<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PROFUNDS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
Please vote all issues on the proxy card that you receive. Thank you for voting
your shares promptly.
ProFunds
7900 Wisconsin Avenue, Suite 300
Bethesda, Maryland 20814
August 25, 1999
Dear Shareholder:
On June 4, 1999, Bankers Trust merged with Deutsche Bank A.G. As a result
of the merger, shareholders of each investment company for which Bankers Trust
serves as investment adviser, including the Cash Management Portfolio, the mas-
ter portfolio in which the Money Market ProFund invests its assets, are being
asked to approve a new advisory agreement. Enclosed is further information re-
lating to these changes, including a Questions & Answers section and proxy
card.
Important information about the changes:
. The merger has no effect on the number of shares you own or the
value of those shares.
. The advisory fee payable under the new advisory agreement has not
increased.
. The investment objective and policies of your Fund and its corre-
sponding Portfolio have not changed.
In addition to the change in the advisory agreement, shareholders are also
being asked to approve other changes outlined in the enclosed Proxy Statement.
The Board of Trustees of the Cash Management Portfolio believes that the pro-
posals are important and recommends that you read the enclosed materials care-
fully and then vote for all proposals.
---
What you need to do:
. Read all enclosed materials, including the Questions & Answers
section.
. Choose one of the following options to vote:
1. By Mail: Complete the enclosed proxy card and return in the
postage-paid envelope provided.
2. By Telephone: Call the toll-free number on your proxy card.
3. By Internet: Log on to www.proxyvote.com.
4. Attend Shareholder Meeting (details enclosed).
Respectfully,
Michael L. Sapir
President and Chairman of the Board
ProFunds
SHAREHOLDERS ARE URGED TO VOTE BY COMPLETING AND RETURNING THE PROXY CARD,
BY TELEPHONE OR THROUGH THE INTERNET TO ENSURE A QUORUM AT THE MEETING. YOUR
VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR SHAREHOLDINGS.
<PAGE>
August 25, 1999
IMPORTANT NEWS
FOR SHAREHOLDERS OF MONEY MARKET PROFUND
While we encourage you to read the full text of the enclosed Proxy State-
ment, here's a brief overview of some matters affecting your Fund which require
a shareholder vote.
Q. What has happened to require a shareholder vote?
A. On June 4, 1999, Bankers Trust became a subsidiary of Deutsche Bank A.G.
Deutsche Bank, a banking company organized under the laws of the Federal
Republic of Germany, provides a comprehensive range of global banking
and financial services.
Deutsche Bank now ranks as the fourth largest investment manager in the
world with $670 billion in assets in a full range of active and index
strategies. Deutsche Asset Management handles the investment management
activities of Deutsche Bank in the Americas, United King-dom and Asia
and will manage $256 billion in assets globally.
To ensure that Bankers Trust may continue to serve as investment adviser
of the Cash Management Portfolio (the "Portfolio"), the master portfolio
in which the Money Market ProFund (the "Fund") invests all of its
assets, we are seeking shareholder approval of a new advisory agreement.
THE BOARD MEMBERS OF THE PORTFOLIO, INCLUDING THOSE WHO ARE NOT
AFFILIATED WITH THE PORTFOLIO, RECOMMEND THAT YOU VOTE FOR THESE
PROPOSALS.
Q. Why am I being asked to vote on the new advisory agreement?
A. The Investment Company Act, which regulates investment companies in the
United States such as your Fund and the Portfolio, requires a
shareholder vote to approve a new advisory agreement following certain
types of business combinations. The new advisory agreement became ef-
fective immediately upon consummation of the merger and will continue in
effect only upon shareholder approval.
Q. How does the merger affect my Fund?
A. Your Fund and the Portfolio, as well as their respective investment
objectives, have not changed as a result of the merger. You still own
the same shares in the same Fund as you did prior to the merger. The new
advisory agreement contains substantially the same terms and conditions
as the agreement in effect prior to the merger, except for the dates
<PAGE>
of execution and termination. If shareholders do not approve the new
advisory agreement, the agreement will no longer continue and the
governing Board of your Fund, and the governing Board of the Portfolio,
will take such action as they deem to be in the best interests of the
Fund, the Portfolio and their respective shareholders.
Q. Have the investment advisory fees remained the same?
A. Yes.
Q. What are the benefits of the merger?
A. There are several potentially positive aspects of the merger you may be
interested in. Most notably, the combined institution will be one of the
largest financial institutions in the world, as well as a leader in a
number of important categories, including asset management. The
financial strength of the combined institution, coupled with the
increased breadth and depth of its resources and capabilities are,
advantages the acquisition brings. Further, as a truly global
institution, the combined entity will be in a unique position to provide
coverage, services and products.
Q. How does the Board of Trustees of the Portfolio recommend that I vote?
A. After careful consideration, the Board of Trustees of the Portfolio
recommends that you vote in favor of all the proposals on the enclosed
proxy card.
Q. Whom do I call for more information?
A. If you need more information, please call BISYS Fund Services, your
Fund's information agent, at 888-776-3637.
Q. How can I vote my shares?
A. You may choose from one of the following options to vote your shares:
. By mail, with the enclosed proxy card and return envelope.
