<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only [as permitted
by Rule 14a-6(e)(2)]
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
NEW ENGLAND FUNDS TRUST I
------------------------------------------------
(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] No fee required
[ ] 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:
<PAGE>
LOGO
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February 19, 1997
Dear New England International Equity Fund Shareholder:
The enclosed Proxy Statement contains detailed information regarding an
important proposal affecting New England International Equity Fund. We have
summarized the most pertinent information below. Please refer to it 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 International Equity Fund's new subadviser, succeeding
Draycott Partners, Ltd. Under the terms of the proposal, Loomis will assume
the day-to-day management of the Fund under the oversight of New England Funds
Management on FEBRUARY 14, 1997. Your vote is necessary to make this
management change permanent. Loomis is an affiliate of New England Funds
Management.
Q. WHY WAS THIS APPROVED BY THE TRUSTEES?
A. Based upon a review of the investment approach and resulting performance
record achieved by Draycott Partners, Ltd. as compared to the proposed
investment approach used by Loomis, Sayles & Co. and its performance record,
the Trustees determined that the arrangement with Loomis Sayles was in the
best interests of shareholders.
As subadviser for New England International Equity Fund, Draycott has
produced poor performance relative to the Fund's benchmark, the MSCI Europe,
Australasia and Far East (EAFE) Index, as well as to its competitors, since
the Fund's inception in May of 1992. It should be noted that Draycott is no
longer an affiliate of New England Funds Management.
Q. HOW WILL THIS PROPOSED CHANGE AFFECT THE FUND?
A. Loomis intends to manage the Fund by combining a top-down approach to
country selection with a bottom-up approach to choosing stocks. In other
words, Loomis will choose investments for the Fund by first selecting
countries it feels are attractive, and then searching for the stocks of
companies that meet certain criteria. The Loomis international team will use
its expertise to invest in a broad universe of countries, including emerging
markets.
Loomis also proposes to invest up to 20% of the Fund's portfolio in
international bonds. New England Funds Management believes that this change
may enhance the Fund's ability to achieve a higher investment return over
time. There can be no assurance, however, that the approval of Loomis as the
Fund's subadviser will have this result.
The management fees payable by the Fund will remain unchanged at 0.90% on
the first $200 million of the Fund's average daily net assets, 0.85% on assets
between $200 million and $500 million, and 0.80% on assets in excess of $500
million.
YOUR VOTE COUNTS
Your vote is extremely important, no matter how many shares of the Fund
you own. Voting promptly is also important, as 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 -- an added expense to the
Fund. You may receive a call from D.F. King, a proxy solicitation firm, to
remind you to return your proxy ballot(s).
<PAGE>
Thank you for your cooperation in voting on this important proposal.
Should you have any questions, please call 800-225-5478 to speak with an
Investor Service and Marketing Representative who will be happy to answer your
questions.
Sincerely,
Henry L.P. Schmelzer
President and CEO
<PAGE>
NEW ENGLAND INTERNATIONAL EQUITY FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
APRIL 3, 1997
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of New England
International Equity Fund (the "Fund"), a series of New England Funds Trust I
(the "Trust"), will be held at the offices of New England Funds, L.P., 399
Boylston Street, Boston, Massachusetts 02116, on Thursday, April 3, 1997 at 2:30
p.m. (Eastern time), for the following purposes:
1. To approve or disapprove a new 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
February 17, 1997
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YOUR VOTE IS IMPORTANT
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PLEASE FILL IN, DATE 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>
NEW ENGLAND INTERNATIONAL EQUITY FUND
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of New England Funds Trust I (the "Trust") for
use at the Special Meeting of Shareholders of New England International Equity
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 02116,
on April 3, 1997 at 2:30 p.m. (Eastern time), and at any adjournment or
adjournments thereof (the "Meeting"). This proxy statement and its enclosures
are being mailed to shareholders beginning on or about February 17, 1997. A copy
of the Fund's most recent Annual Report and any more recent Semi-Annual Report
may be obtained without charge by writing to NEF at the above address or by
calling (800) 225-5478.
All shareholders of record on February 3, 1997, 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 Fund held
as of that date. The number of shares of beneficial interest of the Fund issued
and outstanding as of the Record Date was 11,997,933.
