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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:
[X] 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)
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(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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(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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Notes:
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NEW ENGLAND ZENITH FUND
GOLDMAN SACHS MIDCAP VALUE SERIES
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
APRIL 13, 2000
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of the Goldman
Sachs Midcap Value Series (the "Series") 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 April 13, 2000 at 10:00 a.m. (Boston time) for the following purposes:
1. To approve or disapprove a new Sub-Advisory Agreement relating to the
Series between New England Investment Management, Inc. ("NEIM") and Harris
Associates L.P. ("Harris").
2. To approve or disapprove a proposal that the Series change its
classification from "diversified" to "non-diversified."
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
If Proposals 1 and 2 set forth above are approved, the name of the Series
will change to "Harris/Oakmark Midcap Value Series."
By order of the President,
Thomas M. Lenz, Secretary
March 15, 2000
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YOUR VOTE IS IMPORTANT
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PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED INSTRUCTION FORM PROMPTLY
IN THE ENCLOSED POSTAGE- PAID ENVELOPE WHETHER OR NOT YOU PLAN TO BE PRESENT
AT THE MEETING. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
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NEW ENGLAND ZENITH FUND
GOLDMAN SACHS MIDCAP VALUE 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 Goldman Sachs
Midcap Value Series (the "Series") called to be held at the offices of New
England Life Insurance Company ("New England Financial"), 501 Boylston Street,
Boston, Massachusetts on April 13, 2000 at 10:00 a.m. (Boston time) and at any
adjournment or adjournments thereof (the "Meeting"). This statement and its
enclosures are being mailed to contract holders beginning on or about March
15, 2000. Shareholders of record of the Series at the close of business on
January 31, 2000 (the "Record Date") are entitled to vote on the proposals. A
copy of the Annual Report of the Trust for the fiscal year ended December 31,
1999 may be obtained without charge by calling (800) 356-5015.
This Proxy Statement consists of four parts.
PART I contains general information relating to the Meeting.
PART II contains information relating to Proposal 1, the proposed new Sub-
Advisory Agreement between New England Investment Management, Inc. ("NEIM")
and Harris Associates L.P. ("Harris").
PART III contains information relating to Proposal 2, the proposed change in
classification of the Series from "diversified" to "non-diversified."
PART IV contains information about the Series, Harris, NEIM and other
matters.
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I. GENERAL INFORMATION
Timely, properly executed proxies will be voted as you instruct. If you
return an executed proxy and no choice is indicated, your proxy will be voted
in favor of Proposals 1 and 2 as set forth in the attached Notice of Special
Meeting. At any time before it has been voted, the enclosed proxy may be
revoked by the signer (1) by a written revocation received by the Secretary of
the Trust, (2) by properly executing a later-dated proxy or (3) by attending
the Meeting, requesting return of any previously delivered proxy and voting in
person.
The cost of solicitation of proxies will be borne by the Series.
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 Life Insurance Company ("New England Financial"), Metropolitan Life
Insurance Company ("MetLife") and New England Securities Corporation, the
principal underwriter of the Trust.
II. NEW SUB-ADVISORY AGREEMENT (PROPOSAL 1)
ADVISORY AGREEMENT AND CURRENT SUB-ADVISORY AGREEMENT
NEIM currently serves as investment adviser to the Series pursuant to an
Advisory Agreement between NEIM and the Trust dated May 1, 1998 (the "Advisory
Agreement") and has acted as adviser to the Series since May 1, 1995. The
Advisory Agreement provides 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 a sub-
advisory agreement with Goldman Sachs Asset Management ("GSAM") dated May 1,
1998 (the "Current Sub-Advisory Agreement") at no extra cost to the Series,
under which NEIM has delegated its portfolio management responsibilities for
the Series to GSAM. GSAM is a separate operating division of Goldman, Sachs &
Co., Inc.
Under the Advisory Agreement, which will remain in effect regardless of
whether the Proposals to which this proxy statement relates are approved by
the shareholders of the Series, a management fee is payable by the Series to
NEIM at the annual rate of 0.75% of the Series's average daily net assets.
Under the Current Sub-Advisory Agreement, an investment advisory fee is
payable by NEIM to GSAM at the annual rate of 0.45% of the first $100 million
of the Series's average daily net assets, 0.40% of the next $400 million of
such assets and 0.35% of such assets in excess of $500 million. For the fiscal
year ended December 31, 1999, the aggregate management fee payable by the
Series to NEIM under the Advisory Agreement was $834,843, and the aggregate
investment advisory fee payable by NEIM to GSAM under the Current Sub-Advisory
Agreement was $495,250.
The Trustees most recently approved the continuation of the Current Sub-
Advisory Agreement for a one-year period at a meeting held on June 17, 1999.
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Shareholders of the Series approved the Current Sub-Advisory Agreement at a
meeting held on April 10, 1998. The purpose of the submission of the Current
Sub-Advisory Agreement for shareholder approval at such time was to approve
(i) a change in subadviser from Loomis, Sayles & Company, L.P. to GSAM and
(ii) a change in the sub-advisory fee of the Series.
