<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NEW ENGLAND ZENITH FUND
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Notes:
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NEW ENGLAND ZENITH FUND
Back Bay Advisors Money Market Series
Back Bay Advisors Bond Income Series
Salomon Brothers Strategic Bond Opportunities Series
Salomon Brothers U.S. Government Series
Back Bay Advisors Managed Series
Loomis Sayles Balanced Series
Alger Equity Growth Series
Capital Growth Series
Davis Venture Value Series
Goldman Sachs Midcap Value Series
Loomis Sayles Small Cap Series
MFS Investors Series
MFS Research Managers Series
Westpeak Growth and Income Series
Westpeak Stock Index Series
Morgan Stanley International Magnum Equity Series
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
October 15, 1999
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 Life
Insurance Company ("New England Financial"), 501 Boylston Street, Boston,
Massachusetts 02116, on October 15, 1999 at 2:00 p.m. (Boston time) for the
following purposes:
With respect to each series of the Trust (each, a "Series"):
1. To elect a Board of Trustees.
With respect to the Back Bay Advisors Money Market Series ("Money Market"):
2a. To approve or disapprove a new Advisory Agreement relating to Money
Market between New England Investment Management, Inc. ("NEIM") and the
Trust.
With respect to the Back Bay Advisors Bond Income Series ("Bond Income"):
2b. To approve or disapprove a new Advisory Agreement relating to Bond
Income between NEIM and the Trust.
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With respect to the Westpeak Growth and Income Series ("Growth and Income"):
2c. To approve or disapprove a new Advisory Agreement relating to Growth
and Income between NEIM and the Trust.
With respect to Money Market, Bond Income, the Back Bay Advisors Managed
Series (the "Managed Series"), the Capital Growth Series, the Loomis Sayles
Small Cap Series ("Small Cap"), Growth and Income and the Westpeak Stock Index
Series ("Stock Index"):
3. To replace the fundamental investment objective of the Series with an
otherwise identical, non-fundamental investment objective.
With respect to Money Market, Bond Income, the Managed Series, the Loomis
Sayles Balanced Series, the Alger Equity Growth Series, the Davis Venture
Value Series, Small Cap, the MFS Investors Series, the MFS Research Managers
Series, Growth and Income, Stock Index and the Morgan Stanley International
Magnum Equity Series:
4. To approve or disapprove a proposal with respect to the future
operations of the Series whereby the Series may from time to time, to the
extent permitted by an exemption or exemptions granted by the Securities
and Exchange Commission, permit NEIM to enter into new or amended
agreements with sub-advisers with respect to the Series without obtaining
shareholder approval of such agreements.
With respect to each Series:
5. To approve or disapprove certain changes to the fundamental
investment restrictions of the Series.
With respect to each Series:
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,
Thomas M. Lenz, Secretary
September 10, 1999
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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.
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NEW ENGLAND ZENITH FUND
Back Bay Advisors Money Market Series
Back Bay Advisors Bond Income Series
Salomon Brothers Strategic Bond Opportunities Series
Salomon Brothers U.S. Government Series
Back Bay Advisors Managed Series
Loomis Sayles Balanced Series
Alger Equity Growth Series
Capital Growth Series
Davis Venture Value Series
Goldman Sachs Midcap Value Series
Loomis Sayles Small Cap Series
MFS Investors Series
MFS Research Managers Series
Westpeak Growth and Income Series
Westpeak Stock Index Series
Morgan Stanley International Magnum Equity Series
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
by the Board of Trustees (the "Trustees") of New England Zenith Fund (the
"Trust") for use at the Special Meeting of Shareholders of the Trust called to
be held at the offices of New England Life Insurance Company ("New England
Financial"), 501 Boylston Street, Boston, Massachusetts 02116 on October 15,
1999 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
contract holders beginning on or about September 10, 1999. Shareholders of
record of a series of the Trust (each, a "Series") at the close of business on
July 30, 1999 (the "Record Date") are entitled to vote on the proposals that
apply to that Series. A copy of the Annual Report of the Trust for the fiscal
year ended December 31, 1998, and the Trust's semiannual report for the six
months ended June 30, 1999, may be obtained without charge by calling (800)
356-5015.
This Proxy Statement consists of seven parts.
The Introduction contains general information relating to the Meeting and a
summary of the matters being proposed for shareholder consideration at the
Meeting.
Part I contains information relating to Proposal 1, the election of the
Trustees of the Trust. The shareholders of all Series will vote together on
this Proposal.
Part II contains information relating to Proposals 2a, 2b and 2c, the
proposed new Advisory Agreements for the Back Bay Advisors Money Market Series
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("Money Market"), the Back Bay Advisors Bond Income Series ("Bond Income") and
the Westpeak Growth and Income Series ("Growth and Income"), respectively.
Only the shareholders of Money Market will vote on Proposal 2a; only the
shareholders of Bond Income will vote on Proposal 2b; and only the
shareholders of Growth and Income will vote on Proposal 2c.
Part III contains information relating to Proposal 3, the proposed
replacement of the fundamental investment objectives of certain of the Series
with otherwise identical, non-fundamental objectives. The shareholders of each
of those Series will vote on that Proposal separately from the shareholders of
each other Series.
Part IV contains information relating to Proposal 4 whereby each Series that
has not already done so (other than Capital Growth) may, to the extent
permitted by any exemption or exemptions granted by the Securities and
Exchange Commission (the "SEC"), permit New England Investment Management,
Inc. ("NEIM") to enter into new or amended agreements with sub-advisers with
respect to such Series without obtaining shareholder approval of such
agreements. The shareholders of each Series voting on that Proposal will vote
separately from the shareholders of each other Series.
Part V contains information relating to Proposal 5, the proposed changes to
the fundamental investment restrictions of each Series in order to adopt a set
of standardized investment restrictions. The shareholders of each Series will
vote separately from the shareholders of each other Series on that Proposal.
Part VI contains information about the Trust and other matters.
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INTRODUCTION
The Trust consists of sixteen Series. The following table illustrates which
of the Proposals described in this Proxy Statement relate to which of the
Series:
<TABLE>
<CAPTION>
Proposals Relevant Series
--------- ----------------------------
<C> <S> <C>
1. Election of Trustees. All Series
2a. Approval of a new Advisory Agreement Money Market
relating to Money Market.
2b. Approval of a new Advisory Agreement Bond Income
relating to Bond Income.
2c. Approval of a new Advisory Agreement Growth and Income
relating to Growth and Income.
3. Replacing the fundamental investment Money Market, Bond Income,
objective of the Series with an otherwise the Back Bay Advisors
identical, non-fundamental investment Managed Series (the "Managed
objective. Series"), the Capital Growth
Series ("Capital Growth"),
the Loomis Sayles Small Cap
Series ("Small Cap"), Growth
and Income and the Westpeak
Stock Index Series ("Stock
Index")
4. Approval of a grant of authority to NEIM to Money Market, Bond Income,
enter into new sub-advisory agreements the Managed Series, the
without additional shareholder approval Loomis Sayles Balanced
under certain conditions. Series (the "Balanced
Series"), the Alger Equity
Growth Series ("Equity
Growth"), the Davis Venture
Value Series ("Venture
Value"), Small Cap, the MFS
Investors Series (the
"Investors Series"), the MFS
Research Managers Series
(the "Research Managers
Series"), Growth and Income,
Stock Index and the Morgan
Stanley International Magnum
Equity Series
("International Equity").
</TABLE>
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<TABLE>
<CAPTION>
Proposals Relevant Series
--------- ----------------------------
<C> <S> <C>
5. Approval of certain changes to the Series' See the table following the
fundamental investment restrictions in order summary of changes below.
to adopt a set of standardized investment
restrictions. A summary of each proposed
change is set forth below, followed by a
table indicating which changes apply to
which Series:
</TABLE>
<TABLE>
<C> <S>
5a. Eliminate the fundamental investment restrictions relating to investments
in a single issuer.
5b. Eliminate the fundamental investment restriction relating to short sales
and purchasing securities on margin.
5c. Revise the fundamental investment restriction relating to concentration
of investments in one industry.
5d. Revise the fundamental investment restriction relating to borrowings.
5e. Eliminate the fundamental investment restriction relating to investments
in businesses less than three years old.
5f. Eliminate the fundamental investment restriction relating to issuers
whose shares are beneficially owned by Trustees and officers of the Trust
or directors and officers of certain affiliates of the Trust.
5g. Revise the fundamental investment restriction relating to underwriting of
securities.
5h. Eliminate the fundamental investment restrictions relating to the
purchase of restricted securities and illiquid securities.
5i. Eliminate the fundamental investment restriction relating to investments
made for the purpose of exercising control or management.
5j. Eliminate the fundamental investment restriction relating to joint
trading of securities.
5k. Eliminate the fundamental investment restriction relating to investments
in other investment companies.
5l. Revise the fundamental investment restriction relating to investments in
commodities and real estate.
5m. Eliminate the fundamental investment restriction relating to pledging
assets.
5n. Revise the fundamental investment restriction relating to making loans.
5o. Eliminate the fundamental investment restriction relating to the purchase
and/or writing of options.
5p. Revise the fundamental investment restriction relating to the issuance of
senior securities.
</TABLE>
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<TABLE>
<CAPTION>
Series Relevant Proposals
------ -------------------------
<S> <C>
Money Market, Bond Income, the Managed Series,
Capital Growth, Stock Index 5a through 5o
Strategic Bond, the U.S. Government Series, the
Balanced Series, Equity Growth, Venture Value, the
Goldman Sachs Midcap Value Series, Small Cap, the
Investors Series, the Research Managers Series,
Growth and Income and International Equity. 5c, 5d, 5g, 5l, 5n and 5p
</TABLE>
Each timely, properly executed proxy will be voted as the shareholder of
record instructs. If no choice is indicated, the proxy will be voted in favor
of the Proposals set forth in the attached Notice of Meeting on which the
shareholder is entitled to vote. 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 the proxy and voting in person.
The costs of solicitation of proxies will be borne 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 NEIM, New
England Financial, Metropolitan Life Insurance Company ("MetLife") and New
England Securities Corporation ("New England Securities"), the principal
underwriter of the Trust.
Summary of Proposals
1. Election of Trustees
Proposal 1 relates to the election of the Trustees by all Series.
The Trust currently has a board of eight Trustees, all of whom also serve on
the governing board of New England Variable Annuity Fund I (the "NEVA Fund").
This Proxy Statement proposes re-electing the eight current Trustees and
electing two new nominees, Edward A. Benjamin and Mary Ann Brown.
2. New Advisory Agreements for Money Market, Bond Income and Growth and Income
Proposals 2a, 2b and 2c relate to proposed new Advisory Agreements for Money
Market, Bond Income and Growth and Income, respectively.
The Trustees of the Trust unanimously approved the proposed new Advisory
Agreements between NEIM and each of Money Market, Bond Income and Growth and
Income (the "New Advisory Agreements") at a meeting of the Trustees on June
17, 1999. Under the current Advisory Agreement for each Series (the "Current
Advisory Agreements"), the fee rate payable by a Series to NEIM decreases for
assets in excess of certain levels. These reductions in fees at specific asset
levels are commonly known as "breakpoints." Under the New Advisory Agreements,
the breakpoints will be set at higher asset levels than under the Current
Advisory Agreements. Therefore, if a Series reaches an asset level that
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would have triggered a reduction in fees under its Current Advisory Agreement,
but not under its New Advisory Agreement, that Series will incur higher fees
payable to NEIM under its New Advisory Agreement. The annual rate of the fees
payable by each of these Series under the applicable Current Advisory
Agreement or New Advisory Agreement is expressed as a percentage of the
average daily net assets of the Series in the table below.
<TABLE>
<CAPTION>
Advisory Agreement
---------------------------------------
Series Rate Current New
------ ----- ------------------ --------------------
<S> <C> <C> <C>
Money Market 0.35% First $500,000,000 First $1,000,000,000
0.30% Next $500,000,000 Next $1,000,000,000
0.25% Excess Excess
Bond Income 0.40% First $400,000,000 First $1,000,000,000
0.35% Next $300,000,000 Next $1,000,000,000
0.30% Next $300,000,000 Next $1,000,000,000
0.25% Excess Excess
Growth and Income 0.70% First $200,000,000 First $ 200,000,000
0.65% Next $300,000,000 Next $1,300,000,000
0.60% Excess Excess
</TABLE>
If the shareholders of a Series approve the applicable Proposal, the New
Advisory Agreement and the proposed fee increase for that Series will take
effect on January 1, 2000.
3. Replacement of Fundamental Investment Objectives
Proposal 3 relates to the replacement of the fundamental investment
objectives of certain Series with otherwise identical, non-fundamental
investment objectives. Currently seven Series, Money Market, Bond Income, the
Managed Series, Capital Growth, Small Cap, Growth and Income and Stock Index,
have investment objectives that are "fundamental," which means that a Series
must obtain shareholder approval in order to change its investment objective.
The Trustees are not proposing at this time any other changes to the
investment objectives of the Series. The change from fundamental to non-
fundamental is being proposed to provide greater flexibility and to avoid the
delay and expense of holding a shareholder meeting should the Trustees in the
future determine that further changes to the investment objective of any
Series are desirable.
4. Approval of Exemptive Order Relating to Sub-advisers
Proposal 4 relates to an exemptive order for the Series advised by NEIM.
Generally, the Investment Company Act of 1940 (the "1940 Act") requires that
the shareholders of an investment company like the Trust must vote on the
approval of any new or amended advisory or sub-advisory agreement. The Trust
and NEIM have received from the SEC an exemption from this shareholder
approval voting requirement for sub-advisory agreements in certain
circumstances (the "SEC Voting Exemption").
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Under the SEC Voting Exemption, NEIM is permitted under specified conditions
to enter into new and amended sub-advisory agreements for the management of
each Series to which it acts as adviser, including agreements with new sub-
advisers and agreements with existing sub-advisers if there is a material
change in the terms of the sub-advisory agreement or if there is a
"assignment" as defined in the 1940 Act, or other events causing termination
of the existing sub-advisory agreement, without obtaining approval of the
Series' shareholders of such new or amended sub-advisory agreement. However,
no Series may rely on the SEC Voting Exemption without first obtaining a
shareholder vote granting such Series the authority to use the exemption. The
Trustees believe that approval of this Proposal could reduce the delay and
expense associated with shareholders' meetings that would otherwise need to be
held.
5. Adoption of Standardized Investment Restrictions
Proposal 5 relates to the elimination of and changes to certain fundamental
investment restrictions of each Series.
The Trustees believe that the proposed changes to each Series' fundamental
investment restrictions will enhance the ability of the advisers and sub-
advisers of the Trust to manage each Series more efficiently as regulatory and
investment conditions change in the future. Other revisions are intended to
simplify and make uniform those fundamental investment restrictions that each
Series is required to follow under applicable law.
I. ELECTION OF TRUSTEES
It is proposed that 10 persons be elected as Trustees of the Trust. Of the
ten nominees, only Mr. Benjamin and Ms. Brown are not currently Trustees. The
nominees, their ages at July 30, 1999 and their principal occupations and
directorships during the past five years are listed below; similar prior
positions within the same company (or with corporate predecessors) are
omitted.
<TABLE>
<CAPTION>
Name of Nominee Age Principal Occupations for Last Five Years
--------------- --- ----------------------------------------
<S> <C> <C>
John J. Arena 62 Trustee of the Trust since 1996;
retired; formerly, Vice Chairman of the
Board of Directors of Bay Banks, Inc.
and President of Bay Banks Investment
Management
Edward A. Benjamin* 61 Retired; formerly, Partner, Ropes & Gray
(law firm); Director, Precision Optics
Corporation (optics manufacturer)
Mary Ann Brown* 47 President, New England Products and
Services, New England Financial;
formerly, President and Chief Executive
Officer, Atlantic International
Reinsurance Company; formerly, Director,
Swiss Reinsurance Company; formerly,
Principal, Tillinghast/Towers Perrin
(consulting)
</TABLE>
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<TABLE>
<CAPTION>
Name of Nominee Age Principal Occupations for Last Five Years
--------------- --- ----------------------------------------
<S> <C> <C>
John W. Flynn 60 Trustee of the Trust since 1996;
retired; formerly, Vice Chairman, Chief
Financial Officer, Fleet Financial Group
(banking)
Anne M. Goggin* 50 Trustee of the Trust since 1995;
Chairman of the Board and President of
the Trust; Senior Vice President and
Associate General Counsel, New England
Financial; Chairman of the Board and
President, NEIM; formerly, Vice
President, General Counsel, Secretary
and Clerk, New England Securities
Corporation
Nancy Hawthorne 48 Trustee of the Trust since 1995;
Chairman of the Board, WorldClinic (a
distance medicine company); Director,
Perini Corporation (construction);
Director, Avid Technologies (computer
software company); Director, CGU
(property and casualty insurance
company); formerly, Chief Executive
Officer and Managing Partner, Hawthorne,
Krauss and Associates (corporate
financial advisor); formerly, Chief
Financial Officer and Executive Vice
President, Continental Cablevision,
subsequently renamed MediaOne (cable
television company)
Joseph M. Hinchey 74 Trustee of the Trust since 1993;
retired; formerly, Senior Vice
President-Finance, Analog Devices, Inc.
(manufacturer of electronic devices);
Trustee, Union College and Citizens
Scholarship Foundation of America, Inc.
Robert B. Kittredge 78 Trustee of the Trust since 1989;
retired; Trustee, CGM Trust and CGM
Capital Development Fund; formerly, Vice
President, General Counsel, and
Director, Loomis, Sayles & Company, Inc.
(investment management)
John T. Ludes 63 Trustee of the Trust since 1996; Vice
Chairman, formerly, President and Chief
Operating Officer, Fortune Brands
(global conglomerate); formerly,
President and CEO, Acushnet Company
(athletic equipment)
Dale R. Marshall 62 Trustee of the Trust since 1995;
President, Wheaton College
</TABLE>
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* Mr. Benjamin is an "interested person" of the Trust, as defined in the
1940 Act, because until December 1998 he was a partner of Ropes & Gray, a
law firm that acted as counsel to the Trust and to NEIM and certain of its
affiliated companies. He will continue to be classified as an "interested
person" of the Trust until December 31, 2000. If elected, Mr. Benjamin
shall receive the same remuneration from the Trust as is received by the
Trustees who are not "interested persons" of the Trust. Mses. Goggin and
Brown are considered "interested persons" of the Trust due to their
positions with New England Financial, and, in the case of Ms. Goggin, with
NEIM and the Trust.
Each current Trustee, and each new nominee if elected, will serve as Trustee
until the next meeting held for the purpose of electing Trustees and until his
or her successor is elected and qualified, or until his or her earlier death,
resignation, removal or retirement. However, Messrs. Hinchey and Kittredge are
scheduled to retire from the Board of Trustees on December 31, 1999. If any of
the nominees should be unavailable for election at the time of the Meeting
(which is not presently anticipated), the persons named as proxies may vote
for other persons in their discretion, or the Trustees may vote to fix the
number of Trustees at less than 10.
The Trust's Agreement and Declaration of Trust does not provide for the
annual election of Trustees. However, in accordance with the 1940 Act, (i) the
Trust will hold a shareholders' meeting for the election of Trustees at such
times as less than a majority of the Trustees holding office have been elected
by shareholders, and (ii) if, after filling a vacancy on the Board of
Trustees, less than two-thirds of the Trustees holding office would have been
elected by the shareholders, that vacancy may only be filled by a vote of the
shareholders. In addition, Trustees may be removed from office by a written
consent signed by the holders of two-thirds of the outstanding shares of the
Trust and filed with the Trust's custodian, or by vote of the holders of two-
thirds of the outstanding shares of the Trust at a meeting duly called for
such purpose, which meeting shall be held upon the written request of the
shareholders of not less than 10% of the Trust's outstanding shares.
As of June 30, 1999, Ms. Goggin beneficially owned 130.83 shares of Venture
Value through her participation in an employee benefit plan of New England
Financial. Ms. Brown, as of August 30, 1999, beneficially owned 1,317.84
shares of Venture Value, 219.80 shares of Small Cap and 4,532.07 shares of the
Balanced Series through her participation in an employee benefit plan of New
England Financial. Each such holding represents and, in the case of Venture
Value, both such holdings in the aggregate represent, less than 1% of the
outstanding shares of each such Series and of the Trust.
