<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))
[_] 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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(3) Filing Party:
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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"):
<PAGE>
2b. To approve or disapprove a new Advisory Agreement relating to
Bond Income between NEIM and the Trust.
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
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September ____, 1999
________________________________________________________________________________
YOUR VOTE IS IMPORTANT
________________________________________________________________________________
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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<PAGE>
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 or on about September __, 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 may be obtained without charge by calling [(800) 325-6765].
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.
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PART II contains information relating to Proposals 2a, 2b and 2c, the
proposed new Advisory Agreements for the Back Bay Advisors Money Market Series
("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 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.
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 Funds
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<S> <C>
1. Election of Trustees All Series
2a. Approval of a new Advisory Money Market
Agreement relating to Money
Market
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Proposals Relevant Funds
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<S> <C>
2b. Approval of a new Advisory Bond Income
Agreement relating to Bond
Income
2c. Approval of a new Advisory Growth and Income
Agreement relating to
Growth and Income
3. Replacing the fundamental Money Market, Bond Income, the Back Bay Advisors
investment objective of the Managed Series (the "Managed Series"), the Capital
Series with an otherwise Growth Series ("Capital Growth"), the Loomis Sayles
identical, non-fundamental Small Cap Series ("Small Cap"), Growth and Income
investment objective. and the Westpeak Stock Index Series ("Stock Index")
4. Approval of a grant of Money Market, Bond Income, the Managed Series,
authority to NEIM to enter the Loomis Sayles Balanced Series (the "Balanced
into new sub-advisory Series"), the Alger Equity Growth Series ("Equity
agreements without additional Growth"), the Davis Venture Value Series ("Venture
shareholder approval under Value"), Small Cap, the MFS Investors Series (the
certain conditions. ("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").
5. Approval of certain changes See the table following the summary of changes
to the Series' fundamental below.
investment restrictions in
order to adopt a set of
standardized investment
restrictions. A summary of
each proposed change is set
forth below, followed by a
chart indicating which
changes apply to which
Series:
</TABLE>
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.
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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.
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<PAGE>
<TABLE>
<CAPTION>
SERIES RELEVANT PROPOSALS
- ------ ------------------
<S> <C>
Money Market, Bond Income, the Managed 5a through 5o
Series, Capital Growth, Stock Index
Strategic Bond, the U.S. Government Series, 5c, 5d, 5g, 5l, 5n and 5p
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.
</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.
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<PAGE>
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 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.
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<PAGE>
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").
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.
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<PAGE>
<TABLE>
<CAPTION>
Name of Nominee Age Principal Occupations for Last Five Years
- --------------------- ----- --------------------------------------------
<S> <C> <C>
John J. Arena 61 Trustee of the Trust since ____; 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)
Mary Ann Brown* [ ] President, New England Products and
Services, New England Financial; formerly,
Executive Vice President and Director,
Worldwide Life Insurance, Swiss
Reinsurance Company; Principal,
Tillinghast/Towers Perrin (life insurance)
John W. Flynn 59 Trustee of the Trust since _____; retired;
formerly, Vice Chairman, Chief Financial
Officer, Fleet Financial Group (banking)
Anne M. Goggin* 50 Trustee of the Trust since _____; 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
Nancy Hawthorne 48 Trustee of the Trust since _____; formerly,
Chief Executive Officer and Managing
Partner, Hawthorne, Krauss and Associates
(corporate financial advisor); Executive Vice
President, Enterprise Transformation,
MediaOne (cable television company);
Director, Perini Corporation (construction);
Director, Avid Technologies (computer
software company); Director, CGU (property
and casualty insurance company)
Joseph M. Hinchey 74 Trustee of the Trust since _____; retired;
formerly, Senior Vice President-Finance,
Analog Devices, Inc. (manufacturer of
electronic devices); Trustee, Union College
and Citizens Scholarship Foundation of
America, Inc.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name of Nominee Age Principal Occupations for Last Five Years
- --------------------- ----- --------------------------------------------
<S> <C> <C>
Robert B. Kittredge 78 Trustee of the Trust since _____; 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 62 Trustee of the Trust since _____; Vice
Chairman, formerly, President and Chief
Operating Officer, American Brands (global
conglomerate); formerly, President and CEO,
Acushnet Company (athletic equipment)
Dale R. Marshall 62 Trustee of the Trust since _____; 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. 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 the Trust and NEIM.
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
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<PAGE>
meeting shall be held upon the written request of the shareholders of not less
than 10% of the Trust's outstanding shares.
The table below provides information as of [June 30,] 1999 regarding
beneficial ownership of shares of the Trust by (i) each nominee and current
Trustee of the Trust and (ii) all Trustees and officers of the Trust as a group.
<TABLE>
<CAPTION>
Name Number of Shares Owned % of Trust/Series
- ---- ---------------------- -----------------
<S> <C> <C>
John J. Arena
Edward A. Benjamin
Mary A. Brown
John W. Flynn
Anne M. Goggin
Nancy Hawthorne
Joseph M. Hinchey
Robert B. Kittredge
John T. Ludes
Dale R. Marshall
Trustees and Officers as a group [Less than 1%]
</TABLE>
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, 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 Mss. 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. Hinchey
currently serves as chairman of the Audit Committee, which met twice in 1998.
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<PAGE>
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.
During the fiscal period ended December 31, 1998, the Board of Directors of
the Trust held five meetings. Each of the Trustees attended each of these
meetings.