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 D.F. King & Co., Inc. has been retained to assist in the solicitation of
proxies, at a cost to the Fund which is not expected to exceed $25,000, plus
reimbursement of such firm's out-of-pocket expenses.
The Trustees recommend that the shareholders of the Fund approve a new
Sub-Advisory Agreement (the "New Sub-Advisory Agreement") between New England
Funds Management, L.P. ("NEFM") and Loomis, Sayles & Company, L.P. ("Loomis
Sayles"). The New Sub-Advisory Agreement is substantially similar to the
sub-advisory agreement dated August 30, 1996 (the "Draycott Sub-Advisory
Agreement"), which was until recently in effect between NEFM and Draycott
Partners, Ltd. ("Draycott"), except that the New Sub-Advisory Agreement provides
for a lower sub-advisory fee payable by NEFM to Loomis Sayles than was payable
by NEFM to Draycott under the Draycott Sub-Advisory Agreement, and that
references to Draycott have been changed to Loomis Sayles. The New Sub-Advisory
Agreement does not affect the management fee paid by the Fund to NEFM.
ADVISORY AGREEMENT
NEFM began acting as the Fund's adviser on December 29, 1995, and currently
acts as the Fund's adviser pursuant to an advisory agreement (the "Advisory
Agreement") dated August 30, 1996. The Trustees of the Trust approved the
Advisory Agreement at a meeting held on October 27, 1995, and the Fund's
shareholders approved the Advisory Agreement at a meeting held on December 28,
1995. Prior to December 29, 1995 Draycott acted as the Fund's adviser.
Under the Advisory Agreement, NEFM has overall advisory and administrative
responsibility with respect to the Fund. The Advisory Agreement also provides
that NEFM will, subject to NEFM's 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 0.90% of the first $200 million of the Fund's average
daily net assets, 0.85% of the next $300 million of such assets and 0.80% of any
such assets in excess of $500 million. 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 1.75% of the average daily net
assets of the Fund's Class A shares, 2.50% of the average daily net assets of
the Fund's Class B and Class C shares and 1.15% of the average daily net assets
of the Fund's Class Y shares. This voluntary limitation can be terminated by
NEFM at any time. The Advisory Agreement and this voluntary expense limitation
will remain in effect under the New Sub-Advisory Agreement described below.
OLD SUB-ADVISORY AGREEMENT
Until February 14, 1997, NEFM delegated to Draycott its responsibility under
the Advisory Agreement to provide portfolio management services to the Fund
pursuant to the Draycott Sub-Advisory Agreement. The Draycott Sub-Advisory
Agreement was approved by the Trustees of the Trust at a meeting held on October
27, 1995 and was last submitted to the Fund's shareholders for approval on
December 28, 1995. The purpose of such submission was to approve the continuance
of the Advisory Agreement and the Draycott Sub-Advisory Agreement following a
change of control of Draycott and NEFM. The Draycott Sub-Advisory Agreement
provided for sub-advisory fees payable by NEFM to Draycott at an annual rate of
0.54% of the first $200 million of the Fund's average daily net assets, 0.49% of
the next $300 million of such assets and 0.44% of any such assets in excess of
$500 million. Draycott agreed to waive a portion of its subadvisory fee from
NEFM and, if necessary, to reimburse NEFM for a portion of the expenses of the
Fund borne by NEFM, in an amount equal to such percentage of the cost to NEFM of
NEFM's voluntary management fee reduction and expense assumption described above
as is determined by dividing (A) the amount of subadvisory fees that Draycott
would have been entitled to receive under the Draycott Sub-Advisory Agreement in
the absence of such reduction and expense assumption, by (B) the total amount of
management fees that the Fund would have been obligated to pay to NEFM in the
absence of such management fee reduction and expense assumption.