Committees of the Board
The Trustees have delegated certain functions to two committees, the Audit
Committee and the Contract Review and Governance Committee, each of which
consists of certain Trustees who are not "interested persons" of the Trust.
Currently,
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the members of the Audit Committee are Messrs. Flynn, Hinchey and Ludes and
Ms. Marshall, and the members of the Contract Review and Governance Committee
are Messrs. Arena, Hinchey and Kittredge and Mses. Hawthorne and Marshall.
The Audit Committee's responsibilities include (i) review of financial and
accounting controls and procedures; (ii) recommendations as to the selection
of the independent accountants; (iii) review of the scope of the audit; (iv)
review of financial statements and audit reports; and (v) review of the
independence of the independent accountants and approval of fees and
assignments relating to both audit and non-audit activities of the independent
accountants. Mr. Flynn currently serves as chairman of the Audit Committee,
which met twice in 1998. The Audit Committee met once between January 1, 1999
and July 30, 1999.
The Contract Review and Governance Committee reviews and makes
recommendations to the board as to contracts requiring approval of a majority
of the Trustees who are not interested persons of the Trust or the relevant
adviser or sub-adviser, and any other contracts which may be referred to it by
the board. This Committee also makes recommendations to the board regarding
nominees for election as Trustees of the Trust and the compensation of the
Trustees who are not "interested person" of the Trust. The Committee will
consider nominees recommended by shareholders. Written recommendations
together with supporting information should be directed to the Committee in
care of the Trust. Mr. Arena currently serves as chairman of the Contract
Review and Governance Committee, which met twice in 1998. This Committee met
four times between January 1, 1999 and July 30, 1999.
During 1998, the Board of Directors of the Trust held five meetings. The
Board held four meetings between January 1, 1999 and July 30, 1999. Each of
the Trustees attended all of his/her Board and Committee meetings in 1998
except Mr. Ludes, who attended 86% of these meetings. Each of the Trustees
attended all of his/her Board and Committee meetings between January 1, 1999
and July 30, 1999 except Mr. Hinchey who attended 78% of these meetings.
Board Compensation
The Trust does not pay any remuneration to its officers or to its Trustees
who are directors, officers or employees of the Trust's investment advisers or
sub-advisers or of affiliated companies of such advisers or sub-advisers.
Each Trustee who is not an "interested person" of the Trust currently
receives (and, if elected, Mr. Benjamin will receive), in the aggregate for
serving on the boards of the Trust and the NEVA Fund, a retainer fee at the
annual rate of $20,000 and meeting attendance fees of $2,500 for each board
meeting he or she attends. Committee chairmen also receive an additional
retainer fee at the annual rate of $6,000 for the Contract Review and
Governance Committee chairman and $4,000 for the Audit Committee chairman.
These fees are allocated among the Trust and the NEVA Fund based on a formula
that takes into account, among other factors, the net assets of each, or in
such other manner as the board deems appropriate.
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During the fiscal year ended December 31, 1998, the current Trustees of the
Trust received the amounts set forth below for serving as Trustees of the
Trust and also for serving on the board of the NEVA Fund. As of December 31,
1998, there were a total of 15 funds in the Trust and the NEVA Fund combined.
Compensation Table
for the fiscal period ended December 31, 1998
<TABLE>
<CAPTION>
Total
Pension or Estimated Compensation
Aggregate Retirement as Annual Benefits from Trust and
Name of Compensation Part of Upon Trust Complex*
Person, Position from Trust Trust Expenses Retirement Paid to Trustee
---------------- ------------ -------------- --------------- ---------------
<S> <C> <C> <C> <C>
John J. Arena $39,498 -- -- $41,000
John W. Flynn 31,280 -- -- 32,500**
Anne M. Goggin 0 -- -- 0
Nancy Hawthorne 33,614 -- -- 35,000
Joseph M. Hinchey 37,536 -- -- 39,000
Robert B. Kittredge 35,000 -- -- 72,000***
John T. Ludes 31,280 -- -- 32,500
Dale R. Marshall 31,280 -- -- 32,500
</TABLE>
- -----------
* The current Trustees who are not "interested persons" of the Trust
received compensation for serving on the boards of the Trust and the NEVA
Fund.
** Mr. Flynn's total accrued deferred compensation from the Trust as of
December 31, 1998 was $84,144.
*** Mr. Kittredge's compensation also includes amounts paid to him as a
trustee of the CGM Fund, an affiliate of the Trust.
The Trust provides no pension or retirement benefits to Trustees, but has
adopted a deferred payment arrangement under which each Trustee may elect not
to receive fees from the Trust on a current basis but to receive in a
subsequent period an amount equal to the value that such fees would have if
they had been invested in a designated Series on the normal payment date for
such fees. As a result of this method of calculating the deferred payments,
each Series, upon making the deferred payments, will be in the same financial
position as if the fees had been paid on the normal payment dates.
The Agreement and Declaration of Trust and the By-Laws of the Trust provide
that the Trust will indemnify its Trustees and officers against liabilities
and expenses incurred in connection with litigation in which they may be
involved because of their offices with the Trust, unless it is determined in
the manner specified in the By-Laws that they have not acted in good faith in
the reasonable belief that their actions were in the best interests of the
Trust, and except that no such person shall be indemnified against any
liability to the Trust or its shareholders arising by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such person's office.
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<PAGE>
Executive Officers of the Trust
The following table lists the executive officers of the Trust. Each such
person has been elected to the indicated office by the Trust's Trustees, and
each such person's term is until his or her successor is elected and qualified
or earlier resignation, retirement or removal. Each such person's principal
occupation is as an employee or officer of, and each such person serves as an
officer of the Trust at the request of, one or more of the Trust's investment
advisers, New England Securities, New England Financial or a parent company of
one or more of the foregoing. Each officer's current principal occupation is
listed; similar prior positions within the same company (or with corporate
predecessors) are omitted.
<TABLE>
<CAPTION>
Office with Principal Occupation;
Name and Office with the Trust Business Experience for at
Trust (Age at July 30, 1999) Held Since Least the Past Five Years
---------------------------- ---------------- ----------------------------
<S> <C> <C>
Anne M. Goggin, June 17, 1999 Senior Vice President and
Chairman of the Board, Chief Associate General Counsel,
Executive Officer, President New England Financial;
(50) Chairman of the Board and
President, NEIM; formerly,
Vice President, General
Counsel, Secretary and
Clerk, New England
Securities Corporation
John F. Guthrie, April 28,1995 Vice President, New England
Senior Vice President (55) Financial; Senior Vice
President and Director,
NEIM; President New England
Portfolio Advisors, Inc.
Alan C. Leland, April 23, 1994 Senior Vice President, New
Senior Vice President (47) England Financial; Chief
Financial Officer, NEIM
Peter H. Duffy, October 28, 1998 Second Vice President, New
Treasurer (43) England Financial; Senior
Vice President, NEIM
Thomas M. Lenz, March 5, 1999 Counsel, New England
Secretary (41) Financial; Secretary, Clerk,
and General Counsel, NEIM;
formerly, Vice President,
State Street Bank and Trust
Company; Senior Vice
President, U.S./Offshore
Product Development and
Associate General Counsel,
Signature Financial Group,
Inc.
</TABLE>
- -----------
The address of each of the officers of the Trust is 501 Boylston Street,
Boston, Massachusetts 02116.
14
<PAGE>
Trustee Recommendation
The current Trustees of the Trust unanimously recommend that the
shareholders of the Trust vote FOR the election of each of the nominees.
The election of Trustees will be by a majority of the shares of the Trust
represented at the Meeting either in person or by proxy. All Series will vote
together as a single class.
II. NEW ADVISORY AGREEMENTS
Current Advisory Agreements
NEIM currently serves as investment adviser to Money Market, Bond Income and
Growth and Income under the Current Advisory Agreements, dated August 30,
1996, and has acted as adviser to each of these three Series since May 1,
1995. The Current Advisory Agreements each provide that NEIM will, subject to
its rights to delegate such responsibilities to other parties, provide to the
Series both portfolio management services and administrative services. NEIM
has entered into sub-advisory agreements, at no extra cost to the Series,
under which NEIM has delegated its portfolio management responsibilities for
Money Market and Bond Income to Back Bay Advisors, L.P. ("Back Bay Advisors")
and for Growth and Income to Westpeak Investment Advisors, L.P. ("Westpeak
Advisors"). Those sub-advisory agreements are not being amended in connection
with Proposals 2a, 2b and 2c, and no shareholder action relating to those
agreements is required at this time.
Under each Current Advisory Agreement, a management fee is payable by the
relevant Series to NEIM at the annual rates set forth below under the heading
"Comparison of New Advisory Agreements and Current Advisory Agreements." For
the fiscal year ended December 31, 1998, the aggregate management fees payable
by Money Market, Bond Income and Growth and Income to NEIM under the
applicable Current Advisory Agreement were $463,281, $917,376 and $1,462,154,
respectively.
The Trustees most recently approved the continuation of the Current Advisory
Agreements for one-year periods at meetings held on June 18, 1998 and June 17,
1999. Shareholders of each of these three Series approved the applicable
Current Advisory Agreement at a meeting held on December 28, 1995. The purpose
of the submission of the Current Advisory Agreements for shareholder approval
at such time was to approve their continuance following a change in control of
NEIM, Back Bay Advisors and Westpeak Advisors in connection with the merger of
NEIM's (and New England Financial's) former parent company, New England Mutual
Life Insurance Company (which also controlled Back Bay Advisors' and Westpeak
Advisors' parent companies), with and into MetLife, with MetLife as the
surviving company, which merger was consummated on August 30, 1996.
15
<PAGE>
Comparison of New Advisory Agreements and Current Advisory Agreements
The Trustees have approved, and recommend that the shareholders of Money
Market, Bond Income and Growth and Income approve, the New Advisory Agreement
for each Series between NEIM and the Trust (Proposals 2a, 2b and 2c,
respectively). The New Advisory Agreements are substantially similar to the
Current Advisory Agreements, except that the New Advisory Agreements provide
for reductions in management fees (also known as "breakpoints") at higher
asset levels than provided for in the Current Advisory Agreements. Setting the
breakpoints at higher asset levels will increase the management fee rate
payable by each Series to NEIM, when and if such Series reaches an asset level
that would have triggered a reduction in fees under its Current Advisory
Agreement, but not under its New Advisory Agreement.
The table below sets forth the annual rates at which management fees are
payable by each Series to NEIM under the Current Advisory Agreements and the
New Advisory Agreements. Fees are expressed as annual percentage rates of the
average daily net assets of each Series.
<TABLE>
<CAPTION>
Advisory Agreement
---------------------------------------
Series Rate Current New
------ ----- ------------------ --------------------
<S> <C> <C> <C>
Money Market 0.35% First $500,000,000 First $1,000,000,000
0.30% Next $500,000,000 Next $1,000,000,000
0.25% Excess Excess
Bond Income 0.40% First $400,000,000 First $1,000,000,000
0.35% Next $300,000,000 Next $1,000,000,000
0.30% Next $300,000,000 Next $1,000,000,000
0.25% Excess Excess
Growth and Income 0.70% First $200,000,000 First $ 200,000,000
0.65% Next $300,000,000 Next $1,300,000,000
0.60% Excess Excess
</TABLE>
As the New Advisory Agreements do not affect fee rates at current asset
levels for any Series, but rather increase the asset levels at which possible
reductions in fee rates will occur, it is difficult to predict accurately when
and by how much the New Advisory Agreements will affect fees payable by the
Series. However, it is likely that Money Market, Bond Income and Growth and
Income will pay more under the relevant New Advisory Agreement in the future.
Money Market. On July 30, 1999, Money Market had net assets of approximately
$224 million. The Current Advisory Agreement and the New Advisory Agreement
for that Series each provide that the first $500 million of average daily net
assets will be subject to a fee payable to NEIM at an annual rate of 0.35%.
Therefore, until Money Market's net assets grow by approximately
16
<PAGE>
$276 million to $500 million, Proposal 2a will have no effect on the fees
payable by Money Market. Under its New Advisory Agreement, the next $1.5
billion of net assets of Money Market would be subject to a fee at an annual
rate that is 0.05% higher than under its Current Advisory Agreement. This
means that, for every $1,000,000 dollars of net assets from $500 million up to
$2 billion, Money Market would pay to NEIM $500 more per year under its New
Advisory Agreement than it would have paid under its Current Advisory
Agreement. For all net assets of Money Market in excess of $2 billion, the
fees payable to NEIM under Money Market's New Advisory Agreement would be the
same as under the Current Advisory Agreement.
Bond Income. On July 30, 1999, Bond Income had net assets of approximately
$281 million. The Current Advisory Agreement and the New Advisory Agreement
for that Series each provide that the first $400 million of average daily net
assets are subject to a fee payable to NEIM at an annual rate of 0.40%.
Therefore, until Bond Income's net assets grow by approximately $119 million
to $400 million, Proposal 2b will have no effect on the fees payable by Bond
Income. Under its New Advisory Agreement, Bond Income's net assets from $400
million to $700 million would be subject to a fee at an annual rate that is
0.05% higher, as a percentage of average daily net assets, then under the
Current Advisory Agreement, and Bond Income's net assets from $700 million to
$2 billion would be subject to a fee at an annual rate that is 0.10% higher
than under its Current Advisory Agreement. This means that, for every
$1,000,000 of net assets in excess of $400 million up to $700 million, and for
every $500,000 of net assets in excess of $700 million up to $2 billion, Bond
Income would pay to NEIM $500 more per year under its New Advisory Agreement
than it would have paid under its Current Advisory Agreement. The next $1
billion of net assets of Bond Income (that is, assets from $2 billion to $3
billion) would also be subject to a fee at a 0.05% higher rate under the New
Advisory Agreement than under the Current Advisory Agreement. Net assets in
excess of $3 billion would be subject to a fee payable to NEIM at the same
rate under both agreements.
Growth and Income. On July 30, 1999, Growth and Income had net assets of
approximately $376 million. The Current Advisory Agreement and the New
Advisory Agreement for that Series each provide that the first $500 million of
average daily net assets are subject to a fee payable to NEIM at the same
rate. Therefore, until Growth and Income's net assets grow by approximately
$124 million to $500 million, Proposal 2c would have no effect on the fees
payable by Growth and Income. Under its New Advisory Agreement, the next $1
billion of net assets of Growth and Income would be subject to a fee at an
annual rate that is 0.05% higher than under its Current Advisory Agreement.
This means that, for every $1,000,000 dollars of net assets of Growth and
Income in excess of $500 million up to $1.5 billion, the Series would pay to
NEIM $500 more per year under its New Advisory Agreement than it would have
paid under its Current Advisory
17
<PAGE>
Agreement. For all net assets of Growth and Income in excess of $1.5 billion,
the fees payable to NEIM under Growth and Income's New Advisory Agreement
would be the same as under the Current Advisory Agreement.
Description of the New Advisory Agreements
Under the New Advisory Agreements, NEIM has overall advisory and
administrative responsibility with respect to the Series. Each New Advisory
Agreement provides that NEIM will, subject to its rights to delegate such
responsibilities to other parties, provide to the relevant Series both
portfolio management services and administrative services.
Each New Advisory Agreement provides that it will continue in effect for two
years from its date of execution, and from year to year thereafter so long as
such continuance is specifically approved at least annually (i) by the
Trustees 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," as that term is defined in the 1940 Act, of the Trust or
NEIM, cast in person at a meeting called for the purpose of voting on such
approval.
Each New Advisory Agreement may be terminated without penalty by vote of the
Trustees or by vote of a majority of the outstanding voting securities of the
applicable Series, upon sixty days' written notice to NEIM, or by NEIM upon
ninety days' written notice to the Trust, and each terminates automatically in
the event of its "assignment" as defined in the 1940 Act. In addition, each
New Advisory Agreement will automatically terminate if New England Securities
requires the relevant Series to change its name so as to eliminate all
references to the words "New England" unless the continuance of such New
Advisory Agreement after such change shall have been specifically approved by
vote of a majority of the outstanding voting securities of the relevant Series
and by vote of a majority of the Trustees, including a majority of the
Trustees who are not interested persons of the Trust, NEIM or a Series, cast
in person at a meeting called for the purpose of voting on such approval,
unless otherwise exempt from these requirements of the 1940 Act pursuant to an
order or orders from the SEC. Each New Advisory Agreement provides that NEIM
shall not be subject to any liability in connection with the performance of
its services thereunder in the absence of willful misfeasance, bad faith or
gross negligence in the performance of NEIM's duties or by reason of reckless
disregard by NEIM of its obligations and duties thereunder.
Trustee Decision
The Board of Trustees has determined that the compensation to be paid to
NEIM under each of the New Advisory Agreements is fair and reasonable. In
approving the proposed New Advisory Agreements and recommending their
18
<PAGE>
approval by shareholders, the Trustees of the Trust, including the Trustees
who are not "interested persons" of the Trust, considered the best interests
of shareholders of each of Money Market, Bond Income and Growth and Income and
took into account all such factors they deemed relevant. The factors
considered by the Trustees included: the increased scope and complexity of
administering investment companies; the effect of the proposed investment
advisory fee increase on the expense ratios of the Series; comparative data as
to advisory fees and expense ratios, particularly fees and expense ratios of
funds underlying variable insurance products with similar investment
objectives; the continuance of appropriate incentives to assure that NEIM will
continue to furnish high quality services to the Series; possible benefits
other than the advisory fee which NEIM and its affiliates derive from their
relationship with the Series; the advisability of modifying the current tiered
fee structure under which the fee would be reduced upon reaching certain asset
levels; and the nature, quality and extent of the services furnished by NEIM
to the Series in the adviser/sub-adviser structure, including NEIM's oversight
of sub-advisers, NEIM's ongoing evaluation of each sub-adviser's performance
and searches for replacement sub-advisers when required.
In connection with that review, the Trustees also approved a recommendation
of NEIM that the management fee payable by Small Cap should be reduced from
1.00% of the average daily net assets of the Series to 0.90% of the first $500
million of such assets and 0.85% of the amount of such assets in excess of
$500 million. That reduction, which will take effect on January 1, 2000, does
not require shareholder approval and therefore is not being presented for
shareholder approval at the Meeting.
Information About NEIM
NEIM is a wholly-owned subsidiary of New England Life Holdings, Inc., which
is a wholly-owned subsidiary of New England Financial, which in turn is a
wholly-owned subsidiary of MetLife New England Holdings, Inc. ("MetLife
Holdings"). MetLife Holdings is wholly owned by MetLife, a mutual insurance
company. NEIM acts as adviser to all of the Series except Capital Growth. The
Chairman of the Board and President of NEIM is Anne M. Goggin. Ms. Goggin and
John F. Guthrie, Jr. are NEIM's directors. Ms. Goggin is the Chairman of the
Board and President of the Trust and her principal occupation is Senior Vice
President and Associate General Counsel of New England Financial. Mr. Guthrie
is a Senior Vice President of the Trust, and his principal occupation is Vice
President of New England Financial. The address of NEIM, New England Life
Holdings, Inc., New England Financial, Ms. Goggin and Mr. Guthrie and is 501
Boylston Street, Boston, Massachusetts 02116. The address of MetLife and
MetLife Holdings is One Madison Avenue, New York, New York 10010.
NEIM acts as investment adviser to the following other mutual funds that
have investment objectives similar to those of Bond Income or Growth and
Income,
19
<PAGE>
respectively, for compensation at the annual percentage rates of the
corresponding average net asset levels of those funds set forth in the table
below. Each of these mutual funds is a Series. The table also sets forth the
net assets of those funds at July 30, 1999.
