<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NEW ENGLAND ZENITH FUND
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-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 other underlying value of transaction computed
pursuant 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:
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NEW ENGLAND ZENITH FUND
BACK BAY ADVISORS MONEY MARKET SERIES
BACK BAY ADVISORS BOND INCOME SERIES
BACK BAY ADVISORS MANAGED SERIES
CAPITAL GROWTH SERIES
LOOMIS SAYLES AVANTI GROWTH SERIES
LOOMIS SAYLES SMALL CAP SERIES
LOOMIS SAYLES BALANCED SERIES
WESTPEAK VALUE GROWTH SERIES
WESTPEAK STOCK INDEX SERIES
DRAYCOTT INTERNATIONAL EQUITY SERIES
SALOMON BROTHERS U.S. GOVERNMENT SERIES
SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SERIES
VENTURE VALUE SERIES
ALGER EQUITY GROWTH SERIES
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
December 28, 1995
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of New England
Zenith Fund (the "Trust") will be held at the offices of New England Mutual
Life Insurance Company ("The New England"), 501 Boylston Street, 10th Floor,
Boston, Massachusetts 02116, on December 28, 1995 at 2:00 p.m. Boston time,
for the following purposes:
With respect to all Series of the Trust:
1. To approve or disapprove new investment advisory arrangements
to be effective upon the merger of New England Mutual Life
Insurance Company into Metropolitan Life Insurance Company,
such arrangements to be substantially identical to the
investment advisory arrangements for the Series in effect
immediately prior to such merger.
With respect to the Draycott International Equity Series only:
2. To approve or disapprove a new Sub-Advisory Agreement for the
Series between TNE Advisers, Inc. ("TNE Advisers"), the Series'
current investment adviser, and Draycott Partners, Ltd.
("Draycott"), the Series' current sub-adviser, to be effective
upon the sale of Draycott to Cursitor Holdings Ltd. U.K.
("Cursitor Holdings"); and
3. To approve or disapprove a new Sub-Advisory Agreement for the
Series between TNE Advisers and Draycott, to be effective upon
the acquisition of the business of Cursitor Holdings by
Alliance Capital Management L.P.
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With respect to the Alger Equity Growth Series only:
4. To approve or disapprove a new Advisory Agreement between the
Series and TNE Advisers, the Series' current investment
adviser, which would increase the annual rate of the advisory
fee payable by the Series; and
5. To approve or disapprove a related Sub-Advisory Agreement
between TNE Advisers and Fred Alger Management, Inc., the
Series' current sub-adviser.
With respect to all Series of the Trust:
6. To consider and act upon any other matters which may properly
come before the meeting or any adjournment thereof.
By order of the President,
BEVERLY J. DeWITT, Secretary
November 20, 1995
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YOUR VOTE IS IMPORTANT
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PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED INSTRUCTION FORM PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU PLAN TO BE PRESENT AT
THE MEETING. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE>
NEW ENGLAND ZENITH FUND
BACK BAY ADVISORS MONEY MARKET SERIES
BACK BAY ADVISORS BOND INCOME SERIES
BACK BAY ADVISORS MANAGED SERIES
CAPITAL GROWTH SERIES
LOOMIS SAYLES AVANTI GROWTH SERIES
LOOMIS SAYLES SMALL CAP SERIES
LOOMIS SAYLES BALANCED SERIES
WESTPEAK VALUE GROWTH SERIES
WESTPEAK STOCK INDEX SERIES
DRAYCOTT INTERNATIONAL EQUITY SERIES
SALOMON BROTHERS U.S. GOVERNMENT SERIES
SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SERIES
VENTURE VALUE SERIES
ALGER EQUITY GROWTH SERIES
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees of New England Zenith Fund (the "Trust") for use at
the Special Meeting of Shareholders of the Trust to be held at the offices of
New England Mutual Life Insurance Company ("The New England"), 501 Boylston
Street, 10th Floor, Boston, Massachusetts 02116, on December 28, 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 on or about November 28, 1995. A copy of the Annual Report of the
Trust for the fiscal year ended December 31, 1994, and the Semiannual Report
of the Trust for the six months ended June 30, 1995, may be obtained without
charge by writing to The New England at the above address or by calling
(800) 356-5015.
This Proxy Statement consists of six parts.
PART I contains general information relating to the Meeting and a summary of
the matters being proposed for shareholder consideration at the Meeting.
PART II contains information relating to the merger (the "Merger") of The
New England into Metropolitan Life Insurance Company ("Metropolitan Life").
The Merger is being treated, for purposes of the Investment Company Act of
1940 (the "1940 Act"), as a change of control of (1) TNE Advisers, Inc. ("TNE
Advisers"), which serves as the adviser to each Series of the Trust except the
Capital Growth Series, (2) Capital Growth Management Limited Partnership
("CGM"), which serves as the adviser to the Capital Growth Series, and (3) New
England Investment Companies, L.P. ("NEIC") and its subsidiary firms that
serve
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as sub-advisers to several of the Series of the Trust. TNE Advisers is a
wholly-owned subsidiary of The New England, and The New England owns a
controlling interest in NEIC. After the Merger, TNE Advisers will be an
indirect wholly-owned subsidiary of Metropolitan Life, and Metropolitan Life
will own, directly or indirectly, a controlling interest in NEIC. NEIC owns a
majority limited partnership interest in CGM. Under the 1940 Act, a change of
control of TNE Advisers, CGM and NEIC's subsidiaries constitutes an
"assignment" (as defined in the 1940 Act) of the agreements under which those
firms serve as advisers or sub-advisers to Series of the Trust, and results in
the automatic termination of those agreements, effective at the time of the
Merger. The Trustees have approved, and recommend that the shareholders of
each Series of the Trust approve, new Advisory and Sub-Advisory Agreements.
These proposed new agreements would be identical, except for their dates, to
the agreements in effect immediately prior to the Merger, and would take
effect at the time of the Merger. As a result, the Trust's current advisers
and sub-advisers would continue to perform advisory and sub-advisory services
for the Series of the Trust after the Merger, on the same terms as are in
effect immediately before the Merger.
PART III contains information concerning proposed changes in the investment
advisory arrangements for the Draycott International Equity Series in
connection with certain expected changes in the ownership of Draycott
Partners, Ltd. ("Draycott"), the Series' sub-adviser.
PART IV contains information concerning proposed changes in the investment
advisory arrangements for the Alger Equity Growth Series, which would increase
the annual rate of the advisory fee payable by the Series to TNE Advisers, the
Series' adviser.
PART V contains additional information about the Trust's current advisory
and sub-advisory arrangements, the Trust's advisers and sub-advisers and
certain brokerage matters. Shareholders should review this information in
conjunction with their consideration of the proposals described in this Proxy
Statement.
PART VI contains certain additional information about the conduct of the
Meeting, ownership of Trust shares as of the record date for the Meeting, and
miscellaneous other matters.
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I. GENERAL
The Trust consists of fourteen series (each a "Series"). The following table
illustrates which of the Proposals described in this Proxy Statement relate to
which of the Series:
<TABLE>
<CAPTION>
RELEVANT SECTIONS OF
PROPOSAL RELEVANT SERIES THIS PROXY STATEMENT
-------- --------------- --------------------
<S> <C> <C>
1. New investment advisory All Series II, V
arrangements to be
effective at the time
of the Merger.
2, 3. New Sub-Advisory Draycott International III, V
Agreements to be Equity Series
effective upon certain
changes in the
ownership of Draycott.
4, 5. New investment advisory Alger Equity Growth Series IV, V
arrangements for Alger
Equity Growth Series.
</TABLE>
All shareholders of record on October 31, 1995 (the "Record Date") are
entitled to one vote for each share of beneficial interest of the Trust held
as of that date.
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 one or more of The New
England, NEIC, TNE Advisers, Draycott, Metropolitan Life, Fred Alger
Management, Inc. ("Alger Management") or their respective affiliates, and not
by the Trust. Solicitation of proxies by personal interview, mail, telephone
and telegraph may be made by officers and Trustees of the Trust and employees
of The New England, New England Variable Life Insurance Company, TNE Advisers
and New England Securities Corporation ("New England Securities"), the
principal underwriter of the Trust. The address of New England Securities is
399 Boylston Street, Boston, Massachusetts 02116.
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<PAGE>
SUMMARY OF PROPOSALS
PROPOSAL 1--APPROVAL OF NEW ADVISORY ARRANGEMENTS FOR EACH SERIES, TO BE
EFFECTIVE AT THE TIME OF THE MERGER.
As explained above, the Merger of The New England into Metropolitan Life is
being treated, for purposes of the 1940 Act, as a change of control of TNE
Advisers, CGM, NEIC and NEIC's subsidiaries that serve as sub-advisers to the
Series. The Merger will thus result in the automatic termination, at the time
of the Merger, of each Series' Advisory and (for each Series except the
Capital Growth Series) Sub-Advisory Agreements. Proposal 1 seeks shareholder
approval of new Advisory and (for each Series except the Capital Growth
Series) Sub-Advisory Agreements, to be effective at the time of the Merger.
For each Series, the proposed new agreement(s) would be in substance identical
to the agreement(s) in effect with respect to such Series immediately before
the Merger. THE EFFECT OF PROPOSAL 1 IS TO PERMIT THE SERIES TO CONTINUE TO
OPERATE, FOLLOWING THE MERGER, UNDER ARRANGEMENTS SUBSTANTIALLY IDENTICAL TO
THOSE THAT ARE IN EFFECT IMMEDIATELY BEFORE THE MERGER. PROPOSAL 1 WILL NOT
RESULT IN ANY CHANGE IN THE IDENTITY OF THE FIRMS OR PERSONNEL PROVIDING
ADVISORY OR SUB-ADVISORY SERVICES TO THE SERIES, OR IN THE FEE RATES PAYABLE
BY THE SERIES. For each Series, the advisory arrangements in effect will be
either (1) the arrangements that are currently in effect (the "Existing
Advisory Arrangements") or (2) in the case of the Draycott International
Equity Series and the Alger Equity Growth Series, any new arrangements that
are approved at the Meeting and take effect before the Merger. Part V of this
Proxy Statement describes the Existing Advisory Arrangements for each Series.
Parts III and IV of this Proxy Statement describe proposed changes in the
Existing Advisory Arrangements for the Draycott International Equity Series
and the Alger Equity Growth Series, respectively. The changes proposed in
Parts III and IV are unrelated to the Merger, and, if approved by shareholders
at the Meeting, are expected to be put into effect whether or not the Merger
occurs. The Merger is currently expected to occur no earlier than the first
calendar quarter of 1996.
PROPOSALS 2 AND 3--NEW SUB-ADVISORY AGREEMENTS FOR THE DRAYCOTT INTERNATIONAL
EQUITY SERIES.
Draycott has served as the sub-adviser for the Draycott International Equity
Series since that Series' inception in 1994. NEIC, which owns all of the stock
of Draycott, has recently entered into an agreement to sell the stock to
Cursitor Holdings Ltd. U.K. ("Cursitor Holdings"). Under the 1940 Act, this
sale will constitute a change in control of Draycott and will result in the
automatic termination of the Sub-Advisory Agreement for the Series between TNE
Advisers and Draycott. Shortly after the acquisition of Draycott's stock by
Cursitor Holdings, Cursitor Holdings itself is expected to enter into a
transaction with Alliance Capital Management L.P., as described more fully in
Part III of this Proxy Statement. This transaction will constitute a second
change in control of Draycott and will result in the automatic termination of
the proposed Sub-Advisory Agreement between TNE Advisers and Draycott. The
Trustees have determined
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<PAGE>
that it is desirable to retain Draycott, as sub-adviser, to manage the Series'
investment portfolio following Draycott's acquisition by Cursitor Holdings,
and following Cursitor Holdings' acquisition by Alliance Capital Management
L.P. To permit Draycott to continue to act as sub-adviser following these
changes of control, the Trustees are proposing two new Sub-Advisory
Agreements, the first to take effect at the time of the first change of
control (Proposal 2), and the second to take effect at the time of the second
change of control (Proposal 3). The new Sub-Advisory Agreements would be
identical in substance to the agreement currently in effect. PROPOSALS 2 AND 3
WOULD NOT RESULT IN ANY FEE INCREASE OR ANY CHANGE IN THE SERIES' INVESTMENT
OBJECTIVE OR POLICIES OR IN THE PERSONNEL RESPONSIBLE FOR THE SERIES' DAY-TO-
DAY PORTFOLIO MANAGEMENT.
PROPOSALS 4 AND 5--NEW ADVISORY AND SUB-ADVISORY AGREEMENTS FOR ALGER EQUITY
GROWTH SERIES.
The Trustees of the Trust have approved a new Investment Advisory Agreement
between the Alger Equity Growth Series and TNE Advisers, the Series' current
adviser (Proposal 4), and a related new Sub-Advisory Agreement between TNE
Advisers and Alger Management, the Series' current sub-adviser (Proposal 5).
The new Advisory and Sub-Advisory Agreements would increase the fee rates
payable by the Series to TNE Advisers and payable by TNE Advisers to Alger
Management, effective May 1, 1996. The annual rate of the fee payable by the
Series to TNE Advisers under the new Advisory Agreement would be 0.75% of the
Series' average daily net assets, as compared to the current fee rate of
0.70%. The annual rate of the fee payable to Alger Management under the new
Sub-Advisory Agreement would be 0.45% of the first $100 million of the Series'
average daily net assets, 0.40% of the next $400 million of such assets and
0.35% of such assets in excess of $500 million. The fee to Alger Management is
payable by TNE Advisers, not by the Series.