NEW SUB-ADVISORY AGREEMENT
Based on a review of the investment approach used by Draycott in managing
the Fund's portfolio, the Fund's performance record under Draycott's management,
the performance record of Loomis Sayles and its portfolio management personnel
in managing another international equity mutual fund and the performance of
other international equity funds, NEFM recommended and the Trustees of the Trust
determined that it would be appropriate for Loomis Sayles to assume
responsibility for the day-to-day management of the Fund's portfolio. Thus, upon
the recommendation of NEFM, the Trustees voted on January 31, 1997 to terminate
the Draycott Sub-Advisory Agreement as of the close of business on February 14,
1997 and to approve the New Sub-Advisory Agreement, by which NEFM appointed
Loomis Sayles to act as sub-adviser to the Fund beginning at such time. Draycott
has consented to the termination of the Draycott Sub-Advisory Agreement as of
the close of business on February 14, 1997. The New Sub-Advisory Agreement is
subject to approval by the Fund's shareholders, which approval ordinarily must
be obtained before such an agreement takes effect. However, the New Sub-Advisory
Agreement went into effect on February 14, 1997, pursuant to a rule of the
Securities and Exchange Commission which under certain circumstances allows such
agreements to take effect, and to remain in effect for up to 120 days, without
receiving prior shareholder approval. The Trustees recommend that the
shareholders approve the New Sub-Advisory Agreement.
In determining to approve the appointment of Loomis Sayles as sub-adviser to
the Fund and to recommend the New 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 combines a top down country selection approach
with a bottom up stock picking strategy. Loomis Sayles selects countries it
deems attractive for investment based upon factors such as the price-to-earnings
multiple, earnings growth rate, and price-to-book ratio of the equity markets of
these countries, and selects stocks in those markets based on factors such as
the price-to-earnings ratio and earnings growth rate.
In conjunction with the appointment of Loomis Sayles as subadviser, the
Trustees of the Trust have approved amendments to the Fund's investment policies
to permit the Fund, beginning at the close of business on February 14, 1997, to
invest up to 20% of its assets in bonds issued or guaranteed by foreign
governments (including their political subdivisions, agencies, authorities
and/or instrumentalities), issued by supranational agencies or issued by foreign
companies, including but not limited to convertible debt and below investment
grade or nonrated debt. This change in the Fund's investment policies is not
subject to shareholder approval.
Loomis Sayles has informed the Fund that, shortly after it commences
managing the Fund's portfolio, it will restructure the Fund's portfolio over
time to reflect Loomis Sayles' judgments as to country weightings and stock
selection. Loomis Sayles estimates that the costs of this restructuring, which
will be paid by the Fund, could equal approximately 1% of the Fund's net asset
value. Based on the Fund's net asset value at January 31, 1997, these estimated
costs would be approximately $1,855,000. There can be no assurance that actual
costs would not be significantly higher or lower than this estimate.
Restructuring costs will consist primarily of brokerage fees and dealer spreads
or markups related to purchasing and selling securities for the Fund's
portfolio. These amounts are treated as capital items, rather than operating
expenses. They will thus reduce the Fund's net asset value, rather than increase
its operating expenses. The costs of holding the Meeting, estimated at $77,000,
are in addition to these restructuring costs and will be borne by the Fund,
regardless of whether the New Sub-Advisory Agreement is approved.
The New Sub-Advisory Agreement. A copy of the New Sub-Advisory Agreement is
set forth as Exhibit A to this Proxy Statement. The following description of the
New Sub-Advisory Agreement is qualified in its entirety by reference to the full
text of the Agreement.
The New Sub-Advisory Agreement, which is dated February 14, 1997, 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, using its own discretion and without prior
consultation with NEFM. Loomis Sayles will be 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 0.40% of the first
$200 million of the Fund's average daily net assets and 0.35% of any such assets
in excess of $200 million. Loomis Sayles has agreed to waive payment of this
sub-advisory fee by NEFM through February 14, 1998. This waiver by Loomis Sayles
will benefit NEFM, and will not reduce the management fee paid by the Fund to
NEFM.
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 Investment Company Act of 1940 (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 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 OLD AND NEW ARRANGEMENTS
The new management arrangements for the Fund differ from the previous
arrangements in the following important respects:
1. Loomis Sayles is now responsible for day-to-day management of the
Fund's investment operations, succeeding Draycott.
