-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Fd//UJAqQTSVoZkueAmSDhG8HHbb4dqxdIm36dOinveuE2TOFF0dAUdtUEMNgkrJ /rR7tHRNFBPNAwczEHosmg== 0000052136-95-000010.txt : 19950613 0000052136-95-000010.hdr.sgml : 19950613 ACCESSION NUMBER: 0000052136-95-000010 CONFORMED SUBMISSION TYPE: DEFS14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950424 FILED AS OF DATE: 19950307 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND FUNDS TRUST II CENTRAL INDEX KEY: 0000052136 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 041990692 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-00242 FILM NUMBER: 95519113 BUSINESS ADDRESS: STREET 1: 399 BOYLSTON ST STREET 2: 4TH FLOOR CITY: BOSTON STATE: MA ZIP: 02116 BUSINESS PHONE: 8002831155 MAIL ADDRESS: STREET 1: 399 BOYLSTON STREET STREET 2: 4TH FLOOR CITY: BOSTON STATE: MA ZIP: 02116 FORMER COMPANY: FORMER CONFORMED NAME: INVESTMENT TRUST OF BOSTON FUNDS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WORLD INVESTMENT TRUST DATE OF NAME CHANGE: 19680529 DEFS14A 1 PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [__] Filed by a Party other than the Registrant [__] Check the appropriate box: [__] Preliminary Proxy Statement [__] Confidential, for Use of the Commission Only (as Permitted by Rule 141-6(e)(2)) [X] Definitive Proxy Statement [__] Definitive Additional Materials [__] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 New England Funds Trust II (Name of Registrant as Specified In Its Charter) New England Funds Trust II (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [__] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(2), 15a-6(i)(2) or Item 22(a)(2) of Schedule 14A [__] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3) [__] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11 (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or ther underlying value of transaction computed pursuatn to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined. (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [X] Fee paid previously with preliminary materials [__] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: Notes: [LOGO] NEW ENGLAND GROWTH OPPORTUNITIES FUND NOTICE OF SPECIAL MEETING OF SHAREHOLDERS April 24, 1995 To the Shareholders: Notice is hereby given that a Special Meeting of Shareholders of New England Growth Opportunities Fund (the "Fund"), a series of New England Funds Trust II (the "Trust"), will be held at the offices of New England Funds, L.P., 399 Boylston Street, Boston, Massachusetts, on April 24, 1995 at 2:00 p.m. (Boston time) for the following purposes: 1. To approve or disapprove a new Advisory Agreement with New England Funds Management, L.P., which would increase the fee payable by the Fund. 2. To approve or disapprove a proposed Sub-Advisory Agreement relating to the Fund between New England Funds Management, L.P. and Westpeak Investment Advisors, L.P. 3. 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, SHEILA M. BARRY, Secretary pro tem March 6, 1995 - ------------------------------------------------------------------------------ YOUR VOTE IS IMPORTANT - ------------------------------------------------------------------------------ PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. NEW ENGLAND GROWTH OPPORTUNITIES FUND PROXY STATEMENT This statement is furnished in connection with the solicitation of proxies by the Board of Trustees of New England Funds Trust II (the "Trust") for use at the Special Meeting of Shareholders of New England Growth Opportunities Fund (the "Fund"), a series of the Trust, to be held at the offices of New England Funds, L.P. ("NEF"), 399 Boylston Street, Boston, Massachusetts on April 24, 1995 at 2:00 p.m. (Boston time) and at any adjournment or adjournments thereof (the "Meeting"). This statement and its enclosures are being mailed to shareholders beginning or on about March 6, 1995. A copy of the Annual Report of the Fund for the fiscal year ended December 31, 1994 may be obtained without charge by calling (800) 225-5478. All shareholders of record on February 23, 1995, the record date for determining shareholders entitled to vote at the Meeting (the "Record Date") are entitled to one vote for each share of beneficial interest of the Trust held as of that date. The number of shares of beneficial interest of each Fund issued and outstanding as of the Record Date was 8,716,182. Timely, properly executed proxies will be voted as you instruct. If no choice is indicated, proxies will be voted in favor of the proposals set forth in the attached Notice of Meeting. At any time before it has been voted, the enclosed proxy may be revoked by the signer by a written revocation received by the Secretary of the Trust, by properly executing a later-dated proxy or by attending the Meeting, requesting return of any previously delivered proxy and voting in person. The costs of solicitation of proxies will be borne by the Fund. Solicitation of proxies by personal interview, mail, telephone and telegraph may be made by officers and Trustees of the Trust and employees of NEF. In addition, the firm of D.F. King & Co. has been retained to assist in the solicitation of proxies, at a cost to the Fund which is not expected to exceed $15,000, plus reimbursement of the firm's out-of-pocket expenses. The Trustees of the Trust are recommending that the Fund's shareholders vote to restructure the management arrangements of the Fund. The proposed restructuring includes two components: (1) appointment of New England Funds Management, L.P. ("NEF Management") as the Fund's adviser (replacing the 1 current adviser, Back Bay Advisors, L.P. ("Back Bay Advisors")), and (2) appointment of Westpeak Investment Advisors, L.P. ("Westpeak") as the Fund's sub-adviser, to manage the day-to-day investment operations of the Fund under the oversight of NEF Management. Proposal 1 in the attached Notice of Special Meeting relates to the proposed Advisory Agreement (the "New Advisory Agreement") under which NEF Management would become the Fund's adviser. Proposal 2 relates to the proposed Sub-Advisory Agreement under which Westpeak would act as the Fund's subadviser. Although shareholders of the Fund will vote separately on Proposals 1 and 2, neither the New Advisory Agreement nor the Sub-Advisory Agreement will take effect unless shareholders vote to approve both. Current Management Arrangements Back Bay Advisors has acted as the Fund's adviser since July 27, 1988, pursuant to an Advisory Agreement dated July 27, 1988 (the "Old Agreement"). The Old Agreement was approved by the Fund's shareholders on July 22, 1988, in connection with Back Bay Advisors' assumption of management responsibilities from the Fund's prior adviser, Moseley Capital Management Inc. ("MCM"). The Trustees of the Fund have voted to approve the continuation of the Old Agreement from year to year since 1988, most recently on May 18, 1994, when they voted to continue the Old Agreement in effect for a one-year period beginning June 1, 1994. Since assuming management responsibility for the Fund in 1988, Back Bay Advisors has managed the Fund's portfolio using a relatively passive investment strategy. This strategy has involved investing approximately 80% of the Fund's assets in the common stocks included in the Standard & Poor's 500 Stock Index (the "Index"), in approximately the same proportions as those stocks are represented in the Index. The other 20% of the Fund's assets have been invested primarily in common stocks with relatively low price-to-earnings ratios. Unlike many other managers of mutual funds that invest primarily in common stocks, Back Bay Advisors has not relied on extensive fundamental analysis of industries and individual companies in selecting investments for the Fund. Back Bay Advisors' relatively passive approach to the management of the Fund is reflected in the fee rate payable