Description of the New Sub-Advisory Agreement
The proposed Sub-Advisory Agreement between NEIM and Harris (the "New Sub-
Advisory Agreement") requires Harris to manage the investment and reinvestment
of the assets of the Series, subject to the supervision of NEIM. Under the
terms of the New Sub-Advisory Agreement, Harris is authorized to effect
portfolio transactions for the Series in the discretion of Harris and without
prior consultation with NEIM. Harris is required to report periodically to
NEIM, its agents and the Trustees of the Trust. Under the New Sub-Advisory
Agreement, NEIM compensates Harris at an annual rate of 0.45% of the first
$100 million of the Series's average daily net assets, 0.40% of the next $400
million of such assets and 0.35% of such assets in excess of $500 million.
This compensation rate is identical to that payable by NEIM to GSAM under the
Current Sub-Advisory Agreement.
The New Sub-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
Board of Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Series and (ii) by vote of a majority of the Trustees
who are not "interested persons," as that term is defined in the Investment
Company Act of 1940 (the "1940 Act"), of the Trust, NEIM or Harris, cast in
person at a meeting called for the purpose of voting on such approval. Any
amendment to the New Sub-Advisory Agreement must be approved by NEIM and
Harris and, if required by law, by vote of a majority of the Trustees who are
not interested persons of the Trust, NEIM or Harris, cast in person at a
meeting called for the purpose of voting on such approval, and/or by vote of a
majority of the outstanding voting securities of the Series. The New Sub-
Advisory Agreement may be terminated without penalty by vote of the Board of
Trustees of the Trust, including a majority of the Trustees who are not
interested persons of the Trust, NEIM or Harris, or by vote of a majority of
the outstanding voting securities of the Series, upon sixty days' written
notice to Harris, by Harris upon sixty days' written notice to NEIM and the
Trust or, if approved by the Board of Trustees of the Trust, by NEIM upon
sixty days' written notice to Harris, and it terminates automatically in the
event of its assignment or upon the termination of the Advisory Agreement. In
addition, the New Sub-Advisory Agreement will automatically terminate if
Harris requires the Series to change its name so as to eliminate all
references to "Harris" or "Oakmark," unless the continuance of the New Sub-
Advisory Agreement after such change shall have been specifically approved, if
required by law, by vote of a majority of
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the outstanding voting securities of the Series and by vote of a majority of
the Trustees of the Trust, including a majority of the Trustees who are not
interested persons of the Trust, NEIM or Harris, cast in person at a meeting
called for the purpose of voting on such approval. The New Sub-Advisory
Agreement provides that Harris shall not be subject to any liability in
connection with the performance of its services thereunder in the absence of a
violation of law, willful misfeasance, bad faith or gross negligence in the
performance of Harris's duties or by reason of reckless disregard by Harris of
its obligations and duties thereunder. The New Sub-Advisory Agreement also
requires that the Series change its name so as to delete any reference to
"Harris" or "Oakmark" in the event that Harris or an affiliate thereof no
longer serves as subadviser to the Series.
COMPARISON OF CURRENT AND PROPOSED NEW SUB-ADVISORY AGREEMENTS
The Trustees have approved, and recommend that the shareholders of the
Series approve, the New Sub-Advisory Agreement (Proposal 1). The New Sub-
Advisory Agreement is substantially similar to the Current Sub-Advisory
Agreement, except: (i) references to GSAM have been changed to references to
Harris; (ii) Harris is liable to NEIM for violations of law, whether or not
involving gross negligence; (iii) Harris is required to indemnify NEIM with
respect to material misstatements or omissions in the prospectus disclosure
relating to the Series's investment objective and policies; and (iv) certain
other minor differences.
As explained below, if the New Sub-Advisory Agreement is approved, Harris
will replace GSAM as the subadviser of the Series and will manage the
Series's portfolio using a substantially different investment style than GSAM
currently uses.
APPOINTMENT OF HARRIS AS SUBADVISER
Based on a review of the investment approach used by GSAM in managing the
Series's portfolio, the Series's performance record under GSAM's management,
the performance record of Harris in managing equity accounts and the
performance of other equity funds, NEIM recommended and the Trustees
determined that it would be appropriate for Harris to assume responsibility
for the day-to-day management of the Series's portfolio. Thus, on [March 13,
2000], the Trustees approved the termination of the Current Sub-Advisory
Agreement and approved the New Sub-Advisory Agreement. The New Sub-Advisory
Agreement is subject to the approval of the Series's shareholders. Assuming
that the New Sub-Advisory Agreement is approved by the Series's shareholders,
the Current Sub-Advisory Agreement will terminate, and the New Sub-Advisory
Agreement will take effect, on or about May 1, 2000, at which time Harris will
begin acting as the Series's subadviser. The Trustees unanimously recommend
that shareholders approve the New Sub-Advisory Agreement.
In connection with the change of subadviser, the Series's name would be
changed to the "Harris/Oakmark Midcap Value Series."