BOARD COMPENSATION
The Trust does not pay any remuneration to its officers, or 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, 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.
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.
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<PAGE>
Compensation Table
for the fiscal period ended December 31, 1998
---------------------------------------------
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
---------------- ------------ -------------- --------------- ---------------
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 70,614 -- -- 72,000**
John T. Ludes 31,280 -- -- 32,500
Dale R. Marshall 31,280 -- -- 32,500
Frederick K. 0 -- -- 0
Zimmermann***
</TABLE>
- --------------------
* The current Trustees who are not "interested persons" of the Trust receive
compensation for serving on the boards of the Trust and the NEVA Fund.
** Mr. Kittredge's compensation includes amounts paid to him as a trustee of
the CGM Fund, an affiliate of the Trust.
*** Mr. Zimmermann retired from the Board of Trustees on June 17, 1999.
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.
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<PAGE>
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.
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, Chairman of the July 17, 1999 Senior Vice President and Associate
Board, Chief Executive Officer, General Counsel, New England
President (50) Financial; Chairman of the Board and
President, NEIM
John F. Guthrie, Senior Vice [ ] Vice President, New England
President (55) Financial; Senior Vice President,
NEIM
Alan C. Leland, Senior Vice [ ] Senior Vice President, New England
President (47) Financial; Chief Financial Officer,
NEIM
Peter H. Duffy, Treasurer (43) [ ] Second Vice President, New England
Financial; Senior Vice President,
NEIM; formerly, Senior Vice
President, New England Funds
Management, L.P.
_______________________________________________________________________________________
</TABLE>
-16-
<PAGE>
<TABLE>
<S> <C> <C>
Thomas M. Lenz, Secretary (41) May 5, 1999 Counsel, New England 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.
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
-17-
<PAGE>
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 Metropolitan Life
Insurance Company ("MetLife"), with MetLife as the surviving company, which
merger was consummated on August 30, 1996.
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 by and 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 a 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.
-18-
<PAGE>
<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 31, 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, unless and until Money Market's net assets grow by
approximately $276 million to $500 million, Proposal 2a will have no effect on
the fees payable by Money Market. The next $1.5 billion of net assets of Money
Market will be subject to a fee at an annual rate that is 0.05% higher under its
New Advisory Agreement 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 will 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 31, 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 the New Advisory Agreement, Bond Income's net assets from $300 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
-19-
<PAGE>
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 31, 1999, Growth and Income had net assets of
------------------
approximately $376 million. The Current Advisory Agreement and the New Advisory
Agreement for that Series provide that the first $500 million of average daily
net assets are subject to a fee payable to NEIM at the same annual 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, the Series will 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 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
-20-
<PAGE>
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 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.
-21-
<PAGE>
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 of the Trust except Capital
Growth. The Chairman of the Board and President of NEIM is Anne M. Goggin. Ms.
Goggin and Mr. Guthrie 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, and 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,
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 [June 30,] 1999.
<TABLE>
<CAPTION>
Annual Fee
Approximate ----------------------------
Net Assets of Average Net
Series Other Fund Other Fund Rate Asset Level
- ----------------- ------------------ ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Bond Income
Strategic Bond 0.65% All assets
U.S. Government Series 0.55% All assets
- -------------------------------------------------------------------------------------------
Growth and Income
Equity Growth 0.75% All assets
Venture Value 0.75% All assets
Midcap Value 0.75% All assets
Small Cap 1.00%* All assets
Investors Series 0.75% All assets
Research Managers 0.75% All assets
Series
International Equity 0.90% All assets
</TABLE>
*As discussed above, the annual advisory fee rate for Small Cap will be
reduced to 0.90% on January 1, 2000.
TRUSTEE RECOMMENDATION
-22-
<PAGE>
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
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
<S> <C>
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.
</TABLE>
-23-
<PAGE>
SERIES INVESTMENT OBJECTIVE
Stock Index Investment results that correspond to the composite price
and yield performance of United States publicly traded
commonly stocks.
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 5, the Series
need to be able to change their investment objectives without shareholder
approval. As described in Part VI 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 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 Fund's
-24-
<PAGE>
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 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
-25-
<PAGE>
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, mange 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 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. In
the past five years, there have been ___ changes in control of one or more of
the Series' sub-advisers resulting in a termination of the sub-advisory
agreement with such sub-adviser or sub-advisers.
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.
-26-
<PAGE>
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 OR 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.
VI. 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 Fund, 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 for a complete description of the current and proposed fundamental
and non-fundamental investment
-27-
<PAGE>
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.
If this Proposal is approved, the fundamental investment restriction 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 more even 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
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<PAGE>
diversification requirements of the 1940 Act, which are in substance the same as
the proposed non-fundamental restriction 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:
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."
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<PAGE>
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, or (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.
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
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<PAGE>
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.
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 that 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 Fund's 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 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 states' Blue Sky laws.
The Trustees recommend the elimination of this restriction in order to provide
each Series with greater flexibility in making investments.
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<PAGE>
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.
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:
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<PAGE>
The Series may not:
Underwrite securities issued by other persons except to the extent, 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.
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 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
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<PAGE>
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.
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 they
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.
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<PAGE>
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 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.
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<PAGE>
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, 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
restrictions 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 states' 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.