. By telephone, with a toll-free call to the telephone number that
appears on your proxy card.
. Through the Internet, by using the Internet address located on
your proxy card and following the instructions on the site.
. In person at the shareholder meeting (see details enclosed in the
proxy statement).
Q. Will my Fund pay for the proxy solicitation and legal costs associated
with this transaction?
A. No, Bankers Trust will bear these costs.
<PAGE>
ProFunds
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE MONEY MARKET PROFUND
September 29, 1999
A Special Meeting of Shareholders of the Money Market ProFund (the "Fund")
will be held at the offices of BISYS Fund Services, 3435 Stelzer Road, Colum-
bus, OH 43219, on September 29, 1999 at 10:00 a.m. (the "Special Meeting"). The
Fund is a series of ProFunds, an open-end management investment company orga-
nized under the laws of the state of Delaware. The Fund operates as a feeder
fund in a master feeder fund arrangement with a corresponding master fund port-
folio, the Cash Management Portfolio (the "Portfolio"). As a feeder fund, the
Fund seeks to achieve its investment objective by investing all of its
investable assets in the Portfolio, an open-end management investment company
organized as a trust under the laws of the State of New York. The Portfolio
shares the same investment objective and policies of the Fund. As required by
the Investment Company Act of 1940, as amended, the Fund's voting rights with
respect to the Portfolio shares that it holds must be passed through to the
Fund's own shareholders.
The Special Meeting is being held to consider and vote on the following
matters for the Fund, as indicated below and more fully described under the
corresponding Proposals in the Proxy Statement, and such other matters as may
properly come before the meeting or any adjournments thereof:
PROPOSAL 1: To approve or disapprove a new investment advi-
- ----------
sory agreement between the Fund's corresponding
master fund portfolio, the Portfolio, and Bankers
Trust Company ("Bankers Trust").
PROPOSAL 2: To elect Trustees of the Portfolio to hold office
- ----------
until their respective successors have been duly
elected and qualified or until their earlier res-
ignation or removal.
PROPOSAL 3: To ratify or reject the selection of
- ----------
PricewaterhouseCoopers LLP as the independent ac-
countants for the Portfolio for the current fis-
cal year.
The appointed proxies will vote in their discretion on any other business
as may properly come before the Special Meeting or any adjournment thereof.
The new investment advisory agreement (the "New Advisory Agreement") with
Bankers Trust (the "Adviser") will contain substantially the same terms and
<PAGE>
conditions, except for the dates of execution, effectiveness and initial term,
as the prior investment advisory agreement pursuant to which services were pro-
vided to the Portfolio. As more fully discussed in the accompanying Proxy
Statement, approval of the New Advisory Agreement, which provides for the same
services to be provided by the Adviser at the same fees, is generally occa-
sioned by the merger of Circle Acquisition Corporation, a wholly-owned subsidi-
ary of Deutsche Bank A.G., with and into Bankers Trust Corporation, the parent
company of the Adviser.
The close of business on August 6, 1999 has been fixed as the record date
for the determination of the shareholders of the Fund entitled to notice of,
and to vote at, the Special Meeting. You are cordially invited to attend the
Special Meeting.
This notice and related proxy materials are first being mailed to share-
holders on or about August 25, 1999. This proxy is being solicited by the Board
of Trustees of ProFunds at the request of the Portfolio.
By Order of the Board of Trustees,
Louis Mayberg, Secretary
Bethesda, Maryland
August 25, 1999
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WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES
(UNLESS YOU ARE VOTING BY TELEPHONE OR THROUGH THE INTERNET). NO POSTAGE
IS NECESSARY IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
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<PAGE>
ProFunds
7900 Wisconsin Avenue, Suite 300
Bethesda, Maryland 20814
Proxy Statement for the Special Meeting of Shareholders
of the Money Market ProFund
September 29, 1999
This Proxy Statement and the accompanying Notice of Special Meeting of
Shareholders is being furnished in connection with the solicitation of proxies
by the Board of Trustees of ProFunds (the "Trust"), for use at the special
meeting of shareholders of the Money Market ProFund (the "Fund") to be held at
the offices of BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219, on
September 29, 1999 at 10:00 a.m. (the "Special Meeting"), and at any adjourn-
ments thereof. This Proxy Statement and accompanying proxy card ("Proxy") are
expected to be mailed to shareholders on or about August 25, 1999.
The Special Meeting is being held to consider and vote on the matters set
forth in the Notice of Special Meeting of Shareholders that accompanies this
Proxy Statement, as described more fully under the corresponding Proposals dis-
cussed herein, and such other matters as may properly come before the Special
Meeting or any adjournment thereof. The appointed proxies will vote on any
other business as may properly come before the Special Meeting or any such ad-
journment.
Background Information
Master-Feeder Structure. The Fund operates as a feeder fund in a master-
feeder fund arrangement with a corresponding master fund portfolio, the Cash
Management Portfolio (the "Portfolio"). As a feeder fund, the Fund seeks to
achieve its investment objective by investing all of its investable assets in
the Portfolio, an open-end management investment company organized as a trust
under the laws of the State of New York. The Portfolio has the same investment
objective and policies as the Fund, although the Portfolio invests directly in
investment securities and other investments.