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In determining to approve the appointment of Harris as subadviser to the
Series and to recommend the New Sub-Advisory Agreement for shareholder
approval, the Trustees considered the qualifications of Harris and its
personnel to provide portfolio management services to the Series. The Trustees
also considered extensive information about the Series, Harris and Harris's
proposed approach to managing the Series's portfolio, including information
about Harris's organizational structure, investment and legal and compliance
personnel, compliance procedures and financial condition. In addition, the
Trustees considered Harris's status as a respected and experienced investment
adviser.
The Trustees also considered Harris's policies for placing portfolio
transactions of the Series with Harris and other broker-dealers affiliated
with Harris and broker-dealers that furnish brokerage and research services to
Harris, as described below under "Portfolio Transactions and Brokerage" and
"Brokerage Transactions with Affiliates." The Trustees also took into account
Harris's substantial experience and reputation as a manager of equity
investments, and the prominence of the Harris name in the marketplace for
investment advice, as possible factors that might enhance the marketability of
the insurance products that invest in the Series, and thus lead to growth in
the size of the Series, although such growth cannot be assured.
The Trustees also considered Harris's affiliation with NEIM. In this regard,
the Trustees considered that the overall management fee payable by
shareholders of the Series will not increase.
CHANGES IN INVESTMENT STYLE
In managing the Series's portfolio pursuant to the Current Sub-Advisory
Agreement, GSAM currently evaluates securities using fundamental analysis and
purchases equity securities that are, in its view, underpriced relative to a
combination of such companies' long-term earnings prospects, growth rate, free
cash flow and/or dividend paying ability. GSAM currently seeks long-term
capital appreciation of the Series, primarily by investing, under normal
circumstances, substantially all of the Series's assets in equity securities
and at least 65% of its total assets in equity securities of companies with
public stock market capitalizations (based upon shares available for trading
on an unrestricted basis) of between $500 million and $10 billion at the time
of investment. GSAM may invest up to 35% of the Series's total assets in fixed
income securities. In addition, although GSAM invests primarily in publicly
traded U.S. securities, it may invest up to 25% of the Series's total assets
in foreign securities, including securities of issuers in emerging countries
and securities quoted in foreign currencies.
If the New Sub-Advisory Agreement is approved, Harris plans to manage the
Series's portfolio using a substantially different investment style than GSAM
currently uses. Harris intends to invest primarily in common stocks of U.S.
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companies. In addition, the Series will be non-diversified (see Proposal 2),
which means that it is not limited under the 1940 Act to a percentage of
assets that it may invest in any one issuer. The Series could own as few as 12
securities, but it generally expects to have 15 to 20 securities in its
portfolio.
Harris will normally invest at least 65% of the Series's total assets in
equity securities of companies with public stock market capitalizations within
the range of the market capitalization of companies considered to be midcap by
Morningstar, Inc. As of January 31, 2000, this capitalization range was $1.67
billion to $10.54 billion. This capitalization range will change due to
changes in the value of U.S. stocks.
Harris uses a value investment style in selecting equity securities for the
Series. Harris believes that, over time, a company's stock price converges
with its true business value. By "true business value," Harris means its
estimate of the price a knowledgeable buyer would pay to acquire the entire
business. Harris believes that investing in equity securities priced
significantly below what Harris believes is the true business value presents
the best opportunity to achieve the Series's investment objective. Harris uses
this value philosophy to identify companies that it believes have discounted
stock prices compared to the companies' true business values.
Harris's value strategy also emphasizes investing for the long-term, which
means that the Series will generally own the companies in which it invests for
at least two to three years, although Harris may use short-term trading
strategies as well.
Harris focuses on individual companies in making its investment decisions
rather than on specific economic factors or specific industries. The chief
consideration in the selection of stocks for the Series is the size of the
discount of a company's stock price compared to Harris's view of the company's
true business value. Once Harris determines that a stock is selling at a
significant discount (typically 60%) to Harris's view of its estimated worth,
and the company has other additional qualities, such as free cash flows and
intelligent investment of excess cash, reasonably predictable positive
earnings growth and a high level of manager ownership, Harris generally will
consider buying that stock. Harris usually sells when the company's stock
price approaches 90% of Harris's view of its estimated worth. This process
allows Harris to set specific "buy" and "sell" targets for each stock held by
the Series. Harris also monitors the Series's holdings and, if warranted,
adjusts a stock's price target to reflect changes in a company's
characteristics.
Although Harris anticipates investing the Series's assets primarily in
equity securities, under certain market conditions Harris could invest a
significant portion of the Series's assets in high yield debt (commonly known
as "junk bonds"). High yield debt is usually riskier than investment grade
fixed-income securities for many
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reasons, including company-specific factors such as potential problems with
product development or distribution, reductions in market share or overall
sales, competition in an issuer's markets or a high degree of leverage.
Leverage in this context is a measure of how much a company has borrowed in
relation to its shareholders' equity. Also, high yield debt may be extremely
sensitive to interest rate changes and economic downturns, and high yield debt
may be difficult to value under certain market conditions.
