SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X] Preliminary Proxy Statement [ ] Confidential, for Use of
[ ] Definitive Proxy the Commission Only (as
Statement permitted by Rule 14a-
[ ] Definitive Additional 6(e)(2))
Materials
[ ] Soliciting Material
Pursuant to Rule 14a-
11(c) or Rule 14a-12
NEW ENGLAND FUNDS TRUST II
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
May 17, 1996
Dear New England High Income Fund Shareholder:
The enclosed Proxy Statement contains detailed information regarding an
important proposal affecting New England High Income Fund. You may find it
helpful to review the following questions and answers before turning to the
Proxy Statement.
Q. What is this proposal about?
A. We are asking you to approve the appointment of Loomis, Sayles & Company,
L.P. as New England High Income Fund's new sub-adviser, succeeding Back
Bay Advisors. Under the terms of the proposal, Loomis Sayles would manage
the day-to-day operations of the Fund under the oversight of New England
Funds Management.
In connection with the new sub-advisory arrangement, the advisory fees
payable by the Fund will decrease from the current annual rate of 0.75% of
all the Fund's net assets to the new rates of 0.70% of the first $200
million of the Fund's average daily net assets and 0.65% of any such
assets in excess of $200 million.
Upon adoption of this proposal, New England Funds will also reduce the
Rule 12b-1 fees payable by the Fund's Class A shares from the current
annual rate of 0.35% of Class A net assets to 0.25% of such assets. This
12b-1 fee reduction would affect only the Class A shares.
Q. Why was this approved by the Trustees?
A. Based on a review of the investment approach and performance of Back Bay
Advisors in managing the Fund, Loomis Sayles's proposed portfolio approach
and the performance record of Loomis Sayles in managing other accounts and
other income mutual funds, the Trustees of the Trust determined that the
proposed arrangement with Loomis Sayles is in the best interests of the
Fund's shareholders.
YOUR VOTE COUNTS
Your vote is extremely important, no matter how many shares of the Fund
you own. You may receive a call from D.F. King, a proxy solicitation firm, to
remind you to return your proxy ballot(s). Voting promptly is important; it
will reduce the need to send you another proxy package or to contact you by
phone. If we do not receive enough votes, we will need to resolicit
shareholders.
Thanks for your cooperation in voting on this important proposal. Should
you have any questions, please call 1-800-224-55478 to speak with an Investor
Service and Marketing Representative who will be happy to answer your
questions.
Sincerely,
HENRY L.P. SCHMELZER
President
NEW ENGLAND FUNDS
NEW ENGLAND HIGH INCOME FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
June __, 1996
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of New England
High Income Fund (the "Fund"), a series of New England Funds Trust II (the
"Trust"), will be held at the offices of New England Funds, L.P., 399 Boylston
Street, Boston, Massachusetts, on June __, 1996 at 2:00 p.m. (Boston time) for
the following purposes:
1. To approve or disapprove a proposed Sub-Advisory Agreement relating to the
Fund between New England Funds Management, L.P. and Loomis, Sayles &
Company, L.P.
2. To consider and act upon any other matters which may properly come before
the meeting or any adjournment thereof.
By order of the President of the Trust,
ROBERT P. CONNOLLY, Secretary
May 17, 1996
YOUR VOTE IS IMPORTANT
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING.
YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
Page 1
NEW ENGLAND HIGH INCOME FUND
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees of New England Funds Trust II (the "Trust") for use at
the Special Meeting of Shareholders of New England High Income Fund (the
"Fund"), a series of the Trust, to be held at the offices of New England Funds,
L.P. ("NEF"), 399 Boylston Street, Boston, Massachusetts on June __, 1996 at
2:00 p.m. (Boston time) and at any adjournment or adjournments thereof (the
"Meeting"). This statement and its enclosures are being mailed to shareholders
beginning on or about May 17, 1996. A copy of the Annual Report of the Fund
for the fiscal year ended December 31, 1995 may be obtained without charge by
calling (800) 225-5478.
All shareholders of record on May __, 1996, the record date for determining
shareholders entitled to vote at the Meeting (the "Record Date"), are entitled
to one vote for each share of beneficial interest of the Trust held as of that
date. The number of shares of beneficial interest of the Fund issued and
outstanding as of the Record Date was ______________.