-36-
<PAGE>
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:
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, and as otherwise permitted
by applicable law, regulation or order.
Discussion. If this Proposal is approved, each of the 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 Fund's 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.
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<PAGE>
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.
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 Series relating to senior securities will be revised. Each Series will
become subject to the following fundamental investment restriction:
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<PAGE>
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
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 objectives 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 5, the Trustees of the Trust will consider such alternate
actions as may be in the best interest of such Series.
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<PAGE>
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.
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"),
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<PAGE>
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 NEF 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.
<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 948,102.560 42% 737,398.190 33% 582,866.019 26%
Market
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. 57,715.411 1% 1,305,378.017 30% 2,738,097.414 63%
Government
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 5,767,537.472 25% 6,633,111.247 29% 9,124,424.329 40%
Growth
Capital 2,298,943.134 58% 1,657,168.571 42% -- 0%
Growth
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 15,371.661 3% -- 0% 102,985.653 21%
Managers
Growth and 393,104.546 23% 500,931.783 29% 789,792.139 46%
Income
Stock Index 709,368.886 65% 377,387.421 35% -- 0%
International 1,193,812.753 19% 1,459,928.430 23% 3,583,906.930 57%
Equity
TOTAL 19,720,662.263 21% 27,430,866.473 29% 39,127,542.088 42%
</TABLE>
-41-
<PAGE>
<TABLE>
<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. 26,752.330 1% 246,221.242 6% N/A --
Government
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 -- 0% -- 0% 381,642.686 76%
Managers
Growth and 13,003.669 1% 23,088.243 1% N/A --
Income
Stock Index -- 0% -- 0% N/A --
International 45,575.278 1% 25,929.379 0% N/A --
Equity
TOTAL 3,515,074.127 4% 2,594,079.967 3% 706,201.153 1%
</TABLE>
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:
Beneficial Holder Series Number and Percentage
----------------- ------ ---------------------
[5% (or greater) holders]
VOTING PROVISIONS
-42-
<PAGE>
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 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, John F. Guthrie, Jr., Anne M.
Goggin, Alan C. Leland, Jr., Thomas M. Lenz and Thomas C. McDevitt.
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
-43-
<PAGE>
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 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.
-44-
<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, or (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 as 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 than the U.S. Government securities) if,
as a result, more than 5% of the Series' total assets (taken at current value)
would be invested in securities of a single issuer. This restriction applies to
securities subject to repurchase agreements but not to the repurchase agreements
themselves;
Eliminate. Replace with the following non-fundamental restriction:
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.
(2) Purchase any security (other than the U.S. Government securities) 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 companies are classified in the
industry of their parents. This restriction does not apply to bank obligations.
It does apply to securities subject to repurchase agreements but not to the
repurchase agreements themselves;
Keep fundamental, revise as follows for simplification:
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, or (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.
(3) Purchase securities on margin (but it may obtain such short-term
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
collateral for such sales;
Eliminate. Replace with the following non-fundamental restriction:
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 total value of any class of the
outstanding 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 securities of any issuer;
Eliminate. Replace with the following non-fundamental restriction:
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).
See also the discussion of #11.
A-3
<PAGE>
(5) Borrow money, except as a temporary measure for extraordinary or
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 current value), whichever is lower;
Keep fundamental, revise as follows to obtain maximum flexibility:
Borrow money, except to the extent permitted by applicable law, regulation or
order.
(6) Invest more than 5% of its total assets (taken at current value) in
securities of businesses (including predecessors) less than three years old;
Eliminate.
(7) Purchase or retain securities of any issuer if, to the knowledge of the
Fund, officers and trustees of the Fund or officers and directors of any
investment adviser of the Fund who individually own beneficially more than 1/2
of 1% of the securities of that issuer, together own beneficially more than 5%
of the securities of that issuer;
Eliminate.
(8) Act as underwriter except to the extent that, in connection with the
disposition of portfolio 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;
Keep first clause (as fundamental restriction), revise as follows for
consistency:
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.
Eliminate second clause.
(9) Make investments for the purpose of exercising control or management;
Eliminate.
(10) 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 securities with MetLife or its affiliates, Back Bay Advisors, or
accounts under their management to reduce acquisition costs, to average prices
among such accounts to facilitate such transactions, is not considered
participating in a trading account in securities);
Eliminate.
(11) Invest in the securities of other investment companies, except in
connection with a merger, consolidation or similar transaction. (Under 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' total assets
(taken at current value), or (c) own more than 3% of the outstanding voting
stock of any one investment company);
Eliminate. Replace with the following non-fundamental restriction:
Invest in securities of other investment companies except to the extent
permitted by applicable law, regulation or order.
A-4
<PAGE>
(12) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contracts or real estate. This restriction
does not prevent any Series from purchasing securities of companies investing in
real estate or of companies which are not principally engaged in the business of
buying or selling such leases, rights or contracts;
Eliminate. Replace with the following separate fundamental restrictions relating
to real estate and commodities:
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.
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.
(13) Pledge, mortgage or hypothecate more than 15% of its total assets
(taken at cost);
Eliminate.
(14) The Series will not purchase any illiquid security if, as a result,
more than 10% of its net assets (taken at current value) would be invested in
such securities;
Eliminate. Replace with the following non-fundamental restriction
for Money Market only:
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).
(15) Make loans, except by purchase of debt obligations in which the
Series may invest consistently with its objective and investment policies. This
restriction does not apply to repurchase agreements; or
Keep fundamental, revise as follows to obtain maximum flexibility:
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.