As required by the Investment Company Act of 1940, as amended (the "Act"),
the Fund's voting rights with respect to the Portfolio shares that it holds
must be passed through to the Fund's own shareholders. The Board of Trustees of
the Trust is soliciting Proxies at the request of the Portfolio. For simplici-
ty, actions are described in this Proxy Statement as being taken by the Fund,
which is a series of the Trust, although all actions are actually taken by the
Trust on behalf of the Fund. Some actions described as taken by or with respect
to the Fund are actually actions to be taken by the Portfolio, in which the
Fund invests all of its assets, and on which the Fund votes as a shareholder.
Your vote and the vote of other shareholders of the Fund determines how the
Fund will vote with respect
1
<PAGE>
to the Portfolio. Other feeder funds of the Portfolio also will vote in accor-
dance with their respective charters and/or other applicable requirements with
respect to the Proposals set forth in this Proxy Statement.
Cash Management Portfolio. Bankers Trust Company ("Bankers Trust"), a
banking corporation organized under the laws of the State of New York, located
at One Bankers Trust Plaza, New York, New York 10006, serves as the investment
adviser, custodian and administrator of the Portfolio. Bankers Trust is a
wholly-owned subsidiary of BT Corporation, a registered bank holding company
organized under the laws of the State of New York. ICC Distributors, Inc., lo-
cated at Two Portland Square, Portland, Maine 04101, serves as the principal
underwriter of the Portfolio.
PROPOSAL I
APPROVAL OF NEW ADVISORY AGREEMENT
BETWEEN THE PORTFOLIO AND BANKERS TRUST
The new investment advisory agreement (the "New Advisory Agreement") with
Bankers Trust (the "Adviser") will contain substantially the same terms and
conditions, except for the dates of execution, effectiveness and initial term,
as the prior investment advisory agreement pursuant to which services were
provided to the Portfolio. As more fully discussed below, approval of the New
Advisory Agreement, which provides for the same services to be provided by the
Adviser at the same fees, is generally occasioned by the Merger pursuant to
which Bankers Trust became an indirect subsidiary of Deutsche Bank A.G.
("Deutsche Bank").
The Prior Advisory Agreement
Prior to June 4, 1999, Bankers Trust served as investment adviser to the
Portfolio pursuant to a separate investment advisory agreement between Bankers
Trust and the Portfolio (the "Prior Advisory Agreement"). The Prior Advisory
Agreement was initially approved by the Board of Trustees of the Portfolio,
including a majority of the Trustees who are not "interested persons" ("Inde-
pendent Trustees") of the Portfolio (as defined under the Act).
The following table lists: (i) the date of the Prior Advisory Agreement;
(ii) the most recent date on which each Prior Advisory Agreement was approved
by the Portfolio's Trustees, including a majority of the Independent Trustees,
and shareholders; and (iii) the amount paid by the Portfolio to Bankers Trust
for services rendered pursuant to the Prior Advisory Agreement (for the Port-
folio's last fiscal year, which ended 12/31/98):
<TABLE>
<CAPTION>
Date of Last
Date of Prior Approval By Portfolio's Fee
Advisory -------------------------- -------------------------------
Agreement Trustees Shareholders Contractual Rate Aggregate Fees
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4/23/90 3/8/99 4/23/90 0.15% $8,019,093
</TABLE>
2
<PAGE>
The Merger. On November 30, 1998, BT Corporation, Deutsche Bank and Circle
Acquisition Corporation entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the terms of the Merger Agreement, Circle Ac-
quisition Corporation, a wholly-owned New York subsidiary of Deutsche Bank,
merged with and into BT Corporation on June 4, 1999, with BT Corporation con-
tinuing as the surviving entity (the "Merger"). Under the terms of the Merger,
each outstanding share of BT Corporation common stock was converted into the
right to receive $93 in cash, without interest. Since the Merger, BT Corpora-
tion, along with its affiliates, has continued to offer the range of financial
products and services, including investment advisory services, that it offered
prior to the Merger.
As a result of the Merger, BT Corporation became a wholly-owned subsidiary
of Deutsche Bank. Deutsche Bank is a banking company with limited liability or-
ganized under the laws of the Federal Republic of Germany. Deutsche Bank is the
parent company of a group consisting of banks, capital markets companies, fund
management companies, mortgage banks and a property finance company, install-
ment financing and leasing companies, insurance companies, research and
consultancy companies and other domestic and foreign companies ("Deutsche Bank
Group"). At March 31, 1999, the Deutsche Bank Group had total assets of US $727
billion. The Deutsche Bank Group's capital and reserves at March 31, 1999 were
U.S. $19.6 billion.
Impact of the Merger on the Prior Advisory Agreement. Section 15(a) of the
Act provides, in pertinent part, that "[i]t shall be unlawful for any person to
serve or act as investment adviser of a registered investment company, except
pursuant to a written contract, which contract, whether with such registered
company or with an investment adviser of such registered company, has been ap-
proved by the vote of a majority of the outstanding voting securities of such
registered company . . . ." Section 15(a)(4) of the Act further requires that
such written contract provide for automatic termination in the event of its as-
signment. Section 2(a)(4) of the Act defines "assignment" to include any direct
or indirect transfer of a contract by the assignor.