II. APPROVAL OR DISAPPROVAL OF NEW INVESTMENT ADVISORY ARRANGEMENTS TO BE
EFFECTIVE AT THE TIME OF THE MERGER (ALL SERIES)
The Trustees of the Trust unanimously recommend that the shareholders of
each Series vote to approve new investment advisory arrangements for the
Series, to be effective at the time of the Merger. The new arrangements would
be substantially identical to the arrangements in effect for each Series
immediately prior to the time of the Merger. As explained above, the Merger is
being treated, for purposes of the 1940 Act, as a change in control of TNE
Advisers, CGM, NEIC and NEIC's subsidiaries that serve as sub-advisers for the
Series. The 1940 Act provides that such a change in control constitutes an
"assignment" of the Advisory and Sub-Advisory Agreements under which TNE
Advisers, CGM and NEIC's subsidiaries provide advisory and sub-advisory
services to the Series. The 1940 Act further provides that such an
"assignment" will result in the automatic termination
5
<PAGE>
of those agreements, at the time of the Merger. (In the case of the Salomon
Brothers U.S. Government, Salomon Brothers Strategic Bond Opportunities,
Venture Value and Alger Equity Growth Series, firms that are unaffiliated with
TNE Advisers and NEIC serve as sub-advisers under Sub-Advisory Agreements with
TNE Advisers, which is these Series' adviser. In the case of the Draycott
International Equity Series, if the sale of Draycott by NEIC described in Part
III of this Proxy Statement is consummated before the Merger, this Series'
sub-adviser will also be unaffiliated with TNE Advisers and NEIC. The Merger
will not constitute a change in control of these unaffiliated sub-advisers,
but their Sub-Advisory Agreements with TNE Advisers provide that they
terminate automatically upon any termination of the Advisory Agreement between
the Series and TNE Advisers. Because the Merger will result in the automatic
termination of the Advisory Agreements between the Series and TNE Advisers, it
will also result in the termination of these Sub-Advisory Agreements with
unaffiliated sub-advisers.)
THE MERGER. In August 1995, The New England and Metropolitan Life entered
into an agreement providing for the Merger of the two companies (the "Merger
Agreement"). Metropolitan Life will be the surviving company following the
Merger. Both The New England and Metropolitan Life are mutual insurance
companies. The Merger will result in the insurance policyholders and
contractholders of The New England becoming policyholders or contractholders
of Metropolitan Life. The policyholders and contractholders of The New England
will not receive any other payment, property or consideration in connection
with the Merger. The Merger will not be effected unless it is approved by the
requisite vote of the policyholders and contractholders of both The New
England and Metropolitan Life. The Merger also requires approval by various
government regulatory agencies. In addition, consummation of the Merger is
subject to the fulfillment of a number of other conditions, although the
parties may waive some or all of these conditions. There is no assurance that
the Merger will in fact be consummated. In addition, because it is impossible
to predict with certainty when the necessary regulatory approvals will be
obtained and the other conditions to the Merger be fulfilled, it is not known,
as of the date of this Proxy Statement, when the Merger will occur. The
parties currently expect, however, that the Merger will not occur earlier than
the first calendar quarter of 1996.
NEIC is organized as a limited partnership. Both TNE Advisers and NEIC's
sole general partner, New England Investment Companies, Inc. ("NEIC Inc."),
are wholly-owned subsidiaries of The New England. As a result of the Merger,
TNE Advisers and NEIC Inc. would each become a direct or indirect wholly-owned
subsidiary of Metropolitan Life. The New England also owns a majority limited
partnership interest in NEIC. The Merger would result in Metropolitan Life
becoming the owner (directly or through a wholly-owned subsidiary) of this
limited partnership interest. The Merger Agreement provides that, following
the consummation of the Merger, Metropolitan Life shall have the right to
designate a
6
<PAGE>
majority of the board of directors of NEIC Inc. The following wholly-owned
subsidiaries of NEIC serve as sub-advisers of various Series of the Trust:
Loomis, Sayles & Company, L.P. ("Loomis Sayles"), Back Bay Advisors, L.P.
("Back Bay Advisors"), Westpeak Investment Advisors, L.P. ("Westpeak") and
Draycott. NEIC also owns a majority limited partnership interest in CGM. The
New England's current ownership interest, through NEIC, in these sub-advisers
and in CGM would become indirectly owned by Metropolitan Life as a result of
the Merger. (As explained in Part III of this Proxy Statement, however, NEIC
has entered into an agreement to sell Draycott to Cursitor Holdings, a company
unaffiliated with The New England or Metropolitan Life. This sale is currently
expected to occur before the Merger, in which case Metropolitan Life would not
become the indirect owner of any equity interest in Draycott as a result of
the Merger.)
Under the Merger Agreement, The New England and Metropolitan Life agree that
they will use their best efforts to satisfy the conditions of Section 15(f) of
the 1940 Act with respect to the Trust. Section 15(f) provides that an
investment adviser to a registered investment company (such as the Trust), and
affiliated persons of such investment adviser, may receive any amount or
benefit in connection with the sale of securities of, or a sale of any other
interest in, such investment adviser which results in an assignment of an
investment advisory contract with such investment company, if
(1) for a period of 3 years after the time of such action, at least 75%
of the board of such investment company are not interested persons of such
company's investment adviser or predecessor investment adviser, and
(2) there is not imposed an unfair burden on such investment company as
a result of such transaction or any express or implied terms, conditions
or understandings applicable thereto.
Satisfaction of condition (1) above is not expected to require any changes in
the current composition of the Trust's Board of Trustees.
INFORMATION ABOUT METROPOLITAN LIFE. Metropolitan Life was incorporated
under the laws of New York in 1866 and since 1868 has been engaged in the life
insurance business under its present name. By the early 1900s, it had become
the largest life insurance company in the United States and is currently the
second largest life insurance company in the United States in terms of total
assets. Metropolitan Life's assets as of June 30, 1995 were over $130 billion,
and its adjusted capital as of that date exceeded $8 billion. Subsidiaries of
Metropolitan Life manage over $25 billion of assets for mutual fund,
institutional and other investment advisory clients. The address of
Metropolitan Life is One Madison Avenue, New York, New York 10010.
TRUSTEES' RECOMMENDATION. The Trustees unanimously recommend that
shareholders approve new investment advisory arrangements for the Series, to
be effective at the time of the Merger. These new arrangements will be
substantially
7
<PAGE>
identical to the arrangements in effect immediately before the Merger and to
the Series' Existing Advisory Arrangements (which are described in Part V of
this Proxy Statement). (The only difference will be that the new arrangements
will be set forth in Advisory and Sub-Advisory Agreements dated the date of
the Merger, whereas the arrangements in effect prior to the Merger are set
forth in Advisory and Sub-Advisory Agreements that bear earlier dates.)
In coming to the recommendation set forth above, the Trustees reviewed
extensive information about the Series, the Series' advisers and sub-advisers,
NEIC and Metropolitan Life. The Trustees also considered the policies of each
adviser and sub-adviser with respect to the placing of portfolio transactions
for the Series with brokers or dealers who furnish brokerage and research
services to the advisers and sub-advisers. (Those policies are described in
Part V of this Proxy Statement.)
The Trustees noted that, for purposes of the 1940 Act, the Merger
constitutes a change in control of TNE Advisers and NEIC and of NEIC's
subsidiaries that act as sub-advisers for the Series. The Merger may also
constitute a change in control of CGM, the adviser to the Capital Growth
Series. (NEIC owns a majority limited partnership interest in CGM.) To avoid
any uncertainty over whether the Advisory Agreement between the Capital Growth
Series and CGM would be deemed to terminate with the change of control of
NEIC, it is proposed (and the Trustees recommend) that shareholders approve a
new Advisory Agreement for the Capital Growth Series, identical, except for
its date, to the existing agreement, to be effective at the time of the
Merger.
Although the Merger is being treated as a change in control of TNE Advisers
and NEIC and of CGM and the Series' sub-advisers that are subsidiaries of
NEIC, the Merger is not expected to result in any change in the personnel,
operations or financial condition of TNE Advisers, NEIC, CGM or any of the
Series' sub-advisers that are subsidiaries of NEIC. NEIC has indicated that
CGM and each sub-adviser affiliated with NEIC will continue to be
independently managed, as has historically been the case. Thus, the Merger is
not expected to result in any changes in the investment approaches or styles
of CGM or any of the sub-advisers.
The Trustees accordingly concluded that it is appropriate and desirable for
the Series to continue, after the Merger, to operate under substantially the
same investment advisory and sub-advisory arrangements as are in effect
immediately before the Merger. Under the 1940 Act, such continuation requires,
in the case of each Series, the approval of that Series' shareholders, by vote
of the lesser of (1) 67% of the shares of that Series represented at the
Meeting, if more than 50% of the shares of that Series are represented at the
Meeting, or (2) more than 50% of the outstanding shares of the Series.
The Trustees unanimously recommend that the shareholders of each Series vote
in favor of Proposal 1, in order that the Series may continue to receive
investment advisory and sub-advisory services following the Merger, on the
same basis as before the Merger.
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<PAGE>
If the shareholders of any Series do not approve Proposal 1, the Advisory
and any Sub-Advisory Agreement relating to that Series will terminate at the
time of the Merger, and the Trustees will consider such alternative actions as
are in the best interest of that Series.
III. APPROVAL OR DISAPPROVAL OF NEW SUB-ADVISORY AGREEMENTS (DRAYCOTT
INTERNATIONAL EQUITY SERIES ONLY)
Proposals 2 and 3 relate to proposed new Sub-Advisory Agreements for the
Draycott International Equity Series to take effect upon two expected changes
of control of Draycott, the Series' sub-adviser.
Draycott currently serves as sub-adviser to the Series under a Sub-Advisory
Agreement that obligates Draycott to provide the Series with portfolio
management services, and obligates TNE Advisers, the Series' investment
adviser, to pay Draycott at the annual rate of 0.75% of the first $10 million
of the Series' average daily net assets, 0.60% of the next $40 million of such
assets and 0.45% of the excess of such assets over $50 million. (As of
September 30, 1995, the Series' net assets were $12.3 million.) Pursuant to
such Sub-Advisory Agreement, Back Bay Advisors, as sub-adviser to Draycott, is
obligated to provide short-term cash management services for the Series, for
which services Draycott is obligated to compensate Back Bay Advisors at the
annual rate of 0.08% of the value of the Series' average daily net assets.
Under each proposed new Sub-Advisory Agreement between TNE Advisers and
Draycott, Draycott would continue, as under the current Sub-Advisory
Agreement, to be responsible for the day-to-day portfolio management of the
Series, subject to the oversight of TNE Advisers and the Trustees. Draycott
would continue to receive a fee, payable by TNE Advisers, at the same rate as
in effect under the existing Sub-Advisory Agreement. However, under each
proposed new Sub-Advisory Agreement, Draycott would be obligated to provide
the short-term cash management services for the Series that are currently
provided by Back Bay Advisors, which would no longer be obligated to provide
such services (and would no longer be entitled to receive compensation from
Draycott therefor).
A. PROPOSAL 2--NEW SUB-ADVISORY AGREEMENT TO TAKE EFFECT UPON THE SALE OF
DRAYCOTT TO CURSITOR HOLDINGS.
NEIC has entered into an agreement to sell the stock of Draycott to Cursitor
Holdings. This sale will constitute a change in control of Draycott under the
1940 Act, which will terminate the current Sub-Advisory Agreement between TNE
Advisers and Draycott. Proposal 2 relates to a new Sub-Advisory Agreement
between TNE Advisers and Draycott, to take effect upon the acquisition of
Draycott by Cursitor Holdings.
9
<PAGE>
INFORMATION ABOUT CURSITOR HOLDINGS. Cursitor Holdings, together with
Cursitor Holdings, L.P. ("CHLP"), constitute an international investment
management group (the "Cursitor Group") formed in July 1990 by the
reorganization of a group of related companies with common executive
management and overlapping shareholders. Cursitor Holdings is two-thirds owned
by the Cursitor Group's executive management, and one-third by Eurovest Pte
Ltd, which is a wholly-owned subsidiary of the Government of Singapore
Ministry of Finance. The following members of the Cursitor Group's executive
management each own, directly or indirectly, 10% or more of the outstanding
voting securities of Cursitor Holdings: Eric G. Auboyneau, Hugh M. Eaton III,
Charles J. Gave and John S. Ricciardi.
The principal activity of the Cursitor Group (representing more than 90% of
revenues) is institutional investment management, which is carried on by
Cursitor-Eaton Asset Management Company, Cursitor Management Limited, and
Cursitor Cecogest SA. At present the Cursitor Group manages approximately $9.2
billion, primarily for U.S.-based pension funds, foundations and endowments.
The major investment product is global asset allocation focusing on cash,
bonds and equities in major economies. The address of Cursitor Holdings and
Messrs. Gave and Ricciardi is 66 Buckingham Gate, London SW1E 6AU, England.
The address of Mr. Eaton is Main Street, Dublin, New Hampshire 03444. The
address of Mr. Auboyneau is 79 Avenue Marceau, Paris 75116, France. The
address of Eurovest Pte Ltd and the Government of Singapore Ministry of
Finance is 250 North Bridge Road, 33 Raffles City Tower, Singapore 0617.
As described below under Proposal 3, it is currently expected that,
subsequent to the acquisition of Draycott by Cursitor Holdings, Cursitor
Holdings itself will be acquired by Alliance Capital Management L.P.
SALE OF DRAYCOTT TO CURSITOR HOLDINGS. NEIC currently owns all of the stock
of Draycott. NEIC has agreed to sell this stock to Cursitor Holdings for
$477,000, plus any advances to Draycott that NEIC may make after June 30, 1995
and prior to the closing of the sale, and minus any dividends or distributions
paid by Draycott to NEIC during that period. Cursitor Holdings has also agreed
that, for the five-year period following the sale, Cursitor Holdings will pay
NEIC an amount equal to 30% of Draycott's sub-advisory fee revenues from
Draycott's current mutual fund clients, net of fee waivers and expense
reimbursements and reduced by certain commissions payable by Draycott to a
marketing affiliate of NEIC, and 20% of Draycott's advisory fee revenues from
certain other clients (subject to certain adjustments).
As noted in Part II of this Proxy Statement, Section 15(f) of the 1940 Act
provides that an investment adviser to a registered investment company, and
10
<PAGE>
affiliated persons of such investment adviser, may receive any amount or
benefit in connection with the sale of securities of, or a sale of any other
interest in, such investment adviser which results in an assignment of an
investment advisory contract with such investment company, if
(1) for a period of 3 years after the time of such action, at least 75%
of the board of such investment company are not interested persons of such
company's investment adviser or predecessor investment adviser, and
(2) there is not imposed an unfair burden on such investment company as
a result of such transaction or any express or implied terms, conditions
or understandings applicable thereto.
NEIC, Cursitor Holdings and Draycott have all undertaken to use reasonable
efforts to ensure satisfaction of the conditions of Section 15(f). It is not
expected that compliance with condition (1) above will require any changes in
the current composition of the Board of Trustees of the Trust.
