you fail to
certify to the Fund that you are not subject to such withholding.
The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty.) The Internal Revenue Service
recently revised its regulations affecting the application to foreign investors
of the back-up withholding tax rules described above. The new regulations will
generally be effective for payments made on or after January 1, 1999 (although
transition rules will apply).
In some circumstances, the new rules will increase the certification and
filing requirements imposed on foreign investors in order to qualify for
exemption from the 31% back-up withholding tax and for reduced withholding tax
rates under income tax treaties. Foreign investors in each Fund should consult
their advisors with respect to the potential application of these new
regulations.
TRANSFER AND DIVIDEND INVESTMENT ADVISER
PAYING AGENT AND Loomis, Sayles & Company, L.P.
CUSTODIAN OF ASSETS One Financial Center
State Street Bank and Trust Company Boston, Massachusetts 02111
Boston, Massachusetts 02102
-10-
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
LOOMIS SAYLES SMALL CAP VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
May 17, 1999
This Statement of Additional Information is not a prospectus. This Statement of
Additional Information relates to the Prospectus (the "Prospectus") of Loomis
Sayles Small Cap Value Fund, a series of Loomis Sayles Investment Trust, dated
May 17, 1999, and should be read in conjunction therewith. A copy of the
Prospectus may be obtained from Loomis Sayles Investment Trust, One Financial
Center, Boston, Massachusetts 02111.
<PAGE>
TABLE OF CONTENTS
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS..............................-3-
FOREIGN CURRENCY TRANSACTIONS................................................-6-
OPTIONS......................................................................-7-
MANAGEMENT OF THE TRUST......................................................-9-
INVESTMENT ADVISORY AND OTHER SERVICES......................................-11-
PORTFOLIO TRANSACTIONS AND BROKERAGE........................................-13-
DESCRIPTION OF THE TRUST....................................................-14-
HOW TO BUY SHARES...........................................................-16-
NET ASSET VALUE ............................................................-17-
REDEMPTIONS.................................................................-17-
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS.................-18-
CALCULATION OF TOTAL RETURN.................................................-20-
PERFORMANCE COMPARISONS.....................................................-21-
APPENDIX A
PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION....................-A-1-
APPENDIX B
ADVERTISING AND PROMOTIONAL LITERATURE............................-B-1-
-2-
<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The investment objective and policies of the Loomis Sayles Small Cap Value
Fund (the "Fund"), a series of Loomis Sayles Investment Trust (the "Trust"), are
summarized in the Prospectus under "Investment Objective and Policies" and "More
Information About the Fund's Investments." The investment policies of the Fund
set forth in the Prospectus and in this Statement of Additional Information may
be changed by Loomis, Sayles & Company, L.P. ("Loomis Sayles"), the Fund's
investment adviser, subject to review and approval by the Trust's board of
trustees (the "Trustees"), without shareholder approval except that the
investment objective of the Fund as set forth in the Prospectus and any Fund
policy explicitly identified as "fundamental" may not be changed without the
approval of the holders of a majority of the outstanding shares of the Fund
(which means the lesser of (i) 67% of the shares of the Fund represented at a
meeting at which at least 50% of the outstanding shares are represented or (ii)
more than 50% of the outstanding shares).
In addition to its investment objective and policies set forth in the
Prospectus, the following investment restrictions are policies of the Fund (and
those marked with an asterisk are fundamental policies of the Fund):
The Fund will not:
*(1) Act as underwriter, except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.
*(2) Invest in oil, gas or other mineral leases, rights or royalty
contracts or in real estate, commodities or commodity contracts. (This
restriction does not prevent the Fund from investing in issuers that
invest or deal in the foregoing types of assets or from purchasing
securities that are secured by real estate.)
*(3) Make loans except to the extent permitted under the "1940 Act." (For
purposes of this investment restriction, neither (i) entering into
repurchase agreements nor (ii) purchasing bonds, debentures,
commercial paper, corporate notes and similar evidences of
indebtedness, which are a part of an issue to the public, is
considered the making of a loan.)
*(4) Change its classification pursuant to Section 5(b) of the Investment
Company Act of 1940, as amended (the "1940 Act"), from a "diversified"
to "non-diversified" management investment company.
*(5) Purchase any security (other than U.S. Government Securities) if, as a
result, more than 25% of the Fund's total assets (taken at current
value) would be invested in any one industry (in the utilities
category, gas, electric, water and telephone companies will be
considered as being in separate industries.)
-3-
<PAGE>
*(6) Borrow money in excess of 10% of its total assets (taken at cost) or
5% of its total assets (taken at current value), whichever is lower,
nor borrow any money except as a temporary measure for extraordinary
or emergency purposes; however, the Fund's use of reverse repurchase
agreements and "dollar roll" arrangements shall not constitute
borrowing by the Fund for purposes of this restriction.
(7) Purchase any illiquid security, including any security that is not
readily marketable, if, as a result, more than 15% of the Fund's net
assets (based on current value) would then be invested in such
securities.
*(8) Issue senior securities other than any borrowing permitted by
restriction (6) above. (For the purposes of this restriction none of
the following is deemed to be a senior security: any pledge, mortgage,
hypothecation or other encumbrance of assets; any collateral
arrangements with respect to options, futures contracts and options on
futures contracts and with respect to initial and variation margin;
and the purchase or sale of or entry into options, forward contracts,
futures contracts, options on futures contracts, swap contracts or any
other derivative investments to the extent that Loomis Sayles
determines that the Fund is not required to treat such investments as
senior securities pursuant to the pronouncements of the Securities and
Exchange Commission (the "SEC") or its staff.)
The Fund intends, based on the views of the staff of the SEC, to restrict
its investments, if any, in repurchase agreements maturing in more than seven
days, together with other investments in illiquid securities, to the percentage
permitted by restriction (7) above.
Although authorized to invest in restricted securities, the Fund, as a
matter of non-fundamental operating policy, currently does not intend to invest
in such securities, except Rule 144A securities.
Portfolio Turnover
- ------------------
Portfolio turnover considerations will not limit Loomis Sayles's investment
discretion in managing the Fund's assets. The Fund anticipates that its
portfolio turnover rates will vary significantly from time to time depending on
the volatility of economic and market conditions. High portfolio turnover rates
may result in higher costs such as higher brokerage commissions and higher
levels of taxable gain. See "Portfolio Transactions and Brokerage" for a
description of Loomis Sayles's brokerage practices and "Income Dividends,
Capital Gain Distributions and Tax Status" for more information about the tax
consequences of investing in the Fund.
When-Issued Securities
- ----------------------
As described in the Prospectus, the Fund may enter into agreements with
banks or broker-dealers for the purchase or sale of securities at an agreed-upon
price on a specified future
-4-
<PAGE>
date. Such agreements might be entered into, for example, when the Fund
anticipates a decline in interest rates and is able to obtain a more
advantageous yield by committing currently to purchase securities to be issued
later. When the Fund purchases securities in this manner (i.e. on a when-issued
or delayed-delivery basis), it is required to create a segregated account with
the Trust's custodian and to maintain in that account liquid assets in an amount
equal to or greater than, on a daily basis, the amount of the Fund's when-issued
or delayed-delivery commitments. The Fund will make commitments to purchase on a
when-issued or delayed-delivery basis only securities meeting the Fund's
investment criteria. The Fund may take delivery of these securities or, if it is
deemed advisable as a matter of investment strategy, the Fund may sell these
securities before the settlement date. When the time comes to pay for
when-issued or delayed-delivery securities, the Fund will meet its obligations
from then available cash flow or the sale of securities, or from the sale of the
when-issued or delayed-delivery securities themselves (which may have a value
greater or less than the Fund's payment obligation).