Timely, properly executed proxies will be voted as you instruct. If no
choice is indicated, proxies will be voted in favor of Proposal 1 set forth in
the attached Notice of Meeting. At any time before it has been voted, the
enclosed proxy may be revoked by the signer by a written revocation received by
the Secretary of the Trust, by properly executing a later-dated proxy or by
attending the Meeting, requesting return of any previously delivered proxy and
voting in person.
The costs of solicitation of proxies will be borne by the Fund.
Solicitation of proxies by personal interview, mail, telephone and telegraph
may be made by officers and Trustees of the Trust and employees of NEF. In
addition, the firm of [________________] has been retained to assist in the
solicitation of proxies, at a cost to the Fund which is not expected to exceed
[$--max. cost of solicitation], plus reimbursement of the firm's out-of-pocket
expenses.
New England Funds Management, L.P. ("NEFM") proposes to appoint Loomis,
Sayles & Company, L.P. ("Loomis Sayles") as the Fund's new sub-adviser, to
manage the day-to-day investment operations of the Fund under the oversight of
NEFM. Proposal 1 relates to the proposed Sub-Advisory Agreement (the "New Sub-
Advisory Agreement") under which Loomis Sayles would act as the Fund's sub-
adviser. The Trustees of the Trust recommend that the Fund's shareholders vote
to approve the proposed sub-advisory agreement for the Fund. In connection
with the new sub-advisory arrangement, NEFM has agreed to decrease the advisory
fees payable by the Fund to NEFM from the current annual rate of 0.75% of all
of the Fund's average daily net assets to the new rates of 0.70% of the first
$200 million of the Fund's average daily net assets and 0.65% of any such
assets in excess of $200 million.
PAGE 2
Current Management Arrangements
NEFM and Back Bay Advisors, L.P. ("Back Bay Advisors") have acted as the
Fund's adviser and sub-adviser, respectively, since January 2, 1996, pursuant
to an advisory agreement (the "Advisory Agreement") and a sub-advisory
agreement (the "Current Sub-Advisory Agreement") both dated January 2, 1996.
The Fund's shareholders approved this advisory/sub-advisory arrangement at a
meeting held on December 28, 1995. From July 1988 until January 2, 1996, Back
Bay Advisors, the Fund's current sub-adviser, acted as the Fund's adviser.
Under the Advisory Agreement, NEFM has overall advisory and administrative
responsibility with respect to the Fund. The Fund's Advisory Agreement also
provides that NEFM will, subject to its rights to delegate such
responsibilities to other parties, provide to the Fund both (1) portfolio
management services (defined to mean managing the investment and reinvestment
of the assets of the Fund, subject to the supervision and control of the
Trustees) and (2) administrative services (defined to mean furnishing or paying
the expenses of the Fund for office space, facilities and equipment, services
of executive and other personnel of the Trust and certain other administrative
and general management services). Under the Advisory Agreement, the annual fee
rate payable by the Fund to NEFM is 0.75% of all of the Fund's average net
daily assets. Currently, however, NEFM voluntarily reduces its management fee
and, when necessary, bears certain expenses in order to limit the Fund's
expenses to an annual rate of 1.60% of the average daily net assets of the
Fund's Class A shares and 2.25% of the Fund's Class B shares. Under the
Advisory Agreement, this voluntary limitation can be terminated by NEFM at any
time.
NEFM has delegated its responsibility under the Advisory Agreement to
provide portfolio management services to Back Bay Advisors, which acts as the
Fund's sub-adviser pursuant to the Current Sub-Advisory Agreement. The Current
Sub-Advisory Agreement requires Back Bay Advisors to manage the investment and
reinvestment of the assets of the Fund, subject to the supervision of NEFM and
oversight by the Trustees. Back Bay Advisors is authorized to effect portfolio
transactions for the Fund, using its own discretion and without prior
consultation with NEFM. Back Bay Advisors is required to report periodically
to NEFM, its agents and the Trustees of the Trusts. Under the Current Sub-
Advisory Agreement, the annual fee rate payable by NEFM to Back Bay Advisors is
0.375% of all of the Fund's average net daily assets.
The Current Sub-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 Board of Trustees of
the Trust 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," as that term is defined in the 1940 Act, of the Trust, NEFM or Back
Bay Advisors, cast in person at a meeting called for the purpose of voting on
such approval. Any amendment to the Current Sub-Advisory Agreement must be
approved by NEFM and Back Bay Advisors and, if required by law, 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 such interested persons, cast in person at
a meeting called for the purpose of voting on such approval. The Current Sub-
PAGE 3
Advisory Agreement may be terminated without penalty by vote of the Board of
Trustees or by vote of a majority of the outstanding voting securities of the
Fund, upon sixty days' written notice, or by Back Bay Advisors or NEFM upon
ninety days' written notice, and terminates automatically in the event of its
assignment. The Current Sub-Advisory Agreement will automatically terminate if
the Advisory Agreement is terminated. The Current Sub-Advisory Agreement
provides that Back Bay Advisors 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.