2. Loomis Sayles will be entitled to receive sub-advisory fees, paid by
NEFM, at an annual rate of 0.40% of the first $200 million of the Fund's
average daily net assets and 0.35% of any such assets in excess of $200
million (although Loomis Sayles has agreed to waive such fees through
February 14, 1998). Under the Draycott Sub-Advisory Agreement, NEFM paid
Draycott a sub-advisory fee at the annual rate of 0.54% of the first $200
million of the Fund's average daily net assets, 0.49% of all such assets
between $200 million and $500 million and 0.44% of any such assets in
excess of $500 million. As of January 31, 1997, the Fund's net assets
were $185,450,535. In 1996 NEFM paid sub-advisory fees of $1,296,732 to
Draycott; in the absence of the fee reduction and expense assumption
described above under "Old Sub-Advisory Agreement," such fees would have
amounted to $1,448,628. If the New Sub-Advisory Agreement had been in
effect during 1996, the sub-advisory fees payable by NEFM to Loomis
Sayles would have been $1,063,305, or 26.6% less than the sub-advisory
fees payable to Draycott under the Draycott Sub-Advisory Agreement
(without giving effect either to the fee reduction/ expense assumption by
Draycott or to Loomis Sayles' voluntary agreement to waive its fee in its
entirety until February 14, 1998).
3. As explained above, the Fund's investment strategies have been revised to
permit the Fund to invest up to 20% of its assets in bonds.
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, which is the principal
underwriter for the Fund. 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
Metropolitan Life Insurance Company ("MetLife") through MetLife's wholly-owned
subsidiary, MetLife New England Holdings, Inc. MetLife owns indirectly a
majority of the outstanding limited partnership interest in NEIC.
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
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 MetLife New England Holdings, Inc.
and MetLife is One Madison Avenue, New York, New York 10010.
INFORMATION ABOUT LOOMIS SAYLES
Loomis Sayles is a limited partnership. Its sole general partner, Loomis,
Sayles & Company, Incorporated ("LCSI"), 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 to the following other mutual fund
that has similar investment objectives and policies to the Fund, for
compensation at the annual fee rate of the corresponding average net assets
levels of that fund set forth in the table below. The table also sets forth the
net assets of that other fund at December 31, 1996:
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND
OTHER FUND WITH (IN MILLIONS)
SIMILAR OBJECTIVE AT 12/31/96 ANNUAL FEE RATE
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<S> <C> <C>
Loomis Sayles International $90,662,435 0.75% of all assets+
Equity Fund
- ------------
+Loomis Sayles has voluntarily agreed, for an indefinite period, to reduce its
advisory fees and/or bear expenses of the Loomis Sayles International Equity
Fund to the extent necessary to limit total operating expenses of each class of
shares of such Fund to specified annual percentage rates of such Fund's average
net assets.
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Loomis Sayles selects only brokers or dealers which it believes are
financially responsible and will provide efficient and effective services in
executing, clearing and settling an order. Loomis Sayles will use its best
efforts to obtain information as to the general level of commission rates being
charged by the brokerage community from time to time and will evaluate the
overall reasonableness of brokerage commissions paid on transactions by
reference to such data. In making such evaluation, all factors affecting
liquidity and execution of the order, as well as the amount of the capital
commitment by the broker in connection with the order, are taken into account.
Transactions in unlisted securities are carried out through broker-dealers who
make the primary market for such 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.
Receipt of research services from brokers may sometimes be a factor in
selecting a broker which Loomis Sayles believes will provide best 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' 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. Consistent with the Rules
of Fair Practice of the National Association of Securities Dealers, Inc., Loomis
Sayles may, however, consider purchases of shares of the Fund by customers of
broker-dealers as a factor in the selection of broker-dealers to execute the
Fund's securities transactions.
In placing orders for the purchase and sale of securities for the Fund,
Loomis Sayles may cause the Fund to pay a broker-dealer that provides the
brokerage and research services to Loomis Sayles an amount of commission for
effecting a securities transaction for the Fund in excess of the amount another
broker-dealer would have charged for effecting that transaction. Loomis Sayles
must determine in good faith that such greater commission is reasonable in
relation to the value of the brokerage and research services provided by the
executing broker-dealer viewed in terms of that particular transaction or Loomis
Sayles' overall responsibilities to the Trust and its other clients. Loomis
Sayles' authority to cause the Fund to pay such greater commissions is also
subject to such policies as the Trustees of the Trust may adopt from time to
time.
CERTAIN PAYMENTS TO AFFILIATES
In addition to advisory fees payable to NEFM, the Fund compensates NEF (an
affiliate of NEFM and Loomis Sayles) for providing various services to the Fund
and its shareholders. In 1996, these payments amounted to $495,021 for transfer
agency services, $316,834 for service and distribution (Rule 12b-1) fees for
Class A shares, $513,700 for service and distribution (Rule 12b-1) fees for
Class B shares, $10,445 for service and distribution (12b-1) fees for Class C
shares and $51,077 for the provision of certain legal and accounting services.