TRUSTEES' RECOMMENDATION. The Trustees unanimously recommend that
shareholders of the Draycott International Equity Series vote in favor of
Proposal 2. In reaching this recommendation, the Trustees considered whether
it was desirable for the Series to continue to receive day-to-day portfolio
management services from Draycott following the proposed acquisition of
Draycott by Cursitor Holdings. The Trustees considered extensive information
concerning Draycott's investment approach, personnel, performance record and
regulatory compliance experience. The Trustees were informed by Draycott and
Cursitor Holdings that the acquisition of Draycott by Cursitor Holdings is not
expected to result in any changes in Draycott's investment approach or in the
portfolio management staff at Draycott. The Trustees also considered the
brokerage practices of Draycott that are described in Section V of this Proxy
Statement.
After considering the foregoing factors, the Trustees voted unanimously to
recommend that shareholders of the Draycott International Equity Series
approve Proposal 2 (the proposed new Sub-Advisory Agreement between TNE
Advisers and Draycott, to be effective upon the acquisition of Draycott by
Cursitor Holdings). The required vote for Proposal 2 is the lesser of (1) 67%
of the shares of the Series represented at the Meeting, if more than 50% of
the shares of the Series are represented at the Meeting, or (2) more than 50%
of the outstanding shares of the Series.
If Proposal 2 is not approved, the proposed new Sub-Advisory Agreement will
not take effect, and the Trustees will consider such further actions as may be
in the best interests of the Series.
11
<PAGE>
B. PROPOSAL 3--NEW SUB-ADVISORY AGREEMENT TO TAKE EFFECT UPON THE ACQUISITION
OF CURSITOR HOLDINGS BY ALLIANCE CAPITAL MANAGEMENT L.P.
Subsequent to the acquisition of the stock of Draycott by Cursitor Holdings,
Cursitor Holdings is itself expected to be acquired by another firm, Alliance
Capital Management L.P. ("Alliance"). Through a series of transactions (the
"Cursitor/Alliance Transaction"), the stock of Cursitor Holdings and the
assets of CHLP and certain international operations of Alliance will be
contributed to Cursitor Alliance LLC, a newly formed limited liability
corporation (the "LLC"). Alliance will own directly or indirectly 93% of the
LLC. The Cursitor/Alliance Transaction is subject to the negotiation and
execution of definitive agreements by the parties, and to the satisfaction of
various other conditions. There is no assurance that the Cursitor/Alliance
Transaction will in fact be consummated.
If consummated, the Cursitor/Alliance Transaction will constitute a further
change in control of Draycott, which will terminate the proposed Sub-Advisory
Agreement between TNE Advisers and Draycott that is the subject of Proposal 2
above. Proposal 3 relates to a new Sub-Advisory Agreement between TNE Advisers
and Draycott, to take effect upon the consummation of the Cursitor/Alliance
Transaction. This new Sub-Advisory Agreement would be identical, except for
its date, to the proposed Sub-Advisory Agreement that is the subject of
Proposal 2 above.
Alliance, a New York Stock Exchange listed company with principal offices at
1345 Avenue of the Americas, New York, New York 10105, is a leading
international investment manager supervising client accounts with assets as of
September 30, 1995 totaling over $143 billion. Alliance Capital Management
Corporation ("ACMC"), with offices at the same address, is the sole general
partner of, and the owner of a 1% general partnership interest in, Alliance.
ACMC is an indirect wholly-owned subsidiary of The Equitable Life Assurance
Society of the United States ("Equitable"), one of the largest life insurance
companies in the United States and a wholly-owned subsidiary of The Equitable
Companies Incorporated ("ECI"), a holding company controlled by AXA, a French
insurance holding company. As of September 30, 1995, Equitable, ACMC and
Equitable Capital Management Corporation ("ECMC") owned in the aggregate
approximately 59% of the issued and outstanding units representing assignments
of beneficial ownership of limited partnership interests in Alliance
("Units"). ECMC is a wholly-owned subsidiary of Equitable. As of September 30,
1995, approximately 33% and 8% of the Units were owned by the public and
employees of Alliance and its subsidiaries, respectively.
AXA is the holding company for an international group of insurance and
related financial services companies. AXA's insurance operations consist of
activities in life insurance, property and casualty insurance and reinsurance.
The
12
<PAGE>
insurance operations are diverse geographically with activities in France, the
United States, the United Kingdom, Canada and other countries, principally in
Europe. AXA is also engaged in asset management, investment banking and
brokerage, real estate and other financial services activities in the United
States and Europe. Based on information provided by AXA, as of January 1,
1995, 42.3% of the issued shares (representing 54.7% of the voting power) of
AXA were owned by Midi Participations, a French corporation that is a holding
company. The voting shares of Midi Participations are in turn owned 60% by
Finaxa, a French corporation that is a holding company, and 40% by
subsidiaries of Assicurazioni Generali S.p.A., an Italian corporation
("Generali") (one of which, Belgica Insurance Holding S.A., a Belgian
corporation, owned 34.1%). As of January 1, 1995, 62.1% of the issued shares
(representing 75.7% of the voting power) of Finaxa were owned by five French
mutual insurance companies (the "Mutuelles AXA") (one of which, AXA Assurance
I.A.R.D. Mutuelle, owned 31.8% of the issued shares) (representing 39.0% of
the voting power), and 26.5% of the issued shares (representing 16.6% of the
voting power) of Finaxa were owned by Banque Paribas, a French bank
("Paribas"). Including the shares owned by Midi Participations, as of January
1, 1995, the Mutuelles AXA directly or indirectly owned 51.3% of the issued
shares (representing 65.8% of the voting power) of AXA. In addition, certain
subsidiaries of AXA own 0.4% of the shares of AXA, which are not entitled to
be voted. Acting as a group, the Mutuelles AXA control AXA, Midi
Participations and Finaxa.
The address of Equitable, ECI and ECMC is 787 Seventh Avenue, New York, New
York 10019. The addresses of the Mutuelles AXA are as follows: The address of
each of AXA Assurances I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle is La
Grande Arche, Paroi Nord, Paris La Defense, France; the address of each of
Alpha Assurances Vie Mutuelle and Alpha Assurances I.A.R.D. Mutuelle is Tour
Franklin 100-101 Terrasse Boildieu, Paris La Defense, France; and the address
of Uni Europe Assurance Mutuelle is 24 Rue Drouot, Paris, France.
Although a definitive agreement relating to the acquisition of Cursitor
Holdings by Alliance has not yet been reached, it is anticipated that such
agreement will provide that Cursitor Holdings and Alliance will undertake to
use their best efforts to ensure satisfaction of the conditions of Section
15(f) of the 1940 Act with respect to the Draycott International Equity
Series. It is not expected that such satisfaction will require any changes in
the current composition of the Trust's Board of Trustees.
TRUSTEES' RECOMMENDATION. With regard to Proposal 3, the Trustees considered
the same factors as they considered in connection with their approval of the
Sub-Advisory Agreement with Draycott that is the subject of Proposal 2. In
addition, the Trustees were informed by Draycott, Cursitor Holdings and
Alliance that the acquisition of Cursitor Holdings by Alliance is not expected
to result in
13
<PAGE>
any changes in Draycott's investment approach or brokerage practices or in the
portfolio management staff at Draycott.
After considering the foregoing factors, the Trustees voted unanimously to
recommend that shareholders of the Draycott International Equity Series
approve Proposal 3 (the proposed new Sub-Advisory Agreement between TNE
Advisers and Draycott, effective upon the acquisition of Cursitor Holdings by
Alliance). The required vote for Proposal 3 is the lesser of (1) 67% of the
shares of the Series represented at the Meeting, if more than 50% of the
shares of the Series are represented at the Meeting), or (2) more than 50% of
the outstanding shares of the Series.
The new Sub-Advisory Agreement that is the subject of Proposal 3 will not
take effect unless both (1) the Sub-Advisory Agreement that is the subject of
Proposal 2 has previously taken effect and (2) the proposed acquisition of
Cursitor Holdings by Alliance occurs. If conditions (1) and (2) set forth in
the preceding sentence have been fulfilled but shareholders do not approve
Proposal 3, the proposed new Sub-Advisory Agreement that is the subject of
Proposal 3 will not take effect, and the Trustees will consider such further
actions as may be in the best interests of the Series.
IV. APPROVAL OR DISAPPROVAL OF NEW ADVISORY AND SUB-ADVISORY AGREEMENTS (ALGER
EQUITY GROWTH SERIES ONLY)
Proposals 4 and 5 relate, respectively, to a proposed new Advisory Agreement
and Sub-Advisory Agreement for the Alger Equity Growth Series.
EXISTING ADVISORY ARRANGEMENTS. TNE Advisers currently serves as investment
adviser to the Alger Equity Growth Series under an Advisory Agreement that
obligates TNE Advisers to provide the Series with both portfolio management
services and administrative services, and obligates the Series to pay TNE
Advisers a fee at the annual rate of 0.70% of the Series' average daily net
assets. TNE Advisers has delegated to Alger Management its responsibility to
provide portfolio management services to the Series, pursuant to a Sub-
Advisory Agreement between TNE Advisers and Alger Management. The Sub-Advisory
Agreement obligates Alger Management to manage the investment and reinvestment
of the assets of the Series, and obligates TNE Advisers to pay Alger
Management a fee at the annual rate of 0.45% of the first $10 million of the
Series' average daily net assets, 0.40% of the next $90 million of such
assets, 0.35% of the next $150 million of such assets, 0.30% of the next $250
million of such assets and 0.25% of such assets in excess of $500 million.
PROPOSED NEW ARRANGEMENTS. The Trustees of the Trust have approved a new
Advisory Agreement between the Alger Equity Growth Series and TNE Advisers
(Proposal 4), and a related new Sub-Advisory Agreement between TNE Advisers
and Alger Management (Proposal 5). The new Advisory and Sub-Advisory
Agreements would take effect on May 1, 1996, and would increase the
14
<PAGE>
fee rates payable by the Series to TNE Advisers and payable by TNE Advisers to
Alger Management effective as of such date. The annual rate of the fee payable
by the Series to TNE Advisers under the new Advisory Agreement would be 0.75%
of the Series' average daily net assets, as compared to the current fee rate
of 0.70%. This fee rate is higher than that paid by most mutual funds, but is
comparable to the rates paid by some mutual funds with similar objectives and
policies. The annual rate of the fee payable by TNE Advisers to Alger
Management under the new Sub-Advisory Agreement would be 0.45% of the first
$100 million of the Series' average daily net assets, 0.40% of the next $400
million of such assets and 0.35% of such assets in excess of $500 million.
The following table summarizes the annualized expenses borne by the Alger
Equity Growth Series in the period from October 31, 1994 (commencement of the
Series' operations) to December 31, 1994, as well as such annualized expenses
calculated on a pro forma basis assuming the proposed new Advisory Agreement
had been in effect beginning October 31, 1994:
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
DURING THE PERIOD FROM OCTOBER 31, 1994
(COMMENCEMENT OF THE SERIES' OPERATIONS) TO
DECEMBER 31, 1994
------------------------------------------------
ACTUAL PRO FORMA
------ ---------
<S> <C> <C>
Advisory Fees............... 0.70% 0.75%
Other Expenses.............. 0.15%* 0.15%*
---- ----
Total Series Operating Ex-
penses.................... 0.85%* 0.90%*
</TABLE>
- ----------------------------
* After giving effect to expense deferral arrangements (which are described in
Part V of this Proxy Statement). Without giving effect to such arrangements,
actual and pro forma Other Expenses would each be 2.04% and actual and pro
forma Total Series Operating Expenses would be 2.74% and 2.79%,
respectively.
The foregoing table does not reflect expenses, including sales loads, that
may be imposed by the separate accounts to which the Series offers its shares.
EXAMPLE
A $1,000 investment in the Series would incur the following dollar amount of
transaction costs and operating expenses, assuming a 5% annual return and,
unless otherwise noted, redemption at period end. The 5% return and the
expense levels used in calculating this example (which give effect to the
expense deferral arrangements described in the footnote to the preceding
table) should not be regarded as predictions of future investment return or
Series expenses, both of which will vary:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Based on actual expenses incurred during the
period from October 31, 1994 (commencement of
the Series' operations) to December 31, 1994. $8.68 $27.12 $47.14 $104.90
Based on pro forma expenses for the period from
October 31, 1994 (commencement of the Series'
operations) to December 31, 1994, assuming
the proposed new Advisory Agreement had been
in effect since October 31, 1994............. $9.18 $28.70 $49.85 $110.78
</TABLE>
15
<PAGE>
Because of expense deferral arrangements (which are described in Part V of
this Proxy Statement), the Alger Equity Growth Series effectively paid no
advisory fees to TNE Advisers for the period from October 31, 1994
(commencement of the Series' operations) to December 31, 1994. Without giving
effect to such arrangements, if the proposed new Advisory Agreement had been
in effect beginning October 31, 1994, the Alger Equity Growth Series would
have paid $2,315 in advisory fees to TNE Advisers for such period, which is
3.765% more than the $2,231 in advisory fees that the Series would have paid
for such period under the existing Advisory Agreement. TNE Advisers paid
$1,434 in sub-advisory fees to Alger Management for such period. If the
proposed new Sub-Advisory Agreement had been in effect beginning October 31,
1994, TNE Advisers would have paid this same amount in sub-advisory fees to
Alger Management for such period.
TRUSTEES' RECOMMENDATION. The Trustees unanimously recommend that
shareholders approve the proposed new Advisory and Sub-Advisory Agreements. In
reaching this recommendation, the Trustees considered extensive information
concerning Alger Management's investment approach, personnel, performance
record and regulatory compliance experience. The Trustees considered Alger
Management's policies with respect to the placing of portfolio transactions
for the Series, including its practice of placing such transactions with a
brokerage firm affiliated with Alger Management. (See Part V of this Proxy
Statement for more information about these practices.) The Trustees also
considered the levels of advisory fees paid by other funds with similar
investment objectives, including the Trust's Venture Value Series, which
commenced operations at the same time as the Alger Equity Growth Series, has a
similar investment objective and pays an advisory fee of 0.75% per year of
such Series' average daily net assets.
After considering the foregoing factors, the Trustees voted unanimously
to recommend that shareholders of the Alger Equity Growth Series approve
Proposal 4 (the proposed new Advisory Agreement between the Series and TNE
Advisers) and Proposal 5 (the related Sub-Advisory Agreement between TNE
Advisers and Alger Management). Although shareholders will vote separately on
Proposals 4 and 5, the new Advisory and Sub-Advisory Agreements will not take
effect unless shareholders approve both proposals. On each Proposal, the
required vote is the lesser of (1) 67% of the shares of the Series represented
at the Meeting, if more than 50% of the shares of the Series are represented
at the Meeting, or (2) more than 50% of the outstanding shares of the Series.