Repurchase Agreements
- ---------------------
The Fund may enter into repurchase agreements, by which the Fund purchases
a security and obtains a simultaneous commitment from the seller (a bank or, to
the extent permitted by the 1940 Act, a recognized securities dealer) to
repurchase the security at an agreed upon price and date (usually seven days or
less from the date of original purchase). The resale price is in excess of the
purchase price and reflects an agreed upon market rate unrelated to the coupon
rate on the purchased security. Such transactions afford the Fund the
opportunity to earn a return on temporarily available cash. Although the
underlying security may be a bill, certificate of indebtedness, note or bond
issued by an agency, authority or instrumentality of the U.S. Government, the
obligation of the seller is not guaranteed by the U.S. Government and there is a
risk that the seller may fail to repurchase the underlying security. In such
event, the Fund would attempt to exercise rights with respect to the underlying
security, including possible disposition in the market. However, the Fund may be
subject to various delays and risks of loss, including (a) possible declines in
the value of the underlying security during the period while the Fund seeks to
enforce its rights thereto and (b) inability to enforce rights and the expenses
involved in attempted enforcement.
Rule 144A Securities
- --------------------
The Fund may purchase Rule 144A securities. These are privately offered
securities that can be resold only to certain qualified institutional buyers.
Rule 144A securities are treated as illiquid, unless Loomis Sayles has
determined, under guidelines established by the Trustees, that a particular
issue of Rule 144A securities is liquid. Under the guidelines, Loomis Sayles
considers such factors as: (1) the frequency of trades and quotes for a
security; (2) the number of dealers willing to purchase or sell the security and
the number of other potential purchasers; (3) dealer undertakings to make a
market in the security; and (4) the nature of the security and the nature of
marketplace trades therefor.
-5-
<PAGE>
FOREIGN CURRENCY TRANSACTIONS
- -----------------------------
The Fund may invest in securities of foreign issuers and may enter into
forward foreign currency exchange contracts, or buy or sell options on foreign
currencies, in order to protect against uncertainty in the level of future
foreign exchange rates. Since investment in securities of foreign issuers will
usually involve currencies of foreign countries, and since a Fund may
temporarily hold funds in bank deposits in foreign currencies during the course
of investment programs, the value of the assets of a Fund as measured in U.S.
dollars may be affected by changes in currency exchange rates and exchange
control regulations, and a Fund may incur costs in connection with conversion
between various currencies.
A Fund may enter into forward contracts under two circumstances. First,
when a Fund enters into a contract for the purchase or sale of a security
denominated or traded in a market in which settlement is made in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale, for a fixed amount of
dollars, of the amount of foreign currency involved in the underlying
transactions, the Fund will be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar and
the subject foreign currency during the period between the date on which the
investment is purchased or sold and the date on which payment is made or
received.
Second, when Loomis Sayles believes that the currency of a particular
country may suffer a substantial decline against another currency, it may enter
into a forward contract to sell, for a fixed amount of another currency, the
amount of the first currency approximating the value of some or all of the
Fund's portfolio investments denominated in the first currency. The precise
matching of the forward contract amounts and the value of the securities
involved will not generally be possible since the future value of such
securities in a currency will change as a consequence of market movements in the
value of those investments between the date the forward contract is entered into
and the date it matures.
The Fund generally will not enter into forward contracts with a term of
greater than one year.
Options on foreign currencies are similar to forward contracts, except that
one party to the option (the holder) is not contractually bound to buy or sell
the specified currency. Instead, the holder has discretion whether to "exercise"
the option and thereby require the other party to buy or sell the currency on
the terms specified in the option. Options transactions involve transaction
costs and, like forward contract transactions, involve the risk that the other
party may default on its obligations (if the options are not traded on an
established exchange) and the risk that expected movements in the relative value
of currencies may not occur, resulting in an imperfect hedge or a loss to the
Fund.
The Fund's ability to engage in transactions in currency forward contracts
and options may be limited by tax considerations.
-6-
<PAGE>
The Fund, in conjunction with its transactions in forward contracts,
options and futures, will maintain in a segregated account with its custodian
cash or certain liquid assets with a value, marked to market on a daily basis,
sufficient to satisfy the Fund's outstanding obligations under such contracts,
options and futures.
MANAGEMENT OF THE TRUST
The trustee and officers of the Trust and their principal occupations
during the past five years are as follows:
TIMOTHY J. HUNT (67) -- Trustee. 26 Dennett Road, Marblehead, Massachusetts.
-------
Retired. Formerly, Vice President and Director of Fixed Income Research,
Loomis Sayles.
DANIEL J. FUSS (65) -- President. Executive Vice President and Director, Loomis
---------
Sayles.
MARK W. HOLLAND (49) -- Treasurer. Vice President-Finance and Administration and
---------
Director, Loomis Sayles.
SHEILA M. BARRY (53) -- Secretary and Compliance Officer. Assistant General
--------------------------------
Counsel and Vice President, Loomis Sayles. Formerly, Senior Counsel and Vice
President, New England Funds, L.P.
ROBERT J. BLANDING (51) -- Executive Vice President. 465 First Street West,
------------------------
Sonoma, California. President, Chairman, Director and Chief Executive
Officer, Loomis Sayles.
WILLIAM F. CAMP (37) -- Vice President. 1533 North Woodward, Bloomfield Hills,
--------------
Michigan. Vice President, Loomis Sayles. Formerly, Portfolio Manager, Kmart
Corporation.
MARY C. CHAMPAGNE ( ) -- Vice President. 1533 North Woodward, Bloomfield Hills,
--------------
Michigan. Vice President, Loomis Sayles.
QUENTIN P. FAULKNER (60) -- Vice President. Vice President, Loomis Sayles.
--------------
KATHLEEN C. GAFFNEY (37) -- Vice President. Vice President, Loomis Sayles.
--------------
JEFFREY L. MEADE (48) -- Vice President. Chief Operating Officer, Executive Vice
--------------
President and Director, Loomis Sayles.
CHRISTOPHER R. ELY ( ) -- Vice President. Vice President, Loomis Sayles.
--------------
Formerly, Senior Vice President and Portfolio Manager, Keystone Investment
Management Company, Inc.
-7-
<PAGE>
PHILIP C. FINE ( ) -- Vice President. Vice President, Loomis Sayles. Formerly,
--------------
Vice President and Portfolio Manager, Keystone Investment Management Company,
Inc.
JEFFREY C. PETHERICK ( ) -- Vice President. 1533 North Woodward, Bloomfield
--------------
Hills, Michigan. Vice President, Loomis Sayles.
KENT P. NEWMARK (60) -- Vice President. 555 California Street, San Francisco,
--------------
California. Vice President and Director, Loomis Sayles.
ROBERT K. PAYNE (56) -- Vice President. 555 California Street, San Francisco,
--------------
California. Vice President, Loomis Sayles.
DAVID L. SMITH ( ) -- Vice President. Vice President, Loomis Sayles. Formerly,
--------------
Vice President and Portfolio Manager, Keystone Investment Management Company,
Inc.
ANTHONY J. WILKINS (56) -- Vice President. Vice President and Director, Loomis
--------------
Sayles.
MARI J. SUGAHARA (34) -- Vice President. Vice President, Loomis Sayles.
--------------
FREDERICK E. SWEENEY, JR. (37) -- Vice President. Vice President, Loomis Sayles.