While it may be argued otherwise, consummation of the Merger may have re-
sulted in an "assignment" of the Prior Advisory Agreement within the meaning of
the Act, terminating the agreement according to its terms and the Act as of
June 4, 1999. Specifically, as Bankers Trust is a wholly-owned subsidiary of BT
Corporation, the merger of Circle Corporation with and into BT Corporation
could be deemed to have resulted in an "assignment" of the Prior Advisory
Agreement with Bankers Trust.
On May 25, 1999, the Adviser was granted an exemptive order (the "Exemptive
Order") by the Securities and Exchange Commission permitting implementation,
without obtaining prior shareholder approval, of the New Advisory
3
<PAGE>
Agreement during an interim period commencing on the date of the closing of
the Merger and continuing, for a period of up to 150 days, through the date on
which the New Advisory Agreement is approved or disapproved by the sharehold-
ers of the Portfolio (the "Interim Period"). Under the terms of the Exemptive
Order, the Adviser was allowed to receive advisory fees during the Interim Pe-
riod pursuant to the New Advisory Agreement, provided that these fees would be
held in escrow pending shareholder approval of the New Advisory Agreement. In
accordance with the Exemptive Order, the advisory fees charged to the Portfo-
lio and paid to the Adviser under the New Advisory Agreement have been held in
an interest-bearing escrow account, and the Portfolio expects to continue to
deposit these fees in such account until approval of the New Advisory Agree-
ment by the shareholders of the Portfolio has been obtained. If the New Advi-
sory Agreement is not approved by the shareholders by the expiration of the
Interim Period, the fees held in escrow will be remitted to the Fund. As of
June 30, 1999, the amount in escrow totaled $828,525.08.
The Fund, as a shareholder of the Portfolio, is not being asked to approve
or disapprove the Merger or the Merger Agreement; rather, it is being asked
under this Proposal to approve and continue the New Advisory Agreement for the
Portfolio. Other than the dates of execution, effectiveness, and initial term
of the agreements, the New Advisory Agreement, which has been in effect since
June 4, 1999, contains substantially the same terms and conditions as the
Prior Advisory Agreement. The advisory fee rate charged to the Portfolio under
the Prior Advisory Agreement has continued to apply under the New Advisory
Agreement. In addition, the Adviser has advised the Portfolio that it can ex-
pect to continue to receive the same level and quality of services under the
New Advisory Agreement as it received under the Prior Advisory Agreement. The
Adviser has represented to the Board of Trustees of the Portfolio (the
"Board") that in the event of any material change in the investment management
personnel of the Adviser responsible for providing services to the Portfolio,
the Adviser will apprise and consult with the Board to ensure that the Board,
including a majority of the Board's Independent Trustees, is satisfied that
the services provided by the Adviser will not be diminished in scope and qual-
ity.
The New Advisory Agreement
The New Advisory Agreement, the form of which is attached to this Proxy
Statement as Exhibit A, became effective as of June 4, 1999, the date of the
consummation of the Merger. If shareholders approve the New Advisory Agree-
ment, it will remain in effect for an initial term of two years from its ef-
fective date, and may be renewed annually thereafter by specific approval of
the Board or shareholders of the Portfolio, provided that it is also approved
by a majority of the Independent Trustees of the Portfolio's Board. The terms
and conditions of the New Advisory Agreement, other than its date of execu-
tion, effectiveness and initial term, is substantially the same as those of
the Prior Advisory Agreement.
4
<PAGE>
Under the terms of the New Advisory Agreement, as under the Prior Advisory
Agreement, Bankers Trust agrees to furnish the Portfolio with investment advi-
sory and other services in connection with a continuous investment program for
the Portfolio, including investment research and management with respect to
all securities, investments, cash and cash equivalents in the Portfolio. Sub-
ject to the supervision and control of the Portfolio's Board, Bankers Trust
agrees to: (a) conform to all applicable rules and regulations of the Commis-
sion, including all applicable provisions of the Securities Act of 1933, as
amended (the "1933 Act"), the Securities Exchange Act of 1934, the Act, and
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and will
conduct its activities under the New Advisory Agreement in accordance with ap-
plicable regulations of the Board of Governors of the Federal Reserve System
pertaining to the investment advisory activities of bank holding companies and
their subsidiaries, (b) provide the services rendered by it in accordance with
the Portfolio's investment objective and policies as stated in the Prospectus
and Statement of Additional Information of the Portfolio, as from time to time
in effect, and the Portfolio's then current registration statement on Form N-
1A as filed with the Securities and Exchange Commission (the "Commission") and
the then current offering memorandum if the Portfolio is not registered under
the 1933 Act, (c) place orders pursuant to its investment determinations for
the Portfolio either directly with the issuer or with any broker or dealer se-
lected by it, (d) determine from time to time what securities or other invest-
ments will be purchased, sold or retained by the Portfolio, and (e) maintain
books and records with respect to the securities transactions of the Portfolio
and render to the Board of Trustees of the Trust such periodic and special re-
ports as they may request.