(16) Write or purchase puts, calls or combinations thereof.
Eliminate.
Add the following fundamental restriction:
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 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-5
<PAGE>
Bond Income
- -----------
FUNDAMENTAL:
(1) Purchase any securities (other than the U.S. Government securities)
if, as a result, more than 5% of the Series' total assets (taken at current
value) would be invested in securities of a single issuer. This restriction
applies to securities subject to repurchase agreements but not to the repurchase
agreements themselves;
Eliminate. Replace with the following non-fundamental restriction:
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.
(2) Purchase any security (other than the U.S. Government securities) 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 companies are classified in the
industry of their parents. This restriction applies to securities subject to
repurchase agreements but not to the repurchase agreements themselves;
Keep fundamental, revise as follows for simplification:
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, or (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.
(3) Purchase securities on margin (but it may obtain such short-term
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
collateral for such sales;
Eliminate. Replace with the following non-fundamental restriction:
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 total value of any class of the
outstanding 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 securities of any issuer;
Eliminate. Replace with the following non-fundamental restriction:
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).
See also the discussion of #11.
(5) Borrow money, except as a temporary measure for extraordinary or
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 current value), whichever is lower; provided, however, that the Series
may make loans of its portfolio securities;
Keep fundamental, revise as follows to obtain maximum flexibility:
Borrow money, except to the extent permitted by applicable law, regulation or
order.
(6) Invest more than 5% of its total assets (taken at current value) in
securities of businesses (including predecessors) less than three years old;
Eliminate.
A-6
<PAGE>
(7) Purchase or retain securities of any issuer if, to the knowledge of
the Fund, officers and trustees of the Fund or officers and directors of any
investment adviser of the Fund who individually own beneficially more than 1/2
of 1% of the securities of that issuer, together own beneficially more than 5%
of the securities of that issuer;
Eliminate.
(8) Act as underwriter except to the extent that, in connection with the
disposition of portfolio 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; provided, however, that, subject
to the Fund's limitation on illiquid investments stated below, the Series may
invest up to 10% of its total assets (taken at current value) in such restricted
securities;
Keep first clause (as fundamental restriction), revise as follows for
consistency:
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.
Eliminate second clause.
(9) Make investments for the purpose of exercising control or management;
Eliminate.
(10) 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 securities with MetLife or its affiliates, Back Bay Advisors or
accounts under their management to reduce acquisition costs, to average prices
among such accounts to facilitate such transactions, is not considered
participating in a trading account in securities);
Eliminate.
(11) Invest in the securities of other investment companies, except in
connection with a merger, consolidation or similar transaction, except that the
Series may invest in securities of other investment companies by purchases in
the open market involving only customary broker's commissions. (Under 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' total assets
(taken at current value), or (c) own more than 3% of the outstanding voting
stock of any one investment company);
Eliminate. Replace with the following non-fundamental restriction:
Invest in securities of other investment companies except to the extent
permitted by applicable law, regulation or order.
(12) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contracts or real estate. This restriction
does not prevent any Series from purchasing securities of companies investing in
real estate or of companies which are not principally engaged in the business of
buying or selling such leases, rights or contracts;
Eliminate. Replace with the following separate fundamental restrictions relating
to real estate and commodities:
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.
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.
A-7
<PAGE>
(13) Pledge, mortgage or hypothecate more than 15% of its total assets
(taken at cost). In order to comply with certain state requirements applicable
to this restriction, as a matter of operating policy subject to change without
shareholder approval, the Series will not pledge more than 2% of its assets;
Eliminate.
(14) The Series will not purchase any illiquid security if, as a result,
more than 15% of its net assets (taken at current value) would be invested in
such securities;
Eliminate. Replace with the following non-fundamental restriction:
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).
(15) Make loans, except by purchase of bonds, debentures, commercial
paper, corporate notes and similar evidences of indebtedness which are part of
an issue to the public or to financial institutions, by entering into repurchase
agreements or by lending portfolio securities to the extent set forth under
"Miscellaneous Investment Practices--Lending of Portfolio Securities" in the
SAI; or
Keep fundamental, revise as follows to obtain maximum flexibility:
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.
(16) Write or purchase puts, calls or a combination thereof, except that
Bond Income may purchase warrants or other rights to subscribe to securities of
companies issuing such warrants or rights, or of parents or subsidiaries of such
companies, provided that such warrants or other rights to subscribe are attached
to, or a part of, a unit offering involving other securities.
Eliminate.
Add the following fundamental restriction:
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 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-8
<PAGE>
Strategic Bond, U.S. Government Series, Balanced, Equity Growth, Venture Value,
- -------------------------------------------------------------------------------
Midcap Value, Small Cap, Growth and Income, International Equity
- ----------------------------------------------------------------
FUNDAMENTAL:
(1) Purchase any security (other than U.S. Government securities) if, as a
result, more than 25% of the Series' total assets (taken at current value) would
be invested in any one industry (in the utilities category, gas, electric, water
and telephone 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);
Keep fundamental, revise as follows to obtain maximum flexibility:
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, or (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.
(2) Borrow money in excess of 10% of its total assets (taken at cost) or
5% of its total assets (taken at current value), whichever is lower, and then
only as a temporary measure for extraordinary or emergency purposes;
Keep fundamental, revise as follows to obtain maximum flexibility:
Borrow money, except to the extent permitted by applicable law, regulation or
order.
