<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
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[ ] Definitive Proxy Statement
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Rule 14a-12
NVEST FUNDS TRUST I
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(Name of Registrant as Specified In Its Charter)
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March 2000
Dear Nvest Star Value Fund Shareholder:
The enclosed proxy statement provides detailed information about important
proposals to change the investment advisory arrangement of Nvest Star Value Fund
(formerly, Nvest Value Fund and New England Value Fund) that involves adopting a
multi-manager fund structure, also known as the "Star" concept. This change
requires your vote. We've summarized the pertinent facts here. Reading this
letter completely may make your review of the proxy statement easier.
Q. WHAT ARE THE PROPOSALS ABOUT? After careful consideration, the Board of
Trustees has recommended that Nvest Value
Fund be restructured into a Star
multi-manager fund to make the Fund more
competitive. Although the value style of
investing has been out of favor recently,
it continues to be an important part of a
diversified portfolio. The Trustees believe
that the Star structure and the combination
of several managers' investment approaches
will offer greater diversification within
the mid- to large-cap value investment
style, and a framework for seeking more
consistent and competitive returns. The
Star concept has proven successful with
Nvest Star Advisers Fund, Nvest Star
Worldwide Fund and Nvest Star Small Cap
Fund.
On February 28, 2000 the four managers
assumed day-to-day management of the Fund
segment's investment operations during the
interim time period prior to the
shareholder meeting. YOUR VOTE IS NECESSARY
TO CONFIRM THESE APPOINTMENTS BY APPROVING
THE PROPOSED NEW SUBADVISORY AGREEMENTS.
Q. WHO ARE THE FOUR FIRMS LOOMIS SAYLES Co-managers Lauriann
MANAGING NVEST STAR VALUE Kloppenburg and Jeff Wardlow will continue
FUND? to manage one segment of the Fund,
focusing on large-cap stocks with below
average valuations and above average
earnings prospects. The Trustees have
appointed three additional fund managers to
oversee the three new segments.
HARRIS ASSOCIATES President and CEO, Robert
Levy, and Floyd Bellman will manage a
segment with a concentrated, mid-cap style,
focusing on stocks selling at a deep
discount. Harris Associates currently
manages four segments of the three other
Nvest Star funds.
VAUGHAN, NELSON, SCARBOROUGH & MCCULLOUGH
Principal and Chief Investment Officer Jean
Malo and Margaret Buescher, Principal, will
manage a third segment, applying a relative
value approach with a focus on out-of-favor
or misunderstood large cap stocks. The two
currently manage Nvest Equity Income Fund.
WESTPEAK INVESTMENT ADVISORS Founder,
President and CEO Gerald Scriver is
responsible for a fourth segment, carefully
selecting large company stocks with growth
and value characteristics depending on the
given market environment. He has used this
discipline in Nvest Growth and Income Fund
as that Fund's manager.
Over, please
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Q. HOW DOES THE STAR CONCEPT WORK? The Star concept is based on a
multi-manager approach with each Star fund
having four separate portfolios managed by
four different managers with four separate
management investment disciplines. Each
dollar invested in the Fund is divided
evenly among the segment managers. Each
segment is diversified by investment style,
discipline, holding and sectors, with the
objective of making the Fund less volatile
than a single portfolio fund.
Q. HOW WILL THE PROPOSED CHANGE The Fund's overall investment strategy
AFFECT THE FUND? remains the same. That is, to pursue
long-term growth of capital from a
portfolio of stocks that appear
undervalued. The new structure and added
diversification are intended to provide
more consistent and competitive returns.
The Fund will invest substantially all of
its assets in equity securities, primarily
mid- and large-capitalization companies in
various industries. These companies are
value oriented by one or more measures,
including price-to-earnings ratio,
return-on-equity, dividend yield,
price-to-book value ratio, or
price-to-sales ratio. Nvest Management
allocates money invested in the Fund
equally among Loomis Sayles, Vaughan
Nelson, Harris Associates and Westpeak.
Each of the subadvisers manages its segment
of the Fund's assets in accordance with its
distinct investment style and strategy.
With this transition to the multi-segment
fund structure, it is expected that the
Fund will incur higher custody and other
related expenses. As a direct result, the
Fund's expense ratio will increase.
Importantly, the Trustees believe the new
Fund format will provide more competitive
returns.
REMEMBER - YOUR VOTE COUNTS! Your vote is extremely important, even if
you only own a few Fund shares. Voting
promptly is also important. If we do not
receive enough votes, we will have to
resolicit shareholders, which would
increase expenses to the Fund. You may
receive a reminder call to return your
proxy from D.F. King & Company, a proxy
solicitation firm.
YOU CAN VOTE ON THE INTERNET, OR Now you can use the Internet or your
BY TOLL FREE TELEPHONE, IF YOU telephone, if you want to vote
PREFER. electronically. Access our Web site,
www.nvestfunds.com or call
1-877-779-8683.Your control number is
printed on the left-hand side of your
enclosed proxy. Just follow the helpful
instructions. If you do vote
electronically, you do not need to mail
your proxy card. However, if you want to
change your vote you may do so using the
proxy card, telephone or Internet.
Thank you for your cooperation in voting on these important proposals. If you
have questions, please call your financial representative or 800-225-5478 to
talk with an Investor Service and Marketing representative.
Sincerely,
John T. Hailer
President and CEO
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NVEST STAR VALUE FUND
(formerly, Nvest Value Fund and New England Value Fund)
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
APRIL 19, 2000
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of Nvest
Star Value Fund (the "Fund"), a series of Nvest Funds Trust I (the "Trust"),
will be held at the offices of Nvest Funds Distributor, L.P., 399 Boylston
Street, 4th Floor, Boston, Massachusetts 02116, on Wednesday, April 19, 2000 at
2:00 p.m. (Eastern standard time), for the following purposes:
1. To approve or disapprove a new sub-advisory agreement relating to a segment
of the Fund (a "Fund Segment") between Nvest Funds Management, L.P. ("Nvest
Management") and Loomis, Sayles & Company, L.P.
2. To approve or disapprove a new sub-advisory agreement relating to a Fund
Segment between Nvest Management and Vaughan, Nelson, Scarborough &
McCullough, L.P.
3. To approve or disapprove a new sub-advisory agreement relating to a Fund
Segment between Nvest Management and Harris Associates L.P.
4. To approve or disapprove a new sub-advisory agreement relating to a Fund
Segment between Nvest Management and Westpeak Investment Advisors, L.P.
5. 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,
JOHN E. PELLETIER, Secretary
March 10, 2000
YOUR VOTE IS IMPORTANT.
PLEASE VOTE YOUR SHARES ON THE INTERNET OR BY TELEPHONE OR COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING. YOU MAY STILL VOTE IN
PERSON IF YOU ATTEND THE MEETING.
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NVEST STAR VALUE FUND
(formerly, Nvest Value Fund and New England Value Fund)
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Trustees (the "Trustees") of Nvest Funds Trust I (the
"Trust") for use at the Special Meeting of Shareholders of Nvest Star Value Fund
(the "Fund"), a series of the Trust, to be held at the offices of Nvest Funds
Distributor, L.P. ("Nvest Distributor"), 399 Boylston Street, 4th Floor, Boston,
Massachusetts 02116, on Wednesday, April 19, 2000 at 2:00 p.m. (Eastern standard
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 March 10, 2000.
This Proxy Statement consists of the following three parts:
PART I contains general information relating to the Meeting.
PART II contains information for Proposals 1, 2, 3 and 4 relating to the new
proposed sub-advisory agreement for each segment of the Fund entered into by
Nvest Funds Management, L.P. ("Nvest Management") with each of Loomis, Sayles &
Company, L.P. ("Loomis Sayles"), Vaughan, Nelson, Scarborough & McCullough, L.P.
("Vaughan Nelson"), Harris Associates L.P. ("Harris Associates"), and Westpeak
Investment Advisors, L.P. ("Westpeak" and together with Loomis Sayles, Vaughan
Nelson and Harris Associates, the "Sub-advisers"), respectively.
PART III contains information about the Trust, Nvest Management, Loomis
Sayles, Vaughan Nelson, Harris Associates, Westpeak and certain brokerage and
other miscellaneous matters.
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YOU MAY OBTAIN A COPY OF THE FUND'S ANNUAL REPORT DATED DECEMBER 31, 1999
WITHOUT CHARGE BY WRITING TO NVEST FUNDS DISTRIBUTOR, L.P., 399 BOYLSTON STREET,
4TH FLOOR, BOSTON, MASSACHUSETTS 02116 OR BY CALLING (800) 225-5478. TO ASSURE
PROMPT DELIVERY, THE REPORT WILL BE MAILED TO YOU BY FIRST-CLASS MAIL.
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PART I. GENERAL INFORMATION
All shareholders owning shares of the Fund at the close of business on
February 25, 2000, 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 total number of shares
of beneficial interest of the Fund issued and outstanding as of the Record Date
was __________ shares.