--------------
Formerly, served as an Investment Consultant at Meketa Investment Group and
prior to that served as Vice President of New England Investment
Associates.
Previous positions during the past five years with Loomis Sayles are
omitted, if not materially different from the positions listed. Except as
indicated above, the address of each officer of the Trust affiliated with Loomis
Sayles is One Financial Center, Boston, Massachusetts 02111.
The Trust pays no compensation to its officers listed above who are
interested persons of the Trust. Each Trustee who is not affiliated with Loomis
Sayles is compensated at the rate of $10,000 per annum. No Trustee received
compensation from any other investment company which is advised by Loomis Sayles
or its affiliates or which holds itself out to investors as being related to the
Trust.
-8-
<PAGE>
Compensation Table
for the 1998 fiscal period (January 1, 1998 through September 30, 1998)
- --------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Total Compensation
Person, Compensation Retirement Annual from Trust and Fund
Position from Trust Benefits Benefits Upon Complex Paid to
Accrued as Part Retirement Trustee
of Fund Expenses
- --------------------------------------------------------------------------------
Timothy J. Hunt, $10,000 $0 $0 $10,000
Trustee
As of the date hereof, the Trustee and officers as a group owned less than
1% of the outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
Advisory Agreement. Loomis Sayles serves as investment adviser to the Fund
------------------
under an advisory agreement with the Trust dated [month day, year]. Under the
advisory agreement, Loomis Sayles manages the investment and reinvestment of the
assets of the Fund and generally administers its affairs, subject to supervision
by the Trustees. Loomis Sayles furnishes, at its own expense, all necessary
office space, office supplies, facilities and equipment, services of executive
and other personnel of the Fund and certain administrative services. For these
services, the advisory agreement provides that the Fund shall pay Loomis Sayles
a monthly investment advisory fee at the annual rate of 0.75% of the Fund's
average weekly net assets.
Under the advisory agreement, if the total ordinary business expenses of
the Fund or the Trust as a whole for any fiscal year exceed the lowest
applicable limitation (based on percentage of average net assets or income)
prescribed by any state in which the shares of the Fund or the Trust are
qualified for sale, Loomis Sayles shall pay such excess.
As described in the Prospectus, Loomis Sayles has voluntarily undertaken
for an indefinite period to limit the Fund's total operating expenses. These
arrangements may be modified or terminated by Loomis Sayles at any time, subject
to prior notice to shareholders.
The advisory agreement provides that it will continue in effect for two
years from its date of execution and thereafter from year to year if its
continuance is approved at least annually (i) by the
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Trustees or by vote of a majority of the outstanding voting securities of the
Fund and (ii) by vote of a majority of the Trustees who are not "interested
persons" of the Trust or Loomis Sayles, as that term is defined in the 1940 Act,
cast in person at a meeting called for the purpose of voting on such approval.
Any amendment to the advisory agreement must be approved by vote of a majority
of the outstanding voting securities of the Fund and by vote of a majority of
the Trustees who are not interested persons, cast in person at a meeting called
for the purpose of voting on such approval.
The advisory agreement may be terminated without penalty by vote of the
Trustees or by vote of a majority of the outstanding voting securities of the
Fund, upon sixty days' written notice to Loomis Sayles, or by Loomis Sayles upon
ninety days' written notice to the Trust, and it terminates automatically in the
event of its assignment, as that term is defined in the 1940 Act. In addition,
the agreement will automatically terminate if the Trust or the Fund shall at any
time be required by Loomis Sayles to eliminate all reference to the words
"Loomis" or "Sayles" in the name of the Trust or the Fund, unless the
continuance of the agreement after such change of name is approved by a majority
of the outstanding voting securities of the Fund and by a majority of the
Trustees who are not interested persons of the Trust or Loomis Sayles, cast in
person at a meeting called for the purpose of voting on such approval.
The advisory agreement provides that Loomis Sayles shall not be subject to
any liability in connection with the performance of its services thereunder in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.
Loomis Sayles acts as investment adviser to the eighteen series of the
Loomis Sayles Funds, each a series of a registered open-end diversified
management investment company. Loomis Sayles acts as investment adviser or
sub-adviser to New England Star Advisers Fund, New England Star Small Cap Fund,
New England Value Fund, New England Balanced Fund, New England International
Equity Fund and New England Strategic Income Fund, which are series of New
England Funds Trust I, a registered open-end management investment company, New
England High Income Fund, a series of New England Funds Trust II, a registered
open-end management investment company, New England Equity Income Fund, a series
of New England Funds Trust III, a registered open-end management investment
company and to the Loomis Sayles Balanced Series and the Small Cap Series of New
England Zenith Funds, which is also a registered open-end management investment
company. Loomis Sayles also provides investment advice to other investment
companies and numerous other corporate and fiduciary clients.
The general partner of Loomis Sayles is a special purpose corporation that
is an indirect wholly-owned subsidiary of Nvest Companies, L.P. ("Nvest
Companies"). Nvest Companies' managing general partner, Nvest Corporation, is a
direct wholly-owned subsidiary of Metropolitan Life Insurance Company ("Met
Life"), a mutual life insurance company. Nvest Companies' advising general
partner, Nvest, L.P., is a publicly traded company listed on the New York Stock
Exchange. Nvest Corporation is the sole general partner of Nvest, L.P.
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<PAGE>
Officers of the Trust who hold positions with Loomis Sayles are listed
under "Management of the Trust" in this Statement of Additional Information.
Certain officers of the Trust also serve as officers, directors and trustees of
other investment companies and clients advised by Loomis Sayles. The other
investment companies and clients sometimes invest in securities in which the
Fund also invests. If the Fund and such other investment companies or clients
desire to buy or sell the same portfolio securities at the same time, purchases
and sales may be allocated, to the extent practicable, on a pro rata basis in
proportion to the amounts desired to be purchased or sold for each. It is
recognized that in some cases the practices described in this paragraph could
have a detrimental effect on the price or amount of the securities which the
Fund purchases or sells. In other cases, however, it is believed that these
practices may benefit the Fund. It is the opinion of the Trustee that the
desirability of retaining Loomis Sayles as investment adviser for the Fund
outweighs the disadvantages, if any, which might result from these practices.
Custodial Arrangements. State Street Bank and Trust Company ("State
----------------------
Street"), Boston, Massachusetts 02102, is the Trust's custodian. As such, State
Street holds in safekeeping certificated securities and cash belonging to the
Fund and, in such capacity, is the registered owner of securities held in book
entry form belonging to the Fund. Upon instruction, State Street receives and
delivers cash and securities of the Fund in connection with Fund transactions
and collects all dividends and other distributions made with respect to Fund
portfolio securities. State Street also maintains certain accounts and records
of the Fund and calculates the total net asset value, total net income and net
asset value per share of the Fund on a daily basis.
Independent Accountants. The Fund's independent accountants are
-----------------------
PricewaterhouseCoopers LLP, One Post Office Square, Boston, Massachusetts.
PricewaterhouseCoopers LLP conducts an annual audit of the Trust's financial
statements, assists in the preparation of the Funds' federal and state income
tax returns and consults with the Funds as to matters of accounting and federal
and state income taxation.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In placing orders for the purchase and sale of portfolio securities for the
Fund, Loomis Sayles always seeks the best price and execution. Transactions are
carried out through broker-dealers who make the primary market for securities
unless, in the judgment of Loomis Sayles, a more favorable price can be obtained
by carrying out such transactions through other brokers or dealers.