Back Bay Advisors has implemented a management strategy in which the Fund
invests primarily in long-term corporate fixed-income securities, the majority
of which are rated BBB or lower by S&P or Baa or lower by Moody's or are
unrated. Back Bay Advisors' management strategy has sought to reduce risks to
the Fund by diversification and analysis of the underlying creditworthiness of
issuers and the underlying value of securities. Historically, Back Bay
Advisors has preformed its own credit analysis and has not relied primarily on
the ratings assigned by rating services. Back Bay Advisors' analysis, in
ascertaining both creditworthiness and potential for capital appreciation, has
focused on technical factors as well as fundamental factors such as the
relationship of current market price to anticipated cash flow and its coverage
of interest or dividend requirements, debt as a percentage of assets, earnings
prospects, the experience and perceived strength of the issuer's management,
price responsiveness of the issuer's securities to changes in interest rates
and business conditions, debt maturity schedules and borrowing requirements and
the issuer's liquidation value.
Proposed New Arrangements
Based on a review of the investment approach used by Back Bay Advisors in
managing the Fund's portfolio, the Fund's performance record under Back Bay
Advisors' management, the performance record of Loomis Sayles in managing other
accounts and the performance of other mutual funds investing primarily in
fixed-income securities, NEFM has recommended and the Trustees of the Trust
have determined that it would be appropriate for Loomis Sayles to assume
responsibility for the day-to-day management of the Fund's portfolio.
In determining to recommend the proposed Sub-Advisory Agreement for
shareholder approval, the Trustees considered the qualifications of Loomis
Sayles and its personnel to provide portfolio management services to the Fund.
The Trustees also reviewed information about Loomis Sayles' proposed approach
to managing the Fund's portfolio. Loomis Sayles has indicated that it would
expect to invest the Fund's assets in a smaller number of securities than Back
Bay Advisors has usually done. (For example, the Fund has generally held over
100 different securities in its portfolio. Loomis Sayles has indicated that
it would expect to invest the Fund's assets in the securities of 30 to 50
issuers, with an emphasis on larger, better-known issuers.) Loomis Sayles has
also indicated that, under current market conditions, it would expect the
Fund's portfolio to have a higher duration than the Fund currently does.
(Duration is a measure of the sensitivity of the value of a portfolio to
changes in market rates of interest.) These changes are expected to have the
PAGE 4
effect of increasing the volatility of the Fund's portfolio (that is, the
degree to which its net asset value per share fluctuates over time). There
can, however, be no assurance that appointment of Loomis Sayles as the Fund's
sub-adviser will have these results.
The New Sub-Advisory Agreement. The proposed Sub-Advisory Agreement
requires Loomis Sayles to manage the investment and reinvestment of the assets
of the Fund, subject to the supervision of NEFM. Under the terms of the New
Sub-Advisory Agreement, Loomis Sayles is authorized to effect portfolio
transactions for the Fund in the discretion of Loomis Sayles and without prior
consultation with NEFM. Loomis Sayles is required to report periodically to
NEFM and the Trustees of the Trust. The New Sub-Advisory Agreement provides
that NEFM shall compensate Loomis Sayles at the annual rate of 0.350% of the
first $200 million of the Fund's average daily net assets and 0.300% of any
such assets in excess of $200 million.
The New Sub-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 Board of Trustees of the
Trust 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," as that term is defined in the 1940 Act, of the Trust, NEFM or Loomis
Sayles, cast in person at a meeting called for the purpose of voting on such
approval. Any amendment to the New Sub-Advisory Agreement must be approved by
NEFM and Loomis Sayles and, if required by law, 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 such interested persons, cast in person at a meeting
called for the purpose of voting on such approval. The New Sub-Advisory
Agreement may be terminated without penalty by vote of the Board of Trustees or
by vote of a majority of the outstanding voting securities of the Fund, upon
sixty days' written notice, or by Loomis Sayles or NEFM upon ninety days'
written notice, and will terminate automatically in the event of its
assignment. The New Sub-Advisory Agreement will automatically terminate if the
Advisory Agreement is terminated. The New Sub-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.