Timely and properly executed proxies will be voted as you instruct. You
may vote by any one of the three following methods: (1) by mailing the enclosed
proxy card, (2) through use of the internet [URL address] or (3) by telephone
[800 #]. If you mail the enclosed proxy and no choice is indicated for a
proposal listed in the attached Notice of Meeting, your proxy will be voted in
favor of that proposal. Votes made through use of the internet or by telephone
must have an indicated choice in order to be accepted. At any time before it has
been voted, your proxy may be revoked in one of the following ways: (i) by
sending a written revocation to the Secretary of the Trust, (ii) by properly
executing a later-dated proxy (by the methods of voting described above), or
(iii) 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 [facsimile]
may be made by officers and Trustees and employees of Nvest Distributor. In
addition, the firm of D.F. King & Co., Inc. ("D.F. King") has been retained to
assist in the solicitation of proxies, at a cost which is not expected to exceed
$________, plus any reimbursement for D.F. King's out-of-pocket expenses.
PART II. THE PROPOSALS AND RELATED INFORMATION
OVERVIEW
The Trustees have decided to adopt Nvest's Star concept for your Fund. As
part of implementing this decision, this proxy statement contains proposals for
you to consider relating to the new multi-manager arrangement. The Nvest Star
concept divides the Fund's assets into a number of discrete segments that will
each be managed in the investment style of its sub-adviser. Each sub-adviser is
solely responsible for its Fund segment only. Prior to the Fund becoming an
Nvest Star Fund, the Fund's assets were managed entirely by one sub-adviser,
Loomis Sayles under one sub-advisory agreement. Since the Fund will now have
four segments each with its own sub-adviser rather than one sub-adviser for the
Fund, Nvest Management must enter into four new sub-advisory agreements for the
Fund. Your approval of these new sub-advisory agreements is required. The
proposals explain important information about each of the four sub-advisory
agreements and the respective sub-adviser.
To assist in your consideration, this proxy statement first explains the
primary investment advisory relationship between the Fund and Nvest Management
and the secondary relationship between Nvest Management and Loomis Sayles. This
proxy statement also describes recent actions taken by the Trustees affecting
only the relationship between Nvest Management and the Fund's sub-advisers.
Next, the proposals that you are being asked to consider relating to the new
sub-advisory agreements are presented. Following the four proposals are sections
that detail the Trustees' reasoning in adopting the Star concept, and that
describe the effects of these proposed changes, including a comparison of
current Fund fees and expenses with estimated Fund fees and expenses after the
change to the Star concept.
THE FUND AND NVEST MANAGEMENT
Nvest Management serves as the Fund's investment adviser under an
investment advisory agreement dated August 30, 1996, as amended May 1, 1998,
between the Fund and Nvest Management (the "Advisory Agreement"). Fund
shareholders last approved the Advisory Agreement at a special shareholder
meeting held on December 28, 1995. This shareholder approval of the Advisory
Agreement was necessary in connection with the merger of New England Mutual Life
Insurance Company, Nvest Management's former parent, into Metropolitan Life
Insurance Company (the "MetLife Merger"). This merger was eventually consummated
on August 30, 1996. The Advisory Agreement was amended on May 1, 1998 to allow
the Fund to pay any sub-advisory fees directly to an affiliated sub-adviser
rather than through Nvest Management and to correspondingly reduce the
management fees payable to Nvest Management by the amounts paid directly to the
sub-adviser. With this amendment to the Advisory Agreement, the management fee
rate, Nvest Management's services to the Fund, and the overall level of Fund
fees did not change. The Trustees initially approved the Advisory Agreement on
December 28, 1995 and most recently approved its continuance on May 14, 1999.
Under the Advisory Agreement, Nvest Management provides portfolio
management services and administrative services to the Fund. Portfolio
management services refers to managing the investment and reinvestment of the
Fund's assets, subject to the supervision and control of the Trustees.
Administrative services refers to furnishing or paying the expenses of the Fund
for office space, facilities and equipment, services of executive personnel of
the Trust and certain other administrative and general management services.
Under the Advisory Agreement, the Fund pays Nvest Management a management
fee equal to the annual rate of 0.75% of the first $200 million of the Fund's
average daily net assets, 0.70% of the next $300 million of the Fund's average
net assets, and 0.65% of the Fund's average daily net assets over $500 million.
The management fee is reduced by any sub-advisory fees the Fund pays directly to
a sub-adviser for the same period. For the fiscal year ended December 31, 1999,
the management fee paid by the Fund to Nvest Management under the Advisory
Agreement was $992,511.
It is important to note that no changes are to be made to the Advisory
Agreement between the Fund and Nvest Management. The Fund will continue to pay
Nvest Management the current management fee rate reduced by the amount paid to
each sub-adviser for managing one of its segments. Please refer to the helpful
tables in the section entitled "The Fund and Its Investment Advisory Fees" for a
better understanding.
PREVIOUS SUB-ADVISORY AGREEMENT
Nvest Management had entered into a sub-advisory agreement for the Fund
with Loomis Sayles dated August 30, 1996, as amended May 1, 1998 (the "Previous
Agreement"). Fund shareholders last approved the Previous Agreement at a special
shareholder meeting held on December 28, 1995. This shareholder approval of the
Previous Agreement was necessary in connection with the MetLife Merger. The
Previous Agreement was amended on May 1, 1998 to allow the Fund to pay any
sub-advisory fees directly to an affiliated sub-adviser rather than through
Nvest Management and to correspondingly reduce the management fees payable to
Nvest Management by the amounts paid directly to the sub-adviser. With this
amendment to the Previous Agreement, the management fee rate, Loomis Sayles'
services to the Fund and the overall level of Fund fees did not change. The
Trustees initially approved the Previous Agreement on December 28, 1995 and most
recently approved its continuance on May 14, 1999.
Under the Previous Agreement, Nvest Management delegated to Loomis Sayles
its duties under the Advisory Agreement to provide the day-to-day portfolio
management services. However, Nvest Management retained full responsibility for
evaluating existing and prospective sub-advisers, submitting recommendations to
the Trustees concerning sub-advisers to be engaged by the Fund, monitoring and
reporting to the Trustees concerning the investment results of the sub-adviser,
monitoring the sub-adviser's compliance with the Fund's investment objective,
policies and restrictions and when appropriate recommending that the Trustees
terminate the services of the Fund's sub-adviser.
For the services rendered, the Fund paid Loomis Sayles a sub-advisory fee
equal to the annual rate of 0.535% of the first $200 million of the Fund's
average daily net assets, 0.350% of the next $300 million of the Fund's average
daily net assets and 0.300% of the Fund's average daily net assets in excess of
$500 million. For the fiscal year ended December 31, 1999, the aggregate
sub-advisory fee paid by the Fund to Loomis Sayles under the Previous Agreement
was $1,634,514.
Based in part upon Nvest Management's recommendation and Loomis Sayles'
waiver of its right to a sixty-day notice under the Previous Agreement, the
Trustees voted to terminate the Previous Agreement on February 25, 2000. This
termination was effective at the close of business on February 25, 2000.
<PAGE>
INTERIM SUB-ADVISORY AGREEMENTS
To facilitate the smooth transition to the Star concept, the Trustees
approved temporary sub-advisory agreements during the interim time period
beginning at the start of business on February 28, 2000 and to last until the
anticipated shareholder approval of new sub-advisory agreements on April 19,
2000. Specifically, the Board of Trustees, including a majority of the Trustees
who are not interested persons of the Fund, approved the following interim
agreements, each dated February 28, 2000: (1) an interim sub-advisory agreement
relating to a segment of the Fund ("Fund Segment") between Nvest Management and
Loomis Sayles; (2) an interim sub-advisory agreement relating to a Fund Segment
between Nvest Management and Vaughan Nelson; (3) an interim sub-advisory
agreement relating to a Fund Segment between Nvest Management and Harris
Associates; and (4) an interim sub-advisory agreement relating to a Fund Segment
between Nvest Management and Westpeak (each an "Interim Agreement"). If
shareholder approval of the proposed new sub-advisory agreements is not obtained
at the special shareholder meeting on April 19, 2000 (or an adjournment thereof)
then the Interim Agreements are to be effective until shareholders approve one
or more sub-advisory agreements but not more than 150 days from February 25,
2000.