Loomis Sayles selects only brokers or dealers which it believes are
financially responsible, will provide efficient and effective services in
executing, clearing and settling an order and will charge commission rates
which, when combined with the quality of the foregoing services, will produce
the best price and execution for the transaction. This does not necessarily mean
that the lowest available brokerage commission will be paid for a transaction.
However, the Fund will only pay commissions that Loomis Sayles believes to be
competitive with generally prevailing rates. Loomis Sayles will use its best
efforts to obtain information as to the general level of commission rates being
charged by the brokerage community from time to time and will evaluate the
overall
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<PAGE>
reasonableness of brokerage commissions paid on transactions by reference to
such data. In making such evaluation, all factors affecting liquidity and
execution of the order, as well as the amount of the capital commitment by the
broker in connection with the order, are taken into account. The Fund will not
pay a broker a commission at a higher rate than otherwise available for the same
transaction in recognition of the value of research services provided by the
broker or in recognition of the value of any other services provided by the
broker which do not contribute to the best price and execution of the
transaction.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Loomis Sayles believes will provide the best price and
execution for a transaction. These research services include not only a wide
variety of reports on such matters as economic and political developments,
industries, companies, securities, portfolio strategy, account performance,
daily prices of securities, stock and bond market conditions and projections,
asset allocation and portfolio structure, but also meetings with management
representatives of issuers and with other analysts and specialists. Although it
is not possible to assign an exact dollar value to these services, they may, to
the extent used, tend to reduce Loomis Sayles's expenses. Such services may be
used by Loomis Sayles in servicing other client accounts and in some cases may
not be used with respect to the Fund. Receipt of services or products other than
research from brokers is not a factor in the selection of brokers.
DESCRIPTION OF THE TRUST
The Trust, registered with the SEC as a diversified open-end management
investment company, is organized as a Massachusetts business trust under the
laws of The Commonwealth of Massachusetts by an Agreement and Declaration of
Trust (the "Declaration of Trust") dated December 23, 1993.
The Declaration of Trust currently permits the Trustees to issue an
unlimited number of full and fractional shares of each series. Each share of the
Fund represents an equal proportionate interest in the Fund with each other
share of the Fund and is entitled to a proportionate interest in the dividends
and distributions from the Fund. The shares of the Fund do not have any
preemptive rights. Upon termination of the Fund, whether pursuant to liquidation
of the Trust or otherwise, shareholders of the Fund are entitled to share pro
rata in the net assets of the Fund available for distribution to shareholders.
The Declaration of Trust also permits the Trustees to charge shareholders
directly for custodial, transfer agency and servicing expenses.
The assets received by the Fund for the issue or sale of its shares and all
income, earnings, profits, losses and proceeds therefrom, subject only to the
rights of creditors, are allocated to, and constitute the underlying assets of,
the Fund. The underlying assets are segregated and are charged with the expenses
with respect to the Fund and with a share of the general expenses of the Trust.
Any general expenses of the Trust that are not readily identifiable as belonging
to a particular series of the Trust are allocated by or under the direction of
the Trustees in such manner as the Trustees
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<PAGE>
determine to be fair and equitable. While the expenses of the Trust are
allocated to the separate books of account of the Fund, certain expenses may be
legally chargeable against the assets of all series.
The Declaration of Trust also permits the Trustees, without shareholder
approval, to issue shares of the Trust in one or more series, and to subdivide
any series of shares into various classes of shares with such dividend
preferences and other rights as the Trustees may designate. While the Trustees
have no current intention to subdivide any series of shares into classes, this
flexibility is intended to allow them to provide for an equitable allocation of
the impact of any future regulatory requirements which might affect various
classes of shareholders differently, or to permit shares of a series to be
distributed through more than one distribution channel, with the costs of the
particular means of distribution (or costs of related services) to be borne by
the shareholders who purchase through that means of distribution. The Trustees
may also, without shareholder approval, establish one or more additional
separate portfolios for investments in the Trust or merge two or more existing
portfolios. Shareholders' investments in such an additional or merged portfolio
would be evidenced by a separate series of shares (i.e., a new "fund").
The Declaration of Trust provides for the perpetual existence of the Trust.
The Trust or the Fund, however, may be terminated at any time by vote of at
least two-thirds of the outstanding shares of the Trust or the Fund,
respectively. The Declaration of Trust further provides that the Trustees may
also terminate the Trust or the Fund upon written notice to the shareholders.
Voting Rights
- -------------
As summarized in the Prospectus, shareholders are entitled to one vote for
each full share held (with a fractional vote for each fractional share held) and
may vote (to the extent provided in the Declaration of Trust) in the election of
Trustees and the termination of the Trust and on other matters submitted to the
vote of shareholders.
The Declaration of Trust provides that on any matter submitted to a vote of
all Trust shareholders, all Trust shares entitled to vote shall be voted
together irrespective of series or sub-series unless the rights of a particular
series or sub-series would be adversely affected by the vote, in which case a
separate vote of that series or sub-series shall also be required to decide the
question. Also, a separate vote for each series or sub-series shall be held
whenever required by the 1940 Act or any rule thereunder. Rule 18f-2 under the
1940 Act provides in effect that a class shall be deemed to be affected by a
matter unless it is clear that the interests of each class in the matter are
substantially identical or that the matter does not affect any interest of such
class. On matters exclusively affecting an individual series, only shareholders
of that series are entitled to vote. Consistent with the current position of the
SEC, shareholders of all series vote together, irrespective of series, on the
election of Trustees and the selection of the Trust's independent accountants,
but shareholders of each series vote separately on other matters requiring
shareholder approval, such as certain changes in investment policies of that
series or the approval of the investment advisory agreement relating to that
series. Voting rights are not cumulative.
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<PAGE>
There will normally be no meetings of shareholders for the purpose of
electing Trustees except that, in accordance with the 1940 Act, (i) the Trust
will hold a shareholders' meeting for the election of Trustees at such time as
less than a majority of the Trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy on the board of Trustees,
less than two-thirds of the Trustees holding office have been elected by the
shareholders, that vacancy may be filled only by a vote of the shareholders. In
addition, Trustees may be removed from office by a written consent signed by the
holders of two-thirds of the outstanding shares and filed with the Trust's
custodian or by a vote of the holders of two-thirds of the outstanding shares at
a meeting duly called for that purpose, which meeting shall be held upon the
written request of the holders of not less than 10% of the outstanding shares.
Upon written request by the holders of shares having a net asset value
constituting 1% of the outstanding shares stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Trustee, the
Trust has undertaken to provide a list of shareholders or to disseminate
appropriate materials (at the expense of the requesting shareholders).
Except as set forth above, the Trustees shall continue to hold office
and may appoint successor Trustees.
No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust, except
(i) to change the Trust's name or to cure technical problems in the Declaration
of Trust, (ii) to establish, change or eliminate the par value of any shares
(currently all shares have no par value) and (iii) to issue shares of the Trust
in one or more series, and to subdivide any series of shares into various
classes of shares with such dividend preferences and other rights as the
Trustees may designate.
Shareholder and Trustee Liability
- ---------------------------------
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Fund. However, the
Declaration of Trust disclaims shareholder liability for acts or obligations of
each fund and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or the
Trustees. The Declaration of Trust provides for indemnification out of Fund
property for all loss and expense of any shareholder held personally liable for
the obligations of the Fund. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is considered remote since it is
limited to circumstances in which the disclaimer is inoperative and the Fund
itself would be unable to meet its obligations.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct
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<PAGE>
of his office. The By-Laws of the Trust provide for indemnification by the Trust
of the Trustees and officers of the Trust except with respect to any matter as
to which any such person did not act in good faith in the reasonable belief that
such action was in or not opposed to the best interests of the Trust. No officer
or Trustee may be indemnified against any liability to the Trust or the Trust's
shareholders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
HOW TO BUY SHARES
The procedures for purchasing shares of the Fund and for determining the
offering price of such shares are summarized in the Prospectus under "How to
Purchase Shares."