In addition, in 1996 NEF received from the Fund's shareholders $493,414 in sales
charges (including contingent deferred sales charges on Class A and B shares).
These arrangements are not affected in any way by the New Sub-Advisory
Agreement.
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 NEFM (or officers or directors of that firm's corporate
general partner): Henry L.P. Schmelzer, Bruce Speca, Frank Nesvet and Robert P.
Connolly. In addition, Peter S. Voss, President and Chief Executive Officer of
NEIC, is a Trustee and an officer of the Trust.
SHAREHOLDERS AS OF THE RECORD DATE
As of the Record Date, the following persons owned beneficially (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934), the following
numbers of shares of each class of shares of the Fund, representing the
indicated percentage of the outstanding shares of such class:
<TABLE>
<CAPTION>
CLASS SHAREHOLDER NUMBER OF SHARES PERCENT
----- ----------- ---------------- -------
<S> <C> <C> <C>
Class Y First North Bank 963,033 30.89%
P.O. Box 64010
St. Paul, MN 55164
Class Y Walker Art Center 454,507 14.58%
Vineland Place
Minneapolis, MN 55403
Class Y The New England 345,048 11.07%
Progress Sharing Plan
501 Boylston Street
Boston, MA 02116
Class Y The New England 340,590 10.92%
Agents' Retirement Plan
501 Boylston Street
Boston, MA 02116
Class Y The New England 211,400 6.78%
Agents' Deferred Compensation
Plan
501 Boylston Street
Boston, MA 02116
Class Y Stonehill College 189,394 6.07%
Endowment Fund
320 Washington Street
North Easton, MA 02357
Class Y Norwest Bank 182,241 5.84%
Minnesota NA
733 Marquette Avenue
Minneapolis, MN 55402
Class Y South County Hospital 178,204 5.72%
Foundation
100 Kenyon Avenue
Wakefield, RI 02879
Class Y NEIC Master Retirement Trust 176,672 5.67%
P.O. Box 755
Boston, MA 02117
</TABLE>
As of the Record Date, the officers and Trustees of the Trust as a group
owned less than 1% of the outstanding shares of the Fund.
TRUSTEE ACTION; REQUIRED SHAREHOLDER VOTE
At a meeting held on January 31, 1997, the Trustees of the Trust voted
unanimously to approve the New Sub-Advisory Agreement and to terminate the
Draycott Sub-Advisory Agreement, each effective February 14, 1997, on which date
Loomis Sayles began managing the Fund pursuant to the New Sub-Advisory
Agreement. If shareholders approve the New Sub-Advisory Agreement, Loomis Sayles
will continue to manage the Fund pursuant to the New Sub-Advisory Agreement.
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 the shareholders of the Fund
do not approve the New Sub-Advisory Agreement at the meeting, the Trustees will
consider alternative arrangements for the management of the Fund's portfolio,
and the New Sub-Advisory Agreement will be terminated not later than 120 days
after it took effect.
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 proposal 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.
In the event that a quorum is not present, or if sufficient votes in favor
of Proposal 1 are not received by April 3, 1997, the persons named as proxies
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.
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.
SHAREHOLDER PROPOSALS AT FUTURE MEETINGS
Shareholder proposals to be presented at any future meeting of shareholders
of the Trust must be received by the Trust 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.
February 17, 1997
<PAGE>
EXHIBIT A
NEW ENGLAND INTERNATIONAL EQUITY FUND
SUB-ADVISORY AGREEMENT
(LOOMIS, SAYLES & COMPANY, L.P.)
This Sub-Advisory Agreement (this "Agreement") is entered into as of
February 14, 1997 by and between New England Funds Management, L.P., a Delaware
limited partnership (the "Manager"), and Loomis, Sayles & Company, L.P., a
Delaware limited partnership (the "Sub-Adviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated August 30,
1996 (the "Advisory Agreement") with New England Funds Trust I (the "Trust"),
pursuant to which the Manager provides portfolio management and administrative
services to New England International Equity Fund, a series of the Trust (the
"Series");
WHEREAS, the Advisory Agreement provides that the Manager may delegate any
or all of its portfolio management responsibilities under the Advisory Agreement
to one or more sub-advisers;
WHEREAS, the Manager and the Trustees of the Trust desire to retain the
Sub-Adviser to render portfolio management services in the manner and on the
terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Manager and the Sub-Adviser agree as follows:
1. Sub-Advisory Services.
(a) The Sub-Adviser shall, subject to the supervision of the Manager and of
any administrator appointed by the Manager (the "Administrator"), manage the
investment and reinvestment of the assets of the Series. The Sub-Adviser shall
manage the Series in conformity with (1) the investment objective, policies and
restrictions of the Series set forth in the Trust's prospectus and statement of
additional information relating to the Series, (2) any additional policies or
guidelines established by the Manager or by the Trust's trustees that have been
furnished in writing to the Sub-Adviser and (3) the provisions of the Internal
Revenue Code (the "Code") applicable to "regulated investment companies" (as
defined in Section 851 of the Code), all as from time to time in effect
(collectively, the "Policies"), and with all applicable provisions of law,
including without limitation all applicable provisions of the Investment Company
Act of 1940 (the "1940 Act") and the rules and regulations thereunder. Subject
to the foregoing, the Sub-Adviser is authorized, in its discretion and without
prior consultation with the Manager, to buy, sell, lend and otherwise trade in
any stocks, bonds and other securities and investment instruments on behalf of
the Series, without regard to the length of time the securities have been held
and the resulting rate of portfolio turnover or any tax considerations; and the
majority or the whole of the Series may be invested in such proportions of
stocks, bonds, other securities or investment instruments, or cash, as the
Sub-Adviser shall determine.
(b) The Sub-Adviser shall furnish the Manager and the Administrator monthly,
quarterly and annual reports concerning portfolio transactions and performance
of the Series in such form as may be mutually agreed upon, and agrees to review
the Series and discuss the management of it. The Sub-Adviser shall permit all
books and records with respect to the Series to be inspected and audited by the
Manager and the Administrator at all reasonable times during normal business
hours, upon reasonable notice. The Sub-Adviser shall also provide the Manager
with such other information and reports as may reasonably be requested by the
Manager from time to time, including without limitation all material requested
by or required to be delivered to the Trustees of the Trust.
(c) The Sub-Adviser shall provide to the Manager a copy of the Sub-Adviser's
Form ADV as filed with the Securities and Exchange Commission and a list of the
persons whom the Sub-Adviser wishes to have authorized to give written and/or
oral instructions to custodians of assets of the Series.
2. Obligations of the Manager.
(a) The Manager shall provide (or cause the Fund's custodian to provide)
timely information to the Sub-Adviser regarding such matters as the composition
of assets of the Series, cash requirements and cash available for investment in
the Series, and all other information as may be reasonably necessary for the
Sub-Adviser to perform its responsibilities hereunder.
(b) The Manager has furnished the Sub-Adviser a copy of the prospectus and
statement of additional information of the Series and agrees during the
continuance of this Agreement to furnish the Sub-Adviser copies of any revisions
or supplements thereto at, or, if practicable, before the time the revisions or
supplements become effective. The Manager agrees to furnish the Sub-Adviser with
minutes of meetings of the Trustees of the Trust applicable to the Series to the
extent they may affect the duties of the Sub-Adviser, and with copies of any
financial statements or reports made by the Series to its shareholders, and any
further materials or information which the Sub-Adviser may reasonably request to
enable it to perform its functions under this Agreement.
3. Custodian. The Manager shall provide the Sub-Adviser with a copy of the
Series' agreement with the custodian designated to hold the assets of the Series
(the "Custodian") and any modifications thereto (the "Custody Agreement"),
copies of such modifications to be provided to the Sub-Adviser a reasonable time
in advance of the effectiveness of such modifications. The assets of the Series
shall be maintained in the custody of the Custodian identified in, and in
accordance with the terms and conditions of, the Custody Agreement (or any
sub-custodian properly appointed as provided in the Custody Agreement). The
Sub-Adviser shall have no liability for the acts or omissions of the Custodian,
unless such act or omission is taken in reliance upon instruction given to the
Custodian by a representative of the Sub-Adviser properly authorized to give
such instruction under the Custody Agreement. Any assets added to the Series
shall be delivered directly to the Custodian.