<TABLE>
<CAPTION>
Annual Fee
Approximate ------------------
Net Assets of Average Net
Series Other Funds Other Fund Rate Asset Level
------ ------------------------ ------------- ----- -----------
<S> <C> <C> <C> <C>
Bond Income Strategic Bond $ 95 Million 0.65% All assets
U.S. Government Series $219 Million 0.55% All assets
Growth and Income Equity Growth $613 Million 0.75% All assets
Venture Value $562 Million 0.75% All assets
Midcap Value $117 Million 0.75% All assets
Small Cap $237 Million 1.00%* All assets
Investors Series $ 5 Million 0.75% All assets
Research Managers Series $ 5 Million 0.75% All assets
International Equity $ 29 Million 0.90% All assets
</TABLE>
- -----------
* As discussed above, the annual advisory fee rate for Small Cap will be
reduced to 0.90% of average daily net assets up to $500 million and 0.85%
of such assets in excess of $500 million on January 1, 2000.
Trustee Recommendation
The Trustees of the Trust unanimously recommend that the shareholders of
each of Money Market, Bond Income and Growth and Income vote to approve the
proposed New Advisory Agreement for their Series.
Each Series votes only with respect to the New Advisory Agreement for that
Series. The required vote for approval the New Advisory Agreement for a Series
is the lesser of (1) 67% of the shares of that Series represented at the
Meeting and entitled to vote, 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 that Series. If approved by a Series' shareholders, the New Advisory
Agreement for that Series will take effect January 1, 2000. If shareholders of
any Series do not approve the New Advisory Agreement relating to that Series,
the Current Advisory Agreement relating to that Series will remain in effect.
III. REPLACING FUNDAMENTAL INVESTMENT OBJECTIVES WITH NON-FUNDAMENTAL
INVESTMENT OBJECTIVES
Currently, seven Series, Money Market, Bond Income, the Managed Series,
Capital Growth, Small Cap, Growth and Income and Stock Index, have investment
objectives that are fundamental, meaning that the objectives may be changed
only
20
<PAGE>
by shareholder vote. The purpose of Proposal 3 is to replace the fundamental
investment objective of each of these Series with an otherwise identical, non-
fundamental investment objective. The investment objective for each of these
Series is set forth below.
<TABLE>
<CAPTION>
Series Investment Objective
----------------- ------------------------------------------------------------
<C> <S>
Money Market The highest possible level of income consistent with the
preservation of capital.
Bond Income A high level of current income consistent with protection of
capital.
Managed Series A favorable total return through investment in a diversified
portfolio.
Capital Growth The long-term growth of capital through investment primarily
in equity securities of companies whose earnings are
expected to grow at a faster rate than the United States
economy.
Small Cap Long-term capital growth from investments in common stocks
or their equivalents.
Growth and Income Long-term total return through investment in equity
securities.
Stock Index Investment results that correspond to the composite price
and yield performance of United States publicly traded
commonly stocks.
</TABLE>
If the investment objective of a Series becomes non-fundamental, the
Trustees would be able to change the investment objective for that Series in
the future without first seeking shareholder approval. That ability is
generally desirable for each Series because the Trustees may determine that it
would be in the best interests of the shareholders of a Series to change
investment techniques in response to changing market conditions, but their
ability to do so is currently limited by the fundamental nature of these
Series' investment objectives. The Trustees have no current intention of
changing the investment objective of any of these Series, but, if Proposal 3
is adopted as to a Series, the Trustees could thereafter change that Series'
investment objective at any time. If a Series' objective were changed, the
change would be disclosed in a supplement to the Fund's prospectus relating to
that Series.
In addition, in order for these Series (other than Capital Growth) to take
full advantage of the SEC Voting Exemption described in Proposal 4, the Series
need to be able to change their investment objectives without shareholder
approval. As described in Part IV of this proxy statement, upon receiving from
its shareholders a grant of authority for the use of the SEC Voting Exemption,
a Series (other than Capital Growth) may enter into a new or amended sub-
advisory agreement with a sub-adviser under certain circumstances without
obtaining another shareholder
21
<PAGE>
vote. If, in the future, a new sub-adviser should recommend that a Series
change its investment strategy to comport with its best judgment about
investment policies and market conditions, if the objective were fundamental,
that Series would need to obtain a shareholder vote approving the change of
investment objective despite the SEC Voting Exemption. If the shareholders of
a Series adopt Proposal 3, however, the Trustees could make appropriate
changes to a Series' non-fundamental investment objective consistent with the
interests of shareholders of that Series (other than Capital Growth) in
conjunction with Trustee approval of a new or amended sub-advisory agreement.
The Trustees of the Trust unanimously recommend that the shareholders of
each Series to which this Proposal 3 relates vote to make the investment
objective of that Series an otherwise identical, non-fundamental policy.
Each Series votes separately from each other Series with respect to its
investment objective. For each Series, the required vote for approval of a
change to its fundamental investment objective is the lesser of (1) 67% of the
shares of that Series represented at the Meeting and entitled to vote, if more
than 50% of the outstanding shares of that Series are represented at the
Meeting or (2) more than 50% of the outstanding shares of that Series. The
new, non-fundamental investment objectives would take effect upon amendment of
the Trust's SEC filings to reflect the change. If the Proposal is not approved
by any Series' shareholders, that Series' current fundamental investment
objective will remain unchanged.
IV. FUTURE SUB-ADVISORY AGREEMENTS WITHOUT SHAREHOLDER VOTE
Each Series to which this Proposal 4 applies proposes, to the extent
permitted by any exemption or exemptions granted by the SEC, to permit NEIM to
enter into new or amended agreements with any sub-adviser with respect to the
Series without obtaining shareholder approval of such agreements, and to
permit such sub-advisers to manage the assets of the Series pursuant to such
sub-advisory agreements.
The 1940 Act generally provides that an investment adviser or sub-adviser to
a mutual fund may act as such only pursuant to a written agreement which has
been approved by a vote of the fund's shareholders, as well as by a vote of a
majority of the trustees of the fund who are not parties to such agreement or
interested persons of any party to such agreement. The Trust and NEIM,
however, have received from the SEC an exemption from the shareholder approval
voting requirement in certain circumstances (the "SEC Voting Exemption").
Under the SEC Voting Exemption, NEIM, as the investment adviser of certain
Series, is permitted, under specified conditions, to enter into new and
amended sub-advisory agreements for the management of each such Series,
including agreements with new sub-advisers and
22
<PAGE>
agreements with existing sub-advisers if there were a material change in the
terms of the sub-advisory agreement or if there were an "assignment," as
defined in the 1940 Act, or other event causing termination of the existing
sub-advisory agreement, without obtaining the approval of such new or amended
sub-advisory agreement by that Series' shareholders. Such agreements
nevertheless would require approval by the Trustees, in accordance with the
requirements of the 1940 Act. One of the conditions of the SEC Voting
Exemption is that, under certain circumstances, within 90 days after entering
into a new sub-advisory agreement without shareholder approval, the Series
must provide to shareholders an information statement setting forth
substantially the information that would be required to be contained in a
proxy statement for a meeting of shareholders to vote on the approval of the
agreement. Furthermore, each Series would still require shareholder approval
to amend its Advisory Agreement with NEIM (including any amendment to raise
the management fee rate payable under such agreement) or to enter into a new
advisory agreement with NEIM or any other adviser.
Another condition of the SEC Voting Exemption is that any new or amended
sub-advisory agreement entered into in reliance on the SEC Voting Exemption
must be between NEIM and a sub-adviser that is not an "affiliate" of NEIM, as
that term is defined in the 1940 Act. Therefore, to the extent that NEIM
enters into an amended or new sub-advisory agreement with an affiliated sub-
adviser under the current SEC Voting Exemption, the new or amended contract
will still require shareholder approval to the extent required by the 1940
Act.
The Trust is requesting shareholder approval of this Proposal for several
reasons. The Series other than Capital Growth utilize an adviser/sub-adviser
management structure, in which NEIM acts as these Series' investment adviser,
delegating the day-to-day portfolio management to a sub-adviser. Under such a
structure, the Series' sub-advisers act in a capacity similar to that of the
portfolio manager in a more traditional mutual fund advisory structure that
does not involve a sub-adviser. Specifically, the Series' sub-advisers, like
portfolio managers in a more traditional structure, manage the Series under
the oversight and supervision of the Series's adviser. If a Series were to
change sub-advisers, NEIM would continue in its role as adviser and would
continue to exercise oversight and supervision of the Series' investment
affairs as conducted by the new sub-adviser. Changing the Series' sub-advisers
is, therefore, in some ways analogous to the adviser's replacing the portfolio
manager of a single-manager managed fund who is employed by the adviser, which
does not require shareholder approval under the 1940 Act.
In addition, given the Series' management structure, the shareholder
approval requirement under the 1940 Act may cause a Series' shareholders to
incur unnecessary expenses and could hinder the prompt implementation of sub-
advisory changes that are in the best interest of the shareholders, such as
prompt removal of
23
<PAGE>
a sub-adviser if circumstances warrant such removal. The Trustees believe that
without the ability to employ promptly a new sub-adviser or re-employ promptly
the current sub-adviser upon a change of control of the sub-adviser, as the
case may be, investors' expectations may be frustrated and the Series and its
shareholders could be seriously disadvantaged under the following
circumstances: (a) where a sub-adviser has been terminated because its
performance was unsatisfactory or its retention was otherwise deemed
inadvisable, (b) where a sub-adviser has resigned and (c) where there has been
an "assignment" (i.e., a change in the actual control or management of a sub-
adviser) or other event causing the termination of a sub-advisory agreement.
For example, in 1998, such an assignment caused the termination of the sub-
advisory agreements of two Series, Strategic Bond and the U.S. Government
Series, and necessitated the delivery of a proxy statement to shareholders of
those Series in connection with Shareholder approval of new, virtually
identical sub-advisory agreements for those Series.
In the absence of an exemption, to obtain the shareholder approval required
by the 1940 Act for a sub-advisory agreement, a Series must convene a
shareholders' meeting, which generally involves considerable delay and
expense. Where NEIM, as adviser, has recommended replacement of a sub-adviser,
and the Trustees have determined that such replacement is necessary and
advisable, a Series could receive less than satisfactory sub-advisory services
prior to the time that an agreement with a new sub-adviser is approved by
shareholders. Also, in that situation or where there has been an unexpected
resignation or change in control of a sub-adviser (events which, in many
cases, are beyond the control of the Series), a Series may be forced to
operate with a less than satisfactory sub-adviser for some period of time. In
such circumstances, without the ability to engage in a new sub-adviser
promptly, NEIM, as the adviser, might have to assume direct responsibility on
a temporary basis for management of the assets previously assigned to a sub-
adviser.
Trustee Recommendation
The Trustees of the Trust unanimously recommend that the shareholders of
each Series to which this Proposal 4 relates vote to approve the proposed
grant of authority to permit NEIM to enter into new and amended agreements
with sub-advisers from time to time with respect to the Series without
obtaining shareholder approval of such agreements.
Each Series votes separately from each other Series with respect to the SEC
Voting Exemption. For each Series, the required vote for approval of the
proposed grant of authority is the lesser of (1) 67% of the shares of the
Series represented at the Meeting and entitled to vote, 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 that Series. If the shareholders of a Series do
not approve this Proposal 4, the Trustees of the Trust will consider such
alternate actions as may be in the best interest of such Series.
24
<PAGE>
V. ADOPTION OF STANDARDIZED INVESTMENT RESTRICTIONS
As described in the following Proposal, the Trustees recommend that
shareholders approve the elimination of and revisions to certain investment
restrictions currently observed by the Series. The purpose of these proposed
changes is to increase each Series' investment flexibility and reduce
administrative and compliance burdens by: (1) eliminating restrictive policies
that various state securities authorities formerly imposed on certain types of
mutual funds and (2) simplifying, modernizing and making uniform those
investment restrictions that are still required under federal securities laws.
Background
The 1940 Act requires a registered investment company like the Trust to have
"fundamental" investment restrictions governing certain of its investment
practices. Investment companies may also voluntarily designate restrictions
relating to other investment practices as fundamental. "Fundamental"
investment restrictions can be changed only by a shareholder vote. Several
Series have adopted fundamental investment restrictions in the past in
response to regulatory, business or industry requirements and conditions that
are no longer in effect. For example, the National Securities Markets
Improvement Act of 1996 eliminated many restrictions then required under state
law by preempting state securities ("Blue Sky") regulations for many
investment companies. Although these Blue Sky regulations did not govern the
Trust, many of the Series' investment restrictions were patterned after the
investment restrictions of other mutual funds that were subject to these now-
rescinded Blue Sky requirements.
The proposed elimination of and revisions to certain of the fundamental
investment restrictions of each Series are discussed below. Please refer to
Appendix A at page A-1 for a complete description of the current and proposed
fundamental and non-fundamental investment restrictions for each Series. By
eliminating those fundamental investment restrictions that are not required
and revising those fundamental investment restrictions that are required, the
Trustees believe that the advisers and sub-advisers of the Trust will be
better able to manage the Series' portfolios in a changing regulatory or
investment environment. In addition, the process of monitoring the Series'
compliance with investment restrictions will be simplified.
Proposals
5a. Eliminate fundamental investment restrictions relating to investments
in a single issuer.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
25
<PAGE>
If this Proposal is approved, the fundamental investment restrictions of
each affected Series relating to investments in a single issuer will be
eliminated. Each such Series would, in turn, become subject to the following
proposed non-fundamental investment restrictions:
The Series may not:
With respect to 75% of its total assets, invest in the securities of any
issuer if, immediately after such investment, more than 5% of the total
assets of the Series would be invested in the securities of such issuer;
provided that this limitation does not apply to obligations issued or
guaranteed as to interest or principal by the U.S. Government or its
agencies or instrumentalities, or to securities of any registered
investment company.
With respect to 75% of its total assets, acquire more than 10% of the
outstanding voting securities of any issuer (as of the time of
acquisition).
Discussion. Each Series is classified as "diversified" under the 1940 Act,
which means that each Series must comply with, among other requirements, the
investment restrictions set forth above, which limit the percentage of Series'
assets invested in a single issuer. These investment restrictions need not be
fundamental. However, several Series are currently subject to fundamental
investment restrictions concerning investments in single issuers that are
similar to, or even more restrictive than, those set forth above. The Trustees
believe that the proposed changes to those investment restrictions will
enhance investment flexibility and could assist those Series in achieving
their investment objectives.
Should a Series desire to become non-diversified in the future, that Series
would need to obtain a shareholder vote approving its reclassification from
diversified to non-diversified. Until a Series obtains such a shareholder
vote, that Series must continue to comply with the diversification
requirements of the 1940 Act, which are in substance the same as the proposed
non-fundamental restrictions set forth above.
5b. Eliminate the fundamental investment restriction relating to short
sales and purchasing securities on margin.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
If this Proposal is approved, the fundamental investment restriction of each
affected Series relating to short sales and purchasing securities on margin
will be eliminated. Each such Series will in turn become subject to the
following proposed non-fundamental investment restriction:
26
<PAGE>
The Series may not:
Sell securities short or purchase securities on margin, except to the
extent permitted by applicable law, regulation or order.
Discussion. Upon approval, each of the Series to which this Proposal applies
will be able to engage in short sales. The Trustees believe that the proposed
changes to these investment restrictions will enhance investment flexibility
and could assist these Series in achieving their investment objectives.
However, none of the advisers or sub-advisers of the Series intends to engage
in short sales on behalf of these Series at this time.
In a typical short sale, a Series borrows from a broker a security that it
anticipates will decline in value in order to sell such security to a third
party. The Series is then obligated to return a security of the same issue and
quantity at some future date, and it realizes a loss to the extent that the
security increases in value and a profit to the extent the security declines
in value (after including any associated costs). A Series engaging in short
sales may have to pay a premium to borrow the securities and must pay to the
lender any dividends or interest it receives on the securities while they are
borrowed. All short sales must be fully collateralized.
Short sales "against the box" are those where the Series owns or has the
right to acquire at no added cost a security identical to that sold short.
Short sales "against the box" may protect a Series against the risk of losses
in the value of its portfolio securities because any unrealized losses with
respect to such securities should be wholly or partially offset by a
corresponding gain in the short position. However, any potential gains in such
securities would be wholly or partially offset by a corresponding loss in the
short position. Several Series not affected by this Proposal already have the
ability to make short sales "against the box."
5c. Revise the fundamental investment restriction relating to
concentration of investment in one industry.
Affected Series: All Series.
If this Proposal is approved, the fundamental investment restriction of each
Series relating to concentration of investment in one industry will be
revised. The proposed revised fundamental investment restriction is set forth
below:
The Series may not:
Purchase securities (other than (i) securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, (ii) securities of
a registered investment company, and (iii) in the case of Money Market,
bank instruments issued by domestic banks and U.S. branches of foreign
banks) if,
27
<PAGE>
as a result of such purchase, more than 25% of the total assets of the
Series (as of the time of investment) would be invested in any one
industry, except to the extent permitted by applicable law, regulation or
order.
Discussion. The 1940 Act imposes restrictions on an investment company's
ability to concentrate its investments in any particular industry or group of
industries. This revised investment restriction, which will apply to each
Series, is intended to simplify and standardize the language of the Trust's
policies concerning industry concentration, and with respect to several
Series, to remove from investment restrictions unnecessary explanatory
language that may or may not accurately reflect future industry groupings and
SEC staff policy positions.
5d. Revise the fundamental restriction relating to borrowings.
Affected Series: All Series.
If this Proposal is approved, the fundamental investment restriction of each
Series relating to borrowing money will be revised. The proposed revised
fundamental investment restriction is set forth below:
The Series may not:
Borrow money, except to the extent permitted by applicable law,
regulation or order.
Discussion. Several of the Series are currently allowed to borrow only in an
amount not in excess of 5% or 10% of the value of such Series' total assets.
The investment restrictions of other Series explicitly state that the Series
may borrow up to 33 1/3% of its assets from banks, including the amount
borrowed. The 1940 Act prohibits mutual funds from borrowing more than 33 1/3%
of their assets, including the amount borrowed, and permits borrowing only
from banks. Accordingly, the revised policy on borrowing would provide some
Series with additional authority to borrow and other Series with a more
flexible investment restriction that will not need to be revised if additional
borrowings become permissible under the 1940 Act.
The Trustees believe that amending this fundamental investment restriction
as set forth above would provide the Series with the needed flexibility to
respond quickly to legal, regulatory and market developments regarding the
borrowing of money and could assist each Series in achieving its investment
objective. Series occasionally borrow money to fund substantial shareholder
redemptions or exchange requests or for the clearance of transactions when
available cash is not sufficient for these needs. Although the Series have not
experienced difficulties under the current restrictions, the Trustees believe
that the proposed change would enhance flexibility. The proposed change would
also afford each Series the same capacity to satisfy net redemptions of its
shares on a temporary basis without having to resort to sales of portfolio
securities at possibly disadvantageous prices.
28
<PAGE>
This Proposal, if adopted, will also allow each Series to borrow money to
take advantage of investment opportunities. This type of borrowing involves
the additional risk that interest expense may be greater than the income from
or appreciation of the securities financed and the value of such securities
may decline below the amount borrowed. If a Series were to follow this
practice, any investment gains made on the securities in excess of the
interest paid on the borrowing would cause the net asset value of the Series
to rise faster than would otherwise be the case. Conversely, if the investment
performance of the additional securities purchased failed to cover their cost
(including any interest on the money borrowed) to the Series, the net asset
value would decrease faster than would otherwise be the case. This effect is
known as "leverage." No Series has any current intention to borrow money for
leverage, but the proposed revised restriction would permit borrowing for such
purposes, to the extent approved from time to time by the Trustees.
5e. Eliminate the fundamental investment restriction relating to
investments in businesses less than three years old.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
If this Proposal is approved, the fundamental investment restriction of each
affected Series relating to investments in businesses less than three years
old will be eliminated.
Discussion. Several Series each currently have a fundamental investment
restriction related to investments of more than 5% of its assets in
"unseasoned issuers" (e.g., companies which have been in operation for less
than three years). This restriction was formerly found in certain Blue Sky
laws. The Trustees recommend the elimination of this restriction in order to
provide each Series with greater flexibility in making investments.
The Trustees believe that elimination of this investment restriction will
increase the flexibility of the adviser or sub-adviser, as appropriate, in
managing a Series' assets by permitting investments by the Series in
unseasoned issuers that are otherwise permissible and appropriate under the
investment objective and policies of the Series. While securities of these
issuers may be subject to greater risk, the Trustees believe that the
increasing prevalence of unseasoned issuers, the investment opportunities
offered by such issuers, and the fact that any such investments would be
subject to the other investment policies of the Series, warrants the
elimination of the current investment restriction.