NET ASSET VALUE
The net asset value of the shares of the Fund is determined by dividing the
Fund's total net assets (the excess of its assets over its liabilities) by the
total number of shares of the Fund outstanding and rounding to the nearest cent.
Such determination is made at least weekly and as of the close of regular
trading on the New York Stock Exchange (the "Exchange") on any day on which an
order for purchase or redemption of the Fund's shares is received and on which
the Exchange is open for unrestricted trading. During the twelve months
following the date of this Statement of Additional Information, the Exchange is
expected to be closed on the following weekdays: Memorial Day as observed,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day, New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day and Good Friday. Equity securities
listed on an established securities exchange or on the NASDAQ National Market
System are normally valued at their last sale price on the exchange where
primarily traded or, if there is no reported sale during the day, and in the
case of over the counter securities not so listed, at the last bid price.
Long-term debt securities are valued by a pricing service, which determines
valuations of normal institutional-size trading units of long-term debt
securities. Such valuations are determined using methods based on market
transactions for comparable securities and on various relationships among
securities that are generally recognized by institutional traders. Other
securities for which current market quotations are not readily available
(including restricted securities, if any) and all other assets are taken at fair
value as determined in good faith by the Trustees, although the actual
calculations may be made by persons acting pursuant to the direction of the
Trustees.
Generally, trading in foreign securities markets is substantially completed
each day at various times prior to the close of regular trading on the Exchange.
Occasionally, events affecting the value of foreign securities not traded on a
U.S. exchange may occur between the completion of substantial trading of such
securities for the day and the close of regular trading on the New York Stock
Exchange, which events will not be reflected in the computation of the Fund's
net asset value. If events materially affecting the value of the Fund's
portfolio securities occur during such period, then these securities may be
valued at their fair value as determined in good faith or in accordance with
procedures approved by the Trustees.
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<PAGE>
REDEMPTIONS
The procedures for redemption of Fund shares are summarized in the
Prospectus under "How to Redeem Shares."
The redemption price will be the net asset value per share next determined
--------------------------------------------------------------------------
after the redemption request and any necessary special documentation are
- ------------------------------------------------------------------------
received by the Trust in proper form. Proceeds resulting from a written
- ------------------------------------
redemption request will normally be mailed to you within seven days after
receipt of your request in good order. In those cases where you have recently
purchased your shares by check and your check was received less than fifteen
days prior to the redemption request, the Fund may withhold redemption proceeds
until your check has cleared.
The Fund will normally redeem shares for cash; however, the Fund reserves
the right to pay the redemption price wholly or partly in kind if the Trustees
determine it to be advisable in the interest of the remaining shareholders. If
portfolio securities are distributed in lieu of cash, the shareholder will
normally incur brokerage commissions upon subsequent disposition of any such
securities.
A redemption constitutes a sale of the shares for federal income tax
purposes on which the investor may realize a long- or short-term capital gain or
loss. See "Income Dividends, Capital Gain Distributions and Tax Status."
INCOME DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAX STATUS
As described in the Prospectus under "Dividends, Capital Gain Distributions
and Taxes," it is the policy of the Fund to pay its shareholders annually, as
dividends, substantially all of the Fund's net income and to distribute to its
shareholders annually substantially all net realized capital gains, if any,
after offset by any capital loss carryovers.
Income dividends and capital gain distributions are payable in full and
fractional shares of the Fund based upon the net asset value determined as of
the close of regular trading on the Exchange on the record date for each
dividend or distribution. Shareholders, however, may elect to receive their
income dividends or capital gain distributions, or both, in cash. The election
may be made at any time by submitting a written request directly to the Trust.
In order for an election to be in effect for any dividend or distribution, it
must be received by the Trust on or before the record date for such dividend or
distribution.
As required by federal law, information concerning the federal tax status
of distributions from the Fund will be furnished to each shareholder for each
calendar year on or before January 31 of the succeeding year.
The Fund intends to qualify each year as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). In order so to qualify and to
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<PAGE>
qualify for the special tax treatment accorded regulated investment companies
and their shareholders, the Fund must, among other things: (i) derive at least
90% of its gross income from dividends, interest, payments with respect to
certain securities loans, gains from the sale of securities or foreign
currencies, or other income derived with respect to its business of investing in
such stock, securities or currencies; (ii) distribute each year at least 90% of
the sum of its taxable net investment income, its tax-exempt income and the
excess, if any, of net short-term capital gains over net long-term capital
losses for such year; and (iii) at the end of each fiscal quarter hold at least
50% of the value of its total assets in cash, cash items, U.S. government
securities, securities of other regulated investment companies, and other
securities that represent, with respect to each issuer, no more than 5% of the
value of the Fund's total assets and 10% of the outstanding voting securities of
such issuer, and no more than 25% of the value of its total assets in the
securities (other than those of the U.S. Government or other regulated
investment companies) of any one issuer or of two or more issuers that the Fund
controls and that are engaged in the same, similar or related trades or
businesses. To the extent the Fund qualifies for treatment as a regulated
investment company, it will not be subject to federal income tax on income paid
to its shareholders in the form of dividends or capital gain distributions.
A nondeductible excise tax will be imposed at the rate of 4% on the excess,
if any, of the Fund's "required distribution" over its distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
realized during the one-year period ending on October 31 (or December 31, if the
Fund is permitted to so elect and so elects) plus undistributed amounts from
prior years. The Fund intends to make distributions sufficient to avoid
imposition of the excise tax. Dividends and distributions declared by the Fund
during October, November or December to shareholders of record on a date in any
such month and paid by the Fund during the following January will be treated for
federal tax purposes as paid by the Fund and received by shareholders on
December 31 of the year in which declared.
Distribution by the Fund of net income and short-term capital gains, if
any, will be taxable to shareholders as ordinary income. Distributions
designated by the Fund as deriving from net gains on securities held for more
than one year will be taxable to shareholders as long-term capital gains
(generally at a 20% rate for noncorporate shareholders), without regard to how
long a shareholder has held shares of the Fund.
Dividends and distributions on the Fund's shares are generally subject to
federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when the Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed. Such realized gains may be required to be
distributed even when the Fund's net asset value also reflects unrealized
losses.
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<PAGE>
Redemptions and exchanges of the Fund's shares are taxable events and,
accordingly, shareholders may realize gains and losses on these transactions. If
shares have been held for more than one year, gain or loss realized will
generally be long-term capital gain or loss, and will otherwise be short-term
capital gain or loss. In general, any long term gains realized upon a taxable
disposition of shares will be subject to a maximum tax rate of 20% (for
noncorporate shareholders). However, if a shareholder sells Fund shares at a
loss within six months after purchasing the shares, the loss will be treated as
a long-term capital loss to the extent of any long-term capital gain
distributions received by the shareholder. Furthermore, all or a portion of any
loss will be disallowed on the taxable disposition of Fund shares if the
shareholder acquires other shares of the Fund within 30 days before or after the
disposition.
The Fund's investment in securities issued at a discount and certain other
obligations will (and investments in securities purchased at a discount may)
require the Fund to accrue and distribute income not yet received. In such
cases, the Fund may be required to sell assets (including when it is not
advantageous to do so) to generate the cash necessary to distribute as dividends
to its shareholders all of its income and gains and therefore to eliminate any
tax liability at the Fund level.