If Proposals 4 and 5 are not approved, the proposed new Advisory and Sub-
Advisory Agreements will not take effect, and the Trustees will consider such
further actions as may be in the best interests of the Series.
16
<PAGE>
V. ADDITIONAL INFORMATION REGARDING THE TRUST'S CURRENT ADVISORY AND SUB-
ADVISORY ARRANGEMENTS (ALL SERIES).
ADVISORY STRUCTURE. Pursuant to separate Advisory Agreements, each dated
October 31, 1994, TNE Advisers has agreed to manage the investment and
reinvestment of assets of the Loomis Sayles Balanced, Draycott International
Equity, Salomon Brothers U.S. Government, Salomon Brothers Strategic Bond
Opportunities, Venture Value and Alger Equity Growth Series. Pursuant to
separate Advisory Agreements, each dated May 1, 1995, TNE Advisers has agreed
to manage the investment and reinvestment of the assets of the Back Bay
Advisors Money Market, Back Bay Advisors Bond Income, Westpeak Value Growth,
Loomis Sayles Avanti Growth, Westpeak Stock Index, Back Bay Advisors Managed
and Loomis Sayles Small Cap Series. TNE Advisers has delegated certain of
these responsibilities, including responsibility for determining what
investments each such Series should purchase, hold or sell and for directing
all trading for the Series' account, for each of the above Series, to sub-
advisers under Sub-Advisory Agreements described below. Pursuant to an
Advisory Agreement dated September 1, 1993, CGM has agreed to manage the
investment and reinvestment of the assets of the Capital Growth Series.
In each case, advisory services are provided subject to the supervision and
control of the Trust's Trustees. Each Advisory Agreement also provides that
the relevant investment adviser will furnish or pay the expenses of the
applicable Series for office space, facilities and equipment, services of
executive and other personnel of the Trust and certain administrative
services. TNE Advisers has subcontracted with New England Funds, L.P. to
provide, at no extra cost to any of the Series that TNE Advisers advises,
certain administrative services to the Series. CGM, in the case of the Capital
Growth Series, has subcontracted with New England Funds, L.P. to provide such
services for that Series, at no extra cost to the Series.
Subject to the supervision of TNE Advisers, each sub-adviser, pursuant to
Sub-Advisory Agreements dated either October 31, 1994 (in the case of the
Loomis Sayles Balanced, Draycott International Equity, Salomon Brothers U.S.
Government, Salomon Brothers Strategic Bond Opportunities, Venture Value and
Alger Equity Growth Series) or May 1, 1995 (in the case of the Back Bay
Advisors Money Market, Back Bay Advisors Bond Income, Westpeak Value Growth,
Loomis Sayles Avanti Growth, Westpeak Stock Index, Back Bay Advisors Managed
and Loomis Sayles Small Cap Series), manages the assets of its Series in
accordance with the relevant Series' investment objective and policies and
makes investment decisions for the relevant Series. The Series pay no direct
fees to any of the sub-advisers.
17
<PAGE>
INFORMATION ABOUT TNE ADVISERS
TNE Advisers is a wholly-owned subsidiary of The New England. TNE Advisers
acts as adviser to all of the Series except the Capital Growth Series. The
Chairman and principal executive officer of TNE Advisers is Frederick K.
Zimmermann; Mr. Zimmermann and John F. Guthrie, Jr. are the company's
directors. Mr. Guthrie is Senior Vice President of TNE Advisers.
Mr. Zimmermann's principal occupations are as Executive Vice President and
Chief Investment Officer of The New England, and Mr. Guthrie's principal
occupation is as Vice President--Portfolio Strategy of The New England. The
address of TNE Advisers and Messrs. Zimmermann and Guthrie is 501 Boylston
Street, Boston, Massachusetts 02116.
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, Inc. ("NEIC
Holdings"), which is a wholly-owned subsidiary of NEIC. NEIC owns the entire
limited partnership interest in Back Bay Advisors. Back Bay Advisors acts as
sub-adviser to the Back Bay Advisors Money Market, Back Bay Advisors Bond
Income and Back Bay Advisors Managed Series. Back Bay Advisors also provides
short-term cash management services to the Draycott International Equity
Series, as sub-adviser to Draycott. The principal executive officer of Back
Bay Advisors is Charles T. Wallis, whose principal occupation is his position
with Back Bay Advisors. The address of Back Bay Advisors, Back Bay Advisors,
Inc., NEIC, NEIC Holdings, NEIC Inc. and Mr. Wallis is 399 Boylston Street,
Boston, Massachusetts 02116.
Back Bay Advisors acts as investment adviser to the following other mutual
funds that have similar objectives to the Series listed below, for
compensation at the annual percentage rates of the corresponding average net
asset levels of those funds set forth in the table below. The table also sets
forth the net assets of those funds at September 30, 1995.
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND
OTHER FUND WITH (IN MILLIONS) ANNUAL AVERAGE
SERIES SIMILAR OBJECTIVE AT 9/30/95 FEE RATE NET ASSET LEVELS
------ ---------------------- ------------- -------- -------------------------
<C> <S> <C> <C> <C>
Back Bay New England Cash $650 0.425% of the first $500 million
Advisors Management Trust-- 0.400% of the next $500 million
Money Market Money Market Series 0.350% of the next $500 million
Series 0.300% of the next $500 million
0.250% of amounts in excess
of $2 billion
New England Cash $ 57 0.425% of the first $500 million
Management Trust-- 0.400% of the next $500 million
U.S. Government 0.350% of the next $500 million
Series 0.325% of the next $500 million
0.300% of amounts in excess
of $2 billion
Back Bay New England Bond $215 0.500% of the first $100 million
Advisors Income Fund 0.375% of amounts in excess
Bond Income of $100 million
Series
</TABLE>
18
<PAGE>
INFORMATION ABOUT LOOMIS SAYLES
Loomis Sayles is a limited partnership. Its sole general partner, Loomis,
Sayles & Company, Incorporated ("LSCI"), is a wholly-owned subsidiary of NEIC
Holdings. NEIC owns the entire limited partnership interest in Loomis Sayles.
The principal executive officer of Loomis Sayles is Robert Blanding, whose
principal occupation is his position with Loomis Sayles. The address of Loomis
Sayles and LSCI is One Financial Center, Boston, Massachusetts 02111.
Mr. Blanding's address is 595 Fifth Street West, Sonoma, California 95476.
Loomis Sayles acts as sub-adviser to the Loomis Sayles Avanti Growth, Loomis
Sayles Small Cap and Loomis Sayles Balanced Series.
Loomis Sayles acts as investment adviser (or sub-adviser, in the case of the
funds marked with an asterisk below) to the following other mutual funds that
have similar investment objectives to the Series for which Loomis Sayles acts
as sub-adviser, for compensation at the annual fee rates of the corresponding
average net asset levels of those funds set forth in the table below. The
table also sets forth the net assets of those other funds at September 30,
1995.
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND
OTHER FUND WITH (IN MILLIONS) ANNUAL AVERAGE
SERIES SIMILAR OBJECTIVE AT 9/30/95 FEE RATE NET ASSET LEVELS
------ ------------------- ------------- -------- ----------------
<S> <C> <C> <C> <C>
Loomis Sayles Avanti New England Capital $148 0.75% of the first $200 million
Growth Series Growth Fund 0.70% of the next $300 million
0.65% of amounts in excess of
$500 million
Loomis Sayles $ 48 0.75% of all assets
Growth Fund
Loomis Sayles Small Cap New England Star $440 0.55% of the first $50 million(a)
Series Advisers Fund* 0.50% of amounts in excess
of $50 million(a)
Maxim Series-- $ 25 0.50% of the first $10 million
Maxim Small 0.40% of the next $15 million
Cap Aggressive 0.35% of the next $75 million
Growth Fund* 0.30% of amounts in excess of
$100 million
Loomis Sayles $103 1.00% of all assets
Small Cap Fund
Loomis Sayles Balanced New England $278 0.75% of the first $200 million
Series Balanced Fund 0.70% of the next $300 million
0.65% of amounts in excess of
$500 million
</TABLE>
- ----------------------------
(a) Based on assets of the segment of the fund managed by Loomis Sayles ($105
million as of 9/30/95).
19
<PAGE>
INFORMATION ABOUT WESTPEAK
Westpeak is a limited partnership whose sole general partner is Westpeak
Investment Advisors, Inc. ("Westpeak 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 1011 Walnut Street, Boulder,
Colorado 80302. Westpeak acts as sub-adviser to the Westpeak Value Growth and
Westpeak Stock Index Series.
Westpeak acts as sub-adviser to New England Growth Opportunities Fund, a
mutual fund that has a similar investment objective to the Westpeak Value
Growth Series. For the sub-advisory services it provides to New England Growth
Opportunities Fund, Westpeak receives compensation at the annual rate of 0.50%
of the first $25 million of such fund's average 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 net assets of New England
Growth Opportunities Fund at September 30, 1995 were $143 million.
INFORMATION ABOUT DRAYCOTT
Draycott, formed in 1991, is a wholly-owned subsidiary of NEIC until its
acquisition by Cursitor Holdings is consummated (see Part III of this Proxy
Statement). Draycott acts as sub-adviser to the Draycott International Equity
Series. Draycott's address is 8 City Road, London EC2Y 1HE, England. The names
and principal occupations of Draycott's principal executive officer and
directors are as follows:
<TABLE>
<CAPTION>
POSITION WITH
DRAYCOTT; PRINCIPAL
NAME ADDRESS OCCUPATION
---- ------- -------------------
<S> <C> <C>
Nicholas D.P. Carn 8 City Road, Chief Executive
London EC2Y 1HE, Officer, President,
England Chief Investment
Officer and
Director
Peter S. Voss 399 Boylston Street Director; Chief
Boston, Executive Officer
Massachusetts 02116 and President of
NEIC
Sherry Umberfield 399 Boylston Street Director; Executive
Boston, Vice President of
Massachusetts 02116 NEIC
</TABLE>
20
<PAGE>
Draycott acts as investment adviser (or sub-adviser, in the case of the fund
marked with an asterisk below) to the following other mutual funds that have
similar investment objectives to the Draycott International Equity Series, for
compensation at the annual fee rates of the corresponding average net asset
levels of those funds set forth in the table below. The table also sets forth
the net assets of those other funds at September 30, 1995.
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND
OTHER FUND WITH (IN MILLIONS) ANNUAL AVERAGE
SIMILAR OBJECTIVE AT 9/30/95 FEE RATE NET ASSET LEVELS
----------------- ------------- -------- ------------------------------------
<S> <C> <C> <C>
Maxim Series Fund-- $ 63 0.60% of the first $10 million
Foreign Equity 0.50% of the next $40 million
Portfolio* 0.35% of amounts in excess of $50 million
New England $268 0.80% of the first $200 million
International Equity 0.75% of the next $300 million
Fund(a) 0.70% of amounts in excess of $500 million
</TABLE>
- ----------------------------
(a) Draycott has voluntarily agreed to reduce its fees and, if necessary,
assume expenses of this fund (exclusive of brokerage costs, interest,
taxes, and extraordinary expenses) to the annual rate of 1.75% of such
fund's Class A average net assets, 2.50% of Class B and C average net
assets and 1.00% of Class Y average net assets, until further notice to
the fund.
INFORMATION ABOUT SALOMON BROTHERS ASSET MANAGEMENT INC
Salomon Brothers Asset Management Inc ("SBAM") is a wholly-owned subsidiary
of Salomon Inc. SBAM acts as sub-adviser to the Salomon Brothers U.S.
Government Series and the Salomon Brothers Strategic Bond Opportunities
Series. The address of SBAM and Salomon Inc is 7 World Trade Center, New York,
New York 10048. The names and principal occupations of SBAM's principal
executive officers and directors are as follows:
<TABLE>
<CAPTION>
POSITION WITH SBAM;
PRINCIPAL
NAME ADDRESS OCCUPATION
---- ------- -------------------
<S> <C> <C>
Thomas Wise Brook 7 World Trade Center, Chairman and Chief
New York, New York 10048 Executive Officer
Rodney B. Berens 111 Buckingham Palace Director; Managing
Road, London SW2W OSB, Director, Salomon
England Brothers Inc
Michael S. Hyland 7 World Trade Center, President;
New York, New York 10048 Director; Managing
Director,
Salomon Brothers
Inc
James J. Lee 7 World Trade Center, Director; Director,
New York, New York 10048 Salomon Brothers
Inc
Vilas Gadkari 111 Buckingham Palace Director; Chief
Road, London SW2W OSB, Investment Officer,
England Salomon Brothers
Asset Management
Limited
</TABLE>
21
<PAGE>
SBAM acts as investment adviser (or sub-adviser, in the case of the funds
marked with an asterisk below) to the following other mutual funds that have
similar investment objectives to the Series listed below, for compensation at
the annual percentage rates of the corresponding average net asset levels of
those funds set forth in the table below. The table also sets forth the net
assets of those funds at September 30, 1995.
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND
OTHER FUND WITH (IN MILLIONS) ANNUAL AVERAGE
SERIES SIMILAR OBJECTIVE AT 9/30/95 FEE RATE NET ASSET LEVELS
------ ----------------- ------------- -------- -------------------------
<S> <C> <C> <C> <C>
Salomon NASL U.S. $212 0.225% of the first $200 million
Brothers Government 0.150% of the next $300 million
U.S. Securities Trust* 0.100% of amounts in excess of
Government $500 million
Series
The Salomon $2 0.225% of the first $150 million
Brothers/JNL U.S. 0.175% of the next $150 million
Government Quality 0.150% of the next $200 million
Bond Series* 0.100% of amounts in excess of
$500 million
NAF U.S. Government $111 0.225% of the first $200 million
Securities Fund* 0.150% of the next $300 million
0.100% of amounts in excess of
$500 million
Salomon Brothers $10 0.37% of all assets
U.S. Government
Income Fund
Salomon NASL Strategic Bond $102 0.35% of the first $50 million
Brothers Trust* 0.30% of the next $150 million
Strategic 0.25% of the next $300 million
Bond 0.20% of amounts in excess of
Opportunities $500 million
Series
The Salomon $5 0.375% of the first $50 million
Brothers/JNL Global 0.350% of the next $100 million
Bond Series* 0.300% of the next $350 million
0.200% of amounts in excess of
$500 million
NAF Strategic $43 0.35% of the first $50 million
Income Fund* 0.30% of the next $100 million
0.25% of the next $350 million
0.20% of amounts in excess of
$500 million
Salomon Brothers $11 0.78% of all assets
Strategic Bond Fund
</TABLE>
In connection with SBAM's services as sub-adviser to the Strategic Bond
Opportunities Series, and pursuant to the Sub-Advisory Agreement for such
Series, SBAM's London-based affiliate, Salomon Brothers Asset Management
Limited ("SBAM Limited"), acts as sub-adviser to SBAM in connection with
currency transactions and investments in non-U.S.-dollar denominated debt
securities for the benefit of the Series. For these services, SBAM is
obligated, pursuant to such Sub-Advisory Agreement, to pay to SBAM Limited
one-third of the compensation that
22
<PAGE>
SBAM receives for acting as sub-adviser to the Series. SBAM Limited is a
direct, wholly-owned subsidiary of Salomon Brothers Holding Company Inc, which
is a direct, wholly-owned subsidiary of Salomon Inc. SBAM Limited provides
similar sub-advisory services to each of the funds listed in the preceding
table; in each such case, SBAM compensates SBAM Limited for such services by
paying to SBAM Limited the product of (i) the fee payable under SBAM's
management agreement with such fund, multiplied by (ii) the ratio of (x) the
portion of the assets of such fund that SBAM Limited has been delegated to
manage, to (y) the current value of the net assets of such fund.