4. Proprietary Rights. The Manager agrees and acknowledges that the
Sub-Adviser is the sole owner of the name and mark "Loomis, Sayles & Company,
L.P." and that all use of any designation consisting in whole or part of
"Loomis, Sayles & Company, L.P." (a "Loomis Sayles Mark") under this Agreement
shall inure to the benefit of the Sub-Adviser. The Manager on its own behalf and
on behalf of the Series agrees not to use any Loomis Sayles Mark in any
advertisement or sales literature or other materials promoting the Series,
except with the prior written consent of the Sub-Adviser. Without the prior
written consent of the Sub-Adviser, the Manager shall not, and the Manager shall
use its best efforts to cause the Series not to, make representations regarding
the Sub-Adviser in any disclosure document, advertisement or sales literature or
other materials relating to the Series. Upon termination of this Agreement for
any reason, the Manager shall cease, and the Manager shall use its best efforts
to cause the Series to cease, all use of any Loomis Sayles Mark(s) as soon as
reasonably practicable.
5. Expenses. Except for expenses specifically assumed or agreed to be paid
by the Sub-Adviser pursuant hereto, the Sub-Adviser shall not be liable for any
organizational, operational or business expenses of the Manager or the Trust
including, without limitation, (a) interest and taxes, (b) brokerage commissions
and other costs in connection with the purchase or sale of securities or other
investment instruments with respect to the Series, and (c) custodian fees and
expenses. Any reimbursement of advisory fees required by any expense limitation
provision of any law shall be the sole responsibility of the Manager. The
Manager and the Sub-Adviser shall not be considered as partners or participants
in a joint venture. The Sub-Adviser will pay its own expenses incurred in
furnishing the services to be provided by it pursuant to this Agreement. Neither
the Sub-Adviser nor any affiliated person thereof shall be entitled to any
compensation from the Manager or the Trust with respect to service by any
affiliated person of the Sub-Adviser as an officer or trustee of the Trust
(other than the compensation to the Sub-Adviser payable by the Manager pursuant
to Section 7 hereof).
6. Purchase and Sale of Assets. The Sub-Adviser shall place all orders for
the purchase and sale of securities for the Series with brokers or dealers
selected by the Sub-Adviser, which may include brokers or dealers affiliated
with the Sub-Adviser, provided such orders comply with Rule 17e-1 under the 1940
Act in all respects. To the extent consistent with applicable law, purchase or
sell orders for the Series may be aggregated with contemporaneous purchase or
sell orders of other clients of the Sub-Adviser. The Sub-Adviser shall use its
best efforts to obtain execution of transactions for the Series at prices which
are advantageous to the Series and at commission rates that are reasonable in
relation to the benefits received. However, the Sub-Adviser may select brokers
or dealers on the basis that they provide brokerage, research or other services
or products to the Series and/or other accounts serviced by the Sub-Adviser. To
the extent consistent with applicable law, the Sub-Adviser may pay a broker or
dealer an amount of commission for effecting a securities transaction in excess
of the amount of commission or dealer spread another broker or dealer would have
charged for effecting that transaction if the Sub-Adviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research products and/or services provided by such broker or
dealer. This determination, with respect to brokerage and research services or
products, may be viewed in terms of either that particular transaction or the
overall responsibilities which the Sub-Adviser and its affiliates have with
respect to the Series or to accounts over which they exercise investment
discretion. Not all such services or products need be used by the Sub-Adviser in
managing the Series.
7. Compensation of the Sub-Adviser. As full compensation for all services
rendered, facilities furnished and expenses borne by the Sub-Adviser hereunder,
the Manager shall pay the Sub-Adviser compensation at the annual rate of 0.40 %
of the first $200 million of the average daily net assets of the Series that the
Sub-Adviser manages and 0.35 % of the amount in excess of $200 million. Such
compensation shall be payable monthly in arrears or at such other intervals, not
less frequently than quarterly, as the Manager is paid by the Series pursuant to
the Advisory Agreement.