If the Fund engages in hedging transactions, including hedging transactions
in options, future contracts, and straddles, or other similar transactions, it
will be subject to special tax rules (including constructive sale, mark-to
market straddle, wash sale, and short sale rules), the effect of which may be to
accelerate income to the Fund, defer losses to the Fund, cause adjustments in
the holding periods of the Fund's securities, or convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders. The Fund will
endeavor to make any available elections pertaining to such transactions in a
manner believed to be in the best interests of the Fund.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and the regulations thereunder currently in effect. For
the complete provisions, reference should be made to the pertinent Code sections
and regulations. The Code and regulations are subject to change by legislative
or administrative action, respectively.
Dividends and distributions also may be subject to foreign, state and local
taxes. Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, foreign, state or local taxes.
The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty).
The Internal Revenue Service recently revised its regulations affecting the
application to foreign investors of the back-up withholding and withholding tax
rules described above. The new regulations will generally be effective for
payments made on or after January 1, 1999 (although
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<PAGE>
transition rules will apply). In some circumstances, the new rules will increase
the certification and filing requirements imposed on foreign investors in order
to qualify for exemption from the 31% back-up withholding tax and for reduced
withholding tax rates under income tax treaties. Foreign investors in the Fund
should consult their tax advisors with respect to the potential application of
these new regulations.
CALCULATION OF TOTAL RETURN
Total Return. Total Return with respect to the Fund is a measure of the
------------
change in value of an investment in the Fund over the period covered, and
assumes any dividends or capital gains distributions are reinvested immediately,
rather than paid to the investor in cash. The formula for total return used
herein includes four steps: (1) adding to the total number of shares purchased
through a hypothetical $1,000 investment in the Fund all additional shares which
would have been purchased if all dividends and distributions paid or distributed
during the period had been immediately reinvested; (2) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of shares owned at the end of the period by the net
asset value per share on the last trading day of the period; (3) assuming
redemption at the end of the period; and (4) dividing the resulting account
value by the initial $1,000 investment.
PERFORMANCE COMPARISONS
The Fund may from time to time include the total return of its shares in
advertisements or information furnished to present or prospective shareholders.
The Fund may from time to time include in advertisements or information
furnished to present or prospective shareholders (i) the ranking of performance
figures relative to such figures for groups of mutual funds categorized by
Lipper Analytical Services, Inc. or Micropal, Inc. as having similar investment
objectives, (ii) the rating assigned to the Fund by Morningstar, Inc. based on
the Fund's risk-adjusted performance relative to other mutual funds in its broad
investment class, and/or (iii) the ranking of performance figures relative to
such figures for mutual funds in its general investment category as determined
by CDA/Weisenberger's Management Results.
Lipper Analytical Services, Inc. distributes mutual fund rankings monthly.
-------------------------------
The rankings are based on total return performance calculated by Lipper,
generally reflecting changes in net asset value adjusted for reinvestment of
capital gains and income dividends. They do not reflect deduction of any sales
charges. Lipper rankings cover a variety of performance periods, including
year-to-date, 1-year, 5-year, and 10-year performance. Lipper classifies mutual
funds by investment objective and asset category.
Micropal, Inc. distributes mutual fund rankings weekly and monthly. The
-------------
rankings are based upon performance calculated by Micropal, generally reflecting
changes in net asset value that can be adjusted for the reinvestment of capital
gains and dividends. If deemed appropriate by the user, performance can also
reflect deductions for sales charges. Micropal rankings cover a
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variety of performance periods, including year-to-date, 1-year, 5-year and
10-year performance. Micropal classifies mutual funds by investment objective
and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a month. The
----------------
ratings are divided into five groups: highest, above average, neutral, below
average and lowest. They represent a fund's historical risk/reward ratio
relative to other funds in its broad investment class as determined by
Morningstar, Inc. Morningstar ratings cover a variety of performance periods,
including 3-year, 5-year, 10-year and overall performance. The performance
factor for the overall rating is a weighted-average return performance (if
available) reflecting deduction of expenses and sales charges. Performance is
adjusted using quantitative techniques to reflect the risk profile of the fund.
The ratings are derived from a purely quantitative system that does not utilize
the subjective criteria customarily employed by rating agencies such as Standard
& Poor's and Moody's Investor Service, Inc.
CDA/Weisenberger's Management Results publishes mutual fund rankings and is
-------------------------------------
distributed monthly. The rankings are based entirely on total return calculated
by Weisenberger for periods such as year-to-date, 1-year, 3-year, 5-year and
10-year. Mutual funds are ranked in general categories (e.g., international
bond, international equity, municipal bond, and maximum capital gain).
Weisenberger rankings do not reflect deduction of sales charges or fees.
Performance information may also be used to compare the performance of the
Fund to certain widely acknowledged standards or indices for stock and bond
market performance, such as those listed below.
Consumer Price Index. The Consumer Price Index, published by the U.S.
--------------------
Bureau of Labor Statistics, is a statistical measure of changes, over time, in
the prices of goods and services in major expenditure groups.
Dow Jones Industrial Average. The Dow Jones Industrial Average is a market
----------------------------
value-weighted and unmanaged index of 30 large industrial stocks traded on the
New York Stock Exchange.
MSCI-EAFE Index. The MSCI-EAFE Index contains over 1000 stocks from 20
---------------
different countries with Japan (approximately 50%), United Kingdom, France and
Germany being the most heavily weighted.
MSCI-EAFE ex-Japan Index. The MSCI-EAFE ex-Japan Index consists of all
------------------------
stocks contained in the MSCI-EAFE Index, other than stocks from Japan.
Russell 2000 Index. The Russell 2000 Index is comprised of the 2000
------------------
smallest of the 3000 largest U.S.-domiciled corporations, ranked by market
capitalization.
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<PAGE>
Standard & Poor's/Barra Growth Index. The Standard & Poor's/Barra Growth
------------------------------------
Index is constructed by ranking the securities in the S&P 500 by price-to-book
ratio and including the securities with the highest price-to-book ratios that
represent approximately half of the market capitalization of the S&P 500.
Standard & Poor's/Barra Value Index. The Standard & Poor's/Barra Value
-----------------------------------
Index is constructed by ranking the securities in the S&P 500 by price-to-book
ratio and including the securities with the lowest price-to-book ratios that
represent approximately half of the market capitalization of the S&P 500.
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"). The S&P
-----------------------------------------------------------------
500 is a market value-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43. The
S&P 500 is composed almost entirely of common stocks of companies listed on the
New York Stock Exchange, although the common stocks of a few companies listed on
the American Stock Exchange or traded over-the-counter are included. The 500
companies represented include 400 industrial, 60 transportation and 40 financial
services concerns. The S&P 500 represents about 80% of the market value of all
issues traded on the New York Stock Exchange. The S&P 500 is the most common
index for the overall U.S. stock market.
From time to time, articles about the Fund regarding performance, rankings
and other characteristics of the Fund may appear in publications including, but
not limited to, the publications included in Appendix A. In particular, some or
all of these publications may publish their own rankings or performance reviews
of mutual funds, including the Fund. References to or reprints of such articles
may be used in the Fund's promotional literature. References to articles
regarding personnel of Loomis Sayles who have portfolio management
responsibility may also be used in the Fund's promotional literature. For
additional information about the Fund's advertising and promotional literature,
see Appendix B.