29
<PAGE>
5f. Eliminate the fundamental investment restriction relating to issuers
whose shares are beneficially owned by Trustees and officers of the
Trust or directors and officers of certain affiliates of the Trust.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
If this Proposal is approved, the fundamental investment restriction of each
affected Series relating to securities of issuers that are beneficially owned
by certain persons will be eliminated.
Discussion. Several Series currently have an investment restriction limiting
their investments in securities of issuers in which management of the Trust or
of advisers or sub-advisers to the Series own a certain percentage of
securities. This restriction was formerly found in certain Blue Sky laws. The
Trustees recommend the elimination of this restriction in order to provide the
Trust with the maximum amount of investment flexibility.
If this restriction is eliminated, each Series will be able to invest in the
securities of any issuer without regard to ownership of such issuer by
management of the Trust or of the advisers or sub-advisers of the Series,
except to the extent prohibited by each Series' investment objective and
policies and the 1940 Act. Certain of such transactions are circumscribed by
the 1940 Act's provisions on affiliated transactions and each adviser and sub-
adviser of a Series maintains a code of ethics to monitor transactions
affecting that Series; therefore, the Trustees believe that this investment
restriction is no longer necessary.
5g. Revise the fundamental investment restriction relating to underwriting
of securities.
Affected Series: All Series.
If this Proposal is approved, the fundamental investment restriction of each
Series relating to the underwriting of securities issued by others will be
revised. Each Series will in turn become subject to the following revised
fundamental restriction:
The Series may not:
Underwrite securities issued by other persons except to the extent that,
in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under certain federal securities laws.
Discussion. The federal securities laws limit and regulate an investment
company's ability to act as an underwriter of securities issued by others.
This investment restriction is intended to state clearly and simply that the
limits set forth in those laws will apply to all Series.
30
<PAGE>
5h. Eliminate the fundamental investment restrictions relating to the
purchase of restricted securities and illiquid securities.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
If this Proposal is approved, the fundamental investment restrictions of
each affected Series relating to the purchase of restricted securities and
illiquid securities will be eliminated. Each Series will, in turn, become
subject to the following proposed non-fundamental restriction:
The Series may not:
Invest more than 15% (10% in the case of Money Market) of the value of
the net assets of the Series in illiquid securities (as of the time of
investment), including variable amount and master demand notes (if such
notes provide for prepayment penalties) and repurchase agreements with
remaining maturities in excess of seven days. (If, through a change in
security values or net assets, or due to other circumstances, the value of
illiquid securities held by the Series exceeds 15% (10% in the case of
Money Market) of the net assets of the Series, the Series shall consider
appropriate steps to protect liquidity).
Discussion. The Trustees believe that fundamental restrictions relating to
restricted and illiquid securities are unnecessary in light of current
regulatory requirements and the proposed non-fundamental investment
restriction of each Series, which would prohibit a Series from investing more
than 15% (10% in the case of Money Market) of its net assets in illiquid
securities, including restricted securities.
The Series may benefit from the added flexibility of having the policy with
respect to illiquid investments, including restricted securities, contained in
a single non-fundamental investment restriction. Each Series would then have
greater flexibility to respond quickly to legal, regulatory and market
developments regarding illiquid investments. If this investment restriction
were no longer required, the Trustees could modify or eliminate the
restriction to increase each Series' investment flexibility without the need
for shareholder approval.
To the extent that a Series invests in illiquid investments, that Series may
encounter difficulty in determining the fair value of such securities for
purposes of computing net asset value. In addition, a Series could encounter
difficulty satisfying redemption requests within seven days if it could not
readily dispose of its illiquid investments.
31
<PAGE>
5i. Eliminate the fundamental investment restriction relating to
investments made for the purpose of exercising control or management.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
If this Proposal is approved, the fundamental investment restriction of each
affected Series relating to investments in companies for the purpose of
exercising control will be eliminated.
Discussion. Eliminating this investment restriction would permit a Series to
exercise its rights as shareholders in the various companies in which it can
invest, consistent with any limitation imposed from time to time by the
relevant adviser's or sub-adviser's internal code of conduct and proxy voting
policies. These rights may include the active opposition or support of such
companies' management. These activities could at times fall within the
technical definition of exercising control under the securities laws.
Although no Series currently intends to invest in a company for the purpose
of exercising control over the company, the Trustees believe that approval of
this Proposal will provide each affected Series with the additional capability
to protect the value of its investments through the exercise of influence, in
appropriate circumstances, on the management of the companies in which it
invests. Each Series would be able to communicate its views as a shareholder
on company policies that affect the value of such Series' investment.
Activities in which a Series would then be able to engage include seeking
changes in a company's goals, management or board of directors, seeking the
sale of some or all of a company's assets, or voting to participate in or
oppose a takeover effort with respect to the company.
5j. Eliminate the fundamental investment restriction relating to joint
trading of securities.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
If this Proposal is approved, the fundamental investment restriction of each
affected Series relating to joint trading of securities will be eliminated.
Discussion. The Series will only participate on a joint or joint and several
basis in trading of securities to the extent permitted by rule or order of the
SEC. The Trustees believe that the specific process and mechanics of effecting
trades of portfolio securities need not be the subject of an investment
restriction. Each adviser or sub-adviser of a Series considers many factors
when evaluating a
32
<PAGE>
particular investment, including the marketability and availability of the
security and brokerage-related matters. However, these procedures evolve over
time in response to changes in regulation and business practices, and
therefore are generally not reduced to investment restrictions. Each Series
will continue to comply with applicable rules and regulations relating to
trading of securities in the absence of this investment restriction.
5k. Eliminate the fundamental investment restriction relating to
investments in other investment companies.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
If this Proposal is approved, the fundamental investment restriction of each
affected Series relating to investments in securities of other investment
companies will be eliminated. Each such Series will in turn become subject to
the following proposed non-fundamental restriction:
The Series may not:
Invest in securities of other investment companies, except to the extent
permitted by applicable law, regulation or order.
Discussion. The 1940 Act imposes limitations on an investment company's
ability to purchase and sell securities of other investment companies, but
these restrictions need not be fundamental. If this Proposal is approved, each
Series will be able to invest in other investment companies to the extent
allowed by the 1940 Act and that Series' investment policies. Investment in
these entities may involve duplication of certain fees and expenses, but the
Trustees believe that this enhanced flexibility could provide attractive
investment opportunities and may assist each Series in meeting its investment
objective.
5l. Revise the fundamental investment restriction relating to investments
in commodities and real estate.
Affected Series: All Series.
If this Proposal is approved, the fundamental investment restriction of each
Series relating to investments and commodities in real estate will be revised.
The single investment restriction of each Series relating to commodities and
real estate will be replaced with two fundamental restrictions, one relating
to commodities and one relating to real estate, as set forth below:
The Series may not:
Purchase or sell real estate except that, consistent with its investment
policies, the Series may purchase securities of issuers which deal in real
estate,
33
<PAGE>
securities which are secured by interests in real estate, and securities
which represent interests in real estate, and it may acquire and dispose
of real estate or interests in real estate acquired through the exercise
of its rights as a holder of debt obligations secured by real estate or
interests therein.
Purchase or sell commodities or commodity contracts, except that,
consistent with its investment policies, the Series may purchase and sell
financial futures contracts and options and may enter into swap
agreements, foreign exchange contracts and other financial transactions
not requiring the delivery of physical commodities.
Discussion. These revised investment restrictions, which will apply to each
Series, are intended to simplify and standardize the language of the Trust's
policies concerning commodities and real estate.
5m. Eliminate the fundamental investment restriction relating to pledging
assets.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
If this Proposal is approved, the existing fundamental investment
restriction of each affected Series relating to pledging of assets will be
eliminated.
Discussion. Several Series currently have a fundamental investment
restriction prohibiting them from pledging their assets. This restriction was
formerly found in certain Blue Sky laws. The Trustees recommend the
elimination of this restriction in order to provide the Trust with the greater
investment flexibility. There are currently no regulatory limits on pledging
activity.
Pledging assets does entail certain risks. To the extent that a Series
pledges its assets, that Series may have less flexibility in liquidating
assets. This may delay such Series' ability to meet redemption requests or
other obligations.
5n. Revise the fundamental investment restriction relating to making
loans.
Affected Series: All Series.
Upon approval of this Proposal, the fundamental restriction of each Series
relating to making loans will be revised to standardize the language of each
such restriction and to allow each Series to enter into securities loans. The
proposed revised fundamental restriction is set forth below:
34
<PAGE>
The Series may not:
Make loans, except by purchasing debt obligations in which the Series
may invest consistent with its investment policies, by entering into
repurchase agreements, by lending its portfolio securities, or as
otherwise permitted by applicable law, regulation or order.
Discussion. If this Proposal is approved, each Series will be able to lend
its portfolio securities to brokers, dealers and other financial institutions
under this standardized, simplified investment restriction. The Trustees
believe that this investment flexibility may assist each Series in achieving
its investment objective. Under the proposed revised restriction, each Series
could engage in such lending at any time, to the extent authorized by the
Trustees.
In lending its portfolio securities, a Series receives income while
retaining the securities' potential for capital appreciation. Such loans are
at all times secured by cash or equivalent collateral. The advantage of such
loans is that a Series continues to earn interest and dividends on the loaned
securities while at the same time earning a return on the invested collateral.
Such a loan involves some risk to the Series if the other party should default
on its obligation. If the other party should become involved in bankruptcy
proceedings, it is possible that the Series may encounter a delay in recovery
or even a loss of rights in the collateral. However, loans of a Series'
securities will only be made to borrowers deemed by the adviser or sub-adviser
of the Series to be creditworthy.
The proposed revised investment restriction would also permit the Series to
purchase debt obligations and engage in transactions in repurchase agreements.
These functions are already permitted under each Series' current investment
restrictions.
5o. Eliminate the fundamental restriction relating to the purchase and/or
writing of options.
Affected Series: Money Market, Bond Income, the Managed Series, Capital
Growth and Stock Index.
If this Proposal is approved, the fundamental investment restriction of each
affected Series relating to the purchase and/or writing or options will be
eliminated.
Discussion. If this Proposal is approved, these Series will be able to
engage in a wider variety of options transactions than is currently allowable
under the applicable investment restrictions. The Trustees believe that
approval of this Proposal will enhance investment flexibility and could assist
each Series in achieving its investment objectives.
35
<PAGE>
When a Series purchases a call option, it obtains the right to purchase, and
obligates the writer to sell, a security, currency or unit of an index, at a
specified exercise price on or before a specified expiration date. In order
for a call option purchased by a Series to be profitable, the market price of
the underlying security must rise sufficiently above the exercise price to
cover the amount paid by the Series to acquire the option, and the related
transaction. When a Series purchases a put option, it obtains the right to
sell, and obligates the writer to buy, a security at the exercise price on or
before the expiration date. In order for a put option purchased by a Series to
be profitable, the market price of the underlying security must decline
sufficiently below the exercise price to cover the amount paid by the Series
to acquire the option, and the related transaction. If an option expires
unexercised, the Series will lose the amount it paid for the option.
When a Series writes a call option, it loses the opportunity to profit from
any increase in the price of the security above the exercise price. When a
Series writes a put option, it takes a risk that it will be required to
purchase the security from the option holder at a price above the current
market value. A Series receives a premium for writing a call or put option
(representing the cost of the option), which increases the return to the
Series if the option expires unexercised.
The successful use of options depends on the ability of the adviser or sub-
adviser of the Series to predict correctly interest rate and market movements.
It also depends on the Series' ability to terminate option positions at times
when the adviser or sub-adviser of the Series believes it is desirable to do
so. There is no assurance that the Series will be able to effect closing
transactions at any particular time or at an acceptable price.
No Series has any current intention to change its current policies and
practices, if any, regarding investments in options, but the proposed
elimination of current restrictions on option transactions would permit each
Series to engage in option transactions in the future.
5p. Revise the fundamental restriction relating to the issuance of senior
securities.
Affected Series: All Series other than Money Market, Bond Income, the
Managed Series, Capital Growth and Stock Index.
If this Proposal is approved, the fundamental investment restriction of each
affected Series relating to senior securities will be revised. Each Series
will become subject to the following fundamental investment restriction:
The Series will not:
Issue any senior securities except to the extent permitted by applicable
law, regulation or order. (For purposes of this restriction, collateral
36
<PAGE>
arrangements with respect to any type of swap, option, forward contract or
futures contract and collateral arrangements with respect to initial and
variation margin are not deemed to involve the issuance of a senior
security).
Discussion. The 1940 Act imposes limitations on an investment company's
ability to issue senior securities. This revised investment restriction, which
will apply to all Series, is intended to simplify and standardize the language
of the Trust's policies concerning senior securities, and to permit each
Series to take full advantage of all investment flexibility permitted under
applicable law.
Several Series do not have an express limitation on issuance of senior
securities. These Series will also be subject to the investment restriction
set forth above, although no shareholder vote is necessary for the imposition
of this restriction on such Series. Imposition of this restriction on those
Series will not limit the Series' investment flexibility, since those Series
are already subject to such limitation in their issuance of senior securities
as may be imposed by applicable law.
Trustee Recommendation
The Trustees of the Trust unanimously recommend that the shareholders of
each Series vote to approve the proposed elimination of and revisions to the
fundamental investment restrictions of such Series.
Each Series votes separately from each other Series with respect to its
fundamental investment restrictions. For each Series, the required vote for
approval of the proposed elimination of and revisions to its fundamental
investment restrictions is the lesser of (1) 67% of the shares of the Series
represented at the Meeting and entitled to vote, 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 that Series. The new investment restrictions would
take effect upon amendment of the Trust's SEC filings to reflect the change.
If the shareholders of a Series do not approve this Proposal 5, the Trustees
of the Trust will consider such alternate actions as may be in the best
interest of such Series.
VI. OTHER MATTERS
Number of Shares
Shares of the Series are available for purchase only by separate accounts
established by New England Financial, MetLife and their affiliates. The Trust
serves as the investment vehicle for variable insurance, variable annuity and
group annuity products of New England Financial, MetLife or their affiliates.
Shares of the Series are not offered for direct purchase by the investing
public.
37
<PAGE>
All shareholders of record on the Record Date are entitled to one vote for
each share of beneficial interest of the Trust held as of that date. The
number of shares of beneficial interest of each Series issued and outstanding
as of the Record Date are as follows:
<TABLE>
<CAPTION>
Shares Outstanding
Series on Record Date
------ ------------------
<S> <C>
Money Market 2,268,366.779
Bond Income 2,622,139.333
Strategic Bond 8,362,960.475
U.S. Government 4,374,164.414
Managed Series 1,019,756.754
Balanced Series 13,161,550.710
Equity Growth 22,780,056.214
Capital Growth 3,956,111.709
Venture Value 22,052,415.225
Midcap Value 862,248.584
Small Cap 1,518,826.433
Investors 500,000.000
Research Managers 500,000.000
Growth and Income 1,719,920.380
Stock Index 1,086,756.307
International Equity 6,309,152.771
- --------------------
--------------
Total 93,094,426.088
==============
</TABLE>
Record Ownership
As of the Record Date, all of the shares of the Series were owned by either:
(1) New England Variable Life Separate Account ("NEVL Account"), a separate
account of New England Financial; (2) The New England Variable Account ("TNE
Account"), a separate account of MetLife; (3) New England Variable Annuity
Separate Account ("NEVA Account"), a separate account of New England
Financial; (4) certain separate accounts of MetLife established for the
pooling of contributions under certain tax-qualified group annuity contracts
("MetLife Accounts"); (5) certain separate accounts of New England Financial
established for the pooling of contributions under certain tax-qualified group
annuity contracts ("NEF Accounts"); or (6) with respect to amounts invested by
New England Financial in the Investors Series and the Research Managers Series
in connection with the establishment of those Series, New England Financial.
The shares and percentages of the Series held by these entities are set forth
below. The percentage of shares outstanding may not total 100% due to
rounding.
38
<PAGE>
<TABLE>
<CAPTION>
NEVL Account TNE Account NEVA Account
-------------------------- -------------------------- --------------------------
Number of % Number of % Number of %
Series Shares Outstanding Shares Outstanding Shares Outstanding
------ -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Money Market 948,102.560 42% 737,398.190 33% 582,866.019 26%
Bond Income 668,918.267 26% 1,195,263.511 46% 757,957.555 29%
Strategic Bond 100,648.118 1% 2,790,263.046 33% 5,076,762.280 61%
U.S. Government 57,715.411 1% 1,305,378.017 30% 2,738,097.414 63%
Managed 309,841.692 30% 709,915.062 70% -- 0%
Balanced 1,053,153.535 8% 3,249,580.637 25% 7,133,784.586 54%
Equity Growth 5,767,537.472 25% 6,633,111.247 29% 9,124,424.329 40%
Capital Growth 2,298,943.134 58% 1,657,168.571 42% -- 0%
Venture Value 5,416,568.565 25% 6,138,951.948 28% 8,324,202.976 38%
Midcap Value 290,631.664 34% 264,345.678 31% 301,187.381 35%
Small Cap 470,920.723 31% 411,242.932 27% 462,156.569 30%
Investors 26,023.276 5% -- 0% 149,418.257 30%
Research Managers 15,371.661 3% -- 0% 102,985.653 21%
Growth and Income 393,104.546 23% 500,931.783 29% 789,792.139 46%
Stock Index 709,368.886 65% 377,387.421 35% -- 0%
International Equity 1,193,812.753 19% 1,459,928.430 23% 3,583,906.930 57%
- --------------------
-------------- --- -------------- --- -------------- ---
Total 19,720,662.263 21% 27,430,866.473 29% 39,127,542.088 42%
<CAPTION>
MetLife Accounts NEF Accounts NEF
-------------------------- -------------------------- --------------------------
Number of % Number of % Number of %
Series Shares Outstanding Shares Outstanding Shares Outstanding
------ -------------- ----------- -------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Money Market -- 0% -- 0% N/A --
Bond Income -- 0% -- 0% N/A --
Strategic Bond 137,270.343 2% 258,016.687 3% N/A --
U.S. Government 26,752.330 1% 246,221.242 6% N/A --
Managed -- 0% -- 0% N/A --
Balanced 1,252,489.639 10% 472,542.313 4% N/A --
Equity Growth 456,358.476 2% 798,624.689 4% N/A --
Capital Growth -- 0% -- 0% N/A --
Venture Value 1,460,897.777 7% 711,793.959 3% N/A --
Midcap Value 1,288.334 0% 4,795.528 1% N/A --
Small Cap 121,438.281 8% 53,067.927 3% N/A --
Investors -- 0% -- 0% 324,558.467 65%
Research Managers -- 0% -- 0% 381,642.686 76%
Growth and Income 13,003.669 1% 23,088.243 1% N/A --
Stock Index -- 0% -- 0% N/A --
International Equity 45,575.278 1% 25,929.379 0% N/A --
- --------------------
-------------- --- -------------- --- -------------- ---
Total 3,515,074.127 4% 2,594,079.967 3% 706,201.153 1%
</TABLE>
39
<PAGE>
As of the Record Date, the following persons owned beneficially (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934) the following
numbers of shares of the following Series, representing the indicated
percentage of the outstanding shares of such Series:
<TABLE>
<CAPTION>
Beneficial Holder Series Number and Percentage
----------------- ------------ ---------------------
<S> <C> <C>
John Hancock Mutual Life Money Market 283,300/12.6%
Insurance Company
200 Clarendon Street
Boston, MA 02117
</TABLE>
Voting Provisions
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 (1)
variable life insurance contracts offered by New England Financial and (2)
certain variable annuity contracts, including group annuity contracts, of
MetLife and New England Financial. All shares of the Series owned by NEVL
Account and NEVA Account are attributable to variable life insurance policies
and variable annuity contracts issued by New England Financial or to charges
assessed by New England Financial against those policies and contracts. New
England Financial has agreed that each owner of such a policy or contract (an
"Owner") will be permitted to instruct New England Financial 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. With respect to each of
these separate accounts, all shares of the Series attributable to such
policies and contracts for which no Owner instructions have been received by
New England Financial and all shares of the Series attributable to charges
assessed by New England Financial against such 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 New England Financial with respect to policies or contracts issued by such
separate accounts issued by such separate account. All shares of the Series
held by TNE Account are attributable to variable annuity contracts of MetLife
or to charges assessed by MetLife against such contracts. The holder of each
such contract (a "Contractholder") has the right to instruct MetLife as to how
to vote the shares of the Trust attributable to such contract. All shares of
the Series held by TNE Account for which no Contractholder instructions have
been received by MetLife and any shares of the Series attributable to charges
assessed by MetLife 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
MetLife. All shares of the Series held by NEF Accounts or MetLife Accounts,
and all shares of the Investors Series and the Research Managers Series held
by New England Financial, will be voted for, voted against or withheld from
voting on any proposal in the same proportions as are the
40
<PAGE>
aggregate of (i) the shares for which voting instructions are received and
(ii) the shares that are voted in proportion to such voting instructions.