to Back Bay Advisors under the Old Agreement. This fee rate is 0.50% annually of the Fund's average net assets. This fee 2 rate compares to the annual rate of 0.60% on the first $100 million of average net assets and 0.50% of the excess of such assets over $100 million payable under the Fund's previous advisory agreement with MCM, and to the median advisory and administration fee rate of 0.65% annually that, according to the third quarter 1994 edition of Lipper Directors' Analytical Data, was paid by 279 funds that, like the Fund, are classified by Lipper Analytical Services, Inc. as "growth and income" funds. The Old Agreement obligates Back Bay Advisors to furnish the Fund with both portfolio management services and certain administrative and general management services. Since assuming management responsibilities for the Fund in 1988, Back Bay Advisors has itself provided the Fund with portfolio management services, but has subcontracted to an affiliated company (currently NEF, which also acts as the Fund's principal underwriter and transfer agent) responsibility for providing certain administrative and general management services. Proposed New Arrangements Based on a review of the investment approach used by Back Bay Advisors in managing the Fund's portfolio, the Fund's performance record under Back Bay Advisors' management, the performance record of Westpeak in managing other accounts and the performance of other "growth and income" mutual funds, the Trustees of the Trust have determined that it would be appropriate for Westpeak to assume responsibility for the day-to-day management of the Fund's portfolio. Westpeak proposes to manage the Fund's investments using its proprietary investment process which selects stocks for investment from a large universe of stocks that are continually evaluated by Westpeak. Westpeak evaluates the stocks in this universe based on a large number of factors relating to the individual company, the industry or industries of which it is a part and overall market conditions and developments. In managing the Fund's investments, Westpeak would select some stocks that Westpeak believes are relatively undervalued ("value" stocks) and some stocks issued by companies that Westpeak believes have good growth potential ("growth" stocks). The relative percentages of "value" and "growth" stocks in the Fund's portfolio at any time will vary, based on Westpeak's assessment of current and future market conditions. Concurrently with transferring day-to-day portfolio management responsibility to Westpeak, the Trustees believe that it is desirable to appoint NEF Management to be responsible for the general adminis- 3 tration and management of the Fund's operations and affairs. These operations and affairs are currently conducted or overseen primarily by NEF, under sub-contract from Back Bay Advisors. NEF, which acts as administrator, distributor and transfer agent for the 20 mutual funds in the New England group of funds, has recently established NEF Management to provide comprehensive administrative and general management services to mutual funds. In determining to recommend the proposed Sub-Advisory Agreement for shareholder approval, the Trustees considered the policies of Back Bay Advisors and Westpeak with respect to the placing of portfolio transactions for the Fund. See "Certain Brokerage Matters" below. The Trustees also considered Westpeak's estimate of the one-time costs the Fund would incur in restructuring its portfolio to conform to Westpeak's investment approach, and of the ongoing effect of Westpeak's investment approach on the Fund's portfolio turnover rate. The anticipated restructuring would involve selling approximately 30-35% of the dollar value of the securities in the Fund's portfolio, resulting in various costs and the realization of approximately $0.75 per share of taxable long-term capital gains. See "Restructuring Costs" and "Portfolio Turnover Considerations" below. The Proposed New Advisory Agreement. The proposed New Advisory Agreement provides that NEF Management will, subject to its rights to delegate such responsibilities, provide to the Fund with both (1) Portfolio Management Services (defined to mean managing the investment and reinvestment of the assets of the Fund, subject to the supervision and control of the Trustees of the Trust) and (2) Administrative Services (defined to mean furnishing or paying the expenses of the Fund for office space, facilities and equipment, services of executive and other personnel of the Trust and certain other administrative and general management services). Under the New Advisory Agreement, NEF Management will receive from the Fund compensation at the annual rate of 0.70% of the first $200 million of the Fund's average daily net assets, 0.65% of the next $300 million of such assets and 0.60% of such assets in excess of $500 million. These rates compare to the fee rate of 0.50% annually of net assets payable by the Fund under the Old Agreement with Back Bay Advisors. At December 31, 1994, the Fund's net assets were approximately $109 million. Under the New Advisory Agreement, if the total ordinary business expenses of the Fund or the Trust as a whole for any fiscal year exceed the lowest applicable limitation (based on percentages of 4 average net assets or income) prescribed by any state in which shares of the Fund are qualified for sale, NEF Management shall pay such excess. The term "expenses" is defined in the New Advisory Agreement and excludes brokerage commissions, taxes, interest, distribution-related expenses and extraordinary expenses. The Old Agreement contains a substantially identical provision obligating Back Bay Advisors to bear expenses in excess of those permitted by relevant state law. The New Advisory Agreement does not require NEF Management to delegate responsibility for Portfolio Management Services to any sub-adviser. NEF Management and the Trust will not enter into the proposed New Advisory Agreement, however, unless the proposed Sub-Advisory Agreement with Westpeak is also entered into at the same time. The New Advisory Agreement would nevertheless permit NEF Management to continue as the Fund's investment adviser (subject to the Fund's rights to terminate the New Advisory Agreement as described below) even after termination of the proposed Sub-Advisory Agreement. If at any time the Sub-Advisory Agreement with Westpeak is terminated without simultaneous termination of the New Advisory Agreement with NEF Management, the Trustees of the Trust would consider whether to appoint a new sub-adviser or adviser (subject in each case to approval of the Fund's shareholders). The New Advisory Agreement provides that it will continue in effect for two years from its date of execution and thereafter from year to year if its continuance is approved at least annually (i) by the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund and (ii) by vote of a majority of the Trustees who are not "interested persons" of the Trust, as that term is defined in the Investment Company Act of 1940 (the "1940 Act"), cast in person at a meeting called for the purpose of voting on such approval. Any amendment to the New Advisory Agreement must be approved by vote of a majority of the outstanding voting securities of the Fund, and by vote of a majority of the Trustees who are not such interested persons, cast in person at a meeting called for the purpose of voting on such approval. The New Advisory Agreement may be terminated without penalty by vote of the Board of Trustees or by vote of a majority of the outstanding voting securities of the Fund, upon sixty days' written notice, or by NEF Management upon ninety days' written notice, and terminates automatically in the event of its assignment. In addition, the New Advisory Agreement will automatically terminate if the Trust or the Fund shall at