If Proposals 1 and 2 are approved, Harris plans to manage the Series'
portfolio using a substantially different investment style than GSAM uses, as
described below. Harris has informed the Trust that, if the New Sub-Advisory
Agreement and change in classification of the Series to "non-diversified" are
approved by the Series' shareholders, Harris would expect to restructure the
Series's portfolio to reflect Harris's judgments as to valuation and stock
selection. [Harris expects that the transaction costs of this restructuring
would not exceed 1% of the Series' net asset value.] Based on the Series' net
asset value at December 31, 1999, these estimated costs would not be in excess
of $ . There can be no assurance that actual costs would not be
significantly higher or lower than this estimate. Restructuring costs will
consist primarily of brokerage fees and dealer spreads or markups related to
purchasing and selling securities for the Series' portfolio. These amounts are
treated as capital items, rather than operating expenses. They will thus
reduce the Series's net asset value, rather than increase its operating
expenses. The costs of holding the Meeting, estimated at [$100,000] are in
addition to these restructuring costs and will be borne by the Series, as
described above, regardless of whether the proposed New Sub-Advisory Agreement
and change in Series classification are approved.
Based on this review, the Trustees concluded that it is appropriate and
desirable for Harris to assume responsibility for the management of the Series
under the New Sub-Advisory Agreement.
THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE
SERIES VOTE TO APPROVE THE PROPOSED NEW SUB-ADVISORY AGREEMENT (PROPOSAL 1),
WHICH AGREEMENT WILL TAKE EFFECT ON OR ABOUT MAY 1, 2000 ONLY IF SHAREHOLDERS
OF THE SERIES APPROVE BOTH PROPOSALS 1 AND 2. (PROPOSAL 2 IS DESCRIBED BELOW.)
IF SHAREHOLDERS OF THE SERIES DO NOT APPROVE BOTH PROPOSALS 1 AND 2, THE
CURRENT SUB-ADVISORY AGREEMENT WILL REMAIN IN EFFECT.
The required vote for approval of the New Sub-Advisory Agreement is the
lesser of (1) 67% of the shares of the Series represented at the Meeting, if
more than 50% of the shares of the Series are represented at the Meeting or
(2) more than 50% of the outstanding shares of the Series.
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PART III. CHANGE OF CLASSIFICATION (PROPOSAL 2)
The Series is currently classified as a "diversified company" pursuant to
Section 5(b)(1) of the 1940 Act. In general terms, this means that, with
respect to 75% of the value of the Series's total assets, the Series may not
invest in the securities of any one issuer if, immediately after the
investment, (i) more than 5% of the value of the Series's total assets would
be invested in securities of that issuer or (ii) the investment would
constitute more than 10% of the outstanding voting securities of that issuer.
These requirements do not apply to the Series's holdings in cash and cash
items (including receivables), U.S. Government securities and securities of
other investment companies. Under Section 5(b)(1), the remaining 25% of the
Series's total assets may be invested without regard to these requirements.
As described in Proposal 1 above, if Harris is approved as subadviser of the
Series, the Series could own as few as 12 securities, but generally expects to
hold 15 to 20 securities in its portfolio. Under the Current Sub-Advisory
Agreement, the Series typically holds a much larger number of securities. The
Series's current diversification policy could inhibit the Series in pursuing
the new strategy outlined above in Proposal 1, particularly if Harris deems it
beneficial for the Series to invest a relatively high percentage of its assets
in a few issuers. Accordingly, the Trustees recommend that the Series change
its classification from a "diversified" to a "non-diversified" company to give
the Series additional flexibility to pursue a more selective investment
strategy.
In reviewing Proposal 2, the Trustees considered that changing the Series's
classification involves potential risks. By permitting the Series to focus
investments in a smaller number of issuers, the Series would be more
susceptible to risks associated with a single economic, political or
regulatory occurrence and to factors affecting a particular issuer, such as
management performance, financial leverage or reduced demand for the issuer's
goods and services. In this regard, the Trustees noted that the Series's
performance and share price are likely to fluctuate more sharply and less
predictably than if the Series remained diversified.
The Trustees also considered that the Series intends, in any case, to be
limited by diversification standards under the Internal Revenue Code of 1986
(the "Code") in order to qualify as a regulated investment company under the
Code. Those standards require that the Series diversify its holdings so that,
with respect to 50% of the Series's total assets, at the end of each fiscal
quarter the Series does not have more than 5% of its total assets invested in
the securities of any one issuer. The remaining 50% of the Series's total
assets is not subject to the 5% limitation, but with respect to that 50% of
the Series's total assets, the Series may not invest more that 25% of its
total assets in the securities of any one issuer. These diversification
standards do not apply to U.S. Government securities, cash items and the
securities of other "regulated investment companies" (as defined in the Code).