(3) Make loans, except by entering into repurchase agreements (including
reverse repurchase agreements) or by purchase of bonds, debentures, commercial
paper, corporate notes and similar evidences of indebtedness which are a part of
an issue to the public or to financial institutions, or through the lending of
the Series' portfolio securities to the extent set forth under "Investment
Risks--Lending of Portfolio Securities" above;
Keep fundamental, revise as follows to obtain maximum flexibility:
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.
(4) Buy or sell real estate or commodities or commodity contracts, except
that the Series may buy and sell futures contracts and option. Each Series may
enter into swap agreements, foreign exchange contracts and may also enter into
swap agreements and other financial transactions not requiring the delivery of
physical commodities. (This restriction does not prevent the Series from
purchasing securities of companies investing in the foregoing);
Eliminate. Replace with the following separate fundamental
restrictions relating to real estate and commodities:
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.
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) Act as underwriter, except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter under
certain federal securities laws;
Keep fundamental, revise as follows for consistency:
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.
A-9
<PAGE>
(6) Issue senior securities. (For the purpose of this restriction none of
the following is deemed to be a senior security: any pledge or other encumbrance
of assets permitted by restriction (10) below; any borrowing permitted by
restriction (2) above; any collateral arrangements with respect to options,
futures contracts and options on futures contracts and with respect to initial
and variation margin; the purchase or sale of options, forward contracts,
futures contracts or options on futures contracts; and the issuance of shares of
beneficial interest 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 therefrom.);
Keep fundamental, revise for simplification. Revised restriction:
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 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 Series' total assets, purchase any security
(other than U.S. Government 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 single issuer;
Eliminate. Replace with the following revised non-fundamental
restriction:
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.
(8) Purchase securities on margin (but it may obtain such short-term
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
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);
Eliminate. Replace with the following non-fundamental restriction:
Sell securities short or purchase any securities on margin, except to the extent
permitted by applicable law, regulation or order.
(9) With respect to 75% of the Series' total assets acquire more than 10%
of the outstanding voting securities of an issuer;
Eliminate. Replace with the following revised non-fundamental restriction:
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).
Also add the following non-fundamental restriction relating to investment
companies:
Invest in securities of other investment companies except to the extent
permitted by applicable law, regulation or order.
(10) Pledge more than 15% of its 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 variation margin are not deemed to be a pledge of assets);
Eliminate.
A-10
<PAGE>
(11) Except to the extent permitted 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
securities for a Series with that Series' adviser or subadviser or accounts
under their management to reduce brokerage commissions, to average prices among
them or to facilitate such transactions is not considered a trading account in
securities for purposes of this restriction);
Eliminate.
(12) Write, purchase or sell options except that the Series may (a) write,
purchase and sell put and call options on securities, securities indices,
currencies, futures contracts, swap contracts and other similar investments, (b)
enter into currency forward contracts, and (c) invest in structured notes; or
Eliminate.
(13) Purchase any illiquid security if, as a result, more than 15% of its
net assets (taken at current value) would be invested in such securities.
Revised. The following non-fundamental restriction applies to all Series.
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).
A-11
<PAGE>
Managed
- -------
FUNDAMENTAL:
(1) Purchase any securities (other than the U.S. Government securities)
if, as a result, more than 5% of the Series' total assets (taken at current
value) would be invested in securities of a single issuer; provided, 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 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;
Eliminate. Replace with the following non-fundamental restriction:
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.
(2) Purchase any security (other than the U.S. Government securities) 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 companies are classified in the
industry of their parents. This restriction does not apply to bank obligations.
It does apply to securities subject to repurchase agreements but not to the
repurchase agreements themselves;
Keep fundamental, revise as follows for simplification:
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, or (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.
(3) Purchase securities on margin (but it may obtain such short-term
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
collateral 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 security on margin for the purposes of this restriction);
Eliminate. Replace with the following non-fundamental restriction:
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 total value of any class of the
outstanding 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 securities of any issuer;
Eliminate. Replace with the following non-fundamental restriction:
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).
See also the discussion of #11.
(5) Borrow money, except as a temporary measure for extraordinary or
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 current value), whichever is lower; provided, however, that the Series
may make loans of its portfolio securities;
Keep fundamental, revise as follows to obtain maximum flexibility:
Borrow money, except to the extent permitted by applicable law, regulation or
order.
A-12
<PAGE>
(6) Invest more than 5% of its total assets (taken at current value) in
securities of businesses (including predecessors) less than three years old;
Eliminate.
(7) Purchase or retain securities of any issuer if, to the knowledge of
the Fund, officers and trustees of the Fund or officers and directors of any
investment adviser of the Fund who individually own beneficially more than 1/2
of 1% of the securities of that issuer, together own beneficially more than 5%
of the securities of that issuer;
Eliminate.
(8) Act as underwriter except to the extent that, in connection with the
disposition of portfolio 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; provided, however, that, subject
to the Fund's limitation on illiquid investments stated below, the Series may
invest up to 10% of its total assets (taken at current value) in such restricted
securities;
Keep first clause (as fundamental restriction), revise as follows for
consistency:
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.
Eliminate second clause.
(9) Make investments for the purpose of exercising control or management;
Eliminate.