The Advisory Fees. The investment advisory fee rate charged to the Portfo-
lio under the New Advisory Agreement is the same as the advisory fee rate
charged under the Prior Advisory Agreement.
Bankers Trust is paid a fee under the New Advisory Agreement for its serv-
ices, calculated daily and paid monthly, equal, on an annual basis, to 0.15%
of the Portfolio's average daily net assets.
Generally. If approved, the New Advisory Agreement will remain in effect
for an initial term of two years (unless sooner terminated), and shall remain
in effect from year to year thereafter if approved annually: (1) by the Port-
folio's Board or by the holders of a majority of the Portfolio's outstanding
voting securities and (2) by a majority of the Independent Trustees of the
Portfolio's Board who are not parties to such contract or agreement, or "in-
terested persons" (as defined in the Act) of any such party. Like the Prior
Advisory Agreement, the New Advisory Agreement will terminate upon assignment
by any party and is terminable, without penalty, on 60 days' written notice by
the Portfolio's Board or by a "majority" vote of the shareholders of the Port-
folio (as defined in the Act) or upon 60 days' written notice by the Adviser.
5
<PAGE>
The services of the Adviser are not deemed to be exclusive, and nothing in
the New Advisory Agreement prevents it or its affiliates from providing simi-
lar services to other investment companies and other clients (whether or not
their investment objectives and policies are similar to those of the Portfo-
lio) or from engaging in other activities. In addition, the Adviser is obli-
gated to pay expenses associated with providing the services contemplated by
the New Advisory Agreement. The Portfolio bears certain other expenses, in-
cluding the fees of the Portfolio's Board. The Portfolio also pays any ex-
traordinary expenses incurred.
Under the New Advisory Agreement, the Adviser will exercise its best judg-
ment in rendering its advisory services. The Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Port-
folio in connection with the matters to which the New Advisory Agreement re-
lates, provided that nothing therein shall be deemed to protect or purport to
protect the Adviser against any liability to the Portfolio or to its share-
holders to which the Adviser could otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or by reason of the Adviser's reckless disregard of its obligations
and duties under the New Advisory Agreement.
The Adviser
Bankers Trust. Bankers Trust is the principal banking subsidiary of BT
Corporation. Bankers Trust is a bank and, therefore, not required to register
as an investment adviser under the Advisers Act. Bankers Trust provides a
broad range of commercial banking and financial services, including originat-
ing loans and other forms of credit, accepting deposits and arranging
financings. Bankers Trust also engages in trading currencies, securities, de-
rivatives and commodities. In addition to providing investment advisory serv-
ices to the Portfolio, Bankers Trust serves as investment adviser and sub-ad-
viser to 64 other investment companies. (See Annex I for a discussion of those
investment companies advised by Bankers Trust that have investment objectives
similar to those of the Portfolio, together with information regarding the
fees charged to those companies.) As of March 31, 1999, Bankers Trust had over
$313 billion of assets under management, including $6,085,045,584 of assets in
the Portfolio.
6
<PAGE>
The names, business addresses and principal occupations of the current di-
rectors and chief executive officer of Bankers Trust are set forth below.
<TABLE>
<CAPTION>
Name and Address Principal Occupation
- ---------------------------------------------------------------------
<C> <S>
Josef Ackermann Chairman of the Board, Chief Executive
Deutsche Bank A.G. Officer and President, Bankers Trust;
Taunusanlage 12 Member, Board of Managing Directors,
D-60262 Frankfurt am Main Deutsche Bank A.G.
Federal Republic of Germany
Hans Angermueller Director, Bankers Trust; Of Counsel,
Shearman & Sterling Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
George B. Beitzel Director, Bankers Trust, Computer Task
29 King Street Group, Inc., Phillips Petroleum Company,
Chappaqua, NY 10514-3432 and TIG Holdings Inc.
William R. Howell Director, Bankers Trust, Exxon
J.C. Penney Company, Inc. Corporation, Halliburten Company,
P. O. Box 10001 National Organization on Disability,
Dallas, TX 75301 National Retail Federation, Southern
Methodist University (Chairman), and
Warner-Lambert Company; Chairman
Emeritus, J.C. Penney Company, Inc.
Hermann-Josef Lamberti Director, Bankers Trust; Member, Board
Deutsche Bank A.G. of Managing Directors, Deutsche Bank
Taunusanlage 12 A.G.
D-60262 Frankfurt am Main
Federal Republic of Germany
John A. Ross Director, Bankers Trust; Regional Chief
Deutsche Bank A.G. Executive Officer, Deutsche Bank
31 West 52nd Street Americas Holding Corp.
New York, New York 10019
Ronaldo H. Schmitz Director, Bankers Trust; Member, Board
Deutsche Bank A.G. of Managing Directors, Deutsche Bank
Taunusanlage 12 A.G.