Comparison of the Current and Proposed Arrangements
The proposed new management arrangements for the Fund differ from the
current arrangements in the following important respects:
1. Loomis Sayles would become responsible for day-to-day management of the
Fund's investment operations, succeeding Back Bay Advisors.
2. In connection with the new sub-advisory arrangement, the advisory fees
payable by the Fund will be reduced from the current annual rate of 0.75%
of all the average daily net assets of the Fund to the new rate of 0.70%
of the first $200 million of the Fund's average daily net assets and
0.650% of any such assets in excess of $200 million. The fees paid by
PAGE 5
NEFM to Loomis Sayles would be at the annual rate of 0.35% of the first
$200 million of the Fund's daily net assets and 0.30% of any such assets
in excess of $200 million. Under the Current Sub-Advisory Agreement, NEFM
pays Back Bay Advisors at the annual rate of 0.375% of the Fund's average
daily net assets at all asset levels. In 1995, the Fund paid advisory
fees of $288,711. If the proposed new arrangements had been in effect
through 1995, the Fund would have paid advisory fees of $[amount of pro
forma fees], or [0.___%] less than under the existing arrangements. As of
April 30, 1996, the Fund had net assets of [$ ].
3. NEF, the Fund's distributor, has informed the Trustees that, if the
proposed new arrangements are adopted, it intends to reduce the Rule 12b-
1 fees payable by the Fund's Class A shares from the current annual rate
of 0.35% of Class A net assets to 0.25% of such assets. This fee
reduction would affect only the Class A shares. On the Record Date, Class
A shares represented approximately ___% of the outstanding shares of the
Fund.
The following table summarizes the maximum transaction costs from investing
in the Fund and the annual expenses borne by the Fund's Class A and Class B
shares in the fiscal year ended December 31, 1995, as well as such annual
expenses calculated on a pro forma basis assuming the proposed New Sub-Advisory
Agreement (and reduced Class A Rule 12b-1 fee) had been in effect beginning
January 1, 1995:
Shareholder Transaction Expenses
Class A Class B
Maximum Initial Sales Charge Imposed on a 4.50% None
Purchase (as a percentage of offering price) <F1>
<F2>
Maximum Contingent Deferred Sales Charge (as a <F3> 4.00%
percentage of offering price) <F2>
<F>
<F1> Reduced Class A sales charges apply in some cases.
<F2> Does not apply to reinvested distributions.
<F3> A 1.00% contingent deferred sales charge applies with respect to any
portion of certain purchases of Class A shares greater than $1 million
redeemed within approximately one year after purchase, but not to any
other purchases or redemptions of Class A shares.
</F>
PAGE 6
Annual Fund Operating Expenses
(as a percentage of average net assets)
During the Year Ended December 31, 1995
Actual Pro Forma
Class Class Class Class
A B A B
Advisory Fees . . . . . . . . . 0.63%* 0.63%* [0.__%] [0.__%]
12b-1 Fees . . . . . . . . . . 0.35% 1.00% [0.25%] [1.00%]
Other Expenses . . . . . . . . 0.62% 0.62% [0.__%] [0.__%]
Total Fund Operating Expenses . 1.60%* 2.25%* [_.__%] [_.__%]
* Without the voluntary fee waiver by the Fund's adviser, Management Fees
would be 0.75% for all classes and Total Fund Operating Expenses would be
1.72% for Class A shares and 2.37% for Class B shares. This voluntary
limitation can be terminated by NEFM at any time.
Example
A $1,000 investment in each Class of the Fund would incur the following
dollar amount of transaction costs and operating expenses, assuming a 5% annual
return and, unless otherwise noted, redemption at period end. The 5% return
and the expense levels used in calculating this example should not be regarded
as predictions of future investment return or Fund expenses, both of which will
vary:
PAGE 7
1 3 5 10
Year Years Years Years**
Based on actual expenses
incurred during the year
ended December 31, 1995
Class A . . . . . . . . $61 $93 $128 $226
Class B <F1> . . . . . . $63 $100 $130 $242
Class B <F2> . . . . . . $23 $70 $120 $242
Based on pro forma expenses
for the year ended December
31, 1995, assuming the New
Sub-Advisory Agreement and
Class A 12b-1 fee reduction
had been in effect since
January 1, 1995
Class A . . . . . . . . $ $ $ $
Class B <F1> . . . . . . $ $ $ $
Class B <F2> . . . . . . $ $ $ $
<F>
<F1> Assumes redemption at end of period.