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THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE
SERIES VOTE TO CHANGE THE SERIES'S CLASSIFICATION UNDER THE 1940 ACT FROM
"DIVERSIFIED" TO "NON-DIVERSIFIED" (PROPOSAL 2), WHICH CHANGE WOULD TAKE
EFFECT AT THE SAME TIME THE NEW SUB-ADVISORY AGREEMENT TAKES EFFECT ONLY IF
SHAREHOLDERS OF THE SERIES APPROVE BOTH PROPOSALS 1 AND 2.
IF SHAREHOLDERS OF THE SERIES DO NOT APPROVE BOTH PROPOSALS 1 AND 2, THE
SERIES'S CLASSIFICATION WILL NOT CHANGE.
The required vote for approval of the change of classification is the lesser
of (1) 67% of the shares of the Series represented at the Meeting, if more
than 50% of the shares of the Series are represented at the Meeting, or (2)
more than 50% of the outstanding shares of the Series.
IV. OTHER MATTERS
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 the Series. The Chairman of the Board and
President of NEIM is Anne M. Goggin. Ms. Goggin and John F. Guthrie, Jr. are
NEIM's directors. Ms. Goggin is the Chairman of the Board and President of the
Trust, and her principal occupation is Senior Vice President and Associate
General Counsel of New England Financial. Mr. Guthrie is a Senior Vice
President of the Trust, and his principal occupation is Vice President of New
England Financial. The address of NEIM, New England Life Holdings, Inc., New
England Financial, Ms. Goggin and Mr. Guthrie and is 501 Boylston Street,
Boston, Massachusetts 02116. The address of MetLife and MetLife Holdings is
One Madison Avenue, New York, New York 10010.
INFORMATION ABOUT HARRIS
Harris, located at Two North LaSalle Street, Suite 500, Chicago, Illinois
60602-3790, is a limited partnership managed by its general partner, Harris
Associates, Inc. ("HAI"), whose directors are David G. Herro, Robert M. Levy,
Roxanne M. Martino, Victor A. Morgenstern, Anita M. Nagler, William C. Nygren,
Neil Litvack, Robert J. Sanborn and Peter S. Voss. Mr. Levy is the President
and Chief Executive Officer of HAI, which is a wholly-owned subsidiary of
Nvest Companies, L.P. ("Nvest"). Nvest's managing general partner, Nvest
Corporation, is a direct wholly-owned subsidiary of MetLife. Nvest's advising
general partner, Nvest, L.P., is a publicly traded company listed on the New
York Stock Exchange. Nvest Corporation is the sole general partner of Nvest,
L.P.
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The directors and executive officers of Harris and HAI and their principal
business activities during the past five years are:
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE
AS OF SEPTEMBER 30, 1999 PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
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<C> <S>
David G. Herro; Director, HAI; Fund Manager, Harris (October 1995
Two North LaSalle Street, to present); Principal, Harris Associates
Chicago, IL 60602; 38 Securities L.P. (August 1992 to present); formerly
Limited Partner and Fund Manager, Harris Associates
L.P. (predecessor to Harris)
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Robert M. Levy; Director, HAI; CEO and President, HAI (July 1996 to
Two North LaSalle Street, present); Designated Principal and Portfolio
Chicago, IL 60602; 49 Manager, Harris (October 1995 to present);
Principal, Harris Associates Securities L.P.
(December 1986 to present); formerly, Limited
Partner, Designated Principal and Portfolio
Manager, Harris Associates L.P. (predecessor to
Harris)
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Roxanne M. Martino; Director, HAI; Portfolio Manager, Harris (October
Two North LaSalle Street, 1995 to present); Principal, Harris Associates
Chicago, IL 60602; 42 Securities L.P. (December 1990 to present); Limited
Partner and Portfolio Manager, Harris Associates
L.P. (predecessor to Harris)
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Victor A. Morgenstern; Director, HAI; Chairman, HAI (July 1997 to
Two North LaSalle Street, present); Principal, Harris Associates Securities
Chicago, IL 60602; 56 L.P. (December 1986 to present); CEO, HAI
(September 1995 to June 1997); President, HAI
(September 1995 to July 1996); Limited Partner and
CEO, Harris (December 1986 to September 1995
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Anita M. Nagler; Director, HAI; General Counsel, Harris (October
Two North LaSalle Street, 1995 to present); Principal, Harris Associates
Chicago, IL 60602; 43 Securities L.P., (November 1993 to present);
formerly, General Counsel, Harris Associates L.P.
(predecessor to Harris)
</TABLE>
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<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE
AS OF SEPTEMBER 30, 1999 PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
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<C> <S>
William C. Nygren; Director, HAI; Fund Manager, Harris (November 1996
Two North LaSalle Street, to present); Principal, Harris Associates
Chicago, IL 60602; 41 Securities L.P. (December 1986 to present);
Director of Research, Harris Associates L.P.