(10) 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 securities with MetLife or its affiliates, Back Bay Advisors or
accounts under their management to reduce acquisition costs, to average prices
among such accounts to facilitate such transactions, is not considered
participating in a trading account in securities);
Eliminate.
(11) Invest in the securities of other investment companies, except in
connection with a merger, consolidation or similar transaction, except that the
Series may invest in securities of other investment companies by purchases in
the open market involving only customary broker's commissions. (Under 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' total assets (taken at current value), or (c) own more than 3% of
the outstanding voting stock of any one investment company);
Eliminate. Replace with the following non-fundamental restriction:
Invest in securities of other investment companies except to the extent
permitted by applicable law, regulation or order.
(12) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contracts (except that the Series 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 purchasing securities of companies investing in real estate or of companies
which are not principally engaged in the business of buying or selling such
leases, rights or contracts;
Eliminate. Replace with the following separate fundamental restrictions relating
to real estate and commodities:
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.
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.
A-13
<PAGE>
(13) Pledge, mortgage or hypothecate more than 15% of its total assets
(taken at cost). In order to comply with certain state requirements applicable
to this restriction, as a matter of operating policy subject to change without
shareholder approval, the Series will not pledge more than 2% of its assets;
Eliminate.
(14) Purchase any illiquid security if, as a result, more than 15% of its
net assets (taken at current value) would be invested in such securities;
Eliminate. Replace with the following non-fundamental restriction:
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).
(15) Make loans, except by purchase of bonds, debentures, commercial
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
agreements, or by lending portfolio securities to the extent set forth under
"Miscellaneous Investment Practices--Lending of Portfolio Securities" in the
SAI; or
Keep fundamental, revise as follows to obtain maximum flexibility:
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.
(16) Purchase options or warrants if, as a result, more than 1% of its
total assets (taken at current value) would be invested in such securities;
provided, however, that the Series may, without regard to the foregoing
percentage limit, purchase warrants or other rights to subscribe to securities
of companies issuing such warrants or rights, or of parents or subsidiaries of
such companies, provided that such warrants or other rights to subscribe are
attached to, or a part of a unit offering involving, other securities.
Eliminate.
Add the following fundamental restriction:
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 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-14
<PAGE>
Capital Growth
- --------------
FUNDAMENTAL:
(1) Purchase any securities (other than the U.S. Government securities)
if, as a result, more than 5% of the Series' total assets (taken at current
value) would be invested in securities of a single issuer. This restriction
applies to securities subject to repurchase agreements but not to the repurchase
agreements themselves;
Eliminate. Replace with the following non-fundamental restriction:
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.
(2) Purchase any security (other than the U.S. Government securities) 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 companies are classified in the
industry of their parents. This restriction applies to securities subject to
repurchase agreements but not to the repurchase agreements themselves;
Keep fundamental, revise as follows for simplification:
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, or (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.
(3) Purchase securities on margin (but it may obtain such short-term
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
collateral for such sales; or
Eliminate. Replace with the following non-fundamental restriction:
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 total value of any class of the
outstanding 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 securities of any issuer;
Eliminate. Replace with the following non-fundamental restriction:
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).
See also the discussion of #11.
(5) Borrow money, except as a temporary measure for extraordinary or
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 current value), whichever is lower; provided, however, that the Series
may make loans of their portfolio securities;
Keep fundamental, revise as follows to obtain maximum flexibility:
Borrow money, except to the extent permitted by applicable law, regulation or
order.
(6) Invest more than 5% of its total assets (taken at current value) in
securities of businesses (including predecessors) less than three years old;
Eliminate.
A-15
<PAGE>
(7) Purchase or retain securities of any issuer if, to the knowledge of
the Fund, officers and trustees of the Fund or officers and directors of any
investment adviser of the Fund who individually own beneficially more than 1/2
of 1% of the securities of that issuer, together own beneficially more than 5%
of the securities of that issuer;
Eliminate.
(8) Act as underwriter except to the extent that, in connection with the
disposition of portfolio 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; provided, however, that, subject
to the Fund's limitation on illiquid investments stated below, the Series may
invest up to 10% of its total assets (taken at current value) in such restricted
securities;
Keep first clause (as fundamental restriction), revise as follows for
consistency:
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.
Eliminate second clause.
(9) Make investments for the purpose of exercising control or management;
Eliminate.
(10) 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 securities with MetLife or its affiliates, CGM or accounts under their
management to reduce acquisition costs, to average prices among such accounts to
facilitate such transactions, is not considered participating in a trading
account in securities);
Eliminate.
(11) Invest in the securities of other investment companies, except in
connection with a merger, consolidation or similar transaction, except that the
Series may invest in securities of other investment companies by purchases in
the open market involving only customary broker's commissions. (Under 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' total assets
(taken at current value), or (c) own more than 3% of the outstanding voting
stock of any one investment company);
Eliminate. Replace with the following non-fundamental restriction:
Invest in securities of other investment companies except to the extent
permitted by applicable law, regulation or order.
(12) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contracts or real estate. This restriction
does not prevent any Series from purchasing securities of companies investing in
real estate or of companies which are not principally engaged in the business of
buying or selling such leases, rights or contracts;
Eliminate. Replace with the following separate fundamental restrictions relating
to real estate and commodities:
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.
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.