any time be required by NEF to eliminate all references 5 to the words "TNE" or "New England" in the name of the Trust or the Fund, unless the continuance of the New Advisory Agreement after such change of name is approved by a majority of the outstanding voting securities of the Fund and by a majority of the Trustees who are not interested persons of the Trust or NEF Management. The New Advisory Agreement provides that NEF Management shall not be subject to any liability in connection with the performance of its services thereunder in the absence of willful misfeasance, bad faith, negligence or reckless disregard of its obligations and duties. The Sub-Advisory Agreement. The proposed Sub-Advisory Agreement requires Westpeak to manage the investment and reinvestment of the assets of the Fund, subject to the supervision of NEF Management. Westpeak is authorized to effect portfolio transactions for the Fund in the discretion of Westpeak and without prior consultation with NEF Management. Westpeak is required to report periodically to NEF Management and the Trustees of the Trust. The Sub-Advisory Agreement provides that NEF Management shall compensate Westpeak at the annual rate of 0.50% of the first $25 million of the Fund's average daily net assets, 0.40% of the next $75 million of such assets, 0.35% of the next $100 million of such assets and 0.30% of such assets in excess of $200 million. The Sub-Advisory Agreement provides that it will continue in effect for two years from its date of execution and thereafter from year to year if its continuance is approved at least annually (i) by the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Fund and (ii) by vote of a majority of the Trustees who are not "interested persons," as that term is defined in the 1940 Act, of the Trust, NEF Management or Westpeak, cast in person at a meeting called for the purpose of voting on such approval. Any amendment to the Sub-Advisory Agreement must be approved by NEF Management and Westpeak and, if required by law, by vote of a majority of the outstanding voting securities of the Fund, and by vote of a majority of the Trustees who are not such interested persons, cast in person at a meeting called for the purpose of voting on such approval. The Sub-Advisory Agreement may be terminated without penalty by vote of the Board of Trustees or by vote of a majority of the outstanding voting securities of the Fund, upon sixty days' written notice, or by Westpeak or NEF Management upon ninety days' written notice, and terminates automatically in the event of its assignment. The Sub-Advisory Agreement will automatically terminate if the New Advisory Agreement is terminated. The Sub-Advisory Agreement provides that Westpeak 6 shall not be subject to any liability in connection with the performance of its services thereunder in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations and duties. Comparison of the Current and Proposed Arrangements The proposed new management arrangements for the Fund differ from the current arrangements in the following important respects: 1. Under the new arrangements, NEF Management would assume overall responsibility for the Fund's operations, subject to the supervision of the Trustees. Back Bay Advisors currently has such overall responsibility. 2. Westpeak would become responsible for day-to-day management of the Fund's investment operations, succeeding Back Bay Advisors. Westpeak would implement its more active, "value/growth" management style in place of Back Bay Advisors' approach. 3. The advisory fees payable by the Fund would increase from the current annual rate of 0.50% of average net assets to the new rate of 0.70% of the first $200 million of such assets, 0.65% of the next $300 million of such assets and 0.60% of the excess of such assets over $500 million. In 1994, the Fund paid advisory fees of $555,258. If the proposed new arrangements had been in effect throughout 1994, the Fund would have paid advisory fees of $777,360, or 0.20% more than under the existing arrangements. In addition, the new arrangements would not obligate NEF Management, as the Fund's adviser, to provide the Fund with, or to pay for, certain legal and accounting services that are currently provided by NEF at the expense of Back Bay Advisors. If the New Advisory Agreement is adopted, NEF or an affiliate will continue to provide these services, but will charge the Fund for them. The estimated charge for these services in 1994, had the new arrangements then been in effect, is approximately $20,000 (or 0.02% of Fund average net assets in 1994). 4. NEF has informed the Trustees that, if the proposed new arrangements are adopted, it intends to reduce the Rule 12b-1 fees payable by the Fund's Class A shares from the current annual rate of 0.35% of Class A net assets to 0.25% of such assets. This fee reduction would affect only the Class A 7 shares. On the Record Date, Class A shares represented approximately 95% of the outstanding shares of the Fund. The following table summarizes the maximum transaction costs from investing in the Fund and the annual expenses borne by the Fund's Class A and Class B shares in the fiscal year ended December 31, 1994, as well as such annual expenses calculated on a pro forma basis assuming the proposed New Advisory Agreement (and reduced Class A Rule 12b-1 fee) had been in effect beginning January 1, 1994: Shareholder Transaction Expenses Class A Class B ------- ------- Maximum Initial Sales Charge Imposed on a Purchase (as a percentage of offering price)(1)(2)......... 5.75% None Maximum Contingent Deferred Sales Charge (as a percentage of offering price)(2).................. (3) 4.00% - --------------- (1) Reduced Class A sales charges apply in some cases. (2) Does not apply to reinvested distributions. (3) A 1.00% contingent deferred sales charge applies with respect to any portion of certain purchases greater than $1,000,000 redeemed from Class A within approximately one year after purchase. Annual Fund Operating Expenses (as a percentage of average net assets) during the years ended December 31, 1994 ------------------- Actual Pro Forma ------------------- ------------------- Class A Class B Class A Class B ------- ------- ------- ------- Advisory Fees............... 0.50% 0.50% 0.70% 0.70% 12b-1 Fees.................. 0.35% 1.00% 0.25% 1.00% Other Expenses.............. 0.43% 0.43% 0.43% 0.43% ------- ------- ------- ------- Total Fund Operating Expenses.................. 1.28% 1.93% 1.38% 2.13% Example A $1,000 investment in each Class of the Fund would incur the following dollar amount of transaction costs and operating expenses, assuming a 5% annual return and, unless otherwise noted, redemption at period end. The 5% return and the expense levels used in calculat- 8 ing this example should not be regarded as predictions of future investment return or Fund expenses, both of which will vary: 1 Year 3 Years 5 Years 10 Years(2) ------ ------- ------- ----------- Based on Actual Expenses Incurred During the Year Ended December 31, 1994 Class A................... $ 70 $96 $ 124 $ 203 Class B................... $ 60 $91 $ 114 $ 208 Class B(1)................ $ 20 $61 $ 105 $ 208 Based on Pro Forma Expenses For The Year Ended December 31, 1994, Assuming the Proposed New Advisory Agreement and Class A 12b-1 Fee Reduction Had Been in Effect since January 1, 1994 Class A................... $ 71 $99 $ 129 $ 214 Class B................... $ 62 $97 $ 124 $ 227 Class B(1)................ $ 22 $67 $ 114 $ 227 - --------------- (1) Assumes no redemption. (2) Class B shares automatically convert to Class A eight years after purchase; therefore, Class B amounts are calculated using Class A expenses in years 9 and 10. Restructuring Costs Westpeak has reviewed the existing portfolio holdings of the Fund to determine what holdings it would expect to sell in order to conform the Fund's portfolio to Westpeak's "value/growth" investment style. Based on this review, Westpeak has informed the Trustees that it would expect to sell approximately 30-35% of the dollar value of the Fund's existing portfolio, and to reinvest the sale proceeds in other stocks. Westpeak estimates that these transactions would result in brokerage costs of approximately $60,000 to the Fund. In addition to these commissions costs, the transactions will involve additional costs to the Fund in the form of "market impact." Market impact is the effect on the market price of securities that results when the Fund attempts to sell (or buy) significant amounts of securities. Although these market impact costs cannot be predicted with great certainty, Westpeak estimates that they would be approximately $230,000. In addition, Westpeak estimates that the transactions, based on late 1994 market prices, would result in the realization of approximately 9 $6.1 million of long-term capital gains (or approximately $0.75 per share of the Fund). These gains, together with any other long-term capital gains realized by the Fund in 1995 (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 late 1994 based on then-current Fund holdings and market information available to Westpeak. The actual costs of restructuring the Fund's portfolio could be higher or lower, depending on market conditions and other factors. Westpeak expects that the restructuring would be completed within a few weeks after Westpeak assumes responsibility for the Fund's portfolio. Portfolio Turnover Considerations As explained above, Westpeak's investment approach generally involves a higher level of portfolio trading activity than Back Bay Advisors' approach. During the six full calendar years of Back Bay Advisors' management of the Fund, the Fund's annual portfolio turnover rate ranged between 4% and 17%. (A fund's portfolio turnover rate is calculated by dividing the dollar value of purchases or sales of securities in the Fund's portfolio by the average value of its portfolio holdings during the same period.) Although it is not possible to predict the Fund's future portfolio turnover rates with certainty, Westpeak estimates that, under normal market conditions, the Fund's annual portfolio turnover rate under Westpeak's management would be between 80% and 100%. This higher level of portfolio turnover will involve higher levels of ongoing brokerage costs than the Fund has incurred under Back Bay Advisors' management. In addition, the higher level of portfolio turnover may result in the realization of more capital gains, which would be taxable when distributed to Fund shareholders. Information About NEF Management NEF Management is a limited partnership. Its sole general partner, NEF Corporation, is a wholly-owned subsidiary of NEIC Holdings, Inc. ("NEIC Holdings"), which is a wholly-owned subsidiary of New England Investment Companies, L.P. ("NEIC"). NEF Corporation is also the sole general partner of NEF. NEIC owns the entire limited partnership interest in each of NEF and NEF Management. The sole general partner of NEIC is New England Investment Companies, Inc. ("NEIC Inc."), which is a wholly-owned subsidiary 10 of New England Mutual Life Insurance Company ("The New England"). The principal executive officer of NEF and NEF Management is Henry L.P. Schmelzer, who is President and a Trustee of the Trust and whose principal occupation is his positions with NEF and NEF Management. The address of NEF, NEF Management, NEF Corporation, NEIC Holdings, NEIC, NEIC Inc. and Mr. Schmelzer is 399 Boylston Street, Boston, Massachusetts 02116. The address of The New England is 501 Boylston Street, Boston, Massachusetts 02116. Information About Westpeak Westpeak is a limited partnership. Its sole general partner, Westpeak Investment Advisors, Inc. ("Westpeak Inc."), is a wholly-owned subsidiary of NEIC Holdings. NEIC owns the entire limited partnership interest in Westpeak. The principal executive officer of Westpeak is Gerald H. Scriver, whose principal occupation is his position with Westpeak. The address of Westpeak, Westpeak Inc. and Mr. Scriver is 1050 Walnut Street, Boulder, Colorado 80302. Westpeak currently acts as investment adviser to another mutual fund that has an investment objective similar to the Fund. This other mutual fund is the Value Growth Series of New England Zenith Fund. At December 31, 1994, the Value Growth Series had net assets of $23 million. The advisory fee rate currently payable by the Value Growth Series to Westpeak is 0.70% annually of the first $200 million of average net assets, 0.65% of the next $300 million of such assets and 0.60% of such assets in excess of $500 million. Shareholders of the Value Growth Series will be asked, at a meeting called to be held in April 1995, to adopt new management arrangements for the Series. Under the proposed new arrangements, a subsidiary of The New England would become the adviser of the Series, and would receive compensation at the same fee rates as Westpeak currently receives. Westpeak would become the Series's sub-adviser, and would be paid by the Series's adviser at the annual rate of 0.50% of the first $25 million of the Series's average daily net assets, 0.40% of the next $75 million of such assets, 0.35% of the next $100 million of such assets and 0.30% of such assets in excess of $200 million. Information About Back Bay Advisors Back Bay Advisors is a limited partnership. Its sole general partner, Back Bay Advisors, Inc., is a wholly-owned subsidiary of NEIC Holdings. NEIC owns the entire limited partnership interest in Back Bay Advisors. The principal executive officer of Back Bay 11 Advisors is Charles T. Wallis, who is Executive Vice President of the Trust and whose principal occupation is his position with Back Bay Advisors. The address of Back Bay Advisors, Back Bay Advisors, Inc. and Mr. Wallis is 399 Boylston Street, Boston, Massachusetts 02116. Certain Brokerage Matters In determining to recommend the proposed New Advisory Agreement and Sub-Advisory Agreement, the Trustees considered the following policies of Back Bay Advisors and Westpeak with respect to certain matters relating to the execution of portfolio transactions for the Fund: In placing orders for the purchase and sale of portfolio securities for the Fund, Back Bay Advisors always seeks the best price and execution. Some portfolio transactions are placed with brokers and dealers who provide Back Bay Advisors with supplementary investment and statistical information or furnish market quotations to the Fund or other investment companies or accounts advised by Back Bay Advisors. The business would not be so placed if the Fund would not thereby obtain the best price and execution. Although it is not possible to assign an exact dollar value to these services, they may, to the extent used, tend to reduce the expenses of Back Bay Advisors. The services may also be used by Back Bay Advisors in connection with its other advisory accounts and in some cases may not be used with respect to the Fund. In placing orders for the purchase and sale of securities for its clients, Westpeak always seeks best execution. Westpeak selects only brokers or dealers which it believes are financially responsible, will provide efficient and effective services in executing, clearing and settling an order and will charge commission rates which, when combined with the quality of the foregoing services, will produce best price and execution. This does not necessarily mean that the lowest available brokerage commission will be paid. Westpeak 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. The proposed Sub-Advisory Agreement provides that Westpeak may cause the Fund to pay a broker-dealer that provides brokerage and research services to Westpeak an amount of commission for effecting a 12 securities transaction for