(predecessor of Harris) (October 1995 to April
1998); Limited Partner and Director of Research,
Harris Associates L.P. (predecessor of Harris)
(December 1986 to September 1995)
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Neil Litvack Director, HAI;
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Robert J. Sanborn; Director, HAI; Fund Manager, Harris (October 1995
Two North LaSalle Street, to present); Principal, Harris Associates
Chicago, IL 60602; 41 Securities L.P. (January 1988 to present);
formerly, Limited Partner and Fund Manager, Harris
Associates L.P. (predecessor to Harris)
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Peter S. Voss; Director, HAI (September 1995 to present); CEO and
Two North LaSalle Street, President, Nvest Companies L.P. (December 1997 to
Chicago, IL 60602; 52 present); CEO and President, Nvest L.P. (September
1993 to present); CEO and President, Nvest
Corporation (September 1993 to present)
- -------------------------------------------------------------------------------
Donald Terao; Chief Financial Officer, Harris (October 1995 to
Two North LaSalle Street, present); Financial Principal, Harris Associates
Chicago, IL 60602; 49 Securities L.P. (December 1986 to present);
formerly, Chief Financial Officer and Controller,
Harris Associates L.P. (predecessor to Harris)
- -------------------------------------------------------------------------------
G. Neal Ryland; Director, Harris (September 1995 to present);
Two North LaSalle Street, Executive Vice President, Treasurer and Chief
Chicago, IL 60602; 58 Financial Officer, Nvest L.P. (July 1993 to
present)
- -------------------------------------------------------------------------------
John R. Raitt; Director of Research and Associate
Two North LaSalle Street, Director of Research, Harris (October 1995 to
Chicago, IL 60602; 44 present); formerly, Associate Director of Research,
Harris Associates L.P. (predecessor to Harris)
</TABLE>
12
<PAGE>
Harris acts as investment adviser to the following other mutual funds that
have investment objectives similar to the Series, for compensation at the
annual percentage rates of the corresponding average net asset levels of those
funds set forth in the table below*. The table also sets forth the net assets
of those funds as of [DATE].
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
APPROXIMATE ANNUAL FEE
NET ----------
ASSETS OF AVERAGE NET
FUNDS FUND RATE ASSET LEVEL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
The Oakmark Fund 1.00% Up to $2.5 billion
0.95% Next $1.25 billion
0.90% Next $1.25 billion
0.85% Next $5 billion
0.80% In excess of $10
billion
- --------------------------------------------------------------------------------
The Oakmark Select Fund 1.00% Up to $1 billion
0.95% Next $500 million
0.90% Next $500 million
0.85% Next $500 million
0.80% Next $2.5 billion
0.75% In excess of $5
billion
- --------------------------------------------------------------------------------
The Oakmark Small 1.25% Up to $1 billion
Cap Fund 1.15% Next $500 million
1.10% Next $500 million
1.05% Next $500 million
1.00% In excess of $2.5
billion
- --------------------------------------------------------------------------------
The Oakmark Equity and Income Fund 0.75% All asset levels
- --------------------------------------------------------------------------------
The Oakmark Global Fund 1.00% All asset levels
- --------------------------------------------------------------------------------
The Oakmark International 1.00% Up to $2.5 billion
Fund 0.95% Next $2.5 billion
0.90% In excess of $5
billion
- --------------------------------------------------------------------------------
The Oakmark International Small Cap 1.25% All asset levels
Fund
</TABLE>
- --------------------------------------------------------------------------------
- -----------
* Harris has voluntarily agreed to reimburse Class I shares of each fund to
the extent that the annual ordinary operating expenses of that class exceed
the following percentages of the average net assets of Class I shares:
1.50% in the case of The Oakmark Fund, The Oakmark Select Fund, The Oakmark
Small Cap Fund or The Oakmark Equity and Income Fund; 1.75% in the case of
The Oakmark Global Fund; and 2.00% in the case of The Oakmark International
Fund and The Oakmark
13
<PAGE>
International Small Cap Fund. Harris has also voluntarily agreed to
reimburse Class II Shares of each fund to the extent that the annual
ordinary operating expenses of that class exceed the following percentages
of the average net assets of Class II Shares: The Oakmark Fund, The Oakmark
Select Fund, The Oakmark Small Cap Fund or The Oakmark Equity and Income
Fund, 1.75% (1.50% + 0.25%); The Oakmark Global Fund, 2.00% (1.75% + 0.25%);
and The Oakmark International Fund and The Oakmark Small Cap Fund, 2.25%
(2.00% + 0.25%)
PORTFOLIO TRANSACTIONS AND BROKERAGE
If Harris assumes the role of subadviser to the Series, portfolio
transactions for the Series will be placed with those securities brokers and
dealers that Harris believes will provide the best value in transaction and
research services for the Series, either in a particular transaction or over a
period of time. Subject to that standard, portfolio transactions for the
Series may be executed through Harris Associates Securities L.P. ("HASLP"), a
registered broker-dealer and an affiliate of Harris.
In valuing brokerage services, Harris makes a judgment as to which brokers
are capable of providing the most favorable net price (not necessarily the
lowest commission) and the best execution in a particular transaction. Best
execution connotes not only general competence and reliability of a broker,
but specific expertise and effort of a broker in overcoming the anticipated
difficulties in fulfilling the requirements of particular transactions,
because the problems of execution and the required skills and effort vary
greatly among transactions.