Under each respective Interim Agreement, Loomis Sayles, Vaughan Nelson,
Harris Associates and Westpeak will provide the day-to-day portfolio management
services for each Fund Segment, respectively, subject to oversight and
monitoring of the services from Nvest Management. For the services rendered, the
Fund pays:
|X| to Loomis Sayles a sub-advisory fee equal to the annual rate of 0.535%
of the first $200 million of its Fund Segment's average daily net assets,
0.350% of the next $300 million of its Fund Segment's average daily net
assets and 0.300% of its Fund Segment's average daily net assets in excess of
$500 million;
|X|to Vaughan Nelson a sub-advisory fee equal to the annual rate of 0.500% of
the first $25 million of its Fund Segment's average daily net assets; 0.400%
of the next $175 million of its Fund Segment's average daily net assets,
0.325% of the next $300 million of its Fund Segment's average daily net
assets and 0.275% of its Fund Segment's average daily net assets in excess of
$500 million;
|X|to Harris Associates a sub-advisory fee equal to the annual rate of 0.500%
of the first $100 million of its Fund Segment's average daily net assets and
0.450% of its Fund Segment's average daily net assets in excess of $100
million; and
|X|to Westpeak a sub-advisory fee equal to the annual rate of 0.50% of the
first $25 million of its Fund Segment's average daily net assets, 0.40% of
the next $75 million of its Fund Segment's average daily net assets, 0.35% of
the next $100 million of its Fund Segment's average daily net assets and
0.30% of its Fund Segment's average daily net assets in excess of $200
million.
OTHER RELATED INFORMATION
In connection with the new Star concept for the Fund, the Trustees also
voted to change the name of the Fund, effective February 28, 2000, from "Nvest
Value Fund" to "Nvest Star Value Fund." Prior to this name change, the Trustees
recently amended the Trust's declaration of trust to change the name of the
Fund, effective on February 1, 2000, from "New England Value Fund" to "Nvest
Value Fund." These actions by the Trustees adopting the Star concept and
changing the Fund's name are within the power granted to the Trustees under the
Trust's declaration of trust and by-laws and are not being submitted for a
shareholder vote by this proxy statement.
PROPOSAL 1:
To approve or disapprove a new sub-advisory agreement relating to a Fund
Segment between Nvest Management and Loomis Sayles.
Your vote is requested to approve or disapprove a new sub-advisory
agreement relating to a Fund Segment between Nvest Management and Loomis Sayles.
On February 25, 2000, the Trustees approved the new sub-advisory agreement
between Nvest Management and Loomis Sayles (the "New Loomis Sayles Agreement")
under which Loomis Sayles would make the transition from an interim sub-adviser
to sub-adviser of a Fund Segment upon the approval of the New Loomis Sayles
Agreement by the Fund's shareholders. At that time, the Trustees also
recommended that the New Loomis Sayles Agreement be submitted for approval of
Fund shareholders.
The New Loomis Sayles Agreement, which will take effect (assuming
shareholder approval) on or soon after April 19, 2000, requires Loomis Sayles to
manage the investment and reinvestment of the assets of a Fund Segment, subject
to the supervision of Nvest Management. Under the New Loomis Sayles Agreement,
Loomis Sayles will be authorized to effect portfolio transactions for its Fund
Segment, using its own discretion and without prior consultation with Nvest
Management. Loomis Sayles will also be required to report periodically to Nvest
Management and the Trustees. In addition, under the New Loomis Sayles Agreement,
the Fund will pay a sub-advisory fee to Loomis Sayles equal to the annual rate
of 0.535% of the first $200 million of its Fund Segment's average daily net
assets, 0.350% of the next $300 million of its Fund Segment's average daily net
assets and 0.300% of its Fund Segment's average daily net assets in excess of
$500 million.
The New Loomis Sayles 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 Trustees or by vote of a
majority of the outstanding voting securities of the Fund and (ii) by vote of a
majority of the Trustees who are not "interested persons," as that term is
defined in the Investment Company Act of 1940, as amended (the "1940 Act"), of
the Trust, Nvest Management or Loomis Sayles, cast in person at a meeting called
for the purpose of voting on such approval. Any amendment to the New Loomis
Sayles Agreement must be approved by Nvest Management 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 interested persons, cast
in person at a meeting called for the purpose of voting on such approval. The
New Loomis Sayles Agreement may be terminated without penalty by vote of the
Trustees or by vote of a majority of the outstanding voting securities of the
Fund, upon sixty days' written notice, or by Loomis Sayles or Nvest Management
upon ninety days' written notice, and will terminate automatically in the event
of its assignment. The New Loomis Sayles Agreement will automatically terminate
if the Advisory Agreement is terminated. The New Loomis Sayles Agreement is
non-exclusive with respect to Loomis Sayles' services.
The New Loomis Sayles 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.
The Interim Agreement and the New Loomis Sayles Agreement are
substantially identical to the Previous Agreement. However, the nature of the
Fund's investment advisory arrangement under the Interim Agreement and the New
Loomis Sayles Agreement is different from the Previous Agreement. Under the
Interim Agreement and New Loomis Sayles Agreement, the Fund's assets are broken
up into four distinct segments which reduces the amount of Fund assets that
Loomis Sayles manages. As a result, the Fund's sub-advisory fees to Loomis
Sayles will be less than such fees under the Interim Agreement and New Loomis
Sayles Agreement since the average daily net assets to which the fee rate is
applied is less.
Since the reasons for this Proposal 1 are shared by Proposals 2, 3, and 4,
please refer to the section entitled "The Reasons for Proposals 1, 2, 3 and 4"
on page __ for a detailed explanation of the factors that prompted this proxy
solicitation. Also, the proposed sub-advisory fee rates and a copy of the form
of proposed sub-advisory agreement are provided in Appendix B and Appendix C,
respectively.
LOOMIS SAYLES AS SUB-ADVISER OF A FUND SEGMENT
In deciding to approve the appointment of Loomis Sayles as sub-adviser to
a Fund Segment and to recommend the New Loomis Sayles Agreement for shareholder
approval, the Trustees considered the qualifications of Loomis Sayles and its
personnel to provide portfolio management services to a Fund Segment. The
Trustees also reviewed information about Loomis Sayles' approach to managing a
Fund Segment's portfolio. Loomis Sayles' investment approach uses fundamental
research and active management to analyze a broad selection of company or
industry sectors and to seek value-oriented stocks of well-managed companies
that are industry leaders globally and possess strong competitive positions with
pricing power and strong distribution.
Jeffrey Wardlow and Lauriann Kloppenburg have co-managed Nvest Value
Fund since August 1998 and will continue to co-manage Loomis Sayles' Fund
Segment of the Nvest Star Value Fund under the Interim Agreement and the New
Loomis Sayles Agreement. Mr. Wardlow, Vice President of Loomis Sayles,
joined the company over 10 years ago. Mr. Wardlow, a Chartered Financial
Analyst, received both a B.B.A. and an M.B.A. from Michigan State University
and has over 16 years of investment experience. Ms. Kloppenburg is Vice
President and Director of Equity Research at Loomis Sayles. Ms. Kloppenburg,
a Chartered Financial Analyst, received her B.A. from Wellesley College and
has over 16 years of investment experience.
Additional information about Loomis Sayles is contained in Appendix A to
this Proxy Statement.
PROPOSAL 2:
To approve or disapprove a new sub-advisory agreement relating to a Fund
Segment between Nvest Management and Vaughan Nelson.
Your vote is requested to approve or disapprove a new sub-advisory
agreement relating to a Fund Segment between Nvest Management and Vaughan
Nelson.
On February 25, 2000, the Trustees approved the new sub-advisory agreement
between Nvest Management and Vaughan Nelson (the "New Vaughan Nelson Agreement")
under which Vaughan Nelson would make the transition from an interim sub-adviser
to sub-adviser of a Fund Segment upon the New Vaughan Nelson Agreement's
approval by the Fund's shareholders. At that time, the Trustees also recommended
that the New Vaughan Nelson Agreement be submitted for approval of Fund
shareholders.
The New Vaughan Nelson Agreement, which will take effect (assuming
shareholder approval) on or soon after April 19, 2000, requires Vaughan Nelson
to manage the investment and reinvestment of the assets of a Fund Segment,
subject to the supervision of Nvest Management. Under the New Vaughan Nelson
Agreement, Vaughan Nelson will be authorized to effect portfolio transactions
for its Fund Segment, using its own discretion and without prior consultation
with Nvest Management. Vaughan Nelson will also be required to report
periodically to Nvest Management and the Trustees. In addition, under the New
Vaughan Nelson Agreement, the Fund will pay a sub-advisory fee to Vaughan Nelson
equal to the annual rate of 0.500% of the first $25 million of its Fund
Segment's average daily net assets, 0.400% of the next $175 million of its Fund
Segment's average daily net assets, 0.325% of the next $300 million of its Fund
Segment's average daily net assets and 0.275% of its Fund Segment's average
daily net assets in excess of $500 million.
The New Vaughan Nelson 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 Trustees or by vote of a
majority of the outstanding voting securities of the Fund and (ii) by vote of a
majority of the Trustees who are not "interested persons," as that term is
defined in the 1940 Act, of the Trust, Nvest Management or Vaughan Nelson, cast
in person at a meeting called for the purpose of voting on such approval. Any
amendment to the New Vaughan Nelson Agreement must be approved by Nvest
Management and Vaughan Nelson 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 interested persons, cast in person at a meeting called for the
purpose of voting on such approval. The New Vaughan Nelson Agreement may be
terminated without penalty by vote of the Trustees or by vote of a majority of
the outstanding voting securities of the Fund, upon sixty days' written notice,
or by Vaughan Nelson or Nvest Management upon ninety days' written notice, and
will terminate automatically in the event of its assignment. The New Vaughan
Nelson Agreement will automatically terminate if the Advisory Agreement is
terminated. The New Vaughan Nelson Agreement is non-exclusive with respect to
Vaughan Nelson's services.