D-60262 Frankfurt am Main
Federal Republic of Germany
- ---------------------------------------------------------------------
</TABLE>
In addition to serving as investment adviser to the Portfolio, Bankers
Trust also serves as administrator, transfer agent and custodian of the Port-
folio. The Portfolio has entered into an Administration and Services Agreement
with Bankers Trust under which Bankers Trust provides administrative, custody,
transfer agency and shareholder services to the Portfolio in return for a fee
computed daily and paid monthly at an annual rate of 0.05% of the Portfolio's
average daily net assets. For the year ended December 31, 1998, the Portfolio
paid Bankers Trust $2,673,031 of administration and service fees.
7
<PAGE>
Section 15(f) of the Act
Section 15(f) of the Act provides that when a change of control of an in-
vestment adviser to an investment company occurs, the investment adviser or any
of its affiliated persons may receive an amount or benefit in connection there-
with as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the investment company as a re-
sult of the transaction relating to the change of control, or any express or
implied terms, conditions or understandings applicable thereto. As defined in
the Act, the term "unfair burden" includes any arrangement during the two (2)
year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any "interested person" (as defined in
the Act) of such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its security holders
(other than fees for bona fide investment advisory or other services), or from
any person in connection with the purchase or sale of other property to, or on
behalf of the investment company (other than fees for bona fide brokerage and
principal underwriting services). Bankers Trust has advised the Board that
there are no circumstances arising from the Merger that might result in an "un-
fair burden" (within the meaning of section 15(f) of the Act) being imposed on
the Portfolio. After conducting its reviews of Bankers Trust's performance, and
after reviewing materials specifically provided by Bankers Trust as a result of
the termination of the Prior Advisory Agreement and its request that the Board
approve the New Advisory Agreement, the Board was satisfied that it had re-
ceived and appropriately considered the relevant factors and, after consulta-
tion with counsel, the Board determined to approve the New Advisory Agreement.
The second condition is that, during the three (3) year period immediately
following the Merger, at least 75% of the members of the Portfolio's Board must
not be "interested persons" of the Adviser within the meaning of the Act. All
current members of the Board are not, and have continued not to be since the
Merger, "interested persons" of the Adviser.
Additional Information
On March 11, 1999, Bankers Trust announced that it had reached an agreement
with the United States Attorney's Office in the Southern District of New York
to resolve an investigation concerning inappropriate transfers of unclaimed
funds and related record-keeping problems that occurred between 1994 and early
1996. Bankers Trust pleaded guilty to misstating entries in the bank's books
and records and agreed to pay a $63.5 million fine to state and federal author-
ities. On July 26, 1999, the federal criminal proceedings were concluded with
Bankers Trust's formal sentencing. The events leading up to the guilty pleas
did not arise out of the investment advisory or mutual fund management activi-
ties of Bankers Trust or its affiliates.
8
<PAGE>
As a result of the plea, absent an order from the Commission, Bankers Trust
would not be able to continue to provide investment advisory services to the
Portfolio. The Commission has granted Bankers Trust a temporary order under
Section 9(c) of the Act to permit Bankers Trust and its affiliates to continue
to provide investment advisory services to registered investment companies, and
Bankers Trust, pursuant to Section 9(c) of the Act, has filed an application
for a permanent order. On May 7, 1999, the Commission extended the temporary
order under Section 9(c) of the Act until the Commission takes final action on
the application for a permanent order or, if earlier, November 8, 1999. Howev-
er, there is no assurance that the Commission will grant a permanent order. If
the Commission refuses to grant a permanent order, shareholders will receive
supplemental proxy materials requesting approval to release any amounts held in
escrow up to the time of the refusal and such other action as deemed appropri-
ate by the Board of the Portfolio and the Board of the Trust.
Recommendation of the Portfolio's Board
At a meeting of the Board of Trustees of the Portfolio held on March 8,
1999 called for the purpose of, among other things, voting on approval of the
New Advisory Agreement, the Board, including the Independent Trustees, unani-
mously approved the New Advisory Agreement. In reaching this conclusion, the
Board obtained from BT Corporation, Deutsche Bank and the Adviser such informa-
tion as it deemed reasonably necessary to approve the Adviser as investment ad-
viser to the Portfolio and considered a number of factors, including, among
other things, the continuity of the management of the Portfolio after the Merg-
er; the nature, scope and quality of services that the Adviser would likely
provide to the Portfolio; the quality of the personnel of the Adviser; the Ad-
viser's commitment to continue to provide these services in the future; the
maintenance of the identical advisory fee rates; and the fact that the New Ad-
visory Agreement contains substantially the same terms and conditions as the
Prior Advisory Agreement. Based on the factors discussed above and others, the
Board determined that the New Advisory Agreement is fair and reasonable and in
the best interest of the Portfolio and its shareholders.
In addition, at meetings held on March 24 and April 21, 1999, the Board,
including the Independent Trustees, also were apprised of the guilty pleas dis-
cussed above and the exemptive relief sought by Bankers Trust.
Therefore, after careful consideration, the Board of the Portfolio, includ-
ing the Independent Trustees, recommends that the shareholders of the Fund vote
"FOR" the approval of the New Advisory Agreement as set forth in this Proposal.