Although some transactions involve only brokerage services, many involve
research services as well. In valuing research services, Harris makes a
judgment of the usefulness of research and other information provided by a
broker to Harris in managing the Series's investment portfolio. In some cases,
the information (e.g., data or recommendations concerning particular
securities) relates to the specific transaction placed with the broker, but
typically the research consists of a wide variety of information concerning
companies, industries, investment strategy and economic, financial and
political conditions and prospects, which information may be useful to Harris
in advising the Series.
Harris will be the principal source of information and advice to the Series
and will be responsible for making and initiating the execution of the
investment decisions for the Series. The Trustees recognize, however, that it
is important for Harris, in performing its responsibilities to the Series, to
continue to receive and evaluate the broad spectrum of economic and financial
information that many securities brokers have customarily furnished in
connection with brokerage transactions, and that in compensating brokers for
their services, it is in the interest of the Series to take into account the
value of the information received for use in advising the Series.
Consequently, the commission paid to brokers (other than HASLP) providing
research services may be greater than the amount of commission another broker
would charge for the same transaction. The extent, if any, to which the
obtaining of such information may reduce the expenses of Harris in providing
management services to the Series will
14
<PAGE>
not be determinable. In addition, it is understood by the Trustees that other
clients of Harris might also benefit from the information obtained for the
Series, in the same manner that the Series might also benefit from information
obtained by Harris in performing services for other Harris clients.
BROKERAGE TRANSACTIONS WITH AFFILIATES
Harris may, if the New Sub-Advisory Agreement is approved, cause the Series
to pay brokerage commissions to HASLP or another affiliated broker for acting
as agent on purchases and sales of securities for the portfolio of the Series.
SEC rules require that commissions paid to an affiliated broker of an adviser
or subadviser to a mutual fund for portfolio transactions not exceed "usual
and customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts that are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a
comparable period of time." The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to affiliated brokers and will review these
procedures periodically. [During the fiscal year ended December 31, 1999, the
Series paid $ in brokerage commissions to Goldman Sachs, but paid no
commission to any broker then affiliated with NEIM or Harris.]
OWNERSHIP OF SHARES AND VOTING INFORMATION
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 Series held as of that date. The
number of shares of beneficial interest of the Series issued and outstanding
as of the Record Date was 862,248.58.
RECORD OWNERSHIP
As of the Record Date, all of the shares of the Series were owned by either:
(1) New England Variable Life Separate Account ("NEVL Account"), a separate
account of New England Financial; (2) The New England Variable Account ("TNE
Account"), a separate account of MetLife; (3) New England Variable Annuity
Separate Account ("NEVA Account"), a separate account of New England
Financial; (4) certain separate accounts of MetLife established for the
pooling of contributions under certain tax-qualified group annuity contracts
("MetLife
15
<PAGE>
Accounts"); and (5) certain separate accounts of New England Financial
established for the pooling of contributions under certain tax-qualified group
annuity contracts ("NEF Accounts"). The table below sets out the number of
shares and percentage of the Series's shares represented by such number for
each separate account. The percentage of shares outstanding may not total 100%
due to rounding.
<TABLE>
<CAPTION>
NEVL ACCOUNT TNE ACCOUNT NEVA ACCOUNT
----------------------- ----------------------- -----------------------
NUMBER OF % NUMBER OF % NUMBER OF %
SHARES OUTSTANDING SHARES OUTSTANDING SHARES OUTSTANDING
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
290,631.664 34% 264,345.678 31% 301,187.381 35%
<CAPTION>
METLIFE ACCOUNTS NEF ACCOUNTS
----------------------- -----------------------
NUMBER OF % NUMBER OF %
SHARES OUTSTANDING SHARES OUTSTANDING
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1,288.334 0% 4,795.528 1%
</TABLE>
New England Financial and MetLife have informed the Trust that, as of the
Record Date, other than as set forth above, no person or company beneficially
owned 5% or more of the shares of the Series.
VOTING PROVISIONS
The Trust is subject to special voting provisions. As of the Record Date,
the Trust served as an investment vehicle for use only in connection with (1)
variable life insurance contracts offered by New England Financial and (2)
certain variable annuity contracts, including group annuity contracts, of
MetLife and New England Financial. All shares of the Series owned by NEVL
Account and NEVA Account are attributable to variable life insurance policies
and variable annuity contracts issued by New England Financial or to charges
assessed by New England Financial against those policies and contracts. New
England Financial has agreed that each owner of such a policy or contract (an
"Owner") will be permitted to instruct New England Financial as to how shares
of the Trust attributable to the policies or contracts owned by such Owner
should be voted at meetings of Trust shareholders. With respect to each of
these separate accounts, all shares of the Series attributable to such
policies and contracts for which no Owner instructions have been received by
New England Financial and all shares of the Series attributable to charges
assessed by New England Financial against such policies and contracts will be
voted for, voted against or withheld from voting on any proposal in the same
proportions as are the shares for which Owner instructions have been received
by New England Financial with respect to policies or contracts issued by such
separate accounts issued by such separate account. All shares of the Series
held by TNE Account are attributable to variable annuity contracts of MetLife
or to charges assessed by MetLife against such contracts. The holder of each
such contract (a "Contractholder") has the right to instruct MetLife as to how
to vote the shares of the Trust attributable to such contract. All shares of
the Series held by TNE Account for which no Contractholder instructions have
been received by MetLife
16
<PAGE>
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 will be voted
for, voted against or withheld from voting, by New England Financial or
MetLife, respectively, on any proposal in the same proportions as are the
aggregate of (i) all other shares for which voting instructions are received
and (ii) the shares that are voted in proportion to such voting instructions.