Certain Trustees and Officers of the Trust
The following persons are both officers or Trustees of the Trust and
officers or directors of NEIM: Peter H. Duffy, Anne M. Goggin, John F.
Guthrie, Jr., Alan C. Leland, Jr., Thomas M. Lenz, Thomas C. McDevitt,
Terrence Santry and Catherine Topouzoglou.
Other Matters
The holders of forty percent of the shares of the Series outstanding on the
Record Date, present in person or represented by proxy, constitute a quorum
for the transaction of business at the Meeting. Votes cast by proxy or in
person at the Meeting will be counted by persons appointed by the Trust as
tellers for the Meeting. The tellers will count the total number of votes cast
"for" approval of each Proposal for purposes of determining whether sufficient
affirmative votes have been cast. The tellers will count all shares
represented by proxies that reflect abstentions as present for purposes of
determining whether sufficient affirmative votes have been cast. The tellers
will also count all shares represented by proxies that reflect abstentions as
present for purposes of determining the presence of a quorum. Assuming the
presence of a quorum, abstentions have the effect of a negative vote on each
Proposal, except for Proposal 1, as to which abstentions have no effect.
In the event that a quorum is not present for purposes of acting on each
Proposal, or if sufficient votes in favor of any Proposal are not received by
the time of the Meeting, the persons named as proxies may vote on those
matters for which a quorum is present and as to which sufficient affirmative
votes have been received, and may propose one or more adjournments of the
Meeting with respect to any Proposal not so approved or adopted in order to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of the shares present in person or represented
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 any Proposal as to which sufficient affirmative
votes have been received. They will vote against any such adjournment those
proxies required to be voted against such Proposal as to which sufficient
affirmative votes have been received and will not vote any proxies that direct
them to abstain from voting on such Proposal.
Although the Meeting is called to transact any other business that may
properly come before it, the only business that management intends to present
or knows that others will present is Proposals 1 through 5 mentioned in the
Notice of Special Meeting. However, shareholders are being asked on the
enclosed proxy to
41
<PAGE>
authorize the persons named therein to vote in accordance with their judgment
with respect to any additional matters which properly come before the Meeting,
and on all matters incidental to the conduct of the Meeting.
Shareholder Proposals at Future Meetings
The Trust does not hold annual or other regular meetings of shareholders.
Shareholder proposals to be presented at any future meeting of shareholders of
the Trust must be received by the Trust at 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.
42
<PAGE>
Appendix A
Proposed Investment Restrictions for all Series
of New England Zenith Fund
FUNDAMENTAL RESTRICTIONS (APPLY TO ALL SERIES)
No Series will:
1. Borrow money, except to the extent permitted by applicable law,
regulation or order;
2. Underwrite securities issued by other persons except to the extent that,
in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter under certain federal securities laws;
3. Purchase or sell real estate, except that, consistent with its investment
policies, the Series may purchase securities of issuers which deal in real
estate, securities which are secured by interests in real estate, and
securities which represent interests in real estate, and it may acquire and
dispose of real estate or interests in real estate acquired through the
exercise of its rights as a holder of debt obligations secured by real estate
or interests therein;
4. Purchase or sell commodities or commodity contracts, except that,
consistent with its investment policies, the Series may purchase and sell
financial futures contracts and options and may enter into swap agreements,
foreign exchange contracts and other financial transactions not requiring the
delivery of physical commodities;
5. Make loans, except by purchasing debt obligations in which the Series may
invest consistent with its investment policies, by entering into repurchase
agreements, by lending its portfolio securities, or as otherwise permitted by
applicable law, regulation or order;
6. Purchase securities (other than (i) securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, (ii) securities of a
registered investment company, and (iii) in the case of Money Market, bank
instruments issued by domestic banks and U.S. branches of foreign banks) if,
as a result of such purchase, more than 25% of the total assets of the Series
(as of the time of investment) would be invested in any one industry, except
to the extent permitted by applicable law, regulation or order; or
7. Issue any senior securities except to the extent permitted by applicable
law, regulation or order. (For purposes of this restriction, collateral
arrangements with respect to any type of swap, option, forward contract or
future contract and collateral arrangements with respect to initial and
variation margin are not deemed to involve the issuance of a senior security).
A-1
<PAGE>
NON-FUNDAMENTAL RESTRICTIONS (APPLY TO ALL SERIES)
No Series will:
1) Invest in securities of other investment companies except to the extent
permitted by applicable law, regulation or order;
2) Invest more than 15% (10% in the case of Money Market) of the value of
the net assets of the Series in illiquid securities (as of the time of
investment), including variable amount master demand notes (if such notes
provide for prepayment penalties) and repurchase agreements with remaining
maturities in excess of seven days. (If, through a change in security values
or net assets, or due to other circumstances, the value of illiquid securities
held by the Series exceeds 15% (10% in the case of Money Market) of the value
of the net assets of the Series, the Series shall consider appropriate steps
to protect liquidity);
3) Sell securities short or purchase any securities on margin, except to the
extent permitted by applicable law, regulation or order;
4) With respect to 75% of its total assets, invest in the securities of any
issuer if, immediately after such investment, more than 5% of the total assets
of the Series would be invested in the securities of such issuer; provided
that this limitation does not apply to obligations issued or guaranteed as to
interest or principal by the U.S. government or its agencies or
instrumentalities, or to securities of any registered investment company; or
5) With respect to 75% of its total assets, acquire more than 10% of the
outstanding voting securities of any issuer (as of the time of acquisition).
A-2
<PAGE>
Analysis of Current and Proposed
Zenith Fund Investment Restrictions (by Series)
CURRENT RESTRICTIONS PROPOSED RESTRICTIONS
Each Series will not:
Money Market
FUNDAMENTAL:
(1) Purchase any securities (other Eliminate. Replace with the follow-
than the U.S. Government securities) ing non-fundamental restriction:
if, as a result, more than 5% of the
Series' total assets (taken at cur-
rent value) would be invested in se-
curities of a single issuer. This
restriction applies to securities
subject to repurchase agreements but
not to the repurchase agreements
themselves;
With respect to 75% of its total as-
sets, invest in the securities of
any issuer if, immediately after
such investment, more than 5% of the
total assets of the Series would be
invested in the securities of such
issuer; provided that this limita-
tion does not apply to obligations
issued or guaranteed as to interest
or principal by the U.S. government
or its agencies or instrumentali-
ties, or to securities of any regis-
tered investment company.
(2) Purchase any security (other Keep fundamental, revise as follows
than the U.S. Government securities) for simplification:
if, as a result, more than 25% of
the Series' total assets (taken at
current value) would be invested in
any one industry. For purposes of
this restriction, telephone, gas and
electric public utilities are each
regarded as separate industries and
finance companies whose financing
activities are related primarily to
the activities of their parent com-
panies are classified in the indus-
try of their parents. This restric-
tion does not apply to bank obliga-
tions. It does apply to securities
subject to repurchase agreements but
not to the repurchase agreements
themselves;
Purchase securities (other than (i)
securities issued or guaranteed by
the U.S. government, its agencies or
instrumentalities, (ii) securities
of a registered investment company,
and (iii) in the case of Money Mar-
ket, bank instruments issued by do-
mestic banks and U.S. branches of
foreign banks) if, as a result of
such purchase, more than 25% of the
total assets of the Series (as of
the time of investment) would be in-
vested in any one industry, except
to the extent permitted by applica-
ble law, regulation or order.
A-3
<PAGE>
(3) Purchase securities on margin Eliminate. Replace with the
(but it may obtain such short-term following non-fundamental
credits as may be necessary for the restriction:
clearance of purchases and sales of
securities); or make short sales,
except where, by virtue of ownership
of other securities, it has the
right to obtain, without payment of
further consideration, securities
equivalent in kind and amount to
those sold; or deposit or pledge
more than 10% of its total assets
(taken at current value) as collat-
eral for such sales;
Sell securities short or purchase
any securities on margin, except to
the extent permitted by applicable
law, regulation or order.
(4) Acquire more than 10% of the Eliminate. Replace with the follow-
total value of any class of the out- ing non-fundamental restriction:
standing securities of any issuer
(taking all preferred stock issues
of an issuer as a single class and
all debt issues of an issuer as a
single class) or acquire more than
10% of the outstanding voting secu-
rities of any issuer;
With respect to 75% of its total as-
sets, acquire more than 10% of the
outstanding voting securities of any
issuer (as of the time of acquisi-
tion).
See also the discussion of #11.
(5) Borrow money, except as a tem- Keep fundamental, revise as follows
porary measure for extraordinary or to obtain maximum flexibility:
emergency purposes (but not for the
purpose of investment) up to an
amount not in excess of 10% of its
total assets (taken at cost), or 5%
of its total assets (taken at cur-
rent value), whichever is lower;
Borrow money, except to the extent
permitted by applicable law, regula-
tion or order.
(6) Invest more than 5% of its to- Eliminate.
tal assets (taken at current value)
in securities of businesses (includ-
ing predecessors) less than three
years old;
(7) Purchase or retain securities Eliminate.
of any issuer if, to the knowledge
of the Fund, officers and trustees
of the Fund or officers and direc-
tors of any investment adviser of
the Fund who individually own bene-
ficially more than 1/2 of 1% of the
securities of that
A-4
<PAGE>
issuer, together own beneficially
more than 5% of the securities of
that issuer;
(8) Act as underwriter except to Keep first clause (as fundamental
the extent that, in connection with restriction), revise as follows for
the disposition of portfolio consistency:
securities, it may be deemed to be
an underwriter under the federal
securities laws; or purchase any
security restricted as to
disposition under the federal
securities laws;
Underwrite securities issued by
other persons except to the extent
that, in connection with the dispo-
sition of its portfolio investments,
it may be deemed to be an under-
writer under certain federal securi-
ties laws.
Eliminate second clause.
(9) Make investments for the pur- Eliminate.
pose of exercising control or man-
agement;
(10) Participate on a joint or Eliminate.
joint and several basis in any trad-
ing account in securities. (The
"bunching" of orders for the pur-
chase or sale of portfolio securi-
ties with MetLife or its affiliates,
Back Bay Advisors, or accounts under
their management to reduce acquisi-
tion costs, to average prices among
such accounts to facilitate such
transactions, is not considered par-
ticipating in a trading account in
securities);
(11) Invest in the securities of Eliminate. Replace with the follow-
other investment companies, except ing non-fundamental restriction:
in connection with a merger, consol-
idation or similar transaction. (Un-
der the Investment Company Act of
1940 (the "1940 Act") each Series
generally may not (a) invest more
than 10% of its total assets (taken
at current value) in the securities
of other investment companies, (b)
own securities of any one investment
company having a value in excess of
5% of that Series'
Invest in securities of other in-
vestment companies except to the ex-
tent permitted by applicable law,
regulation or order.
A-5
<PAGE>
total assets (taken at current val-
ue), or (c) own more than 3% of the
outstanding voting stock of any one
investment company);
(12) Buy or sell oil, gas or other Eliminate. Replace with the follow-
mineral leases, rights or royalty ing separate fundamental restric-
contracts, commodities or commodity tions relating to real estate and
contracts or real estate. This re- commodities:
striction does not prevent any Se-
ries from purchasing securities of
companies investing in real estate
or of companies which are not prin-
cipally engaged in the business of
buying or selling such leases,
rights or contracts;
Purchase or sell real estate, except
that, consistent with its investment
policies, the Series may purchase
securities of issuers which deal in
real estate, securities which are
secured by interests in real estate,
and securities which represent in-
terests in real estate, and it may
acquire and dispose of real estate
or interests in real estate acquired
through the exercise of its rights
as a holder of debt obligations se-
cured by real estate or interests
therein.
Purchase or sell commodities or com-
modity contracts, except that, con-
sistent with its investment poli-
cies, the Series may purchase and
sell financial futures contracts and
options and may enter into swap
agreements, foreign exchange con-
tracts and other financial transac-
tions not requiring the delivery of
physical commodities.
(13) Pledge, mortgage or hypothe- Eliminate.
cate more than 15% of its total as-
sets (taken at cost);
(14) The Series will not purchase Eliminate. Replace with the follow-
any illiquid security if, as a re- ing non-fundamental restriction:
sult, more than 10% of its net as-
sets (taken at current value) would
be invested in such securities;
Invest more than 15% (10% in the
case of Money Market) of the value
of the net assets of the Series in
illiquid securities (as of the time
of investment), including variable
amount master demand notes
A-6
<PAGE>
(if such notes provide for prepay-
ment penalties) and repurchase
agreements with remaining maturities
in excess of seven days. (If,
through a change in security values
or net assets, or due to other cir-
cumstances, the value of illiquid
securities held by the Series ex-
ceeds 15% (10% in the case of Money
Market) of the value of the net as-
sets of the Series, the Series shall
consider appropriate steps to pro-
tect liquidity).
(15) Make loans, except by pur- Keep fundamental, revise as follows
chase of debt obligations in which to obtain maximum flexibility:
the Series may invest consistently
with its objective and investment
policies. This restriction does not
apply to repurchase agreements; or
Make loans, except by purchasing
debt obligations in which the Series
may invest consistent with its in-
vestment policies, by entering into
repurchase agreements, by lending
its portfolio securities, or as oth-
erwise permitted by applicable law,
regulation or order.
(16) Write or purchase puts, calls Eliminate.
or combinations thereof.
Add the following fundamental re-
striction:
Issue any senior securities except
to the extent permitted by applica-
ble law, regulation or order. (For
purposes of this restriction, col-
lateral arrangements with respect to
any type of swap, option, forward
contract or futures contract and
collateral arrangements with respect
to initial and variation margin are
not deemed to involve the issuance
of a senior security).
NON-FUNDAMENTAL: NONE.
A-7
<PAGE>
Bond Income
FUNDAMENTAL:
(1) Purchase any securities (other Eliminate. Replace with the follow-
than the U.S. Government securities) ing non-fundamental restriction:
if, as a result, more than 5% of the
Series' total assets (taken at cur-
rent value) would be invested in se-
curities of a single issuer. This
restriction applies to securities
subject to repurchase agreements but
not to the repurchase agreements
themselves;
With respect to 75% of its total as-
sets, invest in the securities of
any issuer if, immediately after
such investment, more than 5% of the
total assets of the Series would be
invested in the securities of such
issuer; provided that this limita-
tion does not apply to obligations
issued or guaranteed as to interest
or principal by the U.S. government
or its agencies or instrumentali-
ties, or to securities of any regis-
tered investment company.
(2) Purchase any security (other Keep fundamental, revise as follows
than the U.S. Government securities) for simplification:
if, as a result, more than 25% of
the Series' total assets (taken at
current value) would be invested in
any one industry. For purposes of
this restriction, telephone, gas and
electric public utilities are each
regarded as separate industries and
finance companies whose financing
activities are related primarily to
the activities of their parent com-
panies are classified in the indus-
try of their parents. This restric-
tion applies to securities subject
to repurchase agreements but not to
the repurchase agreements them-
selves;
Purchase securities (other than (i)
securities issued or guaranteed by
the U.S. government, its agencies or
instrumentalities, (ii) securities
of a registered investment company,
and (iii) in the case of Money Mar-
ket, bank instruments issued by do-
mestic banks and U.S. branches of
foreign banks) if, as a result of
such purchase, more than 25% of the
total assets of the Series (as of
the time of investment) would be in-
vested in any one industry, except
to the extent permitted by applica-
ble law, regulation or order.
(3) Purchase securities on margin Eliminate. Replace with the follow-
(but it may obtain such short-term ing non-fundamental restriction:
credits as may be necessary for the
clearance of purchases and sales of
securities); or make short sales,
except where, by virtue of ownership
of other
Sell securities short or purchase
any securities on margin, except to
the extent permitted by applicable
law, regulation or order.
A-8
<PAGE>
securities, it has the right to ob-
tain, without payment of further
consideration, securities equivalent
in kind and amount to those sold; or
deposit or pledge more than 10% of
its total assets (taken at current
value) as collateral for such sales;
(4) Acquire more than 10% of the Eliminate. Replace with the follow-
total value of any class of the out- ing non-fundamental restriction:
standing securities of any issuer
(taking all preferred stock issues
of an issuer as a single class and
all debt issues of an issuer as a
single class) or acquire more than
10% of the outstanding voting secu-
rities of any issuer;
With respect to 75% of its total as-
sets, acquire more than 10% of the
outstanding voting securities of any
issuer (as of the time of acquisi-
tion).
See also the discussion of #11.
(5) Borrow money, except as a tem- Keep fundamental, revise as follows
porary measure for extraordinary or to obtain maximum flexibility:
emergency purposes (but not for the
purpose of investment) up to an
amount not in excess of 10% of its
total assets (taken at cost), or 5%
of its total assets (taken at cur-
rent value), whichever is lower;
provided, however, that the Series
may make loans of its portfolio se-
curities;
Borrow money, except to the extent
permitted by applicable law, regula-
tion or order.
(6) Invest more than 5% of its to- Eliminate.
tal assets (taken at current value)
in securities of businesses (includ-
ing predecessors) less than three
years old;
(7) Purchase or retain securities Eliminate.
of any issuer if, to the knowledge
of the Fund, officers and trustees
of the Fund or officers and direc-
tors of any investment adviser of
the Fund who individually own bene-
ficially more than 1/2 of 1% of the
securities of that issuer, together
own beneficially more than 5% of the
securities of that issuer;
A-9
<PAGE>
(8) Act as underwriter except to Keep first clause (as fundamental
the extent that, in connection with restriction), revise as follows for
the disposition of portfolio securi- consistency:
ties, it may be deemed to be an un-
derwriter under the federal securi-
ties laws; or purchase any security
restricted as to disposition under
the federal securities laws; provid-
ed, however, that, subject to the
Fund's limitation on illiquid in-
vestments stated below, the Series
may invest up to 10% of its total
assets (taken at current value) in
such restricted securities;
Underwrite securities issued by
other persons except to the extent
that, in connection with the dispo-
sition of its portfolio investments,
it may be deemed to be an under-
writer under certain federal securi-
ties laws.
Eliminate second clause.
(9) Make investments for the pur- Eliminate.
pose of exercising control or man-
agement;
(10) Participate on a joint or Eliminate.
joint and several basis in any trad-
ing account in securities. (The
"bunching" of orders for the pur-
chase or sale of portfolio securi-
ties with MetLife or its affiliates,
Back Bay Advisors or accounts under
their management to reduce acquisi-
tion costs, to average prices among
such accounts to facilitate such
transactions, is not considered par-
ticipating in a trading account in
securities);
(11) Invest in the securities of Eliminate. Replace with the follow-
other investment companies, except ing non-fundamental restriction:
in connection with a merger, consol-
idation or similar transaction, ex-
cept that the Series may invest in
securities of other investment com-
panies by purchases in the open mar-
ket involving only customary bro-
ker's commissions. (Under the In-
vestment Company Act of 1940 (the
"1940 Act") each Series generally
may not (a) invest more than 10% of
its total assets (taken at current
Invest in securities of other in-
vestment companies except to the ex-
tent permitted by applicable law,
regulation or order.