The New Vaughan Nelson Agreement provides that Vaughan Nelson 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.
The Previous Agreement, Interim Agreement and the New Vaughan Nelson
Agreement are substantially identical but differ in the following way. Under the
Interim Agreement and New Vaughan Nelson Agreement, the Fund's assets are
divided into four distinct segments which reduces the amount of Fund assets that
Vaughan Nelson manages. Under the Previous Agreement, the Fund's assets were not
divided into segments. As a result, the Fund's sub-advisory fees to Vaughan
Nelson under the Interim Agreement and the New Vaughan Nelson Agreement will be
less than the fees paid to Loomis Sayles under the Previous Agreement because
the sub-advisory fee rate and the average daily net assets to which such rate is
applied are less. Please refer to the helpful diagram called "The Fund and Its
Investment Advisory Fees" for a better understanding.
Since the reasons for this Proposal 2 are shared by Proposals 1, 3, and 4,
please refer to the section entitled "The Reasons for Proposals 1, 2, 3 and 4"
on page __ for a detailed explanation of the factors that prompted this proxy
solicitation. Also, the proposed sub-advisory fee rates and a copy of the form
of proposed sub-advisory agreement are provided in Appendix B and Appendix C,
respectively.
VAUGHAN NELSON AS SUB-ADVISER OF A FUND SEGMENT
In deciding to approve the appointment of Vaughan Nelson as sub-adviser to
a Fund Segment and to recommend the New Vaughan Nelson Agreement for shareholder
approval, the Trustees considered the qualifications of Vaughan Nelson and its
personnel to provide portfolio management services to a Fund Segment. The
Trustees also reviewed information about Vaughan Nelson's approach to managing a
Fund Segment's portfolio. Vaughan Nelson's investment approach uses rigorous
fundamental research and actively manages in a disciplined, large-cap
value-driven investment process that seeks superior total return in the form of
capital appreciation and dividend income. In holding securities of companies
with medium to large capitalizations, Vaughan Nelson prefers to have significant
exposure to the sectors that are attractively priced while balancing exposure to
the key sectors of the market to control the overall risk profile of the
portfolio.
Jean Malo and Margaret Buescher will co-manage Vaughan Nelson's Fund
Segment. Mr. Malo, Principal and Chief Investment Officer of Vaughan Nelson,
joined the company in 1997. Previously, he was a Senior Vice President at
Daniel Breen & Co., which was merged into Vaughan Nelson in 1997. Mr. Malo
joined Daniel Breen & Co. in 1989. Mr. Malo, a Chartered Financial Analyst,
received an M.B.A. from EESEC, Paris, France and has 22 years of investment
management and research experience. Ms. Buescher, Principal of Vaughan
Nelson, joined the company in 1994. From 1980-1994, she was Managing
Director and Senior Portfolio Manager for the Texas Commerce Investment
Management Company. Ms. Buescher, a Chartered Financial Analyst, received a
B.A. from Vanderbilt University and has 24 years of investment management and
research experience.
Additional information about Vaughan Nelson is contained in Appendix A to
this Proxy Statement.
PROPOSAL 3:
To approve or disapprove a new sub-advisory agreement relating to a Fund
Segment between Nvest Management and Harris Associates.
Your vote is requested to approve or disapprove a new sub-advisory
agreement relating to a Fund Segment between Nvest Management and Harris
Associates.
On February 25, 2000, the Trustees approved the new sub-advisory agreement
between Nvest Management and Harris Associates (the "New Harris Associates
Agreement") under which Harris Associates would make the transition from an
interim sub-adviser to sub-adviser of a Fund Segment upon the New Harris
Associates Agreement's approval by the Fund's shareholders. At that time, the
Trustees also recommended that the New Harris Associates Agreement be submitted
for approval of Fund shareholders.
The New Harris Associates Agreement, which will take effect (assuming
shareholder approval) on or soon after April 19, 2000, requires Harris
Associates to manage the investment and reinvestment of the assets of a Fund
Segment, subject to the supervision of Nvest Management. Under the New Harris
Associates Agreement, Harris Associates will be authorized to effect portfolio
transactions for its Fund Segment, using its own discretion and without prior
consultation with Nvest Management. Harris Associates will also be required to
report periodically to Nvest Management and the Trustees. In addition, under the
New Harris Associates Agreement, the Fund will pay a sub-advisory fee to Harris
Associates equal to the annual rate of 0.500% of the first $100 million of its
Fund Segment's average daily net assets and 0.450% of its Fund Segment's average
daily net assets in excess of $100 million.
The New Harris Associates 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 Trustees or by vote
of a majority of the outstanding voting securities of the Fund and (ii) by vote
of a majority of the Trustees who are not "interested persons," as that term is
defined in the 1940 Act, of the Trust, Nvest Management or Harris Associates,
cast in person at a meeting called for the purpose of voting on such approval.
Any amendment to the New Harris Associates Agreement must be approved by Nvest
Management and Harris Associates 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 interested persons, cast in person at a meeting called for
the purpose of voting on such approval. The New Harris Associates Agreement may
be terminated without penalty by vote of the Trustees or by vote of a majority
of the outstanding voting securities of the Fund, upon sixty days' written
notice, or by Harris Associates or Nvest Management upon ninety days' written
notice, and will terminate automatically in the event of its assignment. The New
Harris Associates Agreement will automatically terminate if the Advisory
Agreement is terminated. The New Harris Associates Agreement is non-exclusive
with respect to Harris Associates' services.
The New Harris Associates Agreement provides that Harris Associates 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.
The Previous Agreement, Interim Agreement and the New Harris Associates
Agreement are substantially identical but differ in the following way. Under the
Interim Agreement and New Harris Associates Agreement, the Fund's assets are
divided into four distinct segments which reduces the amount of Fund assets that
Harris Associates manages. Under the Previous Agreement, the Fund's assets were
not divided into segments. As a result, the Fund's sub-advisory fees to Harris
Associates under the Interim Agreement and the New Harris Associates Agreement
will be less than the fees paid to Loomis Sayles under the Previous Agreement
because the sub-advisory fee rates (except for on the Fund's average daily net
assets over $100 million) and the average daily net assets to which such rates
are applied are less. Please refer to the helpful diagram called "The Fund and
Its Investment Advisory Fees" for a better understanding.
Since the reasons for this Proposal 3 are shared by Proposals 1, 2, and 4,
please refer to the section entitled "The Reasons for Proposals 1, 2, 3 and 4"
on page __ for a detailed explanation of the factors that prompted this proxy
solicitation. Also, the proposed sub-advisory fee rates and a copy of the form
of proposed sub-advisory agreement are provided in Appendix B and Appendix C,
respectively.
HARRIS ASSOCIATES AS SUB-ADVISER OF A FUND SEGMENT
In deciding to approve the appointment of Harris Associates as sub-adviser
to a Fund Segment and to recommend the New Harris Associates Agreement for
shareholder approval, the Trustees considered the qualifications of Harris
Associates and its personnel to provide portfolio management services to a Fund
Segment. The Trustees also reviewed information about Harris Associates'
approach to managing a Fund Segment's portfolio. Harris Associates' value
investment philosophy is based upon the belief that, over time, a company's
stock price converges with the company's true business value. In making
investment decisions for constructing a concentrated portfolio, Harris
Associates focuses on individual companies by utilizing independent, in-house
research to analyze each company. The chief consideration in the selection of
stocks for the Fund Segment is the size of the discount of a company's stock
price compared to the company's true business value. To manage risk, Harris
Associates seeks companies with solid finances and proven records and
continuously monitors each portfolio holding.
Robert Levy will be the lead manager of Harris Associates' Fund Segment
and be assisted by co-manager Floyd Bellman. Mr. Levy is a Partner and
President and Chief Executive Officer of Harris Associates. Mr. Levy, a
Chartered Financial Analyst, received a B.A. from Vanderbilt University and
an M.B.A. from the Wharton School of Business, University of Pennsylvania and
has 23 years of investment experience. Mr. Levy joined Harris Associates in
1985. Mr. Bellman is a Portfolio Manager and Vice President in charge of
Harris Associates Investment Advisory Department. Mr. Bellman, a Chartered
Financial Analyst, received a B.B.A. from the University of Wisconsin and has
19 years of investment experience. Mr. Bellman joined the Harris Associates
in 1995.
Additional information about Harris Associates is contained in Appendix A
to this Proxy Statement.
PROPOSAL 4:
To approve or disapprove a new sub-advisory agreement relating to a Fund
Segment between Nvest Management and Westpeak.