OTHER MATTERS
The holders of 40% 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 New England Financial, on behalf of the Trust.
The total number of votes cast "for" approval of Proposals 1 and 2 will be
voted for purposes of determining whether sufficient affirmative votes have
been cast on each proposal. All shares represented by proxies that reflect
abstentions will be counted as present for purposes of determining whether
sufficient affirmative votes have been cast. All shares represented by proxies
that reflect abstentions will be counted 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 Proposals 1 and 2.
In the event that a quorum is not present for purposes of acting on each
Proposal, or if sufficient votes in favor of Proposals 1 and 2 are not
received by the time of the Meeting, representatives of New England Financial
and MetLife 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 Proposals 1 and 2 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. New England Financial and MetLife will vote in favor of such
adjournment those proxies which provide instructions to vote in favor of
either Proposal 1 or 2. They will vote against any such adjournment those
proxies which provide instructions to vote against both Proposals 1 and 2 and
will not vote any proxies that direct them to abstain from voting on both
Proposals 1 and 2.
Although the Meeting is called to transact any other business that may
properly come before it, the only business that management intends to present
or
knows that others will present are Proposals 1 and 2 mentioned in the Notice
of Special Meeting. However, shareholders are being asked on the enclosed
proxy to instruct New England Financial or MetLife, as the case may be, to
vote in
17
<PAGE>
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.
If either Proposal 1 or Proposal 2 is not approved by the shareholders of
the Series, both Proposal 1 and Proposal 2 will be deemed to have not been
approved by the shareholders of the Series.
PRINCIPAL UNDERWRITER
New England Securities Company, the principal underwriter of the Trust, is
located at 399 Boylston St., Boston, MA 02116.
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.
18
<PAGE>
VOTE BY TELEPHONE
QUICK * * * EASY * * * IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
YOU WILL BE ASKED TO ENTER A CONTROL NUMBER WHICH IS LOCATED IN THE BOX IN THE
LOWER RIGHT HAND CORNER OF THIS FORM.
- -------------------------------------------------------------------------------
OPTION #1: To vote as the Board of Trustees recommends on both proposals
press 1.
- -------------------------------------------------------------------------------
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
- -------------------------------------------------------------------------------
OPTION #2: If you choose to vote on each proposal separately, press 0. You will
hear these instructions:
- -------------------------------------------------------------------------------
Proposal 1: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same for the remaining proposal.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
- -------------------------------------------------------------------------------
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF YOU VOTED BY PHONE
- -------------------------------------------------------------------------------
CALL * * TOLL FREE * * ON A TOUCH-TONE TELEPHONE =======================
1-888-776-5660 - ANYTIME SEE BOX ON
PROXY CARD FOR
TELEPHONE VOTING
There is NO CHARGE to you for this call. CONTROL NUMBER
=======================
<PAGE>
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS BELOW.
---
1. To approve the Sub-Advisory Agreement relating to the Goldman Sachs Midcap
Value Series (the "Series") between New England Investment Management, Inc.
and Harris Associates L.P.
FOR AGAINST ABSTAIN
[_] [_] [_]
2. To approve a change of the classification of the Series under the Investment
Company Act of 1940 from "diversified" to "non-diversified."
FOR AGAINST ABSTAIN
[_] [_] [_]
Please mark
your votes as
indicated in
this sample [X]
NOTE: Please sign exactly as your name appears on this Form. When signing in a
fiduciary capacity, such as executor, administrator, trustee, attorney,
guardian, etc. please so indicate. Corporate and partnership proxies should be
signed by an authorized person indicating the person's title.
Date , 2000
-----------------------------------
- ----------------------------------------------
- ----------------------------------------------
Signature(s), Title(s), (if applicable)
PLEASE SIGN, DATE, AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE
- ----------------------------------------------
CONTROL NUMBER
- ----------------------------------------------
FOR TELEPHONE VOTING
- -------------------------------------------------------------------------------
VOTING INSTRUCTION FORM
NEW ENGLAND ZENITH FUND
GOLDMAN SACHS MIDCAP VALUE SERIES
The undersigned hereby instructs that all shares of the Goldman Sachs Midcap
Value Series (the "Series") of New England Zenith Fund deemed attributable to
the undersigned's annuity contract or variable life policy with the issuing
insurance company be voted at the Special Meeting of Shareholders of the Series
on April 13, 2000 (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******