A-10
<PAGE>
value) in the securities of other
investment companies, (b) own secu-
rities of any one investment company
having a value in excess of 5% of
that Series' total assets (taken at
current value), or (c) own more than
3% of the outstanding voting stock
of any one investment company);
(12) Buy or sell oil, gas or other Eliminate. Replace with the follow-
mineral leases, rights or royalty ing separate fundamental restric-
contracts, commodities or commodity tions relating to real estate and
contracts or real estate. This re- commodities:
striction does not prevent any Se-
ries from purchasing securities of
companies investing in real estate
or of companies which are not prin-
cipally engaged in the business of
buying or selling such leases,
rights or contracts;
Purchase or sell real estate, except
that, consistent with its investment
policies, the Series may purchase
securities of issuers which deal in
real estate, securities which are
secured by interests in real estate,
and securities which represent in-
terests in real estate, and it may
acquire and dispose of real estate
or interests in real estate acquired
through the exercise of its rights
as a holder of debt obligations se-
cured by real estate or interests
therein.
Purchase or sell commodities or com-
modity contracts, except that, con-
sistent with its investment poli-
cies, the Series may purchase and
sell financial futures contracts and
options and may enter into swap
agreements, foreign exchange con-
tracts and other financial transac-
tions not requiring the delivery of
physical commodities.
(13) Pledge, mortgage or hypothe- Eliminate.
cate more than 15% of its total as-
sets (taken at cost). In order to
comply with certain state require-
ments applicable to this restric-
tion, as a matter of operating pol-
icy subject to change without share-
holder approval, the Series will not
pledge more than 2% of its assets;
A-11
<PAGE>
(14) The Series will not purchase Eliminate. Replace with the follow-
any illiquid security if, as a re- ing non-fundamental restriction:
sult, more than 15% of its net as-
sets (taken at current value) would
be invested in such securities;
Invest more than 15% (10% in the
case of Money Market) of the value
of the net assets of the Series in
illiquid securities (as of the time
of investment), including variable
amount master demand notes (if such
notes provide for prepayment penal-
ties) and repurchase agreements with
remaining maturities in excess of
seven days. (If, through a change in
security values or net assets, or
due to other circumstances, the
value of illiquid securities held by
the Series exceeds 15% (10% in the
case of Money Market) of the value
of the net assets of the Series, the
Series shall consider appropriate
steps to protect liquidity).
(15) Make loans, except by pur- Keep fundamental, revise as follows
chase of bonds, debentures, commer- to obtain maximum flexibility:
cial paper, corporate notes and sim-
ilar evidences of indebtedness which
are part of an issue to the public
or to financial institutions, by en-
tering into repurchase agreements or
by lending portfolio securities to
the extent set forth under "Miscel-
laneous Investment Practices--Lend-
ing of Portfolio Securities" in the
SAI; or
Make loans, except by purchasing
debt obligations in which the Series
may invest consistent with its in-
vestment policies, by entering into
repurchase agreements, by lending
its portfolio securities, or as oth-
erwise permitted by applicable law,
regulation or order.
(16) Write or purchase puts, calls Eliminate.
or a combination thereof, except
that Bond Income may purchase war-
rants or other rights to subscribe
to securities of companies issuing
such warrants or rights, or of par-
ents or subsidiaries of such compa-
nies, provided that such warrants or
other rights to subscribe are at-
tached to, or a part of, a unit of-
fering involving other securities.
Add the following fundamental re-
striction:
Issue any senior securities except
to the extent permitted by applica-
ble law, regulation or order. (For
purposes of this restriction, col-
lateral arrangements with respect to
any type of swap, option, forward
contract or futures contract and
collateral arrangements with respect
to initial and variation margin are
not deemed to involve the issuance
of a senior security).
NON-FUNDAMENTAL: NONE (but see #13
above).
A-12
<PAGE>
Strategic Bond, U.S. Government Se-
ries, Balanced, Equity Growth, Ven-
ture Value, Midcap Value, Small Cap,
Growth and Income, International
Equity
FUNDAMENTAL:
(1) Purchase any security (other Keep fundamental, revise as follows
than U.S. Government securities) if, to obtain maximum flexibility:
as a result, more than 25% of the
Series' total assets (taken at cur-
rent value) would be invested in any
one industry (in the utilities cate-
gory, gas, electric, water and tele-
phone companies will be considered
as being in separate industries, and
each foreign country's government
(together with subdivisions thereof)
will be considered to be a separate
industry);
Purchase securities (other than (i)
securities issued or guaranteed by
the U.S. government, its agencies or
instrumentalities, (ii) securities
of a registered investment company,
and (iii) in the case of Money Mar-
ket, bank instruments issued by do-
mestic banks and U.S. branches of
foreign banks) if, as a result of
such purchase, more than 25% of the
total assets of the Series (as of
the time of investment) would be in-
vested in any one industry, except
to the extent permitted by applica-
ble law, regulation or order.
(2) Borrow money in excess of 10% Keep fundamental, revise as follows
of its total assets (taken at cost) to obtain maximum flexibility:
or 5% of its total assets (taken at
current value), whichever is lower,
and then only as a temporary measure
for extraordinary or emergency pur-
poses;
Borrow money, except to the extent
permitted by applicable law, regula-
tion or order.
Keep fundamental, revise as follows
(3) Make loans, except by entering to obtain maximum flexibility:
into repurchase agreements (includ-
ing reverse repurchase agreements)
or by purchase of bonds, debentures,
commercial paper, corporate notes
and similar evidences of indebted-
ness which are a part of an issue to
the public or to financial institu-
tions, or through the lending of the
Series' portfolio securities to the
extent set forth under "Investment
Risks--Lending of Portfolio Securi-
ties" above;
Make loans, except by purchasing
debt obligations in which the Series
may invest consistent with its in-
vestment policies, by entering into
repurchase agreements, by lending
its portfolio securities, or as oth-
erwise permitted by applicable law,
regulation or order.
A-13
<PAGE>
(4) Buy or sell real estate or Eliminate. Replace with the follow-
commodities or commodity contracts, ing separate fundamental restric-
except that the Series may buy and tions relating to real estate and
sell futures contracts and option. commodities:
Each Series may enter into swap
agreements, foreign exchange con-
tracts and may also enter into swap
agreements and other financial
transactions not requiring the de-
livery of physical commodities.
(This restriction does not prevent
the Series from purchasing securi-
ties of companies investing in the
foregoing);
Purchase or sell real estate, except
that, consistent with its investment
policies, the Series may purchase
securities of issuers which deal in
real estate, securities which are
secured by interests in real estate,
and securities which represent in-
terests in real estate, and it may
acquire and dispose of real estate
or interests in real estate acquired
through the exercise of its rights
as a holder of debt obligations se-
cured by real estate or interests
therein.
Purchase or sell commodities or com-
modity contracts, except that, con-
sistent with its investment poli-
cies, the Series may purchase and
sell financial futures contracts and
options and may enter into swap
agreements, foreign exchange con-
tracts and other financial transac-
tions not requiring the delivery of
physical commodities.
(5) Act as underwriter, except to Keep fundamental, revise as follows
the extent that, in connection with for consistency:
the disposition of portfolio securi-
ties, it may be deemed to be an un-
derwriter under certain federal se-
curities laws;
Underwrite securities issued by
other persons except to the extent
that, in connection with the dispo-
sition of its portfolio investments,
it may be deemed to be an under-
writer under certain federal securi-
ties laws.
A-14
<PAGE>
(6) Issue senior securities. (For Keep fundamental, revise for simpli-
the purpose of this restriction none fication. Revised restriction:
of the following is deemed to be a
senior security: any pledge or other
encumbrance of assets permitted by
restriction (10) below; any borrow-
ing per mitted by restriction (2)
above; any collateral arrangements
with respect to options, futures
contracts and options on futures
contracts and with respect to ini-
tial and variation margin; the pur-
chase or sale of options, forward
contracts, futures contracts or op-
tions on futures contracts; and the
issuance of shares of beneficial in-
terest permitted from time to time
by the provisions of the Fund's
Agreement and Declaration of Trust
and by the 1940 Act, the rules
thereunder, or any exemption there-
from.);
Issue any senior securities except
to the extent permitted by applica-
ble law, regulation or order. (For
purposes of this restriction, col-
lateral arrangements with respect to
any type of swap, option, forward
contract or futures contract and
collateral arrangements with respect
to initial and variation margin are
not deemed to involve the issuance
of a senior security).
NON-FUNDAMENTAL:
(7) With respect to 75% of the Se- Eliminate. Replace with the follow-
ries' total assets, purchase any se- ing revised non-fundamental restric-
curity (other than U.S. Government tion:
securities) if, as a result, more
than 5% of the Series' total assets
(taken at current value) would then
be invested in securities of a sin-
gle issuer;
With respect to 75% of its total as-
sets, invest in the securities of
any issuer if, immediately after
such investment, more than 5% of the
total assets of the Series would be
invested in the securities of such
issuer; provided that this limita-
tion does not apply to obligations
issued or guaranteed as to interest
or principal by the U.S. government
or its agencies or instrumentali-
ties, or to securities of any regis-
tered investment company.
(8) Purchase securities on margin Eliminate. Replace with the follow-
(but it may obtain such short-term ing non-fundamental restriction:
credits as may be necessary for the
clearance of purchases and sales of
securities), or make short sales ex-
cept where, by virtue of ownership
of other
Sell securities short or purchase
any securities on margin, except to
the extent permitted by applicable
law, regulation or order.
A-15
<PAGE>
securities, it has the right to ob-
tain, without payment of further
consideration, securities equivalent
in kind and amount to those sold; or
deposit or pledge more than 10% of
its total as sets (taken at current
value) as collateral for such sales.
(For this purpose, the deposit or
payment by the Series of initial or
variation margin in connection with
futures contracts or related options
transactions is not considered the
purchase of a security on margin);
(9) With respect to 75% of the Se- Eliminate. Replace with the follow-
ries' total assets acquire more than ing revised non-fundamental restric-
10% of the outstanding voting secu- tion:
rities of an issuer;
With respect to 75% of its total as-
sets, acquire more than 10% of the
outstanding voting securities of any
issuer (as of the time of acquisi-
tion).
Also add the following non-fundamen-
tal restriction relating to invest-
ment companies:
Invest in securities of other in-
vestment companies except to the ex-
tent permitted by applicable law,
regulation or order.
(10) Pledge more than 15% of its Eliminate.
total assets (taken at cost). (For
the purpose of this restriction,
collateral arrangements with respect
to options, futures contracts and
options on futures contracts and
with respect to initial and varia-
tion margin are not deemed to be a
pledge of assets);
(11) Except to the extent permit- Eliminate.
ted by rule or order of the SEC,
participate on a joint or joint and
several basis in any trading account
in securities. (The "bunching" of
orders for the purchase or sale of
portfolio secu-
A-16
<PAGE>
rities for a Series with that Se-
ries' adviser or subadviser or ac-
counts under their management to re-
duce brokerage commissions, to aver-
age prices among them or to facili-
tate such transactions is not con-
sidered a trading account in securi-
ties for purposes of this restric-
tion);
(12) Write, purchase or sell op- Eliminate.
tions except that the Series may (a)
write, purchase and sell put and
call options on securities, securi-
ties indices, currencies, futures
contracts, swap contracts and other
similar investments, (b) enter into
currency forward contracts, and (c)
invest in structured notes; or
(13) Purchase any illiquid secu- Revised. The following non-fundamen-
rity if, as a result, more than 15% tal restriction applies to all Se-
of its net assets (taken at current ries.
value) would be invested in such se-
curities.
Invest more than 15% (10% in the
case of Money Market) of the value
of the net assets of the Series in
illiquid securities (as of the time
of investment), including variable
amount master demand notes (if such
notes provide for prepayment penal-
ties) and repurchase agreements with
remaining maturities in excess of
seven days. (If, through a change in
security values or net assets, or
due to other circumstances, the
value of illiquid securities held by
the Series exceeds 15% (10% in the
case of Money Market) of the value
of the net assets of the Series, the
Series shall consider appropriate
steps to protect liquidity).
A-17
<PAGE>
Managed
FUNDAMENTAL:
(1) Purchase any securities (other Eliminate. Replace with the follow-
than the U.S. Government securities) ing non-fundamental restriction:
if, as a result, more than 5% of the
Series' total assets (taken at cur-
rent value) would be invested in se-
curities of a single issuer; provid-
ed, however, that the Series may
each invest more than 5% (but not
more than 25%) of its total assets
(taken at current value) in the se-
curities of a single issuer if secu-
rities of any such issuer represent
more than 5%, capitalization weight-
ed, of the stock index that the Se-
ries attempts to track. This re-
striction applies to securities sub-
ject to repurchase agreements but
not to the repurchase agreements
themselves;
With respect to 75% of its total as-
sets, invest in the securities of
any issuer if, immediately after
such investment, more than 5% of the
total assets of the Series would be
invested in the securities of such
issuer; provided that this limita-
tion does not apply to obligations
issued or guaranteed as to interest
or principal by the U.S. government
or its agencies or instrumentali-
ties, or to securities of any regis-
tered investment company.
(2) Purchase any security (other Keep fundamental, revise as follows
than the U.S. Government securities) for simplification:
if, as a result, more than 25% of
the Series' total assets (taken at
current value) would be invested in
any one industry. For purposes of
this restriction, telephone, gas and
electric public utilities are each
regarded as separate industries and
finance companies whose financing
activities are related primarily to
the activities of their parent com-
panies are classified in the indus-
try of their parents. This restric-
tion does not apply to bank obliga-
tions. It does apply to securities
subject to repurchase agreements but
not to the repurchase agreements
themselves;
Purchase securities (other than (i)
securities issued or guaranteed by
the U.S. government, its agencies or
instrumentalities, (ii) securities
of a registered investment company,
and (iii) in the case of Money Mar-
ket, bank instruments issued by do-
mestic banks and U.S. branches of
foreign banks) if, as a result of
such purchase, more than 25% of the
total assets of the Series (as of
the time of investment) would be in-
vested in any one industry, except
to the extent permitted by applica-
ble law, regulation or order.
(3) Purchase securities on margin Eliminate. Replace with the follow-
(but it may obtain such short-term ing non-fundamental restriction:
credits as may be necessary for the
clearance of purchases and sales of
securities); or make short sales,
except
A-18
<PAGE>
where, by virtue of ownership of Sell securities short or purchase
other securities, it has the right any securities on margin, except to
to obtain, without payment of fur- the extent permitted by applicable
ther consideration, securities law, regulation or order.
equivalent in kind and amount to
those sold; or deposit or pledge
more than 10% of its total assets
(taken at current value) as collat-
eral for such sales. (Any deposit or
payment by the Series of initial or
maintenance margin in connection
with futures contracts shall not be
considered the purchase of a secu-
rity on margin for the purposes of
this restriction);
(4) Acquire more than 10% of the Eliminate. Replace with the follow-
total value of any class of the out- ing non-fundamental restriction:
standing securities of any issuer
(taking all preferred stock issues
of an issuer as a single class and
all debt issues of an issuer as a
single class) or acquire more than
10% of the outstanding voting secu-
rities of any issuer;
With respect to 75% of its total as-
sets, acquire more than 10% of the
outstanding voting securities of any
issuer (as of the time of acquisi-
tion).
See also the discussion of #11.
(5) Borrow money, except as a tem- Keep fundamental, revise as follows
porary measure for extraordinary or to obtain maximum flexibility:
emergency purposes (but not for the
purpose of investment) up to an
amount not in excess of 10% of its
total assets (taken at cost), or 5%
of its total assets (taken at cur-
rent value), whichever is lower;
provided, however, that the Series
may make loans of its portfolio se-
curities;
Borrow money, except to the extent
permitted by applicable law, regula-
tion or order.
(6) Invest more than 5% of its to- Eliminate.
tal assets (taken at current value)
in securities of businesses (includ-
ing predecessors) less than three
years old;
(7) Purchase or retain securities Eliminate.
of any issuer if, to the knowledge
of the Fund, officers and trustees
of the Fund or officers and direc-
tors of any
A-19
<PAGE>
investment adviser of the Fund who
individually own beneficially more
than 1/2 of 1% of the securities of
that issuer, together own benefi-
cially more than 5% of the securi-
ties of that issuer;
(8) Act as underwriter except to Keep first clause (as fundamental
the extent that, in connection with restriction), revise as follows for
the disposition of portfolio securi- consistency:
ties, it may be deemed to be an un-
derwriter under the federal securi-
ties laws; or purchase any security
restricted as to disposition under
the federal securities laws; provid-
ed, however, that, subject to the
Fund's limitation on illiquid in-
vestments stated below, the Series
may invest up to 10% of its total
assets (taken at current value) in
such restricted securities;
Underwrite securities issued by
other persons except to the extent
that, in connection with the dispo-
sition of its portfolio investments,
it may be deemed to be an under-
writer under certain federal securi-
ties laws.
Eliminate second clause.
(9) Make investments for the pur- Eliminate.
pose of exercising control or man-
agement;
(10) Participate on a joint or Eliminate.
joint and several basis in any trad-
ing account in securities. (The
"bunching" of orders for the pur-
chase or sale of portfolio securi-
ties with MetLife or its affiliates,
Back Bay Advisors or accounts under
their management to reduce acquisi-
tion costs, to average prices among
such accounts to facilitate such
transactions, is not considered par-
ticipating in a trading account in
securities);
(11) Invest in the securities of Eliminate. Replace with the follow-
other investment companies, except ing non-fundamental restriction:
in connection with a merger, consol-
idation or similar transaction, ex-
cept that the Series may invest in
securities of other investment com-
panies by purchases in the open mar-
ket involving
Invest in securities of other in-
vestment companies except to the ex-
tent permitted by applicable law,
regulation or order.
A-20
<PAGE>
only customary broker's commissions.
(Under the 1940 Act each Series gen-
erally may not (a) invest more than
10% of its total assets (taken at
current value) in the securities of
other investment companies, (b) own
securities of any one investment
company having a value in excess of
5% of that Series' total assets
(taken at current value), or (c) own
more than 3% of the outstanding vot-
ing stock of any one investment com-
pany);
(12) Buy or sell oil, gas or other Eliminate. Replace with the follow-
mineral leases, rights or royalty ing separate fundamental restric-
contracts, commodities or commodity tions relating to real estate and
contracts (except that the Series commodities:
may buy or sell futures contracts on
stock indexes and may buy or sell
interest rate futures contracts) or
real estate. This restriction does
not prevent any Series from purchas-
ing securities of companies invest-
ing in real estate or of companies
which are not principally engaged in
the business of buying or selling
such leases, rights or contracts;
Purchase or sell real estate, except
that, consistent with its investment
policies, the Series may purchase
securities of issuers which deal in
real estate, securities which are
secured by interests in real estate,
and securities which represent in-
terests in real estate, and it may
acquire and dispose of real estate
or interests in real estate acquired
through the exercise of its rights
as a holder of debt obligations se-
cured by real estate or interests
therein.
Purchase or sell commodities or com-
modity contracts, except that, con-
sistent with its investment poli-
cies, the Series may purchase and
sell financial futures contracts and
options and may enter into swap
agreements, foreign exchange con-
tracts and other financial transac-
tions not requiring the delivery of
physical commodities.
(13) Pledge, mortgage or hypothe- Eliminate.
cate more than 15% of its total as-
sets (taken at cost). In order to
com-
A-21
<PAGE>
ply with certain state requirements
applicable to this restriction, as a
matter of operating policy subject
to change without shareholder ap-
proval, the Series will not pledge
more than 2% of its assets;
(14) Purchase any illiquid secu- Eliminate. Replace with the follow-
rity if, as a result, more than 15% ing non-fundamental restriction:
of its net assets (taken at current
value) would be invested in such se-
curities;
Invest more than 15% (10% in the
case of Money Market) of the value
of the net assets of the Series in
illiquid securities (as of the time
of investment), including variable
amount master demand notes (if such
notes provide for prepayment penal-
ties) and repurchase agreements with
remaining maturities in excess of
seven days. (If, through a change in
security values or net assets, or
due to other circumstances, the
value of illiquid securities held by
the Series exceeds 15% (10% in the
case of Money Market) of the value
of the net assets of the Series, the
Series shall consider appropriate
steps to protect liquidity).
