<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:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only [as permitted
by Rule 14a-6(e)(2)]
[ ] 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)
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(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:
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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).
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
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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 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
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 .
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
$ , 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 proposed
New Sub-Advisory Agreement does not affect the management fee paid by the Fund
to NEFM.
ADVISORY AGREEMENTS
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 these advisory arrangements 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 its responsibility under the
Advisory Agreement to provide portfolio management services to the Fund to
Draycott pursuant to the Draycott Sub-Advisory Agreement. [Under investment
performance criteria established by NEFM, any sub-adviser to which NEFM has
delegated this responsibility is continuously monitored by NEFM against
relevant indices and peer groups.] 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
Draycott Sub-Advisory Agreement following a change of control of Draycott. 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 has agreed to
waive a portion of its subadvisory fee from NEFM and, if necessary, 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 be 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 be 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 in managing its
international equity account[s] 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 existing
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,
pursuant to the New Sub-Advisory Agreement. 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 pricing 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 markets of these countries, and selects stocks in those markets based on
factors such as the [relative] valuation and earnings growth [rates]. Loomis
Sayles' country weightings, used to determine investment allocations among
countries selected for investment opportunities, may be significantly
different from those used by Draycott. Loomis Sayles may invest up to 20% of
the Fund's portfolio in international bonds, which may present a greater
opportunity for total return for the Fund. Accordingly, in conjunction with
the appointment of Loomis Sayles as subadvisor, 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.
Loomis Sayles has informed the Fund that, if the New Sub-Advisory
Agreement is approved by the Fund's shareholders, it would expect to
restructure the Fund's portfolio over time, in the manner described in the
foregoing paragraph. Loomis Sayles estimates that the costs of this
restructuring, which would 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 $ . 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 $ , are in addition to these restructuring costs and will be
borne by the Fund, regardless of whether the proposed 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 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 assess in excess of $200
million. 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. In 1996 NEFM paid sub-advisory fees
of $ to Draycott; in the absence of the fee reduction and expense
assumption described above, such fees would have amounted to
$1,448,628. If the New Sub-Advisory Agreement had been in effect during
1996, NEFM would have paid sub-advisory fees to Loomis Sayles of
$1,063,305, or 26.6% less than the sub-advisory fees payable to
Draycott under the Draycott Sub-Advisory Agreement (without giving
effect to the fee reduction/expense assumption agreement).
3. 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.
is 501 Boylston Street, Boston, Massachusetts 02116. The address of 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 to the Fund, for compensation at
the annual fee rates 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:
NET ASSETS OF
OTHER FUND
OTHER FUND WITH (IN MILLIONS)
SIMILAR OBJECTIVE AT 12/31/96 ANNUAL FEE RATE
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Loomis Sayles International $ 0.75% of all assets
Equity Fund+
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+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.
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 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' 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, and $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 and $10,445 for service and distribution
(12b-1) fees for Class C shares. 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). NEF will continue to receive fees
relating to legal and accounting services amounting to $51,077, transfer
agency and Rule 12b-1 fees, and sales charges and contingent deferred sales
charges, under 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.
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:
CLASS SHAREHOLDER NUMBER OF SHARES PERCENT
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 convene a special meeting of Trustees to consider alternative
arrangements for the management of the Fund's portfolio, and the New Sub-
Advisory Agreement will be terminated by the Trustees 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 , 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 or 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:
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Name:
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Title:
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LOOMIS, SAYLES & COMPANY, L.P.
By:
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Name:
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Title:
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<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 partner, 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.
<PAGE>
[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 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.
Please be sure to sign and date this Proxy.
Date ___________________
Shareholder sign here ____________________________
Co-owner sign here ______________________________