The address of SBAM Limited is 111 Buckingham Palace Road, London SW2W OSB,
England. The address of Salomon Brothers Holding Company Inc is 7 World Trade
Center, New York, New York 10048. The names and principal occupations of SBAM
Limited's principal executive officer and directors are as follows:
<TABLE>
<CAPTION>
POSITION WITH SBAM
LIMITED; PRINCIPAL
NAME ADDRESS OCCUPATION
---- ------------------------- -------------------
<S> <C> <C>
Michael S. Hyland 7 World Trade Center Chairman and
New York, New York 10048 Director; Managing
Director, Salomon
Brothers Inc
Vilas Gadkari 111 Buckingham Palace Chief Investment
Road, Officer and
London SW2W OSB England Director
Joseph McDevitt 111 Buckingham Palace Chief Operating
Road, Officer and
London SW2W OSB, England Director
</TABLE>
INFORMATION ABOUT DAVIS SELECTED ADVISORS, L.P.
Davis Selected Advisers, L.P. ("Davis Selected") is a limited partnership.
Venture Advisers, Inc., the sole general partner of Davis Selected, is
controlled by Shelby M.C. Davis, who is the Chief Executive Officer of Davis
Selected and whose principal occupation is his position with Davis Selected.
The address of Davis Selected, Venture Advisers, Inc. and Mr. Davis is 124
East Marcy Street, Santa Fe, New Mexico 87501. Davis Selected acts as sub-
adviser to the Venture Value Series.
23
<PAGE>
Davis Selected acts as investment adviser (or sub-adviser, in the case of
the fund marked with an asterisk below) to the following other mutual funds
that have similar investment objectives to the Venture Value Series, for
compensation at the annual fees rates of the corresponding average net asset
levels of those funds set forth in the table below. The table also sets forth
the net assets of those other funds at September 30, 1995.
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND
OTHER FUND WITH (IN MILLIONS) ANNUAL AVERAGE
SIMILAR OBJECTIVE AT 9/30/95 FEE RATE NET ASSET LEVELS
----------------- ------------- -------- -------------------------
<S> <C> <C> <C>
Davis New York $1,780 0.75% of the first $250 million
Venture Fund 0.65% of the next $250 million
0.55% of amounts in excess of
$500 million
SunAmerica Series Trust $ 125 0.45% of the first $100 million
New York Venture 0.40% of the next $400 million
Portfolio Series* 0.35% of amounts in excess of
$500 million
</TABLE>
INFORMATION ABOUT ALGER MANAGEMENT
Alger Management is a wholly-owned subsidiary of Fred Alger & Company,
Incorporated, which in turn is a wholly-owned subsidiary of Alger Associates,
Inc., a financial services holding company. Fred M. Alger III and his brother,
David D. Alger, own approximately 53% and 17%, respectively, of Alger
Associates, Inc. and may be deemed to control that company and its
subsidiaries. The principal executive officer of Alger Management is its
President, David D. Alger, whose principal occupation is his position with
Alger Management. The directors of Alger Management are Fred M. Alger III,
David D. Alger and Gregory S. Duch. Fred M. Alger III's principal occupation
is Chairman of the Board of Alger Management. Mr. Duch's principal occupation
is Executive Vice President of Alger Management. The address of Alger
Management, Alger Associates, Inc., Fred M. Alger III and David D. Alger is 75
Maiden Lane, New York, New York 10038. The address of Fred Alger & Company,
Incorporated and Mr. Duch is 30 Montgomery Street, Jersey City, New Jersey
07302. Alger Management acts as sub-adviser to the Alger Equity Growth Series.
24
<PAGE>
Alger Management acts as investment adviser to the following other mutual
funds that have similar investment objectives to the Alger Equity Growth
Series, for compensation at the annual fee rates of the corresponding average
net asset levels of those funds set forth in the table below. The table also
sets forth the net assets of those other funds at September 30, 1995.
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND
OTHER FUND WITH (IN MILLIONS) ANNUAL AVERAGE
SIMILAR OBJECTIVE AT 9/30/95 FEE RATE NET ASSET LEVELS
----------------- ------------- -------- ----------------
<S> <C> <C> <C>
The Alger Fund--Growth Portfolio $147 0.75% of all assets
The Alger American Fund--Growth
Portfolio $355 0.75% of all assets
The Alger Defined Contribution
Trust--Growth Portfolio $ 14 0.75% of all assets
</TABLE>
INFORMATION ABOUT CGM
CGM is a limited partnership organized on December 7, 1989. Its operations
are governed by a Second Amended and Restated Limited Partnership Agreement,
dated as of June 23, 1993 (the "Second Partnership Agreement"). CGM acts as
investment adviser to the Capital Growth Series.
CGM's sole general partner, Kenbob, Inc. ("Kenbob"), is a corporation
controlled equally by G. Kenneth Heebner and Robert L. Kemp. Messrs. Heebner
and Kemp are employees of CGM. Messrs. Heebner and Kemp are the Directors of
Kenbob and also serve as its Chairman and President, respectively. As of
September 30, 1995, NEIC owned a 54% limited partnership interest in CGM. The
Second Partnership Agreement provides for the sale of part of NEIC's interest
in CGM to Kenbob in annual increments. The address of CGM and Kenbob is One
International Place, Boston, Massachusetts 02110.
CGM acts as investment adviser to the following other mutual funds that have
similar investment objectives to the Capital Growth Series, for compensation
at the annual fee rates of the corresponding average net asset levels of those
funds set forth in the table below. The table also sets forth the net assets
of those other funds at September 30, 1995.
<TABLE>
<CAPTION>
NET ASSETS OF
OTHER FUND
OTHER FUND WITH (IN MILLIONS) ANNUAL AVERAGE
SIMILAR OBJECTIVE AT 9/30/95 FEE RATE NET ASSET LEVELS
----------------- ------------- -------- -------------------------
<S> <C> <C> <C>
New England Growth Fund $1,209 0.75% of the first $200 million
0.70% of the next $300 million
0.65% of amounts in excess of
$500 million
New England Variable Annuity $ 61 0.3066% of all assets
Fund I
CGM Capital Development Fund $ 502 0.75% of the first $200 million
0.70% of the next $300 million
0.65% of amounts in excess
of $500 million
</TABLE>
25
<PAGE>
ADVISORY FEES. Each Series pays its adviser, TNE Advisers (or CGM in the
case of the Capital Growth Series), compensation at the annual percentage
rates of the corresponding levels of that Series' average daily net asset
values set forth in the following table:
<TABLE>
<CAPTION>
ANNUAL AVERAGE DAILY NET ASSET
SERIES FEE RATES VALUE LEVELS
------ --------- -----------------------
<S> <C> <C>
Back Bay Advisors 0.35% of the first $500 million
Money Market Series 0.30% of the next $500 million
0.25% of amounts in excess of $1
billion
Back Bay Advisors Bond 0.40% of the first $400 million
Income Series 0.35% of the next $300 million
0.30% of the next $300 million
0.25% of amounts in excess of $1
billion
Capital Growth Series 0.70% of the first $200 million
0.65% of the next $300 million
0.60% of amounts in excess of $500
million
Westpeak Value Growth 0.70% of the first $200 million
Series 0.65% of the next $300 million
0.60% of amounts in excess of $500
million
Loomis Sayles Avanti 0.70% of the first $200 million
Growth Series 0.65% of the next $300 million
0.60% of amounts in excess of $500
million
Westpeak Stock Index Series 0.25% of all assets
Back Bay Advisors Managed Series 0.50% of all assets
Loomis Sayles Small Cap Series 1.00%(a) of all assets
Loomis Sayles Balanced Series 0.70% of all assets
Draycott International Equity Series 0.90%(a) of all assets
Salomon Brothers U.S. Government Series 0.55% of all assets
Salomon Brothers Strategic Bond 0.65% of all assets
Opportunities Series
Venture Value Series 0.75%(a) of all assets
Alger Equity Growth Series 0.70% of all assets
</TABLE>
- ----------------------------
(a) This fee rate is higher than that paid by most mutual funds, but is
comparable to the rates paid by some other mutual funds with similar
investment objectives and policies.
26
<PAGE>
SUB-ADVISORY FEES. TNE Advisers pays each sub-adviser at the following rates
for providing sub-advisory services to the following Series:
<TABLE>
<CAPTION>
ANNUAL PERCENTAGE
RATES PAID
BY TNE
ADVISERS TO THE
RESPECTIVE AVERAGE DAILY NET ASSET
SERIES SUB-ADVISERS VALUE LEVELS
------ ----------------- -----------------------
<S> <C> <C>
Back Bay Advisors Money Market 0.15% of the first $100 million
Series 0.10% of amounts in excess of $100
million
Back Bay Advisers Bond Income 0.25% of the first $50 million
Series 0.20% of the next $200 million
0.15% of amounts in excess of $250
million
Westpeak Value Growth Series 0.50% of the first $25 million
0.40% of the next $75 million
0.35% of the next $100 million
0.30% of amounts in excess of $200
million
Loomis Sayles Avanti Growth 0.50% of the first $25 million
Series 0.40% of the next $75 million
0.35% of the next $100 million
0.30% of amounts in excess of $200
million
Westpeak Stock Index Series 0.10% of all assets
Back Bay Advisors Managed Series 0.25% of the first $50 million
0.20% of amounts in excess of $50
million
Loomis Sayles Small Cap Series 0.55% of the first $25 million
0.50% of the next $75 million
0.45% of the next $100 million
0.40% of amounts in excess of $200
million
Loomis Sayles Balanced Series 0.50% of the first $25 million
0.40% of the next $75 million
0.30% of amounts in excess of $100
million
Draycott International Equity 0.75% of the first $10 million
Series 0.60% of the next $40 million
0.45% of amounts in excess of $50
million
Salomon Brothers U.S. Government 0.225% of the first $200 million
Series 0.150% of the next $300 million
0.100% of amounts in excess of $500
million
Salomon Brothers Strategic Bond 0.35% of the first $50 million
Opportunities Series 0.30% of the next $150 million
0.25% of the next $300 million
0.20% of amounts in excess of $500
million
Venture Value Series 0.45% of the first $100 million
0.40% of the next $400 million
0.35% of amounts in excess of $500
million
Alger Equity Growth Series 0.45% of the first $10 million
0.40% of the next $90 million
0.35% of the next $150 million
0.30% of the next $250 million
0.25% of amounts in excess of $500
million
</TABLE>
27
<PAGE>
The advisory and sub-advisory fee rates applicable to the Alger Equity
Growth Series are proposed to be changed effective May 1, 1996. See Part IV of
this Proxy Statement.
Prior to May 1, 1995, the sub-advisers to the Back Bay Advisors Money
Market, Back Bay Advisors Bond Income, Back Bay Advisors Managed, Loomis
Sayles Avanti Growth, Loomis Sayles Small Cap, Westpeak Value Growth and
Westpeak Stock Index Series served as the advisers to those Series under
Advisory Agreements providing the same fee rates as in the current Advisory
Agreements between those Series and TNE Advisers. The Advisory Agreements and
Sub-Advisory Agreements for each of those Series are dated May 1, 1995, were
approved by the Trustees of the Trust on January 27, 1995 and were last
submitted to a shareholder vote on April 10, 1995, in connection with the
initial approval of such agreements.
The Advisory and Sub-Advisory Agreements for the Loomis Sayles Balanced,
Draycott International Equity, Salomon Brothers U.S. Government, Salomon
Brothers Strategic Bond Opportunities, Venture Value and Alger Equity Growth
Series are each dated October 31, 1994, were approved by the Trustees of the
Trust on October 28, 1994 and were approved by a consent of the initial
shareholder of those Series on October 28, 1994 in connection with the initial
approval of such agreements.
The Advisory Agreement for the Capital Growth Series is dated September 1,
1993 and was last approved by shareholders on July 14, 1993 in connection with
a change in control of CGM. The Trustees of the Trust approved the
continuation of this agreement on May 31, 1995.
The Trustees of the Trust approved each of the new Advisory and Sub-Advisory
Agreements that are the subjects of Proposals 1 through 5 on
November 13, 1995.
For the fiscal year ended December 31, 1994, the Back Bay Advisors Money
Market, Back Bay Advisors Bond Income and Back Bay Advisors Managed Series
paid advisory fees of $231,326, $515,084 and $613,249, respectively, to Back
Bay Advisors; the Westpeak Value Growth and Westpeak Stock Index Series paid
advisory fees of $111,827 and $77,350, respectively, to Westpeak; and the
Loomis Sayles Avanti Growth Series paid advisory fees of $132,596 to Loomis
Sayles. None of the Series listed in the preceding sentence paid any advisory
fees for the fiscal year ended December 31, 1994 to TNE Advisers, which did
not act as adviser to any of such Series prior to 1995. For the fiscal year
ended December 31, 1994, the Capital Growth Series paid advisory fees of
$4,396,663 to CGM. After giving effect to expense agreements, for the period
from May 1, 1994 (commencement of operations) to December 31, 1994, the Loomis
Sayles Small Cap Series paid no advisory fees to Loomis Sayles. Without giving
effect to such agreements, the
28
<PAGE>
Loomis Sayles Small Cap Series would have paid $13,485 in advisory fees to
Loomis Sayles for such period. The Loomis Sayles Small Cap Series paid no
advisory fees for this period to TNE Advisers, which did not act as this
Series' adviser prior to 1995. After giving effect to expense deferral
arrangements, for the period from October 31, 1994 (commencement of
operations) to December 31, 1994, the Loomis Sayles Balanced, Draycott
International Equity, Salomon Brothers U.S. Government, Salomon Brothers
Strategic Bond Opportunities, Venture Value and Alger Equity Growth Series
paid no advisory fees to TNE Advisers. Without giving effect to such
arrangements, these Series would have paid $8,151, $11,312, $6,163, $6,799,
$9,339 and $2,231, respectively, in advisory fees to TNE Advisers for such
period.