<F2> Assumes no redemption at end of period
** Class B shares automatically convert to Class A eight years after purchase;
therefore, Class B amounts are calculated using Class A expenses in years 9
and 10.
</F>
Information About NEFM
NEFM is a limited partnership. Its sole general partner, NEF Corporation,
is a wholly-owned subsidiary of NEIC Holdings, Inc. ("NEIC Holdings"), which is
a wholly-owned subsidiary of New England Investment Companies, L.P. ("NEIC").
NEF Corporation is also the sole general partner of NEF. NEIC owns the entire
limited partnership interest in each of NEF and NEFM. The sole general partner
of NEIC is New England Investment Companies, Inc. ("NEIC Inc."), which is a
wholly-owned subsidiary of New England Mutual Life Insurance Company ("The New
England"). The New England and Metropolitan Life Insurance Company ("MetLife")
have entered into an agreement to merge, with MetLife to be the survivor of the
merger. The merger is conditioned upon, among other things, approval by the
policyholders of The New England and MetLife and receipt of certain regulatory
approvals. After such merger, NEIC Inc. will be a wholly-owned subsidiary of
MetLife.
The principal executive officer of NEF and NEFM is Henry L.P. Schmelzer, who
is the President and a Trustee of the Trust and whose principal occupation is
PAGE 8
his positions with NEF and NEFM. The address of NEF, NEFM, NEF Corporation,
NEIC Holdings, NEIC, NEIC Inc. and Mr. Schmelzer is 399 Boylston Street,
Boston, Massachusetts 02116. The address of The New England is 501 Boylston
Street, Boston, Massachusetts 02116.
Information About Loomis Sayles
Loomis Sayles is a limited partnership. Its sole general partner, Loomis,
Sayles & Company, Incorporated ("LSCI"), is a wholly-owned subsidiary of NEIC
Holdings. NEIC owns the entire limited partnership interest in Loomis Sayles.
The principal executive officer of Loomis Sayles is Robert Blanding, whose
principal occupation is his position with Loomis Sayles. The address of Loomis
Sayles and LSCI is One Financial Center, Boston, Massachusetts 02111. Mr.
Blanding's address is 465 First Street West, Sonoma, California 95476.
Loomis Sayles acts as investment adviser (or sub-adviser, in the case of
the funds marked with an asterisk below) to the following other mutual funds
that have similar investment objectives to New England High Income Fund, for
compensation at the annual fee rates of the corresponding average net assets
levels of those funds set forth in the table below. The table also sets forth
the net assets of those other funds at April 30, 1996:
Net Assets of
Other Fund
Other Fund with (in millions) Annual Average
Similar Objective at 4/30/96 Fee Rate Net Asset Levels
Information About Back Bay Advisors
Back Bay Advisors is a limited partnership. Its sole general partner, Back
Bay Advisors, Inc., is a wholly-owned subsidiary of NEIC Holdings. NEIC owns
the entire limited partnership interest in Back Bay Advisors. The principal
executive officer of Back Bay Advisors is Charles T. Wallis, whose principal
occupation is his position with Back Bay Advisors. The address of Back Bay
Advisors, Back Bay Advisors, Inc. and Mr. Wallis is 399 Boylston Street,
Boston, Massachusetts 02116.
Certain Payments to Affiliates
In addition to advisory fees payable to NEFM, the Fund pays NEF (an
affiliate of Back Bay Advisors, NEFM and Loomis Sayles) for providing various
services to the Fund and its shareholders. In 1995, these payments amounted to
$67,656 for transfer agency services, and $130,876 for service and distribution
(Rule 12b-1) fees for Class A shares and $82,798 for service and distribution
(Rule 12b-1) fees for Class B shares. In addition, in 1995 NEF received from
PAGE 9
the Fund's shareholders $182,200 in sales charges (including contingent
deferred sales charges on Class A and B shares). NEF will continue to receive
transfer agency and Rule 12b-1 fees, as well as sales charges and contingent
deferred sales charges, if the proposed New Sub-Advisory Agreement is adopted.
Certain Trustees and Officers of the Trust
The following persons are both (1) Trustees or officers of the Trust and (2)
officers or employees of one or more of NEFM, Loomis Sayles or Back Bay
Advisors (or officers or directors of those firms corporate general partners):
Peter S. Voss, Henry L.P. Schmelzer, Frank Nesvet, Robert P. Connolly, Bruce R.