Your vote is requested to approve or disapprove a new sub-advisory
agreement relating to a Fund Segment between Nvest Management and Westpeak.
On February 25, 2000, the Trustees approved the new sub-advisory agreement
between Nvest Management and Westpeak (the "New Westpeak Agreement") under which
Westpeak would make the transition from an interim sub-adviser to sub-adviser of
a Fund Segment upon the New Westpeak Agreement's approval by the Fund's
shareholders. At that time, the Trustees also recommended that the New Westpeak
Agreement be submitted for approval of Fund shareholders.
The New Westpeak Agreement, which will take effect (assuming shareholder
approval) on or soon after April 19, 2000, requires Westpeak to manage the
investment and reinvestment of the assets of a Fund Segment, subject to the
supervision of Nvest Management. Under the New Westpeak Agreement, Westpeak will
be authorized to effect portfolio transactions for a Fund Segment, using its own
discretion and without prior consultation with Nvest Management. Westpeak will
also be required to report periodically to Nvest Management and the Trustees. In
addition, under the New Westpeak Agreement, the Fund will pay a sub-advisory fee
to Westpeak equal to the annual rate of 0.50% of the first $25 million of its
Fund Segment's average daily net assets, 0.40% of the next $75 million of its
Fund Segment's average daily net assets, 0.35% of the next $100 million of the
Fund Segment's average daily net assets and 0.30% of its Fund Segment's average
daily net assets in excess of $200 million.
The New Westpeak 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 Trustees or by vote of a
majority of the outstanding voting securities of the Fund and (ii) by vote of a
majority of the Trustees who are not "interested persons," as that term is
defined in the 1940 Act, of the Trust, Nvest Management or Westpeak, cast in
person at a meeting called for the purpose of voting on such approval. Any
amendment to the New Westpeak Agreement must be approved by Nvest Management and
Westpeak 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
interested persons, cast in person at a meeting called for the purpose of voting
on such approval. The New Westpeak Agreement may be terminated without penalty
by vote of the Trustees or by vote of a majority of the outstanding voting
securities of the Fund, upon sixty days' written notice, or by Westpeak or Nvest
Management upon ninety days' written notice, and will terminate automatically in
the event of its assignment. The New Westpeak Agreement will automatically
terminate if the Advisory Agreement is terminated. The New Westpeak Agreement is
non-exclusive with respect to Westpeak's services.
The New Westpeak Agreement provides that Westpeak 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.
The Previous Agreement, Interim Agreement and the New Westpeak Agreement
are substantially identical but differ in the following way. Under the Interim
Agreement and New Westpeak Agreement, the Fund's assets are divided into four
distinct segments which reduces the amount of Fund assets that Westpeak manages.
Under the Previous Agreement, the Fund's assets were not divided into segments.
As a result, the Fund's sub-advisory fees to Westpeak under the Interim
Agreement and the New Westpeak Agreement will be less than fees paid to Loomis
Sayles under the Previous Agreement because the sub-advisory fee rates and the
average daily net assets to which such rates are applied are less. Please refer
to the helpful diagram called "The Fund and Its Investment Advisory Fees" for a
better understanding.
Since the reasons for this Proposal 4 are shared by Proposals 1, 2 and 3,
please refer to the section entitled "The Reasons for Proposals 1, 2, 3 and 4"
on page __ for a detailed explanation of the factors that prompted this proxy
solicitation. Also, the proposed sub-advisory fee rates and a copy of the form
of proposed sub-advisory agreement are provided in Appendix B and Appendix C,
respectively.
WESTPEAK AS SUB-ADVISER OF A FUND SEGMENT
In deciding to approve the appointment of Westpeak as sub-adviser to a
Fund Segment and to recommend the New Westpeak Agreement for shareholder
approval, the Trustees considered the qualifications of Westpeak and its
personnel to provide portfolio management services to a Fund Segment. The
Trustees also reviewed information about Westpeak's approach to managing a Fund
Segment's portfolio. Westpeak employs a highly disciplined quantitative
proprietary investment process that was developed over the past 25 years.
Gerald H. Scriver will manage Westpeak's Fund Segment. Mr. Scriver is
the founder, President and Chief Executive Officer of Westpeak. Mr. Scriver
is a graduate of the State University of N.Y. at Buffalo and has over 33
years of investment experience.
Additional information about Westpeak is contained in Appendix A to this
Proxy Statement.
THE FUND AND ITS INVESTMENT ADVISORY FEES
The Fund's total investment advisory fee remains the same. The changes
that will take place are to the allocation of this total advisory fee between
Nvest Management and each of the four particular sub-advisers.
The following chart compares the Fund's total investment advisory fee
before and after the adoption of the proposals. Since the Advisory Agreement
between the Fund and Nvest Management is not affected, the rates are the same.
- -------------------------------------------------------------------------------
TOTAL FUND INVESTMENT ADVISORY FEE RATE (on an
annualized basis)
----------------------------------------------
BEFORE AFTER
FUND'S AVERAGE DAILY NEW SUB-ADVISORY NEW SUB-ADVISORY
NET ASSETS AGREEMENTS AGREEMENTS
- -------------------- ---------------- ----------------
to $200 million 0.75% 0.75%
next $300 million 0.70% 0.70%
over $500 million 0.65% 0.65%
- -------------------------------------------------------------------------------
The following chart shows the former sub-advisory fee for the Fund paid to
Loomis Sayles under the Previous Agreement and the proposed sub-advisory fees
for each of the Fund Segments managed by Loomis Sayles, Vaughan Nelson, Harris
Associates and Westpeak.
- -------------------------------------------------------------------------------
FORMER SUB-ADVISORY
ANNUAL FEE RATE PROPOSED SUB-ADVISORY ANNUAL FEE RATE
- ---------------------- ----------------------------------------------------
SEGMENT'S
FUND'S AVERAGE AVERAGE
DAILY NET LOOMIS DAILY NET LOOMIS VAUGHAN HARRIS
ASSETS SAYLES ASSETS SAYLES NELSON ASSOCIATES WESTPEAK
------ ------ ------ ------ ------ ---------- --------
to $25 million 0.535% to $25 million 0.535% 0.500% 0.500% 0.50%
next $75 0.535% next $75 0.535% 0.400% 0.500% 0.40%
million million
next $100 0.535% next $100 0.535% 0.400% 0.450% 0.35%
million million
next $300 0.350% next $300 0.350% 0.325% 0.450% 0.30%
million million
over $500 0.300% over $500 0.300% 0.275% 0.450% 0.30%
million million
- -------------------------------------------------------------------------------
If the new sub-advisory agreements had been in place in 1999, the Fund
would have paid a total of $[__] to the sub-advisers, which is [__]% lower than
the fees paid to Loomis Sayles under the Previous Agreement.
REASONS FOR PROPOSALS 1, 2, 3 AND 4
The proposals in this proxy statement are a direct result of the Trustees'
decision to adopt the Star concept to remedy its concerns about the Fund's
performance. The Trustees considered various factors including the Fund's recent
unsatisfactory performance compared to its benchmark, the steady outflow of
assets of the Fund, and the decline in sales of the Fund's shares.
The Trustees considered the Fund's total return performance. The Fund's
performance recently underperformed its benchmark, the Russell 1000 Value Index.
The Fund's annual total returns were 7% and -7% for calendar years ended 1998
and 1999, respectively. The Russell 1000 Value Index, the Fund's benchmark,
performed 15% and 7% for the calendar years ended 1998 and 1999, respectively.
The Fund's total returns reflect the reinvestment of all Fund distributions but
do not include any sales charges.
The Trustees also factored into their decision the steady outflow of Fund
assets. For the calendar years 1998 and 1999, the Fund's assets were reduced by
approximately $32 million and $138 million, respectively, compared to the
immediately preceding calendar year-end total assets. The Trustees were
particularly concerned about the harmful effects of this reduction in assets on
the Fund's expense ratio. In addition, declining assets restrict the ability of
the portfolio manager to have readily available cash to take advantage of
investment opportunities when they arise and may require liquidation of assets
at inopportune times in order to meet shareholder redemption requests.
Finally, the Trustees examined the reduction in sales of the Fund shares.
For the calendar years ended 1998 and 1999, the sales of the Fund's shares
declined by approximately $26 million and $17 million from the immediately
preceding calendar year. The Trustees realized the obvious need to curtail this
continuing drop in sales of the Fund shares and, concurrently, to develop a
strategy to attract sales of the Fund's shares.
After careful consideration of the recommendations from Nvest Management,
the Trustees approved implementing a multi-segment structure for the Fund which
is known as, and referred to throughout this proxy statement as, the "Star"
concept. While continuing to pursue its objective of long-term growth of
capital, the Fund will be divided into four distinct parts with each part
managed by a different sub-adviser. The Star concept adds an important layer of
diversification by spreading fund assets across several investment advisory
firms to reduce dependence on any single investment approach. The Trustees
believe the appeal of the Star concept to investors will attract new investors,
improve sales of the Fund's shares and, in turn, increase assets of the Fund and
decrease the Fund's expense ratio. The Trustees expect that through the
diversification of the Fund's management, more consistent and competitive
returns will result.