EXPENSE DEFERRAL ARRANGEMENT. Pursuant to an Expense Deferral Agreement in
effect beginning November 1, 1994 between the Trust and TNE Advisers
pertaining to the Loomis Sayles Balanced, Draycott International Equity,
Salomon Brothers U.S. Government, Salomon Brothers Strategic Bond
Opportunities, Venture Value and Alger Equity Growth Series, which agreement
TNE Advisers may terminate at any time, TNE Advisers has agreed to pay the
expenses of each such Series (exclusive of any brokerage costs, interest,
taxes or extraordinary expenses) in excess of stated expense limits, which
limits vary from Series to Series, subject to the obligation of such Series to
repay such amounts to TNE Advisers in future years, if any, when the
particular Series' expenses fall below the stated expense limit that pertains
to that Series; such deferred expenses may be charged to that Series in a
subsequent year to the extent that it does not cause the total expenses in
such subsequent year to exceed the Series' stated expense limit; provided,
however, that no Series is obligated to repay any expense paid by TNE Advisers
more than two years after the end of the fiscal year in which such expense was
incurred. Under the Expense Deferral Agreement, TNE Advisers has agreed to
defer such expenses in excess of the following stated expense limits: Loomis
Sayles Balanced Series, 0.85% of net assets; Draycott International Equity
Series, 1.30% of net assets; Salomon Brothers U.S. Government Series, 0.70% of
net assets; Salomon Brothers Strategic Bond Opportunities Series, 0.85% of net
assets; Venture Value Series, 0.90% of net assets; Alger Equity Growth Series,
0.85% of net assets (which amount is scheduled to increase to 0.90% of net
assets on January 1, 1996). TNE Advisers may at any time terminate its
obligations to bear future expenses of any Series, but any expenses that were
deferred while a Series' expense limit was in place can never be charged to
that Series unless that Series' expenses fall below the limit.
VOLUNTARY EXPENSE AGREEMENT. Pursuant to a voluntary expense agreement
pertaining to the Back Bay Advisors Money Market, Back Bay Advisors Bond
Income, Back Bay Advisors Managed, Westpeak Stock Index, Loomis Sayles Small
Cap, Loomis Sayles Avanti Growth and Westpeak Value Growth Series, TNE
Advisers bears the expenses (other than the advisory fees and any brokerage
29
<PAGE>
costs, interest, taxes or extraordinary expenses) of the Series (except the
Loomis Sayles Small Cap Series) in excess of 0.15% of the respective Series'
average daily net assets. In the case of the Loomis Sayles Small Cap Series,
TNE Advisers bears expenses of the Series (other than brokerage costs,
interest, taxes or extraordinary expenses) in excess of 1.00% of the Series'
average daily net assets. Similar voluntary expense agreements by The New
England have been in effect with respect to the Capital Growth Series since
November 1, 1994 and were in effect with respect to the Back Bay Advisors
Money Market, Back Bay Advisors Bond Income, Back Bay Advisors Managed and
Westpeak Stock Index Series from November 1, 1994 through April 30, 1995 and
with respect to the Loomis Sayles Small Cap, Loomis Sayles Avanti Growth and
Westpeak Value Growth Series from December 1, 1994 through April 30, 1995. As
a result of the voluntary expense agreements (and assuming the Series incur
the same level of advisory fees as in 1994 and no taxes, interest or
extraordinary expenses), the Series' expense ratios during the continuation of
the voluntary expense agreements are expected to be:
<TABLE>
<CAPTION>
TOTAL EXPENSE RATIO UNDER
SERIES VOLUNTARY EXPENSE AGREEMENT
------ ---------------------------
<S> <C>
Capital Growth Series.............................. 0.70%
Back Bay Advisors Money Market Series.............. 0.50%
Back Bay Advisors Bond Income Series............... 0.55%
Back Bay Advisors Managed Series................... 0.65%
Westpeak Value Growth Series....................... 0.85%
Westpeak Stock Index Series........................ 0.40%
Loomis Sayles Small Cap Series..................... 1.00%
Loomis Sayles Avanti Growth Series................. 0.85%
</TABLE>
The current voluntary expense agreements may be prospectively discontinued
by TNE Advisers or The New England, as the case may be, at any time. Prior to
November 1, 1994, the Series that are now subject to the current voluntary
expense agreements benefited from an Expense Agreement between the Trust and
The New England. Under that agreement, The New England paid the charges and
expenses of preparing, printing and distributing prospectuses and reports to
shareholders, custodial and transfer agent charges and expenses, legal,
auditing and accounting fees, and the expenses of shareholders' and Trustees'
meetings.
OTHER PROVISIONS OF THE ADVISORY AND SUB-ADVISORY AGREEMENTS. Each Advisory
and Sub-Advisory Agreement provides that it will continue in effect after two
years from the date of its execution only if it is approved at least annually
thereafter (i) by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the applicable Series and (ii) by vote of a
majority of the Trustees who are not interested persons of (i) the Trust or
(ii) the applicable Series' investment adviser or sub-adviser. Any amendment
to any Advisory or Sub-Advisory Agreement must be approved by a vote of a
majority of the outstanding voting securities of the applicable Series and by
vote of a majority of the Trustees
30
<PAGE>
who are not interested persons of (i) the Trust or (ii) the applicable Series'
investment adviser or sub-adviser. Each Advisory Agreement may be terminated
without penalty by the Trustees or by the shareholders of the applicable
Series upon sixty days' written notice, or by the applicable Series'
investment adviser upon ninety days' written notice, and each terminates
automatically in the event of its assignment. Each Sub-Advisory Agreement may
be terminated without penalty by the Trustees or by the shareholders of the
applicable Series upon sixty days' written notice, or upon sixty days' (ninety
days', in the case of certain Series) written notice by the relevant sub-
adviser or (if approved by the Trustees) by TNE Advisers, and each terminates
automatically in the event of its assignment or upon the termination of the
Advisory Agreement for the relevant Series. Each Advisory Agreement will
automatically terminate if the Trust shall at any time be required by New
England Securities, which is a wholly-owned subsidiary of The New England, to
eliminate all reference to the words "New England" in its name, unless the
continuance of such agreement after such change of name is approved by a
majority of the outstanding voting securities of the applicable Series and by
a majority of the Trustees who are not interested persons of (i) the Trust or
(ii) the applicable Series' investment adviser. In addition, each Sub-Advisory
Agreement will automatically terminate if the relevant Series shall at any
time be required by the sub-adviser to eliminate all reference to the name of
the sub-adviser in the name of such Series, unless the continuance of the Sub-
Advisory Agreement after such change of name is approved by a majority of the
outstanding voting securities of the relevant Series and by a majority of the
Trustees who are not interested persons of the Trust or the sub-adviser.
Each Advisory Agreement provides that if the total ordinary business
expenses of a particular Series for any fiscal year exceed the lowest
applicable limitations (based on a percentage of average net assets or income)
prescribed by any state in which shares of that Series are qualified for sale,
the applicable Series' investment adviser shall pay such excess. Each Advisory
Agreement provides, however, that the advisory fee shall not be reduced nor
shall any of such expenses be paid to an extent or under circumstances which
might result in the inability of any Series or for the Trust, taken as a
whole, to qualify as a regulated investment company under the Internal Revenue
Code of 1986, as amended. The term "expenses" for this purpose excludes
brokerage commissions, taxes, interest and extraordinary expenses.
As required by state insurance licensing authorities, each Series'
investment adviser has also undertaken, separately from the Advisory
Agreements, to be liable for negligence in the performance of any
administrative services with respect to the Trust which are supplemental to
their management of the investment and reinvestment of that Series' assets.
Each Advisory and Sub-Advisory Agreement provides that the relevant
investment adviser or sub-adviser shall not be subject to any liability in
connection
31
<PAGE>
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.
INFORMATION ABOUT CERTAIN TRUSTEES AND OFFICERS OF THE TRUST
The following table lists persons who are officers or Trustees of the Trust
and are also officers, directors, employees or shareholders of the advisers
and sub-advisers to the Series listed below:
<TABLE>
<CAPTION>
NAME ADVISER OR SUB-ADVISER
- ---- ----------------------
<S> <C>
Frederick K. Zimmermann TNE Advisers
John F. Guthrie, Jr. TNE Advisers
Beverly J. DeWitt TNE Advisers, Westpeak
Alan C. Leland, Jr. TNE Advisers
Robert J. Blanding Loomis Sayles
Meri Ann Beck Loomis Sayles
Scott S. Pape Loomis Sayles
Jeffrey C. Petherick Loomis Sayles
Mary C. Champagne Loomis Sayles
Richard W. Hurckes Loomis Sayles
Douglas D. Ramos Loomis Sayles
G. Kenneth Heebner CGM
Robert L. Kemp CGM
Gerald H. Scriver Westpeak
Phillip J. Cooper Westpeak
Charles T. Wallis Back Bay Advisors
Harold B. Bjornson Back Bay Advisors
Catherine L. Bunting Back Bay Advisors
J. Scott Nicholson Back Bay Advisors
Peter Palfrey Back Bay Advisors
</TABLE>
PORTFOLIO TRANSACTIONS AND BROKERAGE. Some of the Trust's portfolio
transactions are placed with brokers and dealers who provide the investment
advisers or sub-advisers with supplementary investment and statistical
information or furnish market quotations to the Trust or other investment
companies advised by the investment advisers or sub-advisers. 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 the investment advisers or
sub-advisers. The services may also be used by the investment advisers or sub-
advisers in connection with their other advisory accounts and in some cases
may not be used with respect to the Trust.
Back Bay Advisors Money Market Series and Back Bay Advisors Bond Income
Series; Certain Portfolio Transactions of the Back Bay Advisors Managed and
Loomis Sayles Balanced Series. It is expected that the portfolio transactions
of
32
<PAGE>
the Back Bay Advisors Money Market Series and the Back Bay Advisors Bond
Income Series, and portfolio transactions of the Back Bay Advisors Managed
Series and the Loomis Sayles Balanced Series in bonds, notes and money market
instruments, will generally be with issuers or dealers on a net basis without
a stated commission.
Capital Growth Series, Loomis Sayles Avanti Growth Series, Loomis Sayles
Small Cap Series, Back Bay Advisors Managed Series (Common Stock
Transactions), Loomis Sayles Balanced Series (Common Stock Transactions),
Draycott International Equity Series, Venture Value Series and Alger Equity
Growth Series. In placing orders for the purchase and sale of portfolio
securities, CGM, in the case of the Capital Growth Series, Loomis Sayles, in
the case of the Loomis Sayles Avanti Growth Series, the Loomis Sayles Small
Cap Series and the Loomis Sayles Balanced Series, Back Bay Advisors, in the
case of investments in common stocks by the Back Bay Advisors Managed Series,
Draycott, in the case of the Draycott International Equity Series, Davis
Selected, in the case of the Venture Value Series, and Alger Management, in
the case of the Alger Equity Growth Series, each selects only brokers 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 for the transaction. This does
not necessarily mean that the lowest available brokerage commission will be
paid. However, the commissions are believed to be competitive with generally
prevailing rates. The Series' advisers or sub-advisers will use their 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 Capital Growth Series, Loomis Sayles Avanti Growth Series, Loomis Sayles
Small Cap Series, Loomis Sayles Balanced Series, Back Bay Advisors Managed
Series, Draycott International Equity Series, Venture Value Series and Alger
Equity Growth Series will not pay a broker a commission at a higher rate than
otherwise available for the same transaction in recognition of the value of
research services provided by the broker or of any other services provided by
the broker which do not contribute to the best price and execution of the
transaction.
Westpeak Value Growth Series, Westpeak Stock Index Series, Salomon Brothers
U.S. Government Series and Salomon Brothers Strategic Bond Opportunities
Series. In placing orders for the purchase and sale of securities, Westpeak,
in the case of the Westpeak Value Growth Series and the Westpeak Stock Index
Series, and SBAM, in the case of the Salomon Brothers U.S. Government Series
and the Salomon Brothers Strategic Bond Opportunities Series,
33
<PAGE>
always seek best execution. Westpeak and SBAM each 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 or
SBAM will each 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. Westpeak or SBAM may cause the Series they manage to pay a
broker-dealer that provides brokerage and research services to Westpeak or
SBAM an amount of commission for effecting a securities transaction for a
Series in excess of the amount another broker-dealer would have charged for
effecting that transaction. Westpeak or SBAM, as the case may be, 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 or
SBAM's overall responsibilities to the Series and its other clients.
Westpeak's or SBAM's authority to cause the Series it manages to pay such
greater commissions is also subject to such policies as the Trustees of the
Trust may adopt from time to time.
BROKERAGE TRANSACTIONS WITH AFFILIATES. A Series may pay brokerage
commissions to an affiliated broker for acting as the respective Series' agent
on purchases and sales of securities for the portfolio of the Series.
Securities and Exchange Commission rules require that commissions paid to an
affiliated broker of a mutual fund for portfolio transactions not exceed
"usual and customary" brokerage commissions. The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities being purchased or sold on a securities exchange during a
comparable period of time." The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to affiliated brokers and will review these
procedures periodically. The Alger Equity Growth Series paid $2,452 in
brokerage commissions to Fred Alger & Company, Incorporated, an affiliated
broker, for the period from October 31, 1994 (commencement of operations) to
December 31, 1994, representing substantially all of that Series' aggregate
brokerage commissions for such period.