8. Non-Exclusivity. The Manager and the Series agree that the services of
the Sub-Adviser are not to be deemed exclusive and that the Sub-Adviser and its
affiliates are free to act as investment manager and provide other services to
various investment companies and other managed accounts, except as the
Sub-Adviser and the Manager or the Administrator may otherwise agree from time
to time in writing before or after the date hereof. This Agreement shall not in
any way limit or restrict the Sub-Adviser or any of its directors, officers,
employees or agents from buying, selling or trading any securities or other
investment instruments for its or their own account or for the account of others
for whom it or they may be acting, provided that such activities do not
adversely affect or otherwise impair the performance by the Sub-Adviser of its
duties and obligations under this Agreement. The Manager and the Series
recognize and agree that the Sub-Adviser may provide advice to or take action
with respect to other clients, which advice or action, including the timing and
nature of such action, may differ from or be identical to advice given or action
taken with respect to the Series. The Sub-Adviser shall for all purposes hereof
be deemed to be an independent contractor and shall, unless otherwise provided
or authorized, have no authority to act for or represent the Series or the
Manager in any way or otherwise be deemed an agent of the Series or the Manager.
9. Liability. Except as may otherwise be provided by the 1940 Act or other
federal securities laws, neither the Sub-Adviser nor any of its officers,
directors, employees or agents (the "Indemnified Parties") shall be subject to
any liability to the Manager, the Trust, the Series or any shareholder of the
Series for any error of judgment, any mistake of law or any loss arising out of
any investment or other act or omission in the course of, connected with, or
arising out of any service to be rendered under this Agreement, except by reason
of willful misfeasance, bad faith or gross negligence in the performance of the
Sub-Adviser's duties or by reason of reckless disregard by the Sub-Adviser of
its obligations and duties. The Manager shall hold harmless and indemnify the
Sub-Adviser for any loss, liability, cost, damage or expense (including
reasonable attorneys fees and costs) arising from any claim or demand by any
past or present shareholder of the Series that is not based upon the obligations
of the Sub-Adviser under this Agreement.
10. Effective Date and Termination. 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, the Manager or the
Sub-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 Sub-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 or upon the termination of the Advisory Agreement;
(d) this Agreement may be terminated by the Sub-Adviser on ninety days'
written notice to the Manager and the Trust, or by the Manager on ninety days'
written notice to the Sub-Adviser.
Termination of this Agreement pursuant to this Section 10 shall be without
the payment of any penalty.
11. Amendment. This Agreement may be amended at any time by mutual consent
of the Manager and the Sub-Adviser, provided that, if required by law, such
amendment shall also 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, the Manager or the
Sub-Adviser, cast in person at a meeting called for the purpose of voting on
such approval.
12. Certain Definitions. 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 1940 Act, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under the 1940 Act.
13. General.
(a) The Sub-Adviser may perform its services through any employee, officer
or agent of the Sub-Adviser, and the Manager shall not be entitled to the
advice, recommendation or judgment of any specific person; provided, however,
that the persons identified in the prospectus of the Series shall perform the
portfolio management duties described therein until the Sub-Adviser notifies the
Manager that one or more other employees, officers or agents of the Sub-Adviser,
identified in such notice, shall assume such duties as of a specific date.
(b) If any term or provision of this Agreement or the application thereof to
any person or circumstances is held to be invalid or unenforceable to any
extent, the remainder of this Agreement or the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the fullest extent permitted by law.
(c) This Agreement shall be governed by and interpreted in accordance with
the laws of the Commonwealth of Massachusetts.
NEW ENGLAND FUNDS MANAGEMENT, L.P.
By: ----------------------------------------------------------
Name: --------------------------------------------------------
Title: -------------------------------------------------------
LOOMIS, SAYLES & COMPANY, L.P.
By: ----------------------------------------------------------
Name: --------------------------------------------------------
Title: -------------------------------------------------------
<PAGE>
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 partnership, please sign in the partnership name.
The undersigned hereby appoints Henry L.P. Schmelzer, Bruce R. Speca, Frank
Nesvet and Robert P. Connolly, and each of them, proxies, with full power of
substitution to each, and hereby authorizes them to represent and to vote, as
designated on the reverse side hereof, at the Special Meeting of Shareholders of
New England International Equity Fund on April 3, 1997, at 2:30 p.m. Eastern
time, and at any adjournments thereof, all of the shares of the Fund which the
undersigned 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. This proxy is solicited on behalf of the Board of Trustees.
<PAGE>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
NEW ENGLAND INTERNATIONAL EQUITY FUND
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 listed 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.
RECORD DATE SHARES:
Please be sure to sign and date this Proxy.
Date ___________________
Shareholder sign here ____________________________
Co-owner sign here ______________________________