If the New Advisory Agreement is approved by the shareholders of the Port-
folio, the agreement will continue in effect as described above. If the New Ad-
visory Agreement is not approved by the shareholders, the advisory fees held in
escrow with respect
9
<PAGE>
to the New Advisory Agreement will be paid over to the Fund. In such event, the
Board of the Portfolio and the Board of the Trust will consider what other ac-
tion is appropriate based upon the interests of the shareholders of the Portfo-
lio and the Fund, respectively.
PROPOSAL II
ELECTION OF BOARD OF TRUSTEES OF THE PORTFOLIO
Trustees, constituting the entire Board of the Portfolio, are to be elected
at the Special Meeting to serve until their successors have been duly elected
and qualified or until their earlier resignation or removal. The shareholders
of the Fund are to consider the election of Charles P. Biggar, S. Leland Dill,
Martin J. Gruber, Richard Hale, Richard J. Herring, Bruce E. Langton, Philip
Saunders, Jr. and Harry Van Benschoten (the "Trustee Nominees") as Trustees of
the Portfolio. The Trustee Nominees were recently selected by the Independent
Trustees of the Board of the Portfolio and nominated by the full Board at a
meeting held on July 27, 1999. The names and ages of the Trustee Nominees,
their principal occupations during the past five years and certain of their
other affiliations are provided below. Of the Trustee Nominees, Charles P.
Biggar, Leland Dill and Philip Saunders, Jr. are currently Trustees of the
Portfolio. Drs. Gruber and Herring and Messrs. Langton and Van Benschoten serve
as Trustees of various other investment companies within the Bankers Trust fam-
ily of funds. To ensure compliance by the Portfolio with Section 15(f) of the
Act, only Mr. Hale will be an "interested person" (within the meaning of Sec-
tion 2(a)(19) of the Act) of the Portfolio following the Merger and the ap-
proval of the New Advisory Agreement. No current Trustee or Trustee Nominee of
the Portfolio serves or will serve as an officer of the Portfolio.
Each of the Trustee Nominees has agreed to serve if elected at the Special
Meeting. It is the intention of the persons designated as proxies in the Proxy,
unless otherwise directed therein, to vote at the Special Meeting for the elec-
tion of the Trustee Nominees named below as the entire Board of Trustees of the
Portfolio. If any Trustee Nominee is unable or unavailable to serve, the per-
sons named in the Proxy will vote Proxies for such other person as the Board of
the Portfolio may recommend.
10
<PAGE>
The following table sets forth the names, ages, position with the Portfo-
lio, and principal occupation of each Trustee Nominee:
TRUSTEE NOMINEES
<TABLE>
<CAPTION>
Memberships on
the Board of
Other Registered
Investment
Position Companies and
with Principal Occupations Other Publicly
Name and Age Portfolio During Last Five Years Held Companies
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Charles P. Biggar Trustee of Retired; formerly None.
Age: 68 the Vice President of
Portfolio International
Since Business Machines and
Inception President of the
(1990) National Services and
the Field Engineering
Divisions of IBM
S. Leland Dill Trustee of Retired; formerly Director, Coutts
Age: 69 the Partner of KPMG Peat (U.S.A.)
Portfolio Marwick; General International;
Since Partner of Pemco (an Director,
Inception investment company Phoenix--Zweig
(1990) registered under the Trust and
Act) Phoenix--Euclid
Market Neutral
Fund; Director,
Vintners
International
Company Inc.;
Director, Coutts
Trust Holdings
Ltd; Director,
Coutts Group.
Martin J. Gruber Nomura Professor of Trustee, TIAA
Age: 62 Finance, Leonard L. (pension fund),
Stern School of Cowen Mutual
Business, New York Funds, Japan
University (since Equity Funds,
1964) Taiwan Equity
Fund.
Richard T. Hale* Managing Director, Director, Flag
Age: 54 Deutsche Asset Investors Funds
Management (Americas) (registered
investment
companies);
Director and
President,
Investment
Company Capital
Corp.
(registered
investment
adviser).
Richard J. Herring Jacob Safra Professor None.
Age: 53 of International
Banking, Professor of
Finance, Finance
Department, and Vice
Dean, The Wharton
School, University of
Pennsylvania (since
1972)
Bruce E. Langton Retired; Member, Trustee,
Age: 68 Investment Committee, Allmerica
Unilever U.S. Financial Mutual
Corporation Pension Funds; Director,
and Thrift Plans TWA Directed
(1989 to present). Account/401(k)
Plan (1988 to
present).
Philip Saunders, Jr. Trustee of Principal, Philip None.
Age: 63 the Saunders Associates
Portfolio (Economic and
Since Financial Analysis);
Inception President, John
(1990) Hancock Home Mortgage
Corporation; and
Senior Vice President
of Treasury and
Financial Services,
John Hancock Mutual
Life Insurance
Company, Inc.
Harry Van Benschoten Retired (since 1987); None.
Age: 71 Director, Canada Life
Insurance Corporation
of New York
</TABLE>
- -----------
* "Interested Person" within the meaning of Section 2(a)(19) of the Act. Mr.
Hale is a Managing Director of Deutsche Asset Management (Americas).