34
<PAGE>
VI. OTHER MATTERS
The number of shares of beneficial interest of each Series issued and
outstanding as of the Record Date are as follows:
<TABLE>
<CAPTION>
SHARES OUTSTANDING ON
SERIES RECORD DATE
------ ---------------------
<S> <C>
Back Bay Advisors Money Market Series..................... 872,603.992
Back Bay Advisors Bond Income Series...................... 1,374,423.674
Back Bay Advisors Managed Series.......................... 877,295.743
Capital Growth Series..................................... 2,128,806.131
Loomis Sayles Avanti Growth Series........................ 311,191.736
Loomis Sayles Small Cap Series............................ 190,903.167
Loomis Sayles Balanced Series............................. 1,296,282.761
Westpeak Stock Index Series............................... 568,148.109
Westpeak Value Growth Series.............................. 304,758.913
Draycott International Equity Series...................... 1,282,730.210
Salomon Brothers U.S. Government Series................... 550,328.460
Salomon Brothers Strategic Bond Opportunities Series...... 657,210.650
Venture Value Series...................................... 2,130,248.734
Alger Equity Growth Series................................ 2,578,107.108
--------------
TOTAL................................................. 15,123,039.389
</TABLE>
As of the Record Date, the following person owned beneficially (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934) the following
numbers of shares of the following Series, representing the indicated
percentage of the outstanding shares of such Series: Virginia G. Hawkins (2901
Middlebert Rd, West Bloomfield, MI)--33,534.605 (6.1%) of Salomon Brothers
U.S. Government Series.
As of the Record Date, all of the shares of each Series were owned of record
by either: (1) New England Variable Life Separate Account ("NEVL Separate
Account"), a separate account of New England Variable Life Insurance Company
("NEVLICO"), a wholly-owned life insurance subsidiary of The New England; (2)
The New England Variable Account, a separate account of The New England; (3)
New England Variable Annuity Separate Account ("NEVA Separate Account"), a
separate account of NEVLICO; or (4) certain separate accounts of The New
England established for the pooling of contributions under certain tax-
qualified group annuity contracts ("Group Separate Accounts"). The shares and
percentage of each Series held by these entities is set forth below:
35
<PAGE>
<TABLE>
<CAPTION>
SHARES SHARES
OWNED OWNED BY
SHARES BY THE NEW
OWNED BY THE NEW SHARES OWNED ENGLAND'S
NEVL % OF ENGLAND % OF BY NEVA % OF GROUP % OF
SEPARATE OUT- VARIABLE OUT- SEPARATE OUT- SEPARATE OUT-
SERIES ACCOUNT STANDING ACCOUNT STANDING ACCOUNT STANDING ACCOUNTS STANDING
------ ------------- -------- -------------- -------- ------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Back Bay Advisors 197,160.365 22.6 636,449.600 72.9 38,994.027 4.5 -- --
Money Market Series
Back Bay Advisors 252,569.318 18.4 1,100,039.305 80.0 21,815.051 1.6 -- --
Bond Income Series
Back Bay Advisors 142,283.845 16.2 735,011.898 83.8 0 0.0 -- --
Managed Series
Capital Growth Series 1,036,835.292 48.7 1,091,970.839 51.3 0 0.0 -- --
Loomis Sayles Avanti 112,692.607 36.2 185,409.078 59.6 13,068.589 4.2 21.462 0.0
Growth Series
Loomis Sayles Small 56,773.203 29.7 117,702.403 61.7 16,353.328 8.6 74.233 0.0
Cap Series
Loomis Sayles 28,956.053 2.2 981,376.198 75.7 279,202.247 21.6 6,748.263 0.5
Balanced Series
Westpeak Stock Index 202,383.867 35.6 365,764.242 64.4 0 0.0 -- --
Series
Westpeak Value 78,582.793 25.8 204,486.336 67.1 21,667.795 7.1 21.989 0.0
Growth Series
Draycott International 80,966.006 6.3 1,012,443.828 79.0 188,614.767 14.7 705.609 0.0
Equity Series
Salomon Brothers U.S. 0 0.0 390,173.133 70.9 160,155.327 29.1 0 0.0
Government Series
Salomon Brothers 0 0.0 521,598.066 79.3 128,551.352 19.6 7,061.231 1.1
Strategic Bond
Opportunities Series
Venture Value Series 210,439.828 9.9 1,677,314.292 78.7 242,451.315 11.4 43.299 0.0
Alger Equity Growth 325,056.142 12.6 1,992,157.736 77.3 260,577.187 10.1 316.043 0.0
Series
------------- -------------- ------------- ----------
Totals 2,724,699.319 11,011,896.954 1,371,450.985 14,992.129
</TABLE>
The Trust is subject to special voting provisions. As of the Record Date,
the Trust served as an investment vehicle for use only in connection with (i)
variable life insurance contracts offered by NEVLICO and (ii) certain variable
annuity contracts issued by The New England or NEVLICO. All shares of the
Trust owned by NEVLICO are attributable to the variable life insurance
policies and variable annuity contracts issued by NEVLICO or to charges
assessed by NEVLICO against those policies and contracts. NEVLICO has agreed
that each owner of such a policy or contract (an "Owner") will be permitted to
instruct NEVLICO as to how shares of the Trust attributable to the policies or
contracts owned by such Owner should be voted at meetings of Trust
shareholders. All shares of the Trust held by The New England Variable Account
are attributable to variable annuity contracts issued by The New England or to
charges assessed by The New England against such contracts. The holder of each
such contract (a "Contractholder") has the right to instruct The New England
as to how to vote the shares of the Trust attributable
36
<PAGE>
to such contract. All shares of the Trust attributable to variable life
insurance policies and variable annuity contracts for which no Owner
instructions have been received by NEVLICO and all shares of the Trust
attributable to charges assessed by NEVLICO against those policies and
contracts will be voted for, voted against or withheld from voting on any
proposal in the same proportions as are the shares for which Owner
instructions have been received by NEVLICO. All shares of the Trust held in
The New England Variable Account for which no Contractholder instructions have
been received by The New England and any shares of the Trust attributable to
charges assessed by The New England against variable annuity contracts will be
voted for, voted against or withheld from voting on any proposal in the same
proportions as are the shares for which Contractholder instructions have been
received by The New England. All shares of the Trust held by The New England's
Group Separate Accounts will be voted for, voted against or withheld from
voting on any proposal in the same proportions as are the aggregate of (i) all
shares for which voting instructions are received and (ii) all other shares
that are voted in proportion to such voting instructions.
Fifty percent of the shares of each Series outstanding on the Record Date,
present in person or represented by proxy, constitutes a quorum for the
transaction of business with respect to Proposals 1, 2, 3, 4 and 5. Votes cast
by proxy or in person at the Meeting will be counted by persons appointed by
the Trust as tellers for the Meeting. With respect to all Proposals, shares as
to which the proxies are instructed to abstain from voting will have the
effect of a negative vote on the proposal.
In the event that a quorum is not present for purposes of acting on any
Proposal, or sufficient votes in favor of any Proposal with respect to any
Series are not received by December 28, 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 through 5. They will vote against any
such adjournment those proxies required to be voted against any of Proposals 1
through 5 and will not vote any proxies that direct them to abstain from
voting on such Proposals.
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 through 5 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.
37
<PAGE>
SHAREHOLDER PROPOSALS AT FUTURE MEETINGS
Shareholder proposals to be presented at any future meeting of shareholders
of the Trust must be received by the Trust a reasonable time before the
Trust's solicitation of proxies for that meeting in order for such proposals
to be considered for inclusion in the proxy materials relating to that
meeting.
November 20, 1995
38
<PAGE>
INSTRUCTION FORM
THE PROXY TO WHICH THESE INSTRUCTIONS RELATE IS SOLICITED ON BEHALF OF THE
TRUSTEES OF NEW ENGLAND ZENITH FUND.
The undersigned hereby instructs that all shares of any series (each a "Series,"
and collectively, the "Series") of New England Zenith Fund (the "Fund") deemed
attributable to the undersigned's contracts with the issuing insurance company
be voted at the Special Meeting of Shareholders of the Fund on December 28, 1995
(the Notice and Proxy Statement with respect to which have been received by the
undersigned), and at all adjournments thereof, on each proposal described in
said notice set forth below:
- --------------------------------------------------------------------------------
IF YOU WISH TO VOTE BY TELEPHONE, PLEASE SEE THE INSTRUCTIONS BELOW.
- --------------------------------------------------------------------------------
PERSONAL IDENTIFICATION Signature(s)
NUMBER
-------------------------------
-------------------------------
+++ +++ Dated , 1995
+ + -------------------------
NOTE: Please sign exactly as your
name appears on this card. All joint
+ + owners should sign. When signing as
+++ +++ executor, administrator, attorney,
trustee or guardian or as custodian
for a minor, please give full title
as such. If a corporation, please
sign in full corporate name and
indicate the signer's office. If a
partner, sign in the partnership
name.
***PLEASE SEE REVERSE SIDE***
TELEPHONE VOTING INSTRUCTIONS
Dear Contractholder:
Your vote is important. We have provided an automated telephone voting option
which you may access 24 hours a day by dialing 800-842-7629 on a touch tone
telephone and keying in your PERSONAL IDENTIFICATION NUMBER.
HOWEVER, if you wish to vote in favor of some proposals and against or abstain
on others, you must do so by signing the enclosed Instruction Form and returning
it in the envelope provided.
After dialing 800-842-7629, you will hear the following instructions:
Please enter your 8-digit Personal Identification Number: Which is ________
Press 1 to vote for all items as recommended by the Board of Trustees or
press 9 if you wish to vote against all the Board of Trustees'
recommendations.
Once this is completed, the telephone voting option will automatically hang up
and your vote will be cast as you directed. THERE IS NO NEED FOR YOU TO MAIL
BACK YOUR INSTRUCTION FORM.
Thank you for voting.
<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR ALL OF THE ITEMS BELOW
PERTAINING TO THE RELEVANT SERIES
- --------------------------------------------------------------------------------
1. (With respect to all Series) To approve new investment advisory
arrangements to be effective upon the merger of New England Mutual Life
Insurance Company into Metropolitan Life Insurance Company, such
arrangements to be identical in substance to the investment advisory
arrangements in effect for the Series immediately prior to such merger.
FOR AGAINST ABSTAIN
Back Bay Advisors Money Market Series [_] [_] [_] (1)
Back Bay Advisors Bond Income Series [_] [_] [_] (2)
Back Bay Advisors Managed Series [_] [_] [_] (3)
Capital Growth Series [_] [_] [_] (4)
Loomis Sayles Avanti Growth Series [_] [_] [_] (5)
Loomis Sayles Small Cap Series [_] [_] [_] (6)
Loomis Sayles Balanced Series [_] [_] [_] (7)
Westpeak Value Growth Series [_] [_] [_] (8)
Westpeak Stock Index Series [_] [_] [_] (9)
Draycott International Equity Series [_] [_] [_] (10)
Salomon Brothers U.S. Government Series [_] [_] [_] (11)
Salomon Brothers Strategic Bond
Opportunities Series [_] [_] [_] (12)
Venture Value Series [_] [_] [_] (13)
Alger Equity Growth Series [_] [_] [_] (14)
2. (With respect to the Draycott International Equity Series) To approve a new
Sub-Advisory Agreement between TNE Advisers, Inc. ("TNE Advisers"), the
Series' current investment adviser, and Draycott Partners, Ltd.
("Draycott"), the Series' current sub-adviser, to be effective upon the
sale of Draycott to Cursitor Holdings Ltd. U.K.
[_] For [_] Against [_] Abstain (15)
3. (With respect to the Draycott International Equity Series) To approve a new
Sub-Advisory Agreement between TNE Advisers and Draycott to be effective
upon the acquisition of Cursitor Holdings Ltd. U.K. by Alliance Capital
Management L.P.
[_] For [_] Against [_] Abstain (16)
4. (With respect to the Alger Equity Growth Series) To approve a new Advisory
Agreement with TNE Advisers, the Series' current investment adviser, which
would increase the annual rate of the advisory fee payable by the Series.
[_] For [_] Against [_] Abstain (17)
5. (With respect to the Alger Equity Growth Series) To approve a new Sub-
Advisory Agreement between TNE Advisers and Fred Alger Management, Inc.,
the Series' current sub-adviser.
[_] For [_] Against [_] Abstain (18)
If this form is signed and returned with no choices indicated as to any proposal
on which the shares represented by the undersigned's contract are entitled to be
voted, such shares shall be voted FOR such proposal. With respect to each of
Proposals 1-5, only shares of the indicated Series are entitled to vote. Any
voting instructions submitted by the undersigned with respect to proposals on
which the undersigned is not entitled to give voting instructions shall be
disregarded.
YOUR VOTE IS IMPORTANT. Please vote as soon as possible.
<PAGE>
INSTRUCTION FORM
THE PROXY TO WHICH THESE INSTRUCTIONS RELATE IS SOLICITED ON BEHALF OF THE
TRUSTEES OF NEW ENGLAND ZENITH FUND.
The undersigned hereby instructs that all shares of any series (each a "Series,"
and collectively, the "Series") of New England Zenith Fund (the "Fund") deemed
attributable to the undersigned's contracts with the issuing insurance company
be voted at the Special Meeting of Shareholders of the Fund on December 28, 1995
(the Notice and Proxy Statement with respect to which have been received by the
undersigned), and at all adjournments thereof, on each proposal described in
said notice set forth below:
PERSONAL IDENTIFICATION Signature(s)
NUMBER
------------------------------
------------------------------
+++ +++ Dated , 1995
+ + ------------------------
NOTE: Please sign exactly as your
name appears on this card. All
+ + joint owners should sign. When
+++ +++ signing as executor, administrator,
attorney, trustee or guardian or as
custodian for a minor, please give
full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
***PLEASE SEE REVERSE SIDE***
<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE FOR ALL OF THE ITEMS BELOW
PERTAINING TO THE RELEVANT SERIES
- --------------------------------------------------------------------------------
1. (With respect to all Series) To approve new investment advisory
arrangements to be effective upon the merger of New England Mutual Life
Insurance Company into Metropolitan Life Insurance Company, such
arrangements to be identical in substance to the investment advisory
arrangements in effect for the Series immediately prior to such merger.