the Fund in excess of the amount another broker-dealer would have charged for effecting that transaction. Westpeak 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 Westpeak's overall responsibilities to the Fund and Westpeak's other clients. Westpeak's authority to cause the Fund to pay such greater commissions would also be subject to such policies as the Trust's Trustees may adopt from time to time. Certain Payments to Affiliates In addition to advisory fees payable to Back Bay Advisors, the Fund pays NEF (an affiliate of Back Bay Advisors, NEF Management and Westpeak) for providing various services to the Fund and its shareholders. In 1994, these payments amounted to $155,764 for transfer agency services, $376,217 for service and distribution (Rule 12b-1) fees for Class A shares and $35,509 for service and distribution (Rule 12b-1 fees) for Class B shares. In addition, in 1994 NEF received from Fund shareholders $226,644 in sales loads on Class A shares and $5,261 in contingent deferred sales loads on Class A and B shares. NEF will continue to receive transfer agency and Rule 12b-1 fees, as well as sales loads and contingent deferred sales loads, if the proposed new management arrangements are adopted. In addition, NEF Management intends to delegate to NEF responsibility for certain administrative services to the Fund under the New Advisory Agreement. (NEF is currently carrying out these administrative responsibilities under sub-contract from Back Bay Advisors.) NEF Management would compensate NEF for providing these services. Also, as mentioned above under "Comparison of the Current and Proposed Arrangements," NEF would provide certain legal and accounting services to the Fund, at a current estimated cost to the Fund of approximately $20,000 annually. Certain Trustees and Officers of the Trust The following persons are both (1) Trustees or officers of the Trust and (2) officers or employees of one or more of NEF Management, Westpeak or Back Bay Advisors (or officers or directors of those firms' corporate general partners): Peter S. Voss, Henry L.P. Schmelzer, Charles T. Wallis, Harold B. Bjornson, Catherine L. Bunting, Charles G. Glueck, Eric Gutterson, Scott A. Millimet, J. Scott Nicholson, Edgar M. Reed, James S. Welch, Nathan R. 13 Wentworth, Frank Nesvet, and Sheila M. Barry. If the proposed New Advisory Agreement and Sub-Advisory Agreement are adopted, the Trustees expect to elect Gerald H. Scriver and Philip J. Cooper, who are officers of Westpeak, to be Senior Vice President and Vice President, respectively, of the Trust. Trustee Action; Required Shareholder Vote At a meeting held on January 27, 1995, the Trustees of the Trust voted unanimously (1) to approve the New Advisory Agreement and the Sub-Advisory Agreement and (2) to terminate the Old Agreement, effective at such time as the New Advisory Agreement and the Sub-Advisory Agreement became effective. If shareholders approve the New Advisory Agreement and the Sub-Advisory Agreement, they are expected to become effective on or about May 1, 1995. Although shareholders of the Fund will vote on the proposed Sub-Advisory Agreement separately from the proposed New Advisory Agreement, neither the Sub-Advisory Agreement nor the New Advisory Agreement will take effect unless shareholders of the Fund vote to approve both such Agreements. The required vote for each Agreement is the lesser of (1) 67% of the shares of the Fund represented at the Meeting, if more than 50% of the shares of the Fund are represented at the Meeting, or (2) more than 50% of the outstanding shares of the Fund. If shareholders of the Fund do not approve both the New Advisory Agreement and the Sub-Advisory Agreement, the Old Agreement will remain in effect, and the Trustees will consider such alternative actions as may be in the best interests of the Fund. The Trustees unanimously recommend that shareholders of the Fund vote to approve the proposed New Advisory and Sub-Advisory Agreements. VI. Other Matters Forty percent of the shares of the Fund outstanding on the Record Date, present in person or represented by proxy, constitutes a quorum for the transaction of business at the Meeting. Votes cast by proxy or in person at the Meeting will be counted by persons appointed by persons appointed by the Trust as tellers for the Meeting. The tellers will count the total number of votes cast "for" approval of the proposals for purposes of determining whether sufficient affirmative votes have been cast. The tellers will count all shares represented by proxies that reflect abstentions and "broker non-votes" 14 (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 of Proposals 1 and 2, 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 either Proposal 1 or Proposal 2 are not received by April 24, 1995, the persons named as proxies may vote on those matters for which a quorum is present and as to which sufficient votes have been received and may propose one or more adjournments of the Meeting to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of a majority of the shares present in person or by proxy at the session of the Meeting to be adjourned. The persons named as proxies will vote in favor of such adjournment those proxies which they are entitled to vote in favor of Proposals 1 and 2. They will vote against any such adjournment those proxies required to be voted against either of Proposals 1 and 2 and will not vote any proxies that direct them to abstain from voting on such Proposals. Any proposals for which sufficient favorable votes have been received by the time of the Meeting will be acted upon and considered closed regardless of whether the Meeting is adjourned to permit additional solicitation with respect to any other proposal. Although the Meeting is called to transact any other business that may properly come before it, the only business that management intends to present or knows that others will present is Proposals 1 and 2 mentioned in the Notice of Special Meeting. However, you are being asked on the enclosed proxy to authorize the persons named therein to vote in accordance with their judgment with respect to any additional matters which properly come before the Meeting, and on all matters incidental to the conduct of the Meeting. Shareholder proposals 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 6, 1995 15 Appendix A ADVISORY AGREEMENT New England Growth Opportunities Fund AGREEMENT made this 1st day of May, 1995 by and between NEW ENGLAND FUNDS TRUST II, a Massachusetts business trust (the "Fund") with respect to its New England Growth Opportunities Fund series (the "Series"), and NEW ENGLAND FUNDS MANAGEMENT, L.P., a Delaware limited partnership (the "Manager"). WITNESSETH: WHEREAS, the Fund and the Manager wish to enter into an agreement setting forth the terms upon which the Manager (or certain other parties acting pursuant to delegation from the Manager) will perform certain services for the Series; NOW THEREFORE, in consideration of the premises and covenants hereinafter contained, the parties agree as follows: 1.