EFFECTS OF THE PROPOSALS
FUND FEES & EXPENSES
The following tables describe the former fees and expenses of the Fund in
comparison with the proposed fees and expenses that you may pay if you buy and
hold shares of the Fund.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets, as a percentage of average net
assets)
FORMER PROPOSED
NVEST VALUE FUND NVEST STAR VALUE FUND*
------------------------- -----------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
Management fees
Distribution and/or service
(12b-1) fees**
Other expenses of the Fund
Total annual fund operating
expenses
* These amounts are estimated based on the current Fund operating expenses
factoring the anticipated additional costs relating to the adoption of the
new multi-segment structure of the Fund.
** Because of the higher 12b-1 fees, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
rules of the National Association of Securities Dealers, Inc.
EXAMPLE
This example is intended to help you compare the cost of investing in the
former Fund with the cost of investing in the proposed Fund.
The example assumes that:
|X| You invest $10,000 in the Fund for the time periods indicated.
|X| Your investment has a 5% return each year.
|X| The Fund's operating expenses remain the same as those listed above.
Although your actual costs and returns may be higher or lower, based on these
assumptions your costs would be:
FORMER NVEST VALUE FUND PROPOSED NVEST STAR VALUE FUND
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
(1) (2) (1) (2) (1) (2) (1) (2) (1) (2)
1 year
3 years
5 years
10 years
(1) Assumes redemption at end of period.
(2) Assumes no redemption at end of period.
<PAGE>
RESTRUCTURING COSTS
Nvest Management and the sub-advisers have reviewed the existing portfolio
holdings of the Fund to determine what holdings Loomis Sayles would expect to
sell in order to conform the Fund's new multi-segment structure. Based on this
review, Nvest Management has informed the Trustees that Loomis Sayles would
expect to sell approximately [__%] of the dollar value of the Fund's existing
portfolio and to direct the sale proceeds to each of the other sub-advisers.
Loomis Sayles estimates that these transactions would result in brokerage costs
of approximately [$___] to the Fund. In addition to these commission costs, the
transactions will involve additional costs to the Fund resulting from the impact
of the transactions on the prices received and paid by the Fund for the
securities being sold and bought. Although these costs cannot be precisely
ascertained, the sub-advisers estimate that these costs would be approximately
[$___]. In addition, the sub-advisers estimate that the transactions, based on
early 2000 market prices, would result in the realization of approximately
[$___] million of long-term capital gains (or approximately [$___] per share of
the Fund). These gains, together with any other long-term capital gains realized
by the Fund as a whole in 2000 (reduced by any realized capital losses), would
be distributed to Fund shareholders at the end of the year and would constitute
taxable long-term capital gains in the hands of the recipient Fund shareholders.
The foregoing estimates were prepared in early 2000 based on then-current Fund
holdings and market information available to the sub-advisers. The actual costs
of restructuring the Fund's portfolio could be higher or lower, depending on
market conditions and other factors. The sub-advisers expect that the
restructuring will be completed within a few weeks after each of the
sub-advisers assume responsibility for the its Fund Segment on February 28,
2000.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE FUND VOTE TO APPROVE
PROPOSAL 1, PROPOSAL 2, PROPOSAL 3 AND PROPOSAL 4.
REQUIRED VOTE
The required vote for approval of the new sub-advisory agreements 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 any of the new sub-advisory agreements at the Meeting, the
Trustees will consider alternative arrangements for the management of the Fund's
portfolio, and that particular Interim Advisory Agreement will be terminated not
more than 150 days after the Previous Agreement was terminated.
<PAGE>
PART III. OTHER INFORMATION
INFORMATION ABOUT THE TRUST
The Trust was organized as a Massachusetts business trust pursuant to a
Declaration of Trust dated June 7, 1985. The Trust currently has twelve separate
funds.
INFORMATION ABOUT THE ADVISER
See Appendix A for more information about Nvest Management.
NVEST FUNDS MANAGEMENT, L.P.
Nvest Funds Management, L.P., located at 399 Boylston Street, Boston,
Massachusetts 02116, serves as the adviser to the Fund. Nvest Management is a
subsidiary of Nvest Companies, L.P. ("Nvest Companies"), which is part of an
affiliated group including Nvest, L.P., a publicly-traded company listed on the
New York Stock Exchange. Nvest Companies' 14 principal subsidiary or affiliated
asset management firms, collectively, had more than $133 billion in assets under
management as of December 31, 1999. Nvest Management oversees, evaluates and
monitors the performance of the Fund and furnishes general business management
and administration to the Fund. Nvest Management does not determine what
investments will be purchased for the Fund Segments.
INFORMATION ABOUT THE PROPOSED SUB-ADVISERS See Appendix A for more information
on each sub-adviser.
LOOMIS, SAYLES & COMPANY L.P.
Loomis Sayles, located at One Financial Center, Boston, Massachusetts,
02111, serves as sub-adviser to various other Nvest Funds. Founded in 1926,
Loomis Sayles is one of America's oldest and largest investment advisory firms
with approximately $68 billion in assets under management as of December 31,
1999. Loomis Sayles, a subsidiary of Nvest Companies, is well known for its
professional research staff, which is one of the largest in the industry.
Loomis Sayles acts as an investment adviser to the following mutual fund
that has a similar investment objective and policies to its Fund Segment, for
compensation at the annual fee rates of the corresponding average net assets
levels of the fund set forth in the table below. The table also includes the net
assets of the fund as of December 31, 1999.
ANNUAL FEE RATE
(AS A PERCENTAGE OF AVERAGE NET ASSETS
FUND NET ASSETS) (IN MILLIONS)
- -------------------------------------------------------------------------------
Loomis Sayles Core 0.50% $64,604,523
Value Fund
VAUGHAN, NELSON, SCARBOROUGH & MCCULLOUGH, L.P.
Vaughan Nelson, located at 6300 Chase Tower, Houston, Texas 77002, serves
as sub-adviser to the Nvest Equity Income Fund. Vaughan Nelson is a subsidiary
of Nvest Companies. Originally incorporated in 1970, Vaughan Nelson focuses
primarily on managing equity and fixed-income funds for clients who consist of
foundations, university endowments and corporate retirement and
family/individual core funds. As of December 31, 1999, Vaughan Nelson had
approximately $4.4 billion in assets under management.
Currently, Vaughan Nelson does not act as an investment adviser to a
mutual fund that has a similar investment objective and policies to its Fund
Segment.
HARRIS ASSOCIATES L.P.
Harris Associates, located at Two North LaSalle Street, Chicago, Illinois
60602, serves as sub-adviser to various other Nvest Funds. Harris Associates, a
subsidiary of Nvest Companies, manages over $12.6 billion in assets as of
December 31, 1999, and, together with its predecessor, has managed mutual funds
since 1970. It also manages investments for other mutual funds as well as assets
of individuals, trusts, retirement plans, endowments, foundations, and several
private partnerships.
Harris Associates acts as an investment adviser to the following mutual
fund that has a similar investment objective and policies to its Fund Segment,
for compensation at the annual fee rates of the corresponding average net assets
levels of the fund as set forth in the table below. The table also includes the
net assets of the fund as of December 31, 1999.
ANNUAL FEE RATE
(AS A PERCENTAGE OF AVERAGE NET
FUND ASSETS) NET ASSETS
- --------------------------------------------------------------------------------
The Oakmark Fund 1.00% up to $2.5 billion;
0.95% on the next $1.25 billion;
0.90% on the next $1.25 billion;
0.85% on next assets in excess of
$5 billion; and
0.80% on net assets in excess of
$10 billion.
WESTPEAK INVESTMENT ADVISORS L.P.
Westpeak, located at 1011 Walnut Street, Boulder, Colorado 80302, serves
as sub-adviser to Nvest Growth and Income Fund and Nvest Capital Growth Fund.
Westpeak is a subsidiary of Nvest Companies. Founded in 1991, Westpeak manages
mutual funds and other institutional clients, including accounts of New England
Financial. Westpeak has approximately $10 billion in assets under management as
of December 31, 1999.
Westpeak acts as an investment sub-adviser to the following mutual funds
that have similar investment objectives and policies to its Fund Segment, for
compensation at the annual fee rates of the corresponding levels of average net
assets set forth in the table below. The table also includes the net assets of
those funds as of December 31, 1999.
ANNUAL FEE RATE NET ASSETS
FUND (AS A PERCENTAGE OF AVERAGE NET (IN MILLIONS)
ASSETS)
- --------------------------------------------------------------------------------
Nvest Growth and Income 0.50% of the first $25 million
Fund 0.40% of the next $75 million
0.35% of the next $100 million;
and
0.30% of amounts in excess of
$200 million.