A-16
<PAGE>
(13) Pledge, mortgage or hypothecate more than 15% of its total assets
(taken at cost). In order to comply with certain state requirements applicable
this restriction, as a matter of operating policy subject to change without
shareholder approval, Capital Growth will not pledge more than 2% of its assets;
Eliminate.
(14) Purchase any illiquid security if, as a result, more than 15% of its
net assets (taken at current value) would be invested in such securities;
Eliminate. Replace with the following non-fundamental restriction:
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).
(15) Make loans, except by purchase of bonds, debentures, commercial
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 agreements or by lending portfolio securities to the extent set forth
under "Miscellaneous Investment Practices--Lending of Portfolio Securities" in
the SAI. As a matter of operating policy subject to change without shareholder
approval, Capital Growth will not make loans of its portfolio securities;
Keep fundamental, revise as follows to obtain maximum flexibility:
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.
(16) Purchase options or warrants if, as a result, more than 1% of its
total assets (taken at current value) would be invested in such securities; or
Eliminate.
(17) Write options or warrants.
Eliminate.
Add the following fundamental restriction:
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 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-17
<PAGE>
Research Managers Series, Investors Series
- ------------------------------------------
FUNDAMENTAL:
(1) Borrow amounts from banks in excess of 33 1/3% of its assets including
amounts borrowed;
Keep fundamental, revise as follows to obtain maximum flexibility:
Borrow money, except to the extent permitted by applicable law, regulation or
order.
(2) Underwrite securities issued by other persons except insofar as the
Series may technically be deemed an underwriter under the Securities Act of
1933, as amended (the "1933 Act') in selling a portfolio security;
Keep fundamental, revise as follows for consistency:
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 (including limited partnership interest
but excluding securities secured by real estate or interests 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 contracts) in the ordinary course of its business.
The Series reserve the freedom of action to hold and sell real estate, mineral
leases, commodities or commodities contracts (including currencies and any type
of option, futures contract and forward contracts) acquired as a result of the
ownership of securities;
Eliminate. Replace with the following separate fundamental restrictions relating
to real estate and commodities:
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.
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.
(4) Issue any senior securities except to the extent permitted by 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
arrangements with respect to initial and variation margin are not deemed to be
the issuance of a senior security;
Keep fundamental, revise for consistency with other Series.
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 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. For these purposes, the purchase of
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 agreements shall not be considered the making of a
loan;
Keep fundamental, revise as follows to obtain maximum flexibility:
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.
A-18
<PAGE>
(6) Purchase any securities of an issuer of a particular industry, if as a
result, 25% or more of its gross assets would be invested in securities of
issuers whose principal business activities are in the same industry (except
there is no limitation with respect to obligations issued or guaranteed by the
U.S. Government or its agencies or instrumentalities and repurchase agreements
collateralized by such obligations); or
Eliminate. Replace with the following non-fundamental restriction:
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, or (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.
NON-FUNDAMENTAL:
(7) Invest in illiquid investments, including securities subject to legal
or contractual restrictions on resale or for which there is no readily available
market (e.g. trading in the security is suspended, or, in the case of unlisted
securities, where no market exists) if more than 15% of the Series' assets
(taken at market value) would be invested in such securities. Repurchase
agreements maturing in more than seven days will be deemed to be illiquid for
purposes of the Series' limitation on investment in illiquid 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% limitation.
Eliminate. Replace with the following similar non-fundamental restriction:
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).
Add the following non-fundamental restrictions:
Invest in securities of other investment companies except to the extent
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 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).
A-19
<PAGE>
Stock Index
- -----------
FUNDAMENTAL:
(1) Purchase any securities (other than the U.S. Government securities)
if, as a result, more than 5% of the Series' total assets (taken at current
value) would be invested in securities of a single issuer; provided, however,
that the Series may invest 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;
Eliminate. Replace with the following non-fundamental restriction:
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.
(2) Purchase any security (other than the U.S. Government securities) 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 companies are classified in the
industry of their parents. This restriction applies to securities subject to
repurchase agreements but not to the repurchase agreements themselves;
Keep fundamental, revise as follows for simplification:
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, or (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.
(3) Purchase securities on margin (but it may obtain such short-term
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
collateral 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 security on margin for the purposes of this restriction);
Eliminate. Replace with the following non-fundamental restriction:
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 total value of any class of the
outstanding 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 securities of any issuer;
Eliminate. Replace with the following non-fundamental restriction:
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).
See also the discussion of #11.
(5) Borrow money, except as a temporary measure for extraordinary or
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 current value), whichever is lower;
Keep fundamental, revise as follows to obtain maximum flexibility:
Borrow money, except to the extent permitted by applicable law, regulation or
order.
A-20
<PAGE>
(6) Invest more than 5% of its total assets (taken at current value) in
securities of businesses (including predecessors) less than three years old;
Eliminate.
(7) Purchase or retain securities of any issuer if, to the knowledge of
the Fund, officers and trustees of the Fund or officers and directors of any
investment adviser of the Fund who individually own beneficially more than 1/2
of 1% of the securities of that issuer, together own beneficially more than 5%
of the securities of that issuer;
Eliminate.
(8) Act as underwriter except to the extent that, in connection with the
disposition of portfolio 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;
Keep first clause (as fundamental restriction), revise as follows for
consistency:
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.
Eliminate second clause.
(9) Make investments for the purpose of exercising control or management;
Eliminate.