(a) The Fund hereby employs the Manager to furnish the Fund with Portfolio Management Services (as defined in Section 2 hereof) and Administrative Services (as defined in Section 3 hereof), subject to the authority of the Manager to delegate any or all of its responsibilities hereunder to other parties as provided in Sections 1(b) and (c) hereof. The Manager hereby accepts such employment and agrees, at its own expense, to furnish such services (either directly or pursuant to delegation to other parties as permitted by Sections 1(b) and (c) hereof) and to assume the obligations herein set forth, for the compensation herein provided. The Manager shall, unless otherwise expressly provided or authorized, have no authority to act for or represent the Fund in any way or otherwise be deemed an agent of the Fund. (b) The Manager may delegate any or all of its responsibilities hereunder with respect to the provision of Portfolio Management Services (and assumption of related expenses) to one or more other parties (each such party, a "Sub-Adviser"), pursuant in each case to a written agreement with such Sub-Adviser that meets the requirements of Section 15 of the Investment Company Act of 1940 and the rules thereunder (the "1940 Act") applicable to contracts for service as investment adviser of a registered investment company (including A-1 without limitation the requirements for approval by the trustees of the Fund and the shareholders of the Series), subject, however, to such exemptions as may be granted by the Securities and Exchange Commission. Any Sub-Adviser may (but need not) be affiliated with the Manager. If different Sub-Advisers are engaged to provide Portfolio Management Services with respect to different segments of the portfolio of the Series, the Manager shall determine, in the manner described in the prospectus of the Series from time to time in effect, what portion of the assets belonging to the Series shall be managed by each Sub-Adviser. (c) The Manager may delegate any or all of its responsibilities hereunder with respect to the provision of Administrative Services to one or more other parties (each such party, an "Administrator") selected by the Manager. Any Administrator may (but need not) be affiliated with the Manager. 2. As used in this Agreement, "Portfolio Management Services" means management of the investment and reinvestment of the assets belonging to the Series, consisting specifically of the following: (a) obtaining and evaluating such economic, statistical and financial data and information and undertaking such additional investment research as shall be necessary or advisable for the management of the investment and reinvestment of the assets belonging to the Series in accordance with the Series' investment objectives and policies; (b) taking such steps as are necessary to implement the investment policies of the Series by purchasing and selling of securities, including the placing of orders for such purchase and sale; and (c) regularly reporting to the Board of Trustees of the Fund with respect to the implementation of the investment policies of the Series. 3. As used in this Agreement, "Administrative Services" means the provision to the Fund, by or at the expense of the Manager, of the following: (a) office space in such place or places as may be agreed upon from time to time by the Fund and the Manager, and all necessary office supplies, facilities and equipment; (b) necessary executive and other personnel for managing the affairs of the Series (exclusive of those related to and to be A-2 performed under contract for custodial, transfer, dividend and plan agency services by the entity or entities selected to perform such services and exclusive of any managerial functions described in Section 4); (c) compensation, if any, of trustees of the Fund who are directors, officers or employees of the Manager, any Sub-Adviser or any Administrator or of any affiliated person (other than a registered investment company) of the Manager, any Sub-Adviser or any Administrator; and (d) supervision and oversight of the Portfolio Management Services provided by each Sub-Adviser, and oversight of all matters relating to compliance by the Fund with applicable laws and with the Fund's investment policies, restrictions and guidelines, if the Manager has delegated to one or more Sub-Advisers any or all of its responsibilities hereunder with respect to the provision of Portfolio Management Services. 4. Nothing in section 3 hereof shall require the Manager to bear, or to reimburse the Fund for: (a) any of the costs of printing and mailing the items referred to in sub-section (n) of this section 4; (b) any of the costs of preparing, printing and distributing sales literature; (c) compensation of trustees of the Fund who are not directors, officers or employees of the Manager, any Sub-Adviser or any Administrator or of any affiliated person (other than a registered investment company) of the Manager, any Sub-Adviser or any Administrator; (d) registration, filing and other fees in connection with requirements of regulatory authorities; (e) the charges and expenses of any entity appointed by the Fund for custodial, paying agent, shareholder servicing and plan agent services; (f) charges and expenses of independent accountants retained by the Fund; (g) charges and expenses of any transfer agents and registrars appointed by the Fund; A-3 (h) brokers' commissions and issue and transfer taxes chargeable to the Fund in connection with securities transactions to which the Fund is a party; (i) taxes and fees payable by the Fund to federal, state or other governmental agencies; (j) any cost of certificates representing shares of the Fund; (k) legal fees and expenses in connection with the affairs of the Fund including registering and qualifying its shares with federal and state regulatory authorities; (l) expenses of meetings of shareholders and trustees of the Fund; (m) interest, including interest on borrowings by the Fund; (n) the costs of services, including services of counsel, required in connection with the preparation of the Fund's registration statements and prospectuses, including amendments and revisions thereto, annual, semiannual and other periodic reports of the Fund, and notices and proxy solicitation material furnished to shareholders of the Fund or regulatory authorities; and (o) the Fund's expenses of bookkeeping, accounting, auditing and financial reporting, including related clerical expenses. 5. All activities undertaken by the Manager or any Sub-Adviser or Administrator pursuant to this Agreement shall at all times be subject to the supervision and control of the Board of Trustees of the Fund, any duly constituted committee thereof or any officer of the Fund acting pursuant to like authority. 6. The services to be provided by the Manager and any Sub-Adviser or Administrator hereunder are not to be deemed exclusive and the Manager and any Sub-Adviser or Administrator shall be free to render similar services to others, so long as its services hereunder are not impaired thereby. 7. As full compensation for all services rendered, facilities furnished and expenses borne by the Manager hereunder, the Fund shall pay the Manager compensation at the annual rate of 0.70% of the first $200 million of the Series's average daily net assets, 0.65% of the next $300 million of such assets and 0.60% of such assets in excess of $500 million. Such compensation shall be payable monthly in arrears or at such other intervals, not less frequently than quarterly, as the Board of Trustees of the Fund may from time to time determine and specify in A-4 writing to the Manager. The Manager hereby acknowledges that the Fund's obligation to pay such compensation is binding only on the assets and property belonging to the Series. 