Speca, Peter H. Duffy and Sheila M. Barry.
Trustee Action; Required Shareholder Vote
At a meeting held on May 9, 1996, the Trustees of the Trust voted
unanimously to approve the New Sub-Advisory Agreement and to terminate the
Current Sub-Advisory Agreement, effective at such time as the New Sub-Advisory
Agreement becomes effective. If shareholders approve the New Sub-Advisory
Agreement, it is expected to become effective on or about July 1, 1996.
The required vote for approval of the New Sub-Advisory Agreement is the
lesser of (1) 67% of the shares of the Fund represented at the Meeting, if more
than 50% of the shares of the Fund are represented at the Meeting, or (2) more
than 50% of the outstanding shares of the Fund. If shareholders of the Fund do
not approve the New Sub-Advisory Agreement, the Current Sub-Advisory Agreement
will remain in effect, and the Trustees will consider such alternative actions
as may be in the best interests of the Fund.
The Trustees unanimously recommend that shareholders of the Fund vote to
approve the proposed New Sub-Advisory Agreement.
Other Matters
Forty percent of the shares of the Fund outstanding on the Record Date,
present in person or represented by proxy, constitutes a quorum for the
transaction of business at the Meeting. Votes cast by proxy or in person at
the Meeting will be counted by persons appointed by the Trust as tellers for
the Meeting. The tellers will count the total number of votes cast "for"
approval of the proposals for purposes of determining whether sufficient
affirmative votes have been cast. The tellers will count all shares
represented by proxies that reflect abstentions and "broker non-votes" (i.e.,
shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or the persons entitled to vote) for
purposes of determining the presence of a quorum. With respect to Proposal 1,
abstentions and broker non-votes have the effect of a negative vote on the
proposal.
PAGE 10
In the event that a quorum is not present, or if sufficient votes in favor
of Proposal 1 are not received by June __, 1996, the persons named as proxies
may vote on those matters for which a quorum is present and as to which
sufficient votes have been received and may propose one or more adjournments of
the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of the shares present in person
or by proxy at the session of the Meeting to be adjourned. The persons named
as proxies will vote in favor of such adjournment those proxies which they are
entitled to vote in favor of Proposal 1 and will not vote any proxies that
direct them to abstain from voting on such Proposal. Any proposals for which
sufficient favorable votes have been received by the time of the Meeting will
be acted upon and considered closed regardless of whether the Meeting is
adjourned to permit additional solicitation with respect to any other proposal.
Although the Meeting is called to transact any other business that may
properly come before it, the only business that management intends to present
or knows that others will present is Proposal 1 mentioned in the Notice of
Special Meeting. However, you are being asked on the enclosed proxy to
authorize the persons named therein to vote in accordance with their judgment
with respect to any additional matters which properly come before the Meeting,
and on all matters incidental to the conduct of the Meeting.
Shareholders' proposals to be presented at any future meeting of
shareholders of the Trust must be received by the Trust at a reasonable time
before the Trust s solicitation of proxies for that meeting in order for such
proposals to be considered for inclusion in the proxy materials relating to
that meeting.
May 17, 1996
PAGE 11
YOUR VOTE IS NEEDED!
Please vote on the reverse side of this form and sign in the space provided.
Return your completed proxy in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not
duplicates; you should sign and return each proxy card in order for your votes
to be counted. Please return them as soon as possible to avoid additional
mailings.
NOTE: Please sign exactly as your name appears on this card. All joint owners
should sign. When signing as executor, administrator, attorney, trustee or
guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign in the partnership name.
The undersigned hereby appoints Henry L.P. Schmelzer, Robert P. Connolly and
Sheila M. Barry, and each of them, proxies, with power of substitution to each,
and hereby authorizes them to represent and to vote, as designated below, at
the Special Meeting of Shareholders of New England High Income Fund on June __,
1996, at ________ Eastern time, and at any adjournments thereof, all of the
shares of the Fund which the undersigned and would be entitled to vote if
personally present.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted FOR the proposal.
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[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. The Trustees recommend a
vote FOR the proposal below:
For Against Abstain
1. Proposal to approve new [ ] [ ] [ ]
Sub-Advisory Agreement
relating to the Fund
between New England Funds
Management, L.P. and
Loomis, Sayles & Company,
L.P.
Please be sure to sign and date this Proxy.
Date
Shareholder sign here Co-owner sign here
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