(15) Make loans, except by pur- Keep fundamental, revise as follows
chase of bonds, debentures, commer- to obtain maximum flexibility:
cial paper, corporate notes and sim-
ilar evidences of indebtedness which
are a part of an issue to the public
or to financial institutions, by en-
tering into repurchase agreements,
or by lending portfolio securities
to the extent set forth under "Mis-
cellaneous Investment Practices--
Lending of Portfolio Securities" in
the SAI; or
Make loans, except by purchasing
debt obligations in which the Series
may invest consistent with its in-
vestment policies, by entering into
repurchase agreements, by lending
its portfolio securities, or as oth-
erwise permitted by applicable law,
regulation or order.
(16) Purchase options or warrants Eliminate.
if, as a result, more than 1% of its
total assets (taken at current val-
ue) would be invested in such secu-
rities;
A-22
<PAGE>
provided, however, that the Series
may, without regard to the foregoing
percentage limit, purchase warrants
or other rights to subscribe to se-
curities of companies issuing such
warrants or rights, or of parents or
subsidiaries of such companies, pro-
vided that such warrants or other
rights to subscribe are attached to,
or a part of a unit offering involv-
ing, other securities.
Add the following fundamental re-
striction:
Issue any senior securities except
to the extent permitted by applica-
ble law, regulation or order. (For
purposes of this restriction, col-
lateral arrangements with respect to
any type of swap, option, forward
contract or futures contract and
collateral arrangements with respect
to initial and variation margin are
not deemed to invlove the issuance
of a senior security).
NON-FUNDAMENTAL: NONE (but see #13
above).
A-23
<PAGE>
Capital Growth
FUNDAMENTAL:
(1) Purchase any securities (other Eliminate. Replace with the follow-
than the U.S. Government securities) ing non-fundamental restriction:
if, as a result, more than 5% of the
Series' total assets (taken at cur-
rent value) would be invested in se-
curities of a single issuer. This
restriction applies to securities
subject to repurchase agreements but
not to the repurchase agreements
themselves;
With respect to 75% of its total as-
sets, invest in the securities of
any issuer if, immediately after
such investment, more than 5% of the
total assets of the Series would be
invested in the securities of such
issuer; provided that this limita-
tion does not apply to obligations
issued or guaranteed as to interest
or principal by the U.S. government
or its agencies or instrumentali-
ties, or to securities of any regis-
tered investment company.
(2) Purchase any security (other Keep fundamental, revise as follows
than the U.S. Government securities) for simplification:
if, as a result, more than 25% of
the Series' total assets (taken at
current value) would be invested in
any one industry. For purposes of
this restriction, telephone, gas and
electric public utilities are each
regarded as separate industries and
finance companies whose financing
activities are related primarily to
the activities of their parent com-
panies are classified in the indus-
try of their parents. This restric-
tion applies to securities subject
to repurchase agreements but not to
the repurchase agreements them-
selves;
Purchase securities (other than (i)
securities issued or guaranteed by
the U.S. government, its agencies or
instrumentalities, (ii) securities
of a registered investment company,
and (iii) in the case of Money Mar-
ket, bank instruments issued by do-
mestic banks and U.S. branches of
foreign banks) if, as a result of
such purchase, more than 25% of the
total assets of the Series (as of
the time of investment) would be in-
vested in any one industry, except
to the extent permitted by applica-
ble law, regulation or order.
A-24
<PAGE>
(3) Purchase securities on margin Eliminate. Replace with the follow-
(but it may obtain such short-term ing non-fundamental restriction:
credits as may be necessary for the
clearance of purchases and sales of
securities); or make short sales,
except where, by virtue of ownership
of other securities, it has the
right to obtain, without payment of
further consideration, securities
equivalent in kind and amount to
those sold; or deposit or pledge
more than 10% of its total assets
(taken at current value) as collat-
eral for such sales; or
Sell securities short or purchase
any securities on margin, except to
the extent permitted by applicable
law, regulation or order.
(4) Acquire more than 10% of the Eliminate. Replace with the follow-
total value of any class of the out- ing non-fundamental restriction:
standing securities of any issuer
(taking all preferred stock issues
of an issuer as a single class and
all debt issues of an issuer as a
single class) or acquire more than
10% of the outstanding voting secu-
rities of any issuer;
With respect to 75% of its total as-
sets, acquire more than 10% of the
outstanding voting securities of any
issuer (as of the time of acquisi-
tion).
See also the discussion of #11.
(5) Borrow money, except as a tem- Keep fundamental, revise as follows
porary measure for extraordinary or to obtain maximum flexibility:
emergency purposes (but not for the
purpose of investment) up to an
amount not in excess of 10% of its
total assets (taken at cost), or 5%
of its total assets (taken at cur-
rent value), whichever is lower;
provided, however, that the Series
may make loans of their portfolio
securities;
Borrow money, except to the extent
permitted by applicable law, regula-
tion or order.
A-25
<PAGE>
(6) Invest more than 5% of its to- Eliminate.
tal assets (taken at current value)
in securities of businesses (includ-
ing predecessors) less than three
years old;
(7) Purchase or retain securities Eliminate.
of any issuer if, to the knowledge
of the Fund, officers and trustees
of the Fund or officers and direc-
tors of any investment adviser of
the Fund who individually own bene-
ficially more than 1/2 of 1% of the
securities of that issuer, together
own beneficially more than 5% of the
securities of that issuer;
(8) Act as underwriter except to Keep first clause (as fundamental
the extent that, in connection with restriction), revise as follows for
the disposition of portfolio securi- consistency:
ties, it may be deemed to be an un-
derwriter under the federal securi-
ties laws; or purchase any security
restricted as to disposition under
the federal securities laws; provid-
ed, however, that, subject to the
Fund's limitation on illiquid in-
vestments stated below, the Series
may invest up to 10% of its total
assets (taken at current value) in
such restricted securities;
Underwrite securities issued by
other persons except to the extent
that, in connection with the dispo-
sition of its portfolio investments,
it may be deemed to be an under-
writer under certain federal securi-
ties laws.
Eliminate second clause.
(9) Make investments for the pur- Eliminate.
pose of exercising control or
management;
(10) Participate on a joint or Eliminate.
joint and several basis in any trad-
ing account in securities. (The
"bunching" of orders for the pur-
chase or sale of portfolio securi-
ties with MetLife or its affiliates,
CGM or accounts under their manage-
ment to reduce acquisition costs, to
average prices among such accounts
to facilitate such transactions, is
not considered participating in a
trading account in securities);
A-26
<PAGE>
(11) Invest in the securities of Eliminate. Replace with the follow-
other investment companies, except ing non-fundamental restriction:
in connection with a merger, consol-
idation or similar transaction, ex-
cept that the Series may invest in
securities of other investment com-
panies by purchases in the open mar-
ket involving only customary bro-
ker's commissions. (Under the In-
vestment Company Act of 1940 (the
"1940 Act") each Series generally
may not (a) invest more than 10% of
its total assets (taken at current
value) in the securities of other
investment companies, (b) own secu-
rities of any one investment company
having a value in excess of 5% of
that Series' total assets (taken at
current value), or (c) own more than
3% of the outstanding voting stock
of any one investment company);
Invest in securities of other in-
vestment companies except to the ex-
tent permitted by applicable law,
regulation or order.
(12) Buy or sell oil, gas or other Eliminate. Replace with the follow-
mineral leases, rights or royalty ing separate fundamental restric-
contracts, commodities or commodity tions relating to real estate and
contracts or real estate. This re- commodities:
striction does not prevent any Se-
ries from purchasing securities of
companies investing in real estate
or of companies which are not prin-
cipally engaged in the business of
buying or selling such leases,
rights or contracts;
Purchase or sell real estate, except
that, consistent with its investment
policies, the Series may purchase
securities of issuers which deal in
real estate, securities which are
secured by interests in real estate,
and securities which represent in-
terests in real estate, and it may
acquire and dispose of real estate
or interests in real estate acquired
through the exercise of its rights
as a holder of debt obligations se-
cured by real estate or interests
therein.
Purchase or sell commodities or com-
modity contracts, except that, con-
sistent with its investment poli-
cies, the Series may purchase and
sell financial futures contracts and
options and may
A-27
<PAGE>
enter into swap agreements, foreign
exchange contracts and other finan-
cial transactions not requiring the
delivery of physical commodities.
(13) Pledge, mortgage or hypothe- Eliminate.
cate more than 15% of its total as-
sets (taken at cost). In order to
comply with certain state require-
ments applicable this restriction,
as a matter of operating policy sub-
ject to change without shareholder
approval, Capital Growth will not
pledge more than 2% of its assets;
(14) Purchase any illiquid secu- Eliminate. Replace with the follow-
rity if, as a result, more than 15% ing non-fundamental restriction:
of its net assets (taken at current
value) would be invested in such se-
curities;
Invest more than 15% (10% in the
case of Money Market) of the value
of the net assets of the Series in
illiquid securities (as of the time
of investment), including variable
amount master demand notes (if such
notes provide for prepayment penal-
ties) and repurchase agreements with
remaining maturities in excess of
seven days. (If, through a change in
security values or net assets, or
due to other circumstances, the
value of illiquid securities held by
the Series exceeds 15% (10% in the
case of Money Market) of the value
of the net assets of the Series, the
Series shall consider appropriate
steps to protect liquidity).
(15) Make loans, except by pur- Keep fundamental, revise as follows
chase of bonds, debentures, commer- to obtain maximum flexibility:
cial paper, corporate notes, and
similar evidences of indebtedness
which are a part of an issue to the
public or to financial institutions,
by entering into repurchase agree-
ments or by lending portfolio secu-
rities to the extent set
Make loans, except by purchasing
debt obligations in which the Series
may invest consistent with its in-
vestment policies, by entering into
repurchase agreements, by lending
its port-
A-28
<PAGE>
forth under "Miscellaneous Invest- folio securities, or as otherwise
ment Practices--Lending of Portfolio permitted by applicable law, regula-
Securities" in the SAI. As a matter tion or order.
of operating policy subject to
change without shareholder approval,
Capital Growth will not make loans
of its portfolio securities;
(16) Purchase options or warrants Eliminate.
if, as a result, more than 1% of its
total assets (taken at current val-
ue) would be invested in such secu-
rities; or
(17) Write options or warrants. Eliminate.
Add the following fundamental
restriction:
Issue any senior securities except
to the extent permitted by applica-
ble law, regulation or order. (For
purposes of this restriction, col-
lateral arrangements with respect to
any type of swap, option, forward
contract or futures contract and
collateral arrangements with respect
to initial and variation margin are
not deemed to involve the issuance
of a senior security).
NON-FUNDAMENTAL: NONE (but see #13 and #15 above).
A-29
<PAGE>
Research Managers Series, Investors Series
FUNDAMENTAL:
(1) Borrow amounts from banks in Keep fundamental, revise as follows
excess of 33 1/3% of its assets in- to obtain maximum flexibility:
cluding amounts borrowed;
Borrow money, except to the extent
permitted by applicable law, regula-
tion or order.
(2) Underwrite securities issued Keep fundamental, revise as follows
by other persons except insofar as for consistency:
the Series may technically be deemed
an underwriter under the Securities
Act of 1933, as amended (the "1933
Act") in selling a portfolio securi-
ty;
Underwrite securities issued by
other persons except to the extent
that, in connection with the dispo-
sition of its portfolio investments,
it may be deemed to be an under-
writer under certain federal securi-
ties laws.
(3) Purchase or sell real estate Eliminate. Replace with the follow-
(including limited partnership in- ing separate fundamental restric-
terest but excluding securities se- tions relating to real estate and
cured by real estate or interests commodities:
therein and securities of companies,
such as real estate investment
trust, which deal in real estate or
interests therein), interest in oil,
gas, or mineral leases, commodities
or commodity contracts (excluding
currencies and any type of option,
futures contracts and forward con-
tracts) in the ordinary course of
its business. The Series reserve the
freedom of action to hold and sell
real estate, mineral leases, commod-
ities or commodities contracts (in-
cluding currencies and any type of
option, futures contract and forward
contracts) acquired as a result of
the ownership of securities;
Purchase or sell real estate, except
that, consistent with its investment
policies, the Series may purchase
securities of issuers which deal in
real estate, securities which are
secured by interests in real estate,
and securities which represent in-
terests in real estate, and it may
acquire and dispose of real estate
or interests in real estate acquired
through the exercise of its rights
as a holder of debt obligations se-
cured by real estate or interests
therein.
Purchase or sell commodities or com-
modity contracts, except that, con-
sistent with its investment poli-
cies, the Series may purchase and
sell financial futures contracts and
options and may enter into swap
agreements, foreign exchange con-
tracts and other financial transac-
tions not requiring the delivery of
physical commodities.
A-30
<PAGE>
(4) Issue any senior securities Keep fundamental, revise for consis-
except to the extent permitted by tency with other Series.
the 1940 Act. For purposes of this
restriction, collateral arrangements
with respect to any type of swap,
option, forward contracts and
futures contracts and collateral ar-
rangements with respect to initial
and variation margin are not deemed
to be the issuance of a senior secu-
rity;
Issue any senior securities except
to the extent permitted by applica-
ble law, regulation or order. (For
purposes of this restriction, col-
lateral arrangements with respect to
any type of swap, option, forward
contract or futures contract and
collateral arrangements with respect
to initial and variation margin are
not deemed to involve the issuance
of a senior security).
(5) Make loans to other persons. Keep fundamental, revise as follows
For these purposes, the purchase of to obtain maximum flexibility:
commercial paper, the purchase of a
portion or all of an issue of debt
securities, the lending of portfolio
securities, or the investment of the
Series' assets in repurchase agree-
ments shall not be considered the
making of a loan;
Make loans, except by purchasing
debt obligations in which the Series
may invest consistent with its in-
vestment policies, by entering into
repurchase agreements, by lending
its portfolio securities, or as oth-
erwise permitted by applicable law,
regulation or order.
(6) Purchase any securities of an Eliminate. Replace with the follow-
issuer of a particular industry, if ing non-fundamental restriction:
as a result, 25% or more of its
gross assets would be invested in
securities of issuers whose princi-
pal business activities are in the
same industry (except there is no
limitation with respect to obliga-
tions issued or guaranteed by the
U.S. Government or its agencies or
instrumentalities and repurchase
agreements collateralized by such
obligations); or
Purchase securities (other than (i)
securities issued or guaranteed by
the U.S. government, its agencies or
instrumentalities, (ii) securities
of a registered investment company,
and (iii) in the case of Money Mar-
ket, bank instruments issued by do-
mestic banks and U.S. branches of
foreign banks) if, as a result of
such purchase, more than 25% of the
total assets of the Series (as of
the time of investment) would be in-
vested in any one industry, except
to the extent permitted by applica-
ble law, regulation or order.
A-31
<PAGE>
NON-FUNDAMENTAL:
(7) Invest in illiquid invest- Eliminate. Replace with the follow-
ments, including securities subject ing similar non-fundamental restric-
to legal or contractual restrictions tion:
on resale or for which there is no
readily available market (e.g. trad-
ing in the security is suspended,
or, in the case of unlisted securi-
ties, where no market exists) if
more than 15% of the Series' assets
(taken at market value) would be in-
vested in such securities. Repur-
chase agreements maturing in more
than seven days will be deemed to be
illiquid for purposes of the Series'
limita tion on investment in illiq-
uid securities. Securities that are
not registered under the 1933 Act,
but are deemed to be liquid by the
Board of Trustees (or its delegee),
will not be subject to this 15% lim-
itation.
Invest more than 15% (10% in the
case of Money Market) of the value
of the net assets of the Series in
illiquid securities (as of the time
of investment), including variable
amount master demand notes (if such
notes provide for prepayment penal-
ties) and repurchase agreements with
remaining maturities in excess of
seven days. (If, through a change in
security values or net assets, or
due to other circumstances, the
value of illiquid securities held by
the Series exceeds 15% (10% in the
case of Money Market) of the value
of the net assets of the Series, the
Series shall consider appropriate
steps to protect liquidity).
Add the following non-fundamental
restrictions:
Invest in securities of other in-
vestment companies except to the ex-
tent permitted by applicable law,
regulation or order.
Sell securities short or purchase
any securities on margin, except to
the extent permitted by applicable
law, regulation or order.
With respect to 75% of its total as-
sets, invest in the securities of
any issuer if, immediately after
such investment, more than 5% of the
total assets of the Series would be
invested in the securities of such
issuer; provided that this limita-
tion does not apply to obligations
issued or guaranteed as to interest
or principal by the U.S. government
or its agencies or instrumentali-
ties, or to securities of any regis-
tered investment company.
With respect to 75% of its total as-
sets, acquire more than 10% of the
outstanding voting securities of any
issuer (as of the time of acquisi-
tion).
A-32
<PAGE>
Stock Index
FUNDAMENTAL:
(1) Purchase any securities (other Eliminate. Replace with the follow-
than the U.S. Government securities) ing non-fundamental restriction:
if, as a result, more than 5% of the
Series' total assets (taken at cur-
rent value) would be invested in se-
curities of a single issuer; provid-
ed, however, that the Series may in-
vest more than 5% (but not more than
25%) of its total assets (taken at
current value) in the securities of
a single issuer if securities of any
such issuer represent more than 5%,
capitalization weighted, of the
stock index that the Series attempts
to track. This restriction applies
to securities subject to repurchase
agreements but not to the repurchase
agreements themselves;
With respect to 75% of its total as-
sets, invest in the securities of
any issuer if, immediately after
such investment, more than 5% of the
total assets of the Series would be
invested in the securities of such
issuer; provided that this limita-
tion does not apply to obligations
issued or guaranteed as to interest
or principal by the U.S. government
or its agencies or instrumentali-
ties, or to securities of any regis-
tered investment company.
(2) Purchase any security (other Keep fundamental, revise as follows
than the U.S. Government securities) for simplification:
if, as a result, more than 25% of
the Series' total assets (taken at
current value) would be invested in
any one industry. For purposes of
this restriction, telephone, gas and
electric public utilities are each
regarded as separate industries and
finance companies whose financing
activities are related primarily to
the activities of their parent com-
panies are classified in the indus-
try of their parents. This restric-
tion applies to securities subject
to repurchase agreements but not to
the repurchase agreements them-
selves;
Purchase securities (other than (i)
securities issued or guaranteed by
the U.S. government, its agencies or
instrumentalities, (ii) securities
of a registered investment company,
and (iii) in the case of Money Mar-
ket, bank instruments issued by do-
mestic banks and U.S. branches of
foreign banks) if, as a result of
such purchase, more than 25% of the
total assets of the Series (as of
the time of investment) would be in-
vested in any one industry, except
to the extent permitted by applica-
ble law, regulation or order.
(3) Purchase securities on margin Eliminate. Replace with the follow-
(but it may obtain such short-term ing non-fundamental restriction:
credits as may be necessary for the
clearance of purchases and sales of
securities); or make short sales,
except
A-33
<PAGE>
where, by virtue of ownership of Sell securities short or purchase
other securities, it has the right any securities on margin, except to
to obtain, without payment of fur- the extent permitted by applicable
ther consideration, securities law, regulation or order.
equivalent in kind and amount to
those sold; or deposit or pledge
more than 10% of its total assets
(taken at current value) as collat-
eral for such sales. (Any deposit or
payment by the Series of initial or
maintenance margin in connection
with futures contracts shall not be
considered the purchase of a secu-
rity on margin for the purposes of
this restriction);
(4) Acquire more than 10% of the Eliminate. Replace with the follow-
total value of any class of the out- ing non-fundamental restriction:
standing securities of any issuer
(taking all preferred stock issues
of an issuer as a single class and
all debt issues of an issuer as a
single class) or acquire more than
10% of the outstanding voting secu-
rities of any issuer;
With respect to 75% of its total as-
sets, acquire more than 10% of the
outstanding voting securities of any
issuer (as of the time of acquisi-
tion).
See also the discussion of #11.
(5) Borrow money, except as a tem- Keep fundamental, revise as follows
porary measure for extraordinary or to obtain maximum flexibility:
emergency purposes (but not for the
purpose of investment) up to an
amount not in excess of 10% of its
total assets (taken at cost), or 5%
of its total assets (taken at cur-
rent value), whichever is lower;
Borrow money, except to the extent
permitted by applicable law, regula-
tion or order.