(10) 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 securities with MetLife or its affiliates, Westpeak or accounts under
their management to reduce acquisition costs, to average prices among such
accounts to facilitate such transactions, is not considered participating in a
trading account in securities);
Eliminate.
(11) Invest in the securities of other investment companies, except in
connection with a merger, consolidation or similar transaction, and except that
the Series may invest in securities of other investment companies by purchases
in the open market involving only customary broker's commissions. (Under 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' total assets
(taken at current value), or (c) own more than 3% of the outstanding voting
stock of any one investment company);
Eliminate. Replace with the following non-fundamental restriction:
Invest in securities of other investment companies except to the extent
permitted by applicable law, regulation or order.
(12) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contracts (except that the Series may buy or
sell futures contracts on stock indexes or real estate. This restriction does
not prevent any Series from purchasing securities of companies investing in real
estate or of companies which are not principally engaged in the business of
buying or selling such leases, rights or contracts;
Eliminate. Replace with the following separate fundamental restrictions relating
to real estate and commodities:
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.
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.
A-21
<PAGE>
(13) Pledge, mortgage or hypothecate more than 15% of its total assets
(taken at cost). In order to comply with certain state requirements applicable
to this restriction, as a matter of operating policy subject to change without
shareholder approval, the Series will not pledge more than 2% of its assets;
Eliminate.
(14) The Series will not purchase any illiquid security if, as a result,
more than 15% of its net assets (taken at current value) would be invested in
such securities;
Eliminate. Replace with the following non-fundamental restriction:
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).
(15) Make loans, except by purchase of bonds, debentures, commercial
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 agreements or by lending portfolio securities to the extent set forth
under "Miscellaneous Investment Practices--Lending of Portfolio Securities" in
the SAI;
Keep fundamental, revise as follows to obtain maximum flexibility:
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.
(16) Purchase options or warrants if, as a result, more than 1% of its
total assets (taken at current value) would be invested in such securities; or
Eliminate.
(17) Write options or warrants.
Eliminate.
Add the following fundamental restriction:
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 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-22
<PAGE>
The Board of Trustees recommends that you vote for [X] Please mark
the Proposals pertaining to the relevant Series*. your vote
as in this
example
If shares of two or more Series are attributable to your insurance contract(s):
All Series' shares deemed attributable to your 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 NOTE: Please sign exactly as your name
this box and sign, date and appears on this Proxy. When signing in a
return this instruction form. fiduciary capacity, such as executor,
(No additional vote is necessary.) administrator, trustee, attorney,
guardian, etc, please so indicate.
[If you wish to vote by Corporate and partnership proxies should
telephone, please see be signed by an authorized person
the enclosed instruction card.] indicating the person's title.
Date______________________________, 1999
________________________________________
________________________________________
Signature(s), Title(s) (if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSE ENVELOPE
<TABLE>
<S> <C> <C> <C>
1. With respect to all Series, to elect ten trustees.
FOR WITHHOLD FOR ALL
ALL (except as noted below)
[_] [_]
Trustees: John J. Arena, Edward A. Benjamin, Mary Ann Brown, John W. Flynn,
Anne M. Goggin, Nancy Hawthorne, Joseph M. Hinchey, Robert B.
Kittredge, John T. Ludes and Dale Rogers Marshall.
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 FOR AGAINST ABSTAIN
NEIM and the trust. [_] [_] [_]
2b. With respect to Bond Income, to approve a new Advisory Agreement between FOR AGAINST ABSTAIN
NEIM and the Trust. [_] [_] [_]
2c. With respect to Growth and Income, to approve a new Advisory Agreement FOR AGAINST ABSTAIN
between NEIM and the Trust. [_] [_] [_]
3. To replace the fundamental investment objective of the Series* with an FOR AGAINST ABSTAIN
otherwise identical, non-fundamental investment objective. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
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 New England Investment FOR AGAINST ABSTAIN
Management, Inc. to enter into new or amended agreements with sub-advisers [_] [_] [_]
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.
___________________________________________________________________________
___________________________________________________________________________
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 FOR AGAINST ABSTAIN
securities on margin. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
5c. To revise the restriction relating to concentration of investments in one FOR AGAINST ABSTAIN
industry. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
5d. To revise the restriction relating to borrowings. FOR AGAINST ABSTAIN
[_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
5e. To eliminate the restriction relating to investments in businesses less FOR AGAINST ABSTAIN
than three years old. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
5f. To eliminate the restriction relating to issuers whose shares are
beneficially owned by Trustees and officers of the Trust or directors FOR AGAINST ABSTAIN
and officers of certain affiliates of the Trust. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
5g. To revise the restriction relating to underwriting of securities. FOR AGAINST ABSTAIN
[_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
5h. To eliminate the restrictions relating to the purchase of restricted FOR AGAINST ABSTAIN
securities and illiquid securities. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
5i. To eliminate the restriction relating to investments made for the purpose FOR AGAINST ABSTAIN
of exercising control or management. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
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 FOR AGAINST ABSTAIN
companies. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
5l. To revise the restriction relating to investments in commodities and real FOR AGAINST ABSTAIN
estate. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
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 FOR AGAINST ABSTAIN
options. [_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
5p. To revise the restriction relating to the issuance of senior securities. FOR AGAINST ABSTAIN
[_] [_] [_]
___________________________________________________________________________
___________________________________________________________________________
</TABLE>
*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 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:
Proposals Relevant Series
- --------- ---------------
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