Nvest Capital Growth 0.40% of the first $200 million;
Fund 0.35% of the next $300 million;
and
0.30% of amounts in excess of
$500 million.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Each Sub-adviser selects only brokers or dealers that it believes are
financially responsible and will provide efficient and effective services in
executing, clearing and settling an order. Each Sub-adviser 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 a
Sub-adviser, 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 a Sub-adviser 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 a Sub-adviser's expenses. Such services may be used by each
Sub-adviser in servicing other client accounts and in some cases may not be used
with respect to its Fund Segment. Receipt of services or products other than
research from brokers is not a factor in the selection of brokers. Consistent
with the Conduct Rules of the National Association of Securities Dealers, Inc.,
each Sub-adviser may, however, consider purchases of shares of the Fund and
other funds managed by that Sub-adviser by customers of broker-dealers as a
factor in the selection of broker-dealers to execute its Fund Segment's
securities transactions.
In placing orders for the purchase and sale of securities for the Fund
Segment, a Sub-adviser may cause its Fund Segment to pay a broker-dealer that
provides the brokerage and research services to that Sub-adviser an amount of
commission for effecting a securities transaction for its Fund Segment in excess
of the amount another broker-dealer would have charged for effecting that
transaction. Each Sub-adviser 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 each Sub-adviser's overall responsibilities to the
Trust and its other clients. A Sub-adviser's authority to cause its Fund Segment
to pay such greater commissions is also subject to such policies as the Trustees
may adopt from time to time.
To the extent permitted by applicable law, and in all instances subject to
the foregoing policy of best execution, each Sub-adviser may allocate brokerage
transactions in a manner that takes into account the sale of shares of one or
more funds distributed by Nvest Distributor. In addition, each Sub-adviser may
allocate brokerage transactions to broker-dealers (including affiliates of Nvest
Distributor) that have entered into arrangements in which the broker-dealer
allocates a portion of the commissions paid by a Fund toward the reduction of
that Fund's expenses, subject to the policy of best execution.
CERTAIN PAYMENTS TO AFFILIATES
In addition to advisory fees payable to Nvest Management, the Fund
compensates Nvest Distributor and Nvest Services Company ("Nvest Services"), a
wholly owned subsidiary of Nvest Distribution Corporation, for providing various
services to the Fund and its shareholders. In 1999, these payments to Nvest
Services amounted to $_____ for transfer agency services. In 1999, payments to
Nvest Distributor amounted to $______ for service and distribution (Rule 12b-1)
fees for Class A shares, $______ for service and distribution (Rule 12b-1) fees
for Class B shares, $______ for service and distribution (Rule 12b-1) fees for
Class C shares and $________ for the provision of certain legal and accounting
services. In addition, Nvest Distributor received $______ in sales charges
(including contingent deferred sales charges on Class A, B and [C] shares) from
the Fund's shareholders in 1999. These arrangements are not affected in any way
by the new sub-advisory agreements.
CERTAIN TRUSTEES AND OFFICERS OF THE TRUST
Certain persons serve as a trustee or officers of the Trust and
officers or employees of Nvest Management. These persons are Peter S. Voss,
President and Chief Executive Officer of Nvest Companies, L.P. and Trustee of
the Trust. Neal G. Litvack, President of the Trust and President and Chief
Executive Officer of Nvest Management. Thomas P. Cunningham, Treasurer of
the Trust and Senior Vice President of Nvest Management and John E.
Pelletier, Secretary and Clerk of the Trust and Senior Vice President,
General Counsel, Secretary and Clerk of Nvest Management.
CERTAIN SHAREHOLDERS
As of February 1, 2000, 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 OF CLASS
----- ----------- ---------------- ----------------
Class Y
As of February 1, 2000, the officers and Trustees as a group owned less
than 1% of the outstanding shares of the Fund.
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, although at least 50% of the outstanding
shares of the Fund must be present or represented at the Meeting in order for
each proposal to be approved. 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 each
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 each proposal, assuming the presence of a quorum, 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 each proposal are not received by April 19, 2000, 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 that they are entitled to vote in favor of each
proposal and will not vote any proxies that direct them to abstain from voting
on any 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 are the proposals 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.
<PAGE>
SHAREHOLDER PROPOSALS AT FUTURE MEETINGS
The Trust does not hold annual or other regular meetings of shareholders.
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.
March 10, 2000
<PAGE>
APPENDIX A
NVEST MANAGEMENT, LOOMIS SAYLES, VAUGHAN NELSON,
HARRIS ASSOCIATES AND WESTPEAK
NVEST FUNDS MANAGEMENT, L.P.
Nvest Management, formed in 1995, is a limited partnership. Its sole
general partner, Nvest Distribution Corporation, is a wholly-owned subsidiary of
Nvest Holdings, L.P. ("Nvest Holdings"), which in turn is a wholly-owned
subsidiary of Nvest Companies, L.P. ("Nvest Companies"). Nvest Distribution
Corporation is also the sole general partner of Nvest Distributor, which is the
principal underwriter for the Fund. Nvest Companies owns the entire limited
partnership interest in each of Nvest Management and Nvest Distributor. Nvest
Companies' managing general partner, Nvest Corporation, is a wholly-owned
subsidiary of MetLife New England Holdings, Inc., which in turn is a
wholly-owned subsidiary of Metropolitan Life Insurance Company ("MetLife"), a
mutual life insurance company. MetLife owns approximately 47% (and in the
aggregate, directly and indirectly, approximately 48%) of the outstanding
limited partnership interests in Nvest Companies. Nvest Companies' advising
general partner, Nvest, L.P., is a publicly traded company listed on the New
York Stock Exchange. Nvest Corporation is the sole general partner of Nvest,
L.P. The fourteen principal subsidiary or affiliated asset management firms of
Nvest Companies, collectively, have more than $133 billion of assets under
management or administration as of December 31, 1999.
The principal executive officer of Nvest Management is Neal G. Litvack,
who is the President of the Trust and whose principal occupation is his position
with Nvest Companies. The address of Nvest Management, Nvest Distributor, Nvest
Distribution Corporation, Nvest Holdings, Nvest Companies, Nvest Corporation and
Mr. Litvack 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.
LOOMIS, SAYLES & COMPANY, L.P.
Loomis Sayles, organized in 1926, is a limited partnership and is one of
the oldest and largest investment management firms in the country. Its sole
general partner, Loomis, Sayles & Company, Incorporated ("LSCI"), is a
wholly-owned subsidiary of Nvest Holdings, Inc. Nvest Companies owns the entire
limited partnership interest in Loomis Sayles. As of December 31, 1999, Loomis
Sayles had approximately $68 billion in assets under management. The principal
executive officer of Loomis Sayles is Robert Blanding, whose principal
occupation is his position with Loomis Sayles. The address of Loomis Sayles,
LSCI and Mr. Blanding is One Financial Center, Boston, Massachusetts 02111.
VAUGHAN, NELSON, SCARBOROUGH & MCCULLOUGH, L.P.
Vaughan Nelson, founded in 1970, is a Houston-based investment counseling
firm comprised of highly experienced, research-oriented professionals. Vaughan
Nelson is a limited partnership. Its sole general partner, Vaughan, Nelson,
Scarborough & McCullough, Inc. ("VNSMI") is a wholly owned subsidiary of Nvest
Holdings, Inc. Nvest Companies is the sole limited partner of Vaughan Nelson. As
of January 31, 2000, Vaughan Nelson had approximately $4.3 billion in assets
under management. The principal executive officer of Vaughan Nelson is Lee A.
Lahourcade, whose principal occupation is his position with Vaughan Nelson. The
address of Vaughan Nelson, VNSMI and Mr. Lahourcade is 6300 Chase Tower,
Houston, Texas 77002.
HARRIS ASSOCIATES L.P.
Harris Associates is a limited partnership that was organized in 1995 to
succeed to the business of a previous limited partnership with the same name.
Together with its predecessor, Harris Associates has advised and managed mutual
funds since 1970. Its sole general partner, Harris Associates Inc. ("HAI") is a
wholly-owned subsidiary of Nvest Holdings, Inc. Nvest Companies is the sole
limited partner of Harris Associates. As of December 31, 1999, Harris Associates
had approximately $12.6 billion in assets under management. The principal
executive officer of Harris Associates is Robert M. Levy, whose principal
occupation is his position with Harris Associates. The address of Harris
Associates, HAI and Mr. Levy is Two North LaSalle Street, Chicago, Illinois
60602-3790.
WESTPEAK INVESTMENT ADVISORS, L.P.