(6) Invest more than 5% of its to- Eliminate.
tal assets (taken at current value)
in securities of businesses (includ-
ing predecessors) less than three
years old;
(7) Purchase or retain securities Eliminate.
of any issuer if, to the knowledge
of the Fund, officers and trustees
of the Fund or officers and direc-
tors of any investment adviser of
the Fund who individually own bene-
ficially more
A-34
<PAGE>
than 1/2 of 1% of the securities of
that issuer, together own benefi-
cially more than 5% of the securi-
ties of that issuer;
(8) Act as underwriter except to Keep first clause (as fundamental
the extent that, in connection with restriction), revise as follows for
the disposition of portfolio securi- consistency:
ties, it may be deemed to be an un-
derwriter under the federal securi-
ties laws; or purchase any security
restricted as to disposition under
the federal securities laws;
Underwrite securities issued by
other persons except to the extent
that, in connection with the dispo-
sition of its portfolio investments,
it may be deemed to be an under-
writer under certain federal securi-
ties laws.
Eliminate second clause.
(9) Make investments for the Eliminate.
purpose of exercising control or
management;
(10) Participate on a joint or Eliminate.
joint and several basis in any trad-
ing account in securities. (The
"bunching" of orders for the pur-
chase or sale of portfolio securi-
ties with MetLife or its affiliates,
Westpeak or accounts under their
management to reduce acquisition
costs, to average prices among such
accounts to facilitate such transac-
tions, is not considered participat-
ing in a trading account in securi-
ties);
Eliminate. Replace with the follow-
(11) Invest in the securities of ing non-fundamental restriction:
other investment companies, except
in connection with a merger, consol-
idation or similar transaction, and
except that the Series may invest in
securities of other investment com-
panies by purchases in the open mar-
ket involving only customary bro-
ker's commissions. (Under the In-
vestment Company Act of 1940 (the
"1940 Act") each Series generally
may not (a) invest more than
Invest in securities of other in-
vestment companies except to the ex-
tent permitted by applicable law,
regulation or order.
A-35
<PAGE>
10% of its total assets (taken at
current value) in the securities of
other investment companies, (b) own
securities of any one investment
company having a value in excess of
5% of that Series' total assets
(taken at current value), or (c) own
more than 3% of the outstanding vot-
ing stock of any one investment com-
pany);
(12) Buy or sell oil, gas or other Eliminate. Replace with the follow-
mineral leases, rights or royalty ing separate fundamental restric-
contracts, commodities or commodity tions relating to real estate and
contracts (except that the Series commodities:
may buy or sell futures contracts on
stock indexes or real estate. This
restriction does not prevent any Se-
ries from purchasing securities of
companies investing in real estate
or of companies which are not prin-
cipally engaged in the business of
buying or selling such leases,
rights or contracts;
Purchase or sell real estate, except
that, consistent with its investment
policies, the Series may purchase
securities of issuers which deal in
real estate, securities which are
secured by interests in real estate,
and securities which represent in-
terests in real estate, and it may
acquire and dispose of real estate
or interests in real estate acquired
through the exercise of its rights
as a holder of debt obligations se-
cured by real estate or interests
therein.
Purchase or sell commodities or com-
modity contracts, except that, con-
sistent with its investment poli-
cies, the Series may purchase and
sell financial futures contracts and
options and may enter into swap
agreements, foreign exchange con-
tracts and other financial transac-
tions not requiring the delivery of
physical commodities.
(13) Pledge, mortgage or hypothe- Eliminate.
cate more than 15% of its total as-
sets (taken at cost). In order to
comply with certain state require-
ments applicable to this restric-
tion, as a matter of operating pol-
icy subject to change
A-36
<PAGE>
without shareholder approval, the
Series will not pledge more than 2%
of its assets;
(14) The Series will not purchase Eliminate. Replace with the follow-
any illiquid security if, as a re- ing non-fundamental restriction:
sult, more than 15% of its net as-
sets (taken at current value) would
be invested in such securities;
Invest more than 15% (10% in the
case of Money Market) of the value
of the net assets of the Series in
illiquid securities (as of the time
of investment), including variable
amount master demand notes (if such
notes provide for prepayment penal-
ties) and repurchase agreements with
remaining maturities in excess of
seven days. (If, through a change in
security values or net assets, or
due to other circumstances, the
value of illiquid securities held by
the Series exceeds 15% (10% in the
case of Money Market) of the value
of the net assets of the Series, the
Series shall consider appropriate
steps to protect liquidity).
(15) Make loans, except by pur- Keep fundamental, revise as follows
chase of bonds, debentures, commer- to obtain maximum flexibility:
cial paper, corporate notes, and
similar evidences of indebtedness
which are a part of an issue to the
public or to financial institutions,
by entering into repurchase agree-
ments or by lending portfolio secu-
rities to the extent set forth under
"Miscellaneous Investment Practic-
es--Lending of Portfolio Securities"
in the SAI;
Make loans, except by purchasing
debt obligations in which the Series
may invest consistent with its in-
vestment policies, by entering into
repurchase agreements, by lending
its portfolio securities, or as oth-
erwise permitted by applicable law,
regulation or order.
(16) Purchase options or warrants Eliminate.
if, as a result, more than 1% of its
total assets (taken at current val-
ue) would be invested in such secu-
rities; or
(17) Write options or warrants. Eliminate.
A-37
<PAGE>
Add the following fundamental re-
striction:
Issue any senior securities except
to the extent permitted by applica-
ble law, regulation or order. (For
purposes of this restriction, col-
lateral arrangements with respect to
any type of swap, option, forward
contract or futures contract and
collateral arrangements with respect
to initial and variation margin are
not deemed to involve the issuance
of a senior security).
NON-FUNDAMENTAL: NONE (but see #13 above).
A-38
<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS BELOW. IF NO
---
SPECIFICATION IS MADE FOR A PROPOSAL, THE PROXY SHALL BE VOTED FOR THAT
---
PROPOSAL.
If shares of two or more Series are attributable to your insurance
policy/contract(s):
All Series' shares deemed attributable to your policy/contracts will be voted as
indicated by the box next to the proposal, EXCEPT that you may instruct that
shares of one or more Series attributable to your contracts are to be voted
differently by writing the name of such Series (and your voting instructions) on
the lines below each Proposal.
[_] To vote FOR all Proposals, mark this box and sign, date and return this
Instruction Form. (NO ADDITIONAL VOTE IS NECESSARY.)
- --------------------------------------------------------------------------------
IF YOU WISH TO VOTE BY TELEPHONE, PLEASE SEE THE ENCLOSED INSTRUCTION SHEET.
- --------------------------------------------------------------------------------
CALL * * TOLL FREE * * ON A TOUCH-TONE TELEPHONE
1-888-776-5660 - ANYTIME
There is NO CHARGE to you for this call.
NOTE: Please sign exactly as your name appears on this Proxy. When signing in a
fiduciary capacity, such as executor, administrator, trustee, attorney,
guardian, etc. please so indicate. Corporate and partnership proxies should be
signed by an authorized person indicating the person's title.
Date , 1999
--------------------------------
- --------------------------------------------
- --------------------------------------------
Signature(s), Title(s),(if applicable)
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
============================================
CONTROL NUMBER
FOR TELEPHONE VOTING
============================================
1. With respect to all Series, to elect a Board of Trustees.
Trustees: 01 John J. Arena, 02 Edward A. Benjamin, 03 Mary Ann Brown,
04 John W. Flynn, 05 Anna M. Goggin, 06 Nancy Hawthorne, 07 Joseph M. Hinchey,
08 Robert B. Kittredge, 09 John T. Ludes and 10 Dale R. Marshall.
FOR ALL WITHHOLD
(except as noted) FOR ALL
[_] [_]
Instruction: To withhold authority to vote for any individual trustee, strike a
line through the trustee's name in the list above.
2a. With respect to Money Market, to approve a new Advisory Agreement between
New England Investment Management, Inc. ("NEIM") and the Trust.
FOR AGAINST ABSTAIN
[_] [_] [_]
- --------------------------------------------------------------------------------
PLEASE FOLD AT LINE TO RETURN
2b. With respect to Bond Income, to approve a new Advisory Agreement between
NEIM and the Trust.
FOR AGAINST ABSTAIN
[_] [_] [_]
2c. With respect to Growth and Income, to approve a new Advisory Agreement
between NEIM and the Trust.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To replace the fundamental investment objective of the Series* with an
otherwise identical, non-fundamental investment objective.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
4. To approve a grant of authority whereby each Series* may from time to time,
to the extent permitted by an exemption or exemptions granted by the
Securities and Exchange Commission, permit NEIM to enter into new or amended
agreements with sub-advisors with respect to the Series without obtaining
shareholder approval of such agreements, and to permit such sub-advisers to
manage the assets of the Series* pursuant to such sub-advisory agreements.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5. Adoption of Standardized Investment Restrictions for the Series*
5a. To eliminate the restrictions relating to investments in a single issuer.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5b. To eliminate the restriction relating to short sales and purchasing
securities on margin.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5c. To revise the restriction relating to concentration of investments in one
industry.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5d. To revise the restriction relating to borrowings.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5e. To eliminate the restriction relating to investments in businesses less than
three years old.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5f. To eliminate the restriction relating to issuers whose shares are
beneficially owned by Trustees and officers of the Trust or directors and
officers of certain affiliates of the Trust.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5g. To revise the restriction relating to underwriting of securities.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5h. To eliminate the restrictions relating to the purchase of restricted
securities and illiquid securities.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5i. To eliminate the restriction relating to investments made for the purpose of
exercising control or management.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5j. To eliminate the restriction relating to joint trading of securities.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5k. To eliminate the restriction relating to investments in other investment
companies.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5l. To revise the restriction relating to investments in commodities and real
estate.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5m. To eliminate the restriction relating to pledging assets.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5n. To revise the restriction relating to making loans.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5o. To eliminate the restriction relating to the purchase and/or writing of
options.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
5p. To revise the restriction relating to the issuance of senior securities.
--------------------------------------------
--------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
* Not all Proposals apply to all Series. Please refer to the cross-reference
table on the back of this card to determine which Proposals apply to which
Series.
<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 the Back Bay Advisors Money
Market Series ("Money Market"), the Back Bay Advisors Bond Income Series ("Bond
Income"), the Salomon Brothers Strategic Bond Opportunities Series ("Strategic
Bond"), the Salomon Brothers U.S. Government Series (the "U.S. Government
Series"), the Back Bay Advisors Managed Series (the "Managed Series"), the
Loomis Sayles Balanced Series (the "Balanced Series"), the Alger Equity Growth
Series ("Equity Growth"), the Capital Growth Series ("Capital Growth"), the
Davis Venture Value Series ("Venture Value"), the Goldman Sachs Midcap Value
Series ("Midcap Value"), the Loomis Sayles Small Cap Series ("Small Cap"), the
MFS Investors Series (the "Investors Series"), the MFS Research Managers Series
(the "Research Managers Series"), the Westpeak Growth and Income Series ("Growth
and Income"), the Westpeak Stock Index Series ("Stock Index") and the Morgan
Stanley International Magnum Equity Series ("International Equity") (each a
"Series" and collectively, the "Series") of New England Zenith Fund (the
"Trust") deemed attributable to the undersigned's contracts with the issuing
insurance company to be voted at the Special Meeting of Shareholders of the
Series on October 15, 1999 (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 as set forth on the reverse side hereof.
The issuing insurance company is authorized to vote in its discretion on any
other matters which may properly come before the meeting.
YOUR VOTE IS IMPORTANT. PLEASE VOTE AS SOON AS POSSIBLE.
PLEASE SEE REVERSE SIDE.
PLEASE FOLD AT LINE TO RETURN
- --------------------------------------------------------------------------------
CROSS-REFERENCE TABLE
The Trust consists of sixteen Series. The following table illustrates which
of the Proposals described in this Proxy Statement relate to which of the
Series:
<TABLE>
<CAPTION>
Proposals Relevant Series
- --------- ---------------
<S> <C>
1. All Series
2a. Money Market
2b. Bond Income
2c. Growth and Income
3. Money Market, Bond Income, the Managed Series,
Capital Growth, Small Cap, Growth and Income and
Stock Index
4. All Series other than Strategic Bond, the U.S.
Government Series, Capital Growth and Midcap Value
5a, b, e, f, h-k, m and o Money Market, Bond Income, the Managed Series,
Capital Growth and Stock Index
5c, d, g, l and n. All Series
5p. All Series other than Money Market, Bond Income, the
Managed Series, Capital Growth and Stock Index.
</TABLE>
<PAGE>
EASY * * * QUICK * * * IMMEDIATE
TELEPHONE VOTING INSTRUCTIONS
Dear Contract/Policyholder:
Your vote is important. We have provided an automated telephone voting option
which you may access 24 hours a day by dialing on a TOUCH TONE TELEPHONE and
keying in your CONTROL NUMBER which is located on the Instruction Form.
NOTE: The Board of Trustees recommends a vote FOR each Proposal.
After dialing, you will hear the following instructions:
. Please enter your Control Number;
. Press 1 to vote FOR ALL PROPOSALS as recommended by the Board of Trustees; or
. Press 9 if you wish to vote AGAINST all Proposals; or
. Press 0 if you wish to ABSTAIN from voting all Proposals.
Once this is completed, you will be asked to confirm your vote. IF YOU VOTE BY
TELEPHONE, THERE IS NO NEED FOR YOU TO MAIL BACK YOUR INSTRUCTION FORM.
HOWEVER, if you wish to withhold authority to vote for an individual nominee, or
to abstain from voting on a proposal or to vote in favor of some proposals and
against others, you must do so by signing your Instruction Form and returning it
in the envelope provided.
Thank you for voting.
<PAGE>
[NEW ENGLAND FINANCIAL LOGO APPEARS HERE]
NEW ENGLAND FINANCIAL
A MetLife Affiliate
September 10, 1999
To Owners of NELICO Variable Life Insurance Policies:
A Special Meeting of Shareholders of New England Zenith Fund (the "Trust") will
be held on October 15, 1999. At the Shareholders Meeting, New England Life
Insurance Company ("NELICO") will vote all shares of the Trust held in the New
England Variable Life Separate Account which are attributable to NELICO
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.
Your voting instructions only apply to 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 July 30, 1999. If you give voting
instructions on a proposal for which you are not eligible to vote, NELICO 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
follow the Telephone Voting Instructions or complete and execute the
Instruction Form and return it in the enclosed, postage-paid, self-addressed
envelope. If you fail to give voting instructions, shares of the Trust deemed
attributable to your Policy will be voted by NELICO in proportion to the voting
instructions received from all other NELICO Variable Life Policy Owners.
[NEF "wave" logo]
501 BOYLSTON STREET
[NEF "wave" logo]
BOSTON, MASSACHUSETTS
[NEF "wave" logo]
T 617-578-2000
New England Life Insurance Company, Boston, MA
- --------------------------------------------------------------------------------
LI
<PAGE>
[NEW ENGLAND FINANCIAL LOGO APPEARS HERE]
NEW ENGLAND FINANCIAL
A MetLife Affiliate
September 10, 1999
To Owners of NELICO Variable Life Insurance Policies:
A Special Meeting of Shareholders of New England Zenith Fund (the "Trust") will
be held on October 15, 1999. At the Shareholders Meeting, New England Life
Insurance Company ("NELICO") will vote all shares of the Trust held in the New
England Variable Life Separate Account which are attributable to NELICO
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
some plans, however, plan participants may 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 NELICO in proportion to the voting instructions received from all
other NELICO Variable Life Insurance 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 names of the plan participants who may be 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,
Charlie Antonioy, Consultant, New England Life Insurance Company at
(617) 578-3808.
[NEF "wave" logo]
501 BOYLSTON STREET
[NEF "wave" logo]
BOSTON, MASSACHUSETTS
[NEF "wave" logo]
T 617-578-2000
New England Life Insurance Company, Boston, MA
- --------------------------------------------------------------------------------
LT
<PAGE>
[NEW ENGLAND FINANCIAL LOGO APPEARS HERE]
NEW ENGLAND FINANCIAL
---------------------
ANNUITIES
September 10, 1999
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 October 15, 1999. At the Shareholders Meeting, New England Life
Insurance Company ("NELICO") 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.
Your voting instructions only apply to 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 July 30, 1999. If you give voting
instructions on a proposal for which you are not eligible to vote, NELICO 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
follow the Telephone Voting Instructions or complete and execute the
Instruction Form and return it in the enclosed, postage-paid, self-addressed
envelope. If you fail to give voting instructions, shares of the Trust deemed
attributable to your Contract will be voted by NELICO in proportion to the
voting instructions received from all other American Growth Series Variable
Annuity Contractholders.
[NEF "wave" logo]
501 BOYLSTON STREET
[NEF "wave" logo]
BOSTON, MASSACHUSETTS
[NEF "wave" logo]
T 617-578-2000
New England Life Insurance Company, Boston, MA
- --------------------------------------------------------------------------------
AGSI
<PAGE>
[NEW ENGLAND FINANCIAL LOGO APPEARS HERE]
NEW ENGLAND FINANCIAL
---------------------
ANNUITIES
September 10, 1999
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 October 15, 1999. At the Shareholders Meeting, New England Life
Insurance Company ("NELICO") 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. Under some plans, however, plan participants (i.e. annuitants) may
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
NELICO in proportion to the voting instructions received from all other
American Growth Series Variable Annuity 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 names of the annuitants who may be 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,
Lora Pappas, Assistant Vice President, New England Life Insurance Company at
(617) 578-2659.
[NEF "wave" logo]
501 BOYLSTON STREET
[NEF "wave" logo]
BOSTON, MASSACHUSETTS
[NEF "wave" logo]
T 617-578-2000
New England Life Insurance Company, Boston, MA
- --------------------------------------------------------------------------------
AGST
<PAGE>
[NEW ENGLAND FINANCIAL LOGO APPEARS HERE]
NEW ENGLAND FINANCIAL
---------------------
ANNUITIES
September 10, 1999
To Owners of Zenith Accumulator Variable Annuity Contracts:
A Special Meeting of Shareholders of New England Zenith Fund (the "Trust") will
be held on October 15, 1999. At the Shareholders Meeting, Metropolitan Life
Insurance Company ("MetLife") will vote all shares of the Trust held in The New
England Variable 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.
Your voting instructions only apply to 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 July 30, 1999. If you give voting
instructions on a proposal for which you are not eligible to vote, MetLife 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
follow the Telephone Voting Instructions or complete and execute the
Instruction Form and return it in the enclosed, postage-paid, self-addressed
envelope. If you fail to give voting instructions, shares of the Trust deemed
attributable to your Contract will be voted by MetLife in proportion to the
voting instructions received from all other Zenith Accumulator Contractholders.
[LOGO APPEARS HERE]
[NEF "wave" logo]
501 BOYLSTON STREET
[NEF "wave" logo]
BOSTON, MASSACHUSETTS
[NEF "wave" logo]
T 617-578-2000
New England Life Insurance Company, Boston, MA
- --------------------------------------------------------------------------------
ZAVAI
<PAGE>
[NEW ENGLAND FINANCIAL LOGO APPEARS HERE]
NEW ENGLAND FINANCIAL
---------------------
ANNUITIES
September 10, 1999
To Owners of Zenith Accumulator Variable Annuity Contracts:
A Special Meeting of Shareholders of New England Zenith Fund (the "Trust") will
be held on October 15, 1999. At the Shareholders Meeting, Metropolitan Life
Insurance Company ("MetLife") will vote all shares of the Trust held in The New
England Variable 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 some plans, however, plan participants (i.e. annuitants) may 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
MetLife 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 names of the annuitants who may be 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,
Lora Pappas, Assistant Vice President, New England Life Insurance Company at
(617) 578-2659.
[LOGO APPEARS HERE]
[NEF "wave" logo]
501 BOYLSTON STREET
[NEF "wave" logo]
BOSTON, MASSACHUSETTS
[NEF "wave" logo]
T 617-578-2000
New England Life Insurance Company, Boston, MA
- --------------------------------------------------------------------------------
ZAVAT