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<PAGE>
APPENDIX A
PUBLICATIONS THAT MAY CONTAIN FUND INFORMATION
ABC and affiliates Financial Research Corp.
Adam Smith's Money World Financial Services Week
America On Line Financial World
Anchorage Daily News Fitch Insights
Atlanta Constitution Forbes
Atlanta Journal Fort Worth Star-Telegram
Arizona Republic Fortune
Austin American Statesman Fox Network and affiliates
Baltimore Sun Fund Action
Bank Investment Marketing Fund Decoder
Barron's Global Finance
Bergen County Record (NJ) (the) Guarantor
Bloomberg Business News Hartford Courant
Bond Buyer Houston Chronicle
Boston Business Journal INC
Boston Globe Indianapolis Star
Boston Herald Individual Investor
Broker World Institutional Investor
Business Radio Network International Herald Tribune
Business Week Internet
CBS and affiliates Investment Advisor
CDA Investment Technologies Investment Company Institute
CFO Investment Dealers Digest
Changing Times Investment Profiles
Chicago Sun Times Investment Vision
Chicago Tribune Investor's Daily
Christian Science Monitor IRA Reporter
Christian Science Monitor News Service Journal of Commerce
Cincinnati Enquirer Kansas City Star
Cincinnati Post KCMO (Kansas City)
CNBC KOA-AM (Denver)
CNN LA Times
Columbus Dispatch Leckey, Andrew (syndicated column)
CompuServe Life Association News
Dallas Morning News Lifetime Channel
Dallas Times-Herald Miami Herald
Denver Post Milwaukee Sentinel
Des Moines Register Money Magazine
Detroit Free Press Money Maker
Donoghues Money Fund Report Money Management Letter
Dorfman, Dan (syndicated column) Morningstar
Dow Jones News Service Mutual Fund Market News
Economist Mutual Funds Magazine
FACS of the Week National Public Radio
Fee Adviser National Underwriter
Financial News Network NBC and affiliates
Financial Planning New England Business
Financial Planning on Wall Street New England Cable News
A-1
<PAGE>
New Orleans Times-Picayune Wall Street Letter
New York Daily News Wall Street Week
New York Times Washington Post
Newark Star Ledger WBZ
Newsday WBZ-TV
Newsweek WCVB-TV
Nightly Business Report WEEI
Orange County Register WHDH
Orlando Sentinel Worcester Telegram
Palm Beach Post World Wide Web
Pension World Worth Magazine
Pensions and Investments WRKO
Personal Investor
Philadelphia Inquirer
Porter, Sylvia (syndicated column)
Portland Oregonian
Prodigy
Public Broadcasting Service
Quinn, Jane Bryant (syndicated column)
Registered Representative
Research Magazine
Resource
Reuters
Rocky Mountain News
Rukeyser's Business (syndicated column)
Sacramento Bee
San Diego Tribune
San Francisco Chronicle
San Francisco Examiner
San Jose Mercury
Seattle Post-Intelligencer
Seattle Times
Securities Industry Management
Smart Money
St. Louis Post Dispatch
St. Petersburg Times
Standard & Poor's Outlook
Standard & Poor's Stock Guide
Stanger's Investment Advisor
Stockbroker's Register
Strategic Insight
Tampa Tribune
Time
Tobias, Andrew (syndicated column)
Toledo Blade
UP
US News and World Report
USA Today
USA TV Network
Value Line
Wall Street Journal
A-2
<PAGE>
APPENDIX B
ADVERTISING AND PROMOTIONAL LITERATURE
Loomis Sayles Investment Trust advertising and promotional material may include,
but is not limited to, discussions of the following information:
. Loomis Sayles Investment Trust's participation in wrap fee and no
transaction fee programs
. Loomis Sayles Investment Trust and Loomis, Sayles & Company, L.P. Website
. Characteristics of Loomis Sayles including the number and locations of its
offices, its investment practices and clients
. Specific and general investment philosophies, strategies, processes and
techniques
. Specific and general sources of information, economic models, forecasts and
data services utilized, consulted or considered in the course of providing
advisory or other services
. Industry conferences, electronically transmitted programs relating to the
investment industry and the like at which Loomis Sayles participates
. Current capitalization, levels of profitability and other financial
information
. Identification of portfolio managers, researchers, economists, principals
and other staff members and employees
. The specific credentials of the above individuals, including but not
limited to, previous employment, current and past positions, titles and
duties performed, industry experience, educational background and degrees,
awards and honors
. Specific identification of, and general reference to, current individual,
corporate and institutional clients, including pension and profit sharing
plans
. Current and historical statistics relating to:
-total dollar amount of assets managed
-Loomis Sayles assets managed in total and by Fund
-the growth of assets
-asset types managed
References may be included in Loomis Sayles Investment Trust's advertising
and promotional literature about 401(k) and retirement plans, if any, that offer
the Fund. The information may include, but is not limited to:
. Specific and general references to industry statistics regarding 401(k) and
retirement plans including historical information and industry trends and
forecasts regarding the growth of assets, numbers or plans, funding
vehicles, participants, sponsors and other demographic data relating to
plans, participants and sponsors, third party and other administrators,
benefits consultants and firms with whom Loomis Sayles may or may not have
a relationship.
B-1
<PAGE>
. Specific and general reference to comparative ratings, rankings and other
forms of evaluation as well as statistics regarding the Fund as a 401(k) or
retirement plan funding vehicle produced by industry authorities, research
organizations and publications.
B-2
<PAGE>
LOOMIS SAYLES INVESTMENT TRUST
Index to Exhibits
Exhibit No. Description
- ----------- -----------
5i. Form of Investment Advisory Agreement between the Trust and
Loomis Sayles Small Cap Value Fund.
<PAGE>
EXHIBIT 5i
FORM OF
ADVISORY AGREEMENT
------------------
AGREEMENT made this ___ day of _______________, 1999 by and between Loomis
Sayles Investment Trust, a Massachusetts business trust (the "Trust"), with
respect to its Loomis Sayles Small Cap Value Fund series (the "Series"), and
Loomis, Sayles & Company, L.P., a Delaware limited partnership (the "Adviser").
WITNESSETH:
WHEREAS, the Trust and the Adviser wish to enter into an agreement setting
forth the terms upon which the Adviser will perform certain services for the
Series;
NOW THEREFORE, in consideration of the premises and covenants hereinafter
contained, the parties agree as follows:
1. The Trust hereby employs the Adviser to manage the investment and
reinvestment of the assets belonging to the Series and to perform the other
services herein set forth, subject to the supervision and control of the Board
of Trustees of the Trust. The Adviser hereby accepts such employment and agrees,
at its own expense, to render the services and to assume the obligations herein
set forth, for the compensation herein provided. The Adviser shall for all
purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the Trust.
2. In carrying out its obligations to manage the investment and
reinvestment of the assets belonging to the Series, the Adviser shall:
(a) obtain and evaluate such economic, statistical and financial data
and information and undertake such additional investment research as it
shall believe necessary or advisable for the management of the investment
and reinvestment of the assets belonging to the Series in accordance with
the Series' investment objective and policies;
(b) take such steps as are necessary to implement the investment
policies of the Series by purchase and sale of securities, including the
placing of orders for such purchase and sale; and
(c) regularly report to the Board of Trustees with respect to the
implementation of the investment policies of the Series.
<PAGE>
3. All activities in connection with the management of the affairs of the
Series undertaken by the Adviser pursuant to this Agreement shall at all times
be subject to the supervision and control of the Board of Trustees, any duly
constituted committee thereof or any officer of the Trust acting pursuant to
like authority.