8. If the total of all ordinary business expenses of the Fund as a whole (including investment advisory fees but excluding interest, taxes, portfolio brokerage commissions, distribution-related expenses and extraordinary expenses) for any fiscal year exceeds the lowest applicable percentage of average net assets or income limitations prescribed by any state in which shares of the Series are qualified for sale, the Manager shall pay such excess. Solely for purposes of applying such limitations in accordance with the foregoing sentence, the Series and the Fund shall each be deemed to be a separate fund subject to such limitations. Should the applicable state limitation provisions fail to specify how the average net assets of the Fund or belonging to the Series are to be calculated, that figure shall be calculated by reference to the average daily net assets of the Fund or the Series, as the case may be. 9. It is understood that any of the shareholders, trustees, officers, employees and agents of the Fund may be a shareholder, director, officer, employee or agent of, or be otherwise interested in, the Manager, any affiliated person of the Manager, any organization in which the Manager may have an interest or any organization which may have an interest in the Manager; that the Manager, any such affiliated person or any such organization may have an interest in the Fund; and that the existence of any such dual interest shall not affect the validity hereof or of any transactions hereunder except as otherwise provided in the Agreement and Declaration of Trust of the Fund, the partnership agreement of the Manager or specific provisions of applicable law. 10. This Agreement shall become effective as of the date of its execution, and (a) unless otherwise terminated, this Agreement shall continue in effect for two years from the date of execution, and from year to year thereafter so long as such continuance is specifically approved at least annually (i) by the Board of Trustees of the Fund 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 Fund who are not interested persons of the Fund or the Manager, cast in person at a meeting called for the purpose of voting on such approval; A-5 (b) this Agreement may at any time be terminated on sixty days' written notice to the Manager either by vote of the Board of Trustees of the Fund or by vote of a majority of the outstanding voting securities of the Series; (c) this Agreement shall automatically terminate in the event of its assignment; (d) this Agreement may be terminated by the Manager on ninety days' written notice to the Fund; (e) if New England Funds, L.P., the Fund's principal underwriter, requires the Fund or the Series to change its name so as to eliminate all references to the words "New England" or the letters "TNE" pursuant to the provisions of the Fund's Distribution Agreement relating to the Series with said principal underwriter, this Agreement shall automatically terminate at the time of such change unless the continuance of this Agreement after such change shall have been specifically approved by vote of a majority of the outstanding voting securities of the Series and by vote of a majority of the trustees of the Fund who are not interested persons of the Fund or the Manager, cast in person at a meeting called for the purpose of voting on such approval. Termination of this Agreement pursuant to this section 10 shall be without the payment of any penalty. 11. This Agreement may be amended at any time by mutual consent of the parties, provided that such consent on the part of the Fund shall have been approved by vote of a majority of the outstanding voting securities of the Series and by vote of a majority of the trustees of the Fund who are not interested persons of the Fund or the Manager, cast in person at a meeting called for the purpose of voting on such approval. 12. For the purpose of this Agreement, the terms "vote of a majority of the outstanding voting securities," "interested person," "affiliated person" and "assignment" shall have their respective meanings defined in the 1940 Act, subject, however, to such exemptions as may be granted by the Securities and Exchange Commission under the 1940 Act. References in this Agreement to any assets, property or liabilities "belonging to" the Series shall have the meaning defined in the Fund's Agreement and Declaration of Trust as amended from time to time. 13. In the absence of willful misfeasance, bad faith or negligence on the part of the Manager, or reckless disregard of its obligations and duties hereunder, the Manager shall not be subject to any liability to the A-6 Fund, to any shareholder of the Fund or to any other person, firm or organization, for any act or omission in the course of, or connected with, rendering services hereunder. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. NEW ENGLAND FUNDS TRUST II, NEW ENGLAND FUNDS on behalf of its New England MANAGEMENT, L.P. Growth Opportunities Fund series By: By: NOTICE A copy of the Agreement and Declaration of Trust establishing New England Funds Trust II is on file with the Secretary of The Commonwealth of Massachusetts, and notice is hereby given that this Agreement is executed with respect to the Fund's New England Growth Opportunities Fund 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. A-7 Appendix B NEW ENGLAND GROWTH OPPORTUNITIES FUND SUB-ADVISORY AGREEMENT (Westpeak Investment Advisors, L.P.) This Sub-Advisory Agreement (this "Agreement") is entered into as of May 1, 1995 by and between New England Funds Management, L.P., a Delaware limited partnership (the "Manager"), and Westpeak Investment Advisors, L.P., a Delaware limited partnership (the "Sub-Adviser"). WHEREAS, the Manager has entered into an Advisory Agreement dated May 1, 1995 (the "Advisory Agreement") with New England Funds Trust II (the "Trust"), pursuant to which the Manager provides portfolio management and administrative services to New England Growth Opportunities Fund, a series of the Trust (the "Series"); WHEREAS, the Advisory Agreement provides that the Manager may delegate any or all of its portfolio management responsibilities under the Advisory Agreement to one or more sub-advisers; WHEREAS, the Manager and the Trustees of the Trust desire to retain the Sub-Adviser to render portfolio management services in the manner and on the terms set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, the Manager and the Sub-Adviser agree as follows: 1. Sub-Advisory Services. a. The Sub-Adviser shall, subject to the supervision of the Manager and of any administrator appointed by the Manager (the "Administrator"), manage the investment and reinvestment of the assets of the Series. The Sub-Adviser shall manage the Series in conformity with (1) the investment objective, policies and restrictions of the Series set forth in the Trust's prospectus and statement of additional information relating to the Series, (2) any additional policies or guidelines established by the Manager or by the Trust's trustees that have been furnished in writing to the Sub-Adviser and (3) the provisions of the Internal Revenue Code (the "Code") applicable to "regulated investment companies" (as defined in Section 851 of the Code), all as B-1 from time to time in effect (collectively, the "Policies"), and with all applicable provisions of law, including without limitation all applicable provisions of the Investment Company Act of 1940 (the "1940 Act") and the rules and regulations thereunder. Subject to the foregoing, the Sub-Adviser is authorized, in its discretion and without prior consultation with the Manager, to buy, sell, lend and otherwise trade in any stocks, bonds and other securities and investment instruments on behalf of the Series, without regard to the length of time the securities have been held and the resulting rate of portfolio turnover or any tax considerations; and the majority or the whole of the Series may be invested in such proportions of stocks, bonds, other securities or investment instruments, or cash, as the Sub-Adviser shall determine. b. The Sub-Adviser shall furnish the Manager and the Administrator monthly, quarterly and annual reports concerning portfolio transactions and performance of the Series in such form as may be mutually agreed upon, and agrees to review the Series and discuss the management of it. The Sub-Adviser shall permit all books and records with respect to the Series to be inspected and audited by the Manager and the Administrator at all reasonable times during normal business hours, upon reasonable notice. The Sub-Adviser shall also provide the Manager with such other information and reports as may reasonably be requested by the Manager from time to time, including without limitation all material requested by or required to be delivered to the Trustees of the Trust pursuant to Section 15(c) of the 1940 Act. c. The Sub-Adviser shall provide to the Manager a copy of the Sub-Adviser's Form ADV as filed with the Securities and Exchange Commission and a list of the persons whom the Sub-Adviser wishes to have authorized to give written and/or oral instructions to custodians of assets of the Series. 