FOR AGAINST ABSTAIN
Back Bay Advisors Money Market Series [_] [_] [_] (1)
Back Bay Advisors Bond Income Series [_] [_] [_] (2)
Back Bay Advisors Managed Series [_] [_] [_] (3)
Capital Growth Series [_] [_] [_] (4)
Loomis Sayles Avanti Growth Series [_] [_] [_] (5)
Loomis Sayles Small Cap Series [_] [_] [_] (6)
Loomis Sayles Balanced Series [_] [_] [_] (7)
Westpeak Value Growth Series [_] [_] [_] (8)
Westpeak Stock Index Series [_] [_] [_] (9)
Draycott International Equity Series [_] [_] [_] (10)
Salomon Brothers U.S. Government Series [_] [_] [_] (11)
Salomon Brothers Strategic Bond
Opportunities Series [_] [_] [_] (12)
Venture Value Series [_] [_] [_] (13)
Alger Equity Growth Series [_] [_] [_] (14)
2. (With respect to the Draycott International Equity Series) To approve a new
Sub-Advisory Agreement between TNE Advisers, Inc. ("TNE Advisers"), the
Series' current investment adviser, and Draycott Partners, Ltd.
("Draycott"), the Series' current sub-adviser, to be effective upon the
sale of Draycott to Cursitor Holdings Ltd. U.K.
[_] For [_] Against [_] Abstain (15)
3. (With respect to the Draycott International Equity Series) To approve a new
Sub-Advisory Agreement between TNE Advisers and Draycott to be effective
upon the acquisition of Cursitor Holdings Ltd. U.K. by Alliance Capital
Management L.P.
[_] For [_] Against [_] Abstain (16)
4. (With respect to the Alger Equity Growth Series) To approve a new Advisory
Agreement with TNE Advisers, the Series' current investment adviser, which
would increase the annual rate of the advisory fee payable by the Series.
[_] For [_] Against [_] Abstain (17)
5. (With respect to the Alger Equity Growth Series) To approve a new Sub-
Advisory Agreement between TNE Advisers and Fred Alger Management, Inc.,
the Series' current sub-adviser.
[_] For [_] Against [_] Abstain (18)
If this form is signed and returned with no choices indicated as to any proposal
on which the shares represented by the undersigned's contract are entitled to be
voted, such shares shall be voted FOR such proposal. With respect to each of
Proposals 1-5, only shares of the indicated Series are entitled to vote. Any
voting instructions submitted by the undersigned with respect to proposals on
which the undersigned is not entitled to give voting instructions shall be
disregarded.
YOUR VOTE IS IMPORTANT. Please vote as soon as possible.
<PAGE>
501 Boylston Street
Boston, MA 02116-3700
617-578-2000
[LOGO APPEARS HERE] NEW ENGLAND ANNUITIES
A Business Unit of The New England
November 27, 1995
TO OWNERS OF ZENITH ACCUMULATOR VARIABLE ANNUITY CONTRACTS:
A Special Meeting of Shareholders of New England Zenith Fund (the "Trust") will
be held on December 28, 1995. At the Shareholders Meeting, New England Mutual
Life Insurance Company ("The New England") will vote all shares of the Trust
held in The New England Variable Account (the "Account") which are attributable
to Zenith Accumulator Variable Annuity Contracts in accordance with
instructions received from Contractholders. You are now being asked how shares
of the Trust deemed attributable to your Contract should be voted at the
Shareholders Meeting.
You should give voting instructions only on proposals which relate to a series
of the Trust in which your contract value was invested on the record date for
the Shareholders Meeting. The record date is October 31, 1995. If you give
voting instructions on a proposal for which you are not eligible to vote, The
New England will simply disregard those instructions.
Enclosed you will find a copy of the Notice of Meeting and Proxy Statement
relating to the Shareholders Meeting. After reviewing this material, please
complete and execute the Instruction Form and return it in the enclosed,
postage-paid, self-addressed envelope. If you fail to return an executed
Instruction Form, shares of the Trust deemed attributable to your Contract will
be voted by The New England in proportion to the voting instructions received
from all other Zenith Accumulator Contractholders.
The enclosed Proxy Statement describes matters affecting the Trust as a result
of The New England's agreement to merge with Metropolitan Life Insurance
Company ("Metropolitan Life"). Upon consummation of the merger, the Account
will become a separate account of Metropolitan Life. The Contracts issued by
the Account will thereafter be deemed to be variable annuity contracts issued
by Metropolitan Life, and the insurance obligations under the Contracts will be
backed by the assets of Metropolitan Life. It is possible, however, that in
light of the merger, the Contracts issued by the Account will be transferred to
New England Variable Life Insurance Company ("NEVLICO") pursuant to a separate
arrangement. NEVLICO is currently a subsidiary of The New England, but will
become a subsidiary of Metropolitan Life as a consequence of the merger. If the
Contracts are transferred to NEVLICO, your Contract will thereafter be deemed
to be a variable annuity contract issued by NEVLICO, and the insurance
obligations under your Contract will be backed by the assets of NEVLICO. In
connection with any such transfer, you will receive more information about the
transaction and how it affects your Contract. In either event, you will receive
more information about the company assuming the insurance obligations under
your Contract.
New England Mutual Life Insurance
Company
<PAGE>
501 Boylston Street
Boston, MA 02116-3700
617-578-2000
[LOGO APPEARS HERE] NEW ENGLAND ANNUITIES
A Business Unit of The New England
November 27, 1995
TO OWNERS OF ZENITH ACCUMULATOR VARIABLE ANNUITY CONTRACTS:
A Special Meeting of Shareholders of New England Zenith Fund (the "Trust") will
be held on Thursday, December 28, 1995. At the Shareholders Meeting, New
England Mutual Life Insurance Company ("The New England") will vote all shares
of the Trust held in The New England Variable Account (the "Account") which are
attributable to Zenith Accumulator Variable Annuity Contracts in accordance
with instructions received from Contractholders. You are now being asked how
shares of the Trust deemed attributable to your Contract should be voted at the
Shareholders Meeting. Under certain circumstances, however, annuitants have the
right to instruct Contractholders as to how all or a portion of the votes
attributable to a Contract are to be cast, and Contractholders are required to
cast such votes as instructed.
IN ORDER FOR THE VOTES UNDER YOUR CONTRACTS TO BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN BY YOU AND YOUR ANNUITANTS, YOU MUST RETURN A COMPLETED,
EXECUTED INSTRUCTION FORM. If you fail to return an executed Instruction Form,
shares of the Trust deemed attributable to your Contracts will be voted by The
New England in proportion to the voting instructions received from all other
Zenith Accumulator Contractholders.
Enclosed you will find a copy of the Notice of Meeting and Proxy Statement
relating to the Shareholders Meeting, as well as voting instruction forms with
the name of the annuitant entitled to instruct the Contractholder.
Please forward promptly (1) one Notice of Meeting and Proxy Statement and (2)
one Instruction Form to each person entitled to give voting instructions. One
Instruction Form is enclosed for each Contract under which votes are subject to
instruction.
The Instruction Form is to be used by each annuitant to convey instructions to
you as Contractholder. INSTRUCTION FORMS COMPLETED BY YOUR ANNUITANTS SHOULD
NOT BE RETURNED. AFTER YOU HAVE RECEIVED INSTRUCTIONS FROM AN ANNUITANT, YOU
SHOULD TRANSFER THESE INSTRUCTIONS TO THE ANNUITANT LISTING PROVIDED. RETURN
ONLY THE SINGLE INSTRUCTION FORM IN YOUR NAME, SIGNED BY YOU, ALONG WITH THE
APPROPRIATELY CHECKED ANNUITANT LIST.
If no annuitants transmit voting instructions, or if the annuitants do not have
the right to instruct, cast all votes at your sole discretion by completing and
signing the Instruction Form.
In order to cast votes under the Contracts you must return an INSTRUCTION FORM
signed by you, the Contract Owner.
If you have any questions concerning these procedures, please call collect,
Peter Zucker, Consultant, New England Mutual Life Insurance Company (617) 578-
3566.
The enclosed Proxy Statement describes matters affecting the Trust as a result
of The New England's agreement to merge with Metropolitan Life Insurance
Company ("Metropolitan Life"). Upon consummation of the merger, the Account
will become a separate account of Metropolitan Life. The Contracts issued by
the Account will thereafter be deemed to be variable annuity contracts issued
by Metropolitan Life, and the insurance obligations under the Contracts will be
backed by the assets of Metropolitan Life. It is possible, however, that in
light of the merger, the Contracts issued by the Account will be transferred to
New England Variable Life Insurance Company ("NEVLICO") pursuant to a separate
arrangement. NEVLICO is currently a subsidiary of The New England, but will
become a subsidiary of Metropolitan Life as a consequence of the merger. If the
Contracts are transferred to NEVLICO, your Contract will thereafter be deemed
to be a variable annuity contract issued by NEVLICO, and the insurance
obligations under your Contract will be backed by the assets of NEVLICO. In
connection with any such transfer, you will receive more information about the
transaction and how it affects your Contract. In either event, you will receive
more information about the company assuming the insurance obligations under
your Contract.
<PAGE>
501 Boylston Street
Boston, MA 02116-3700
617-578-2000
[LOGO APPEARS HERE] THE NEW ENGLAND
Insurance and Investment
November 27, 1995
TO OWNERS OF NEVLICO'S VARIABLE LIFE INSURANCE POLICIES:
A Special Meeting of Shareholders of New England Zenith Fund (the "Trust") will
be held on December 28, 1995. At the Shareholders Meeting, New England Variable
Life Insurance Company ("NEVLICO") will vote all shares of the Trust held in
The New England Variable Life Separate Account which are attributable to
NEVLICO's Variable Life Insurance Policies in accordance with instructions
received from Policy Owners. You are now being asked how shares of the Trust
deemed attributable to your Policy should be voted at the Shareholders Meeting.
You should give voting instructions only on proposals which relate to a series
of the Trust in which your policy's cash value was invested on the record date
for the Shareholders Meeting. The record date is October 31, 1995. If you give
voting instructions on a proposal for which you are not eligible to vote,
NEVLICO will simply disregard those instructions.
Enclosed you will find a copy of the Notice of Meeting and Proxy Statement
relating to the Shareholders Meeting. After reviewing this material, please
complete and execute the Instruction Form and return it in the enclosed,
postage-paid, self-addressed envelope. If you fail to return an executed
Instruction Form, shares of the Trust deemed attributable to your Policy will
be voted by NEVLICO in proportion to the voting instructions received from all
other NEVLICO Variable Life Policy Owners.
New England Variable Life Insurance
Company
<PAGE>
501 Boylston Street
Boston, MA 02116-3700
617-578-2000
[LOGO APPEARS HERE] THE NEW ENGLAND
Insurance and Investment
November 27, 1995
TO OWNERS OF NEVLICO'S VARIABLE LIFE INSURANCE POLICIES:
A Special Meeting of Shareholders of New England Zenith Fund (the "Trust") will
be held on Thursday, December 28, 1995. At the Shareholders Meeting, New
England Variable Life Insurance Company ("NEVLICO") will vote all shares of the
Trust held in The New England Variable Life Separate Account which are
attributable to NEVLICO'S Variable Life Insurance Policies in accordance with
instructions received from Policy Owners. You are now being asked how shares of
the Trust deemed attributable to your Policy should be voted at the
Shareholders Meeting. Under certain circumstances, however, plan participants
have the right to instruct Policy Owners as to how all or a portion of the
votes attributable to a Policy are to be cast, and Policy Owners are required
to cast such votes as instructed.
IN ORDER FOR THE VOTES UNDER YOUR POLICIES TO BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS GIVEN BY YOU AND YOUR PLAN PARTICIPANTS, YOU MUST RETURN A
COMPLETED, EXECUTED INSTRUCTION FORM. If you fail to return an executed
Instruction Form, shares of the Trust deemed attributable to your Policies will
be voted by NEVLICO in proportion to the voting instructions received from all
other Policy Owners.
Enclosed you will find a copy of the Notice of Meeting and Proxy Statement
relating to the Shareholders Meeting, as well as voting instruction forms with
the name of the plan participant entitled to instruct the Policy Owner.
Please forward promptly (1) one Notice of Meeting and Proxy Statement and (2)
one Instruction Form to each person entitled to give voting instructions. One
Instruction Form is enclosed for each Policy under which votes are subject to
instruction.
The Instruction Form is to be used by each plan participant to convey
instructions to you as Policy Owner. INSTRUCTION FORMS COMPLETED BY YOUR PLAN
PARTICIPANTS SHOULD NOT BE RETURNED. AFTER YOU HAVE RECEIVED INSTRUCTIONS FROM
A PLAN PARTICIPANT, YOU SHOULD TRANSFER THESE INSTRUCTIONS TO THE PLAN
PARTICIPANT LISTING PROVIDED. RETURN ONLY THE SINGLE INSTRUCTION FORM IN YOUR
NAME, SIGNED BY YOU, ALONG WITH THE APPROPRIATELY CHECKED PLAN PARTICIPANT
LIST.
If no plan participants transmit voting instructions, or if the plan
participants do not have the right to instruct, cast all votes at your sole
discretion by completing and signing the Instruction Form.
In order to cast votes under the Policies you must return an INSTRUCTION FORM
signed by you, the Policy Owner.
If you have any questions concerning these procedures, please call collect,
Peter Zucker, Consultant, New England Mutual Life Insurance Company (617) 578-
3566.
<PAGE>
501 Boylston Street
Boston, MA 02116-3700
617-578-2000
[LOGO APPEARS HERE] NEW ENGLAND ANNUITIES
A Business Unit of The New England
November 27, 1995
TO OWNERS OF AMERICAN GROWTH SERIES VARIABLE ANNUITY CONTRACTS:
A Special Meeting of Shareholders of New England Zenith Fund (the "Trust") will
be held on December 28, 1995. At the Shareholders Meeting, New England Variable
Life Insurance Company ("NEVLICO") will vote all shares of the Trust held in
the New England Variable Annuity Separate Account which are attributable to
American Growth Series Variable Annuity Contracts in accordance with
instructions received from Contractholders. You are now being asked how shares
of the Trust deemed attributable to your Contract should be voted at the
Shareholders Meeting.
You should give voting instructions only on proposals which relate to a series
of the Trust in which your contract value was invested on the record date for
the Shareholders Meeting. The record date is October 31, 1995. If you give
voting instructions on a proposal for which you are not eligible to vote,
NEVLICO will simply disregard those instructions.
Enclosed you will find a copy of the Notice of Meeting and Proxy Statement
relating to the Shareholders Meeting. After reviewing this material, please
complete and execute the Instruction Form and return it in the enclosed,
postage-paid, self-addressed envelope. If you fail to return an executed
Instruction Form, shares of the Trust deemed attributable to your Contract will
be voted by NEVLICO in proportion to the voting instructions received from all
other American Growth Series Contractholders.
New England Variable Life Insurance
Company