Westpeak was founded in 1991 and is located in Boulder, Colorado. Westpeak
manages Small Cap, Large Cap, Enhanced S&P 500 and Market Neutral strategies for
many of America's premier corporate and public pension plans. In addition,
Westpeak is a sub-adviser for several mutual funds. Westpeak employs a
highly-disciplined quantitative proprietary investment process that was
developed over the past 25 years by Gerald H. Scriver, President and Chief
Investment Officer whose principal occupations are these positions with
Westpeak. Westpeak is a limited partnership. Its sole general partner, Westpeak
Investment Advisors, Inc. ("WIAI") is a wholly-owned subsidiary of Nvest
Holdings, Inc. Nvest Companies is the sole limited partner of Westpeak. As of
December 31, 1999, Westpeak had approximately $10 billion in assets under
management. The address of Westpeak, WIAI and Mr. Scriver is 1011 Walnut Street,
Boulder, Colorado 80302.
<PAGE>
APPENDIX B
NVEST STAR VALUE FUND
PROPOSED SUB-ADVISORY FEE RATES
A form of the proposed sub-advisory agreement is provided in Appendix C.
Under separate sub-advisory agreements, the Fund will pay to each Sub-adviser
the following respective sub-advisory fee equal to the annual rate of:
Loomis Sayles
|X| 0.535% on the first $200 million of its Fund Segment's average daily
net assets;
|X| 0.350% on the next $300 million of its Fund Segment's average daily
net assets; and
|X| 0.300% on amounts over $500 million of its Fund Segment's average daily net
assets.
Vaughan Nelson
|X| 0.500% on the first $25 million of its Fund Segment's average daily
net assets;
|X| 0.400% on the next $175 million of its Fund Segment's average daily
net assets;
|X| 0.325% on the next $300 million of its Fund Segment's average daily
net assets; and
|X| 0.275% on amounts over $500 million of its Fund Segment's average daily net
assets.
Harris Associates
|X| 0.500% on the first $100 million of its Fund Segment's average daily
net assets; and
|X| 0.450% on amounts over $100 million of its Fund Segment's average daily net
assets.
Westpeak
|X| 0.50% on the first $25 million of its Fund Segment's average daily
net assets;
|X| 0.40% on the next $75 million of its Fund Segment's average daily
net assets;
|X| 0.35% on the next $100 million of its Fund Segment's average daily
net assets; and
|X| 0.30% on amounts over $200 million of its Fund Segment's average daily net
assets.
<PAGE>
APPENDIX C
NVEST STAR VALUE FUND
FORM OF SUB-ADVISORY AGREEMENT
(SUB-ADVISER'S NAME)
Sub-Advisory Agreement (this "Agreement") entered into as of [month, day],
2000, by and among Nvest Funds Trust I, a Massachusetts business trust (the
"Trust"), with respect to its Nvest Star Value Fund series (the "Series"), Nvest
Funds Management, L.P., a Delaware limited partnership (the "Manager"), and
[Name of sub-adviser], a [state of organization] limited partnership (the
"Sub-Adviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated August
30, 1996 and amended May 1, 1998 (the "Advisory Agreement") with the Trust,
relating to the provision of portfolio management and administrative services to
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 Trust, 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 such portion of the assets of the Series as the
Manager may from time to time allocate to the Sub-Adviser for management (each
such portion, the "Segment") and the Sub-Adviser shall have the authority on
behalf of the Series to vote all proxies and exercise all other rights of the
Series as a security holder of companies in which the Segment from time to time
invests. The Sub-Adviser shall manage the Segment 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, as amended (the "1940 Act")
and the rules and regulations thereunder. For purposes of compliance with the
Policies, the Sub-Adviser shall be entitled to treat the Segment as though the
Segment constituted the entire Series, and the Sub-Adviser shall not be
responsible in any way for the compliance of any assets of the Series, other
than the Segment, with the Policies, or for the compliance of the Series, taken
as a whole, with the Policies. 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 Segment, 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 Segment
may be invested in such proportions of stocks, bonds, other securities or
investment instruments, or cash, as the Sub-Adviser shall determine.
Notwithstanding the foregoing provisions of this Section 1.a, however, the
Sub-Adviser shall, upon written instructions from the Manager, effect such
portfolio transactions for the Segment as the Manager shall determine are
necessary in order for the Series to comply with the Policies.
b. The Sub-Adviser shall furnish the Manager and the Administrator
monthly, quarterly and annual reports concerning portfolio transactions and
performance of the Segment in such form as may be mutually agreed upon, and
agrees to review the Segment and discuss the management of it. The Sub-Adviser
shall permit all books and records with respect to the Segment 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 Series' Custodian (as defined
in Section 3 hereof) to provide) timely information to the Sub-Adviser regarding
such matters as the composition of assets in the Segment, cash requirements and
cash available for investment in the Segment, 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 Segment
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 Segment
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 "[Name of Sub-adviser]" and "[Name of
Sub-Adviser]" and that all use of any designation consisting in whole or part of
"[Name of Sub-Adviser]" and "[Name of Sub-Adviser" (a "[Name of Sub-Adviser
Mark") under this Agreement shall inure to the benefit of the Sub-Adviser. The
Manager on its own behalf and on behalf of the Segment agrees not to use any
[Name of Sub-Adviser] Mark in any advertisement or sales literature or other
materials promoting the Series or the Segment, 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 or
the [Name of Sub-Adviser] Funds 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 [Name of
Sub-Adviser] 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 Trust pursuant to
Section 7 hereof).
6. Purchase and Sale of Assets. Absent instructions from the Manager to the
contrary, the Sub-Adviser shall place all orders for the purchase and sale of
securities for the Segment 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 Segment
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 Segment 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 Segment.
7. Compensation of the Sub-Adviser. As full compensation for all services
rendered, facilities furnished and expenses borne by the Sub-Adviser hereunder,
the Sub-Adviser shall be paid at the annual rate of [0.__%] of the first [$___]
million of the average daily net assets of the Segment; [0.___%] of the next
[$___] million of such assets and [0.___%] of such assets in excess of [$___]
million. Such compensation shall be paid by the Trust (except to the extent that
the Trust, the Sub-Adviser and the Manager otherwise agree in writing from time
to time). 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 hereunder. 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.
Without limiting the foregoing, it is expressly understood and agreed that
the Manager and the Series shall hold harmless and indemnify the Indemnified
Parties for any loss arising out of any act or omission of any other sub-adviser
to the Series, or for any loss arising out of the failure of the Series to
comply with the Policies, except for losses arising out of the Sub-Adviser's
failure to comply with the Policies with respect to the Segment. The Manager
acknowledges and agrees that the Sub-Adviser makes no representation or
warranty, expressed or implied, that any level of performance or investment
results will be achieved by the Series or the Segment or that the Series or the
Segment will perform comparably with any standard or index, including other
clients of the Sub-Adviser, whether public or private.
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; and
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.
<PAGE>
NVEST FUNDS MANAGEMENT, L.P.
By Nvest Distribution Corp., its general partner
By: _______________________________
Name: John E. Pelletier
Title: Managing Director, Senior Vice President, General Counsel,
Secretary & Clerk
NVEST FUNDS TRUST I,
on behalf of its Nvest Star Value Fund series
By: _______________________________
Name: John T. Hailer
Title: President
[Name of Sub-Adviser]
By: _______________________________
Name:
Title:
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust establishing Nvest Funds
Trust I (the "Fund") is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that his Agreement is executed with
respect to the Fund's Nvest Star Value Fund series (the "Series") on behalf of
the Fund by officers of the Fund as officers and not individually and that the
obligations of or arising out of this Agreement are not binding upon any of the
Trustees, officers or shareholders individually but are binding only upon the
assets and property belonging to the Series.
<PAGE>
YOUR VOTE IS NEEDED.
Internet and telephone voting are now available. Please see the instructions in
the enclosed letter for details. If voting by mail, 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 a full corporate name and indicate the signer's office.
If a partnership, please sign in the partnership name.
The undersigned hereby appoints Neal G. Litvack, Thomas P. Cunningham and John
E. Pelletier, 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 Nvest Star Value
Fund (the "Fund") on April 19, 2000 at 2:00 p.m. Eastern Time, and at any
adjournment 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>
VOTE BY MAIL
NVEST STAR VALUE 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
proposals listed below:
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
1. Proposal to approve new Sub-Advisory For Against Abstain
Agreement relating to a segment of the [ ] [ ] [ ]
Fund between Nvest Funds Management,
L.P. and Loomis, Sayles & Company, L.P.
2. Proposal to approve new Sub-Advisory For Against Abstain
Agreement relating to a segment of the [ ] [ ] [ ]
Fund between Nvest Funds Management,
L.P. and Vaughan, Nelson, Scarborough &
McCullough, L.P.
3. Proposal to approve new Sub-Advisory For Against Abstain
Agreement relating to a segment of the [ ] [ ] [ ]
Fund between Nvest Funds Management,
L.P. and Harris Associates L.P.
4. Proposal to approve new Sub-Advisory For Against Abstain
Agreement relating to a segment of the [ ] [ ] [ ]
Fund between Nvest Funds Management,
L.P. and Westpeak Investment Advisors,
L.P.
Please be sure to sign and date this Proxy
Shareholder sign here:________________________________
Co-owner sign here:___________________________________
Date:_________________________________________________