2. Obligations of the Manager. a. The Manager shall provide (or cause the Fund's custodian to provide) timely information to the Sub-Adviser regarding such matters as the composition of assets of the Series, cash requirements and cash available for investment in the Series, and all other information as may be reasonably necessary for the Sub-Adviser to perform its responsibilities hereunder. B-2 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's agreement with the custodian designated to hold the assets of the Series (the "Custodian") and any modifications thereto (the "Custody Agreement"), copies of such modifications to be provided to the Sub-Adviser a reasonable time in advance of the effectiveness of such modifications. The assets of the Series shall be maintained in the custody of the Custodian identified in, and in accordance with the terms and conditions of, the Custody Agreement (or any sub-custodian properly appointed as provided in the Custody Agreement). The Sub-Adviser shall have no liability for the acts or omissions of the Custodian, unless such act or omission is taken in reliance upon instruction given to the Custodian by a representative of the Sub-Adviser properly authorized to give such instruction under the Custody Agreement. Any assets added to the Series shall be delivered directly to the Custodian. 4. 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 B-3 compensation from the Manager or the Trust with respect to service by any affiliated person of the Sub-Adviser as an officer or trustee of the Trust (other than the compensation to the Sub-Adviser payable by the Manager pursuant to Section 6 hereof). 5. Purchase and Sale of Assets. The Sub-Adviser shall place all orders for the purchase and sale of securities for the Series with brokers or dealers selected by the Sub-Adviser, which may include brokers or dealers affiliated with the Sub-Adviser, provided such orders comply with Rule 17e-1 under the 1940 Act in all respects. To the extent consistent with applicable law, purchase or sell orders for the Series may be aggregated with contemporaneous purchase or sell orders of other clients of the Sub-Adviser. The Sub-Adviser shall use its best efforts to obtain execution of transactions for the Series at prices which are advantageous to the Series and at commission rates that are reasonable in relation to the benefits received. However, the Sub-Adviser may select brokers or dealers on the basis that they provide brokerage, research or other services or products to the Series and/or other accounts serviced by the Sub-Adviser. To the extent consistent with applicable law, the Sub-Adviser may pay a broker or dealer an amount of commission for effecting a securities transaction in excess of the amount of commission or dealer spread another broker or dealer would have charged for effecting that transaction if the Sub-Adviser determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage and research products and/or services provided by such broker or dealer. This determination, with respect to brokerage and research services or products, may be viewed in terms of either that particular transaction or the overall responsibilities which the Sub-Adviser and its affiliates have with respect to the Series or to accounts over which they exercise investment discretion. Not all such services or products need be used by the Sub-Adviser in managing the Series. 6. Compensation of the Sub-Adviser. As full compensation for all services rendered, facilities furnished and expenses borne by the Sub-Adviser hereunder, the Manager shall pay the Sub-Adviser compensation at the annual rate of 0.50% of the first $25 million of the average daily net assets of the Series, 0.40% of the next $75 million of such assets, 0.35% of the next $100 million of such assets and 0.30% of such assets in excess of $200 million. Such compensation shall be payable monthly in arrears or at such other intervals, not less frequently than quarterly, as the Manager is paid by the Series pursuant to the Advisory Agreement. B-4 7. 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. 8. Liability. Except as may otherwise be provided by the 1940 Act or other federal securities laws, neither the Sub-Adviser nor any of its officers, directors, employees or agents (the "Indemnified Parties") shall be subject to any liability to the Manager, the Trust, the Series or any shareholder of the Series for any error of judgment, any mistake of law or any loss arising out of any investment or other act or omission in the course of, connected with, or arising out of any service to be rendered under this Agreement, except by reason of willful misfeasance, bad faith or gross negligence in the performance of the Sub-Adviser's duties or by reason of reckless disregard by the Sub-Adviser of its obligations and duties. The Manager shall hold harmless and indemnify the Sub-Adviser for any loss, liability, cost, damage or expense (including reasonable attorneys fees and costs) arising from any claim or demand by any past or present shareholder of the Series that is not based upon the obligations of the Sub-Adviser under this Agreement. 9. 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 B-5 year to year thereafter so long as such continuance is specifically approved at least annually (i) by the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Series, and (ii) by vote of a majority of the trustees of the Trust who are not interested persons of the Trust, the Manager or the Sub-Adviser, cast in person at a meeting called for the purpose of voting on such approval; b. this Agreement may at any time be terminated on sixty days' written notice to the Sub-Adviser either by vote of the Board of Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Series; c. this Agreement shall automatically terminate in the event of its assignment or upon the termination of the Advisory Agreement; d. this Agreement may be terminated by the Sub-Adviser on ninety days' written notice to the Manager and the Trust, or by the Manager on ninety days' written notice to the Sub-Adviser. Termination of this Agreement pursuant to this Section 9 shall be without the payment of any penalty. 10. 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. 11. 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. 12. 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 B-6 identified in the prospectus of the Series shall perform the portfolio management duties described therein until the Sub-Adviser notifies the Manager that one or more other employees, officers or agents of the Sub-Adviser, identified in such notice, shall assume such duties as of a specific date. b. If any term or provision or this Agreement or the application thereof to any person or circumstances is held to be invalid or unenforceable to any extent, the remainder of this Agreement or the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the fullest extent permitted by law. c. This Agreement shall be governed by and interpreted in accordance with the laws of the Commonwealth of Massachusetts. NEW ENGLAND FUNDS MANAGEMENT, L.P. By: ______________________________________ Name: ________________________________ Title: _______________________________ WESTPEAK INVESTMENT ADVISORS, L.P. By: ______________________________________ Name: ________________________________ Title: _______________________________ B-7 -----END PRIVACY-ENHANCED MESSAGE-----