4. In addition to performing at its expense the obligations set forth in
section 2 hereof, the Adviser shall furnish to the Trust at the Adviser's own
expense or pay the expenses of the Trust for the following:
(a) office space in such place or places as may be agreed upon from
time to time, and all necessary office supplies, facilities and equipment;
(b) necessary executive and other personnel for managing the affairs
of the Series (exclusive of those related to and to be performed under
contract for custodial, transfer, dividend and plan agency services by the
entity or entities, if any, selected to perform such services and exclusive
of any managerial functions described in section 5); and
(c) compensation, if any, of Trustees of the Trust who are directors,
officers or employees of the Adviser or any affiliated person (other than a
registered investment company) of the Adviser.
5. Except as the Adviser may otherwise agree from time to time, nothing
in section 4 hereof shall require the Adviser to bear, or to reimburse the Trust
for:
(a) any of the costs of printing and mailing the items referred to in
sub- section (n) of this section 5;
(b) any of the costs of preparing, printing and distributing sales
literature;
(c) compensation of Trustees of the Trust who are not directors,
officers or employees of the Adviser or of any affiliated person (other
than a registered investment company) of the Adviser;
(d) registration, filing and other fees in connection with
requirements of regulatory authorities;
(e) the charges and expenses of the custodian appointed by the Trust
for custodial, paying agent, transfer agent and plan agent services;
(f) charges and expenses of independent accountants retained by the
Trust;
-2-
<PAGE>
(g) charges and expenses of any transfer agents and registrars
appointed by the Trust;
(h) brokers' commissions and issue and transfer taxes chargeable to
the Trust in connection with securities transactions to which the Trust is
a party;
(i) taxes and fees payable by the Trust to Federal, State or other
governmental agencies;
(j) any cost of certificates representing shares of the Series;
(k) legal fees and expenses in connection with the affairs of the
Trust including registering and qualifying its shares with Federal and
State regulatory authorities;
(l) expenses of meetings of shareholders and Trustees of the Trust;
and
(m) interest, including interest on borrowings by the Trust;
(n) the cost of services, including services of counsel, required in
connection with the preparation of the Trust's registration statements and
prospectuses, including amendments and revisions thereto, annual,
semiannual and other periodic reports of the Trust, and notices and proxy
solicitation material furnished to shareholders of the Trust or regulatory
authorities; and
(o) the Trust's expenses of bookkeeping, accounting, auditing and
financial reporting, including related clerical expenses.
6. The services of the Adviser to the Trust hereunder are not to be
deemed exclusive and the Adviser shall be free to render similar services to
others, so long as its services hereunder are not impaired thereby.
7. As full compensation for all services rendered, facilities furnished
and expenses borne by the Adviser hereunder, the Trust shall pay the Adviser
compensation at the annual rate of .75% or such lesser rate as the Adviser may
agree to from time to time. Such compensation shall be payable monthly in
arrears or at such other intervals, not less frequently than quarterly, as the
Board of Trustees of the Trust may from time to time determine and specify in
writing to the Adviser. The Adviser hereby acknowledges that the Trust's
obligation to pay such compensation is binding only on the assets and property
belonging to the Series.
8. If the total of all ordinary business expenses of the Series or the
Trust as a whole (including investment advisory fees but excluding taxes and
portfolio brokerage
-3-
<PAGE>
commissions) for any fiscal year exceeds the lowest applicable percentage of
average net assets or income limitations prescribed by any state in which shares
of the Series are qualified for sale, the Adviser shall pay any such excess.
Solely for purposes of applying such limitations in accordance with the
foregoing sentence, the Series and the Trust shall each be deemed to be a
separate fund subject to such limitations. Should the applicable state
limitation provisions fail to specify how the average net assets of the Trust or
belonging to the Series are to be calculated, that figure shall be calculated by
reference to the average daily net assets of the Trust or the Series, as the
case may be.
9. It is understood that any of the shareholders, Trustees, officers,
employees and agents of the Trust may be a partner, shareholder, director,
officer, employee or agent of, or be otherwise interested in the Adviser, any
affiliated person of the Adviser, any organization in which the Adviser may have
an interest or any organization which may have an interest in the Adviser; that
the Adviser, any such affiliated person or any such organization may have an
interest in the Trust; and that the existence of any such dual interest shall
not affect the validity hereof or of any transactions hereunder except as
otherwise provided in the Agreement and Declaration of Trust of the Trust and
the Partnership Agreement of the Adviser, respectively, or by specific
provisions of applicable law.
10. This Agreement shall become effective as of the date of its
execution, and
(a) unless otherwise terminated, this Agreement shall continue in
effect for two years from the date of execution, and from year to year
thereafter so long as such continuance is specifically approved at least
annually (i) by the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Series, and (ii) by vote of a
majority of the Trustees of the Trust who are not interested persons of the
Trust or the Adviser, cast in person at a meeting called for the purpose of
voting on such approval;
(b) this Agreement may at any time be terminated on sixty days'
written notice to the Adviser either by vote of the Board of Trustees of
the Trust or by vote of a majority of the outstanding voting securities of
the Series;
(c) this Agreement shall automatically terminate in the event of its
assignment;
(d) this Agreement may be terminated by the Adviser on ninety days'
written notice to the Trust;
(e) if the Adviser requires the Trust or the Series to change its name
so as to eliminate all references to the words "Loomis" or "Sayles," then
this Agreement shall automatically terminate at the time of such change
unless the continuance of this Agreement after such change shall have been
specifically approved by vote of a
-4-
<PAGE>
majority of the outstanding voting securities of the Series and by vote of
a majority of the Trustees of the Trust who are not interested persons of
the Trust or the Adviser, cast in person at a meeting called for the
purpose of voting on such approval.
Termination of this Agreement pursuant to this section 10 shall be without
payment of any penalty.
11. This Agreement may be amended at any time by mutual consent of the
parties, provided that such consent on the part of the Trust shall have been
approved by vote of a majority of the outstanding voting securities of the
Series and by vote of a majority of the Trustees of the Trust who are not
interested persons of the Trust or the Adviser, cast in person at a meeting
called for the purpose of voting on such approval.
12. For the purpose of this Agreement, the terms "vote of a majority of
the outstanding voting securities," "interested person," "affiliated person" and
"assignment" shall have their respective meanings defined in the Investment
Company Act of 1940 and the rules and regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act. References in this Agreement to any assets, property or
liabilities "belonging to" the Series shall have the meaning defined in the
Trust's Agreement and Declaration of Trust and By-Laws as amended from time to
time.
13. In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Adviser, or reckless disregard of its obligations and duties
hereunder, the Adviser shall not be subject to any liability to the Trust, to
any shareholder of the Trust or to any other person, firm or organization, for
any act or omission in the course of, or connected with, rendering services
hereunder.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
LOOMIS SAYLES INVESTMENT TRUST,
on behalf of its
LOOMIS SAYLES SMALL CAP VALUE FUND
series
By:
-------------------------------
Daniel J. Fuss
President
LOOMIS, SAYLES & COMPANY, L.P.
By: LOOMIS, SAYLES & COMPANY,
INC., its general partner
By:
-------------------------------
Mark W. Holland
Vice President
A copy of the Agreement and Declaration of Trust establishing the Trust is
on file with the Secretary of State of the Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed with respect to the
Trust's Loomis Sayles Small Cap Value Fund series on behalf of the Trust by
officers of the Trust as officers and not individually and that the obligations
of or arising out of this Agreement are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon the assets and
property belonging to the Series.
-6-