11
<PAGE>
The Board has established an Audit Committee that meets with the Portfo-
lio's independent accountants to review the financial statements of the Portfo-
lio, the adequacy of internal controls and the accounting procedures and poli-
cies of the Portfolio, and reports on these matters to the Board. The Indepen-
dent Trustees of the Board, who constitute 100% of the membership of the cur-
rent Board, select and nominate the new trustee nominees who are not "inter-
ested persons", as defined under the Act, of the Trust. The Board does not have
a compensation committee. During 1998, the Board held four meetings and the Au-
dit Committee held two meetings. No Trustee attended less than 75% of the ap-
plicable meetings. If Richard T. Hale is elected, he will not be a member of
the Audit Committee.
The following table sets forth the compensation received by the Trustee
Nominees for their services to the Portfolio and the Bankers Trust Fund Complex
(as defined below) during the most recent calendar year ended December 31,
1998. In addition to the fees listed below, the Trustees of the Portfolio are
also reimbursed for all reasonable expenses incurred during the execution of
their duties for the Portfolio and the Bankers Trust Fund Complex.
<TABLE>
<CAPTION>
Total
Pension or Estimated Compensation
Retirement Annual From the Bankers
Aggregate Benefits Accrued Benefits Trust Fund
Compensation as Part of Portfolio upon Complex* Paid to
Name of Trustee from the Portfolio Expenses Retirement Trustees
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles P. Biggar....... $1,148 N/A N/A $36,250
S. Leland Dill.......... $ 971 N/A N/A $36,250
Martin J. Gruber........ N/A N/A N/A $36,250
Richard T. Hale......... N/A N/A N/A N/A
Richard J. Herring...... N/A N/A N/A $36,250
Bruce E. Langton........ N/A N/A N/A $36,250
Philip Saunders, Jr. ... $ 977 N/A N/A $36,250
Harry Van Benschoten.... N/A N/A N/A $36,250
</TABLE>
- -----------
* The "Bankers Trust Fund Complex" consists of the Portfolio, as well as BT
Investment Portfolios, Intermediate Tax Free Portfolio, Tax Free Money Port-
folio, NY Tax Free Money Portfolio, Treasury Money Portfolio, International
Equity Portfolio, Equity 500 Index Portfolio, Capital Appreciation Portfo-
lio, Asset Management Portfolio, BT Investment Funds, BT Institutional
Funds, BT Pyramid Mutual Funds, BT Advisor Funds and BT Insurance Funds
Trust.
12
<PAGE>
The following table sets forth the names, ages, position with the Portfolio
and length of service in such position, and principal occupations during the
past five years of the officers of the Portfolio.
<TABLE>
<CAPTION>
Name and Age Position with Portfolio and Principal Occupations
- ------------------------------------------------------------------------------
<C> <S>
John A. Keffer President and Chief Executive Officer since December 1998;
Age: 58 President, Forum Financial Group, L.L.C.; President, ICC
Distributors, Inc.*
Daniel O. Hirsch Secretary since December 1998; Director, Deutsche Asset
Age: 45 Management (Americas) since July 1998; Associate General
Counsel, Office of General Counsel, United States Securities
and Exchange Commission, 1993-1998.
Charles A. Rizzo Treasurer since July 1999; Vice President and Department
Age: 42 Head, Deutsche Asset Management (Americas) since April 1998;
Senior Manager, PricewaterhouseCoopers LLP from October 1993
to April 1998.
</TABLE>
- -----------
* Principal underwriter of the Portfolio.
Recommendation of the Portfolio's Board
At a meeting of the Portfolio's Board of Trustees held on July 27, 1999,
the Board, based on a recommendation of the incumbent Independent Trustees,
unanimously approved the nomination of the Trustee Nominees. In reaching this
conclusion, the Board obtained from the Trustee Nominees such information as
they deemed reasonably necessary to approve the Trustee Nominees and considered
a number of factors, including, among other things: the nature, scope and qual-
ity of services that the Trustee Nominees would likely provide to the Portfo-
lio; and the desirability of maintaining compliance with Section 15(f) of the
Act. Based on the factors discussed above and others, the Board determined that
the election of the Trustee Nominees is in the best interest of the Portfolio
and its shareholders.
Therefore, after careful consideration, the Board of the Portfolio, includ-
ing the Independent Trustees, recommends that the shareholders of the Fund vote
"FOR" the election of the Trustee Nominees as set forth in this Proposal.
If the Trustee Nominees are elected by the shareholders, each Trustee Nomi-
nee will serve until his successor is duly elected and qualified or until his
earlier resignation or removal. If the Trustee Nominees are not elected, the
Board of the Portfolio and the Board of the Trust will consider what action is
appropriate based upon the interests of the shareholders of the Portfolio and
the Fund, respectively.
13
<PAGE>
PROPOSAL III
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS FOR THE PORTFOLIO
The Board of the Portfolio, including a majority of the Independent Trust-
ees, have approved the selection of PricewaterhouseCoopers LLP to serve as in-
dependent accountants for the Portfolio for the current fiscal year.
PricewaterhouseCoopers LLP has served as independent accountants of the Portfo-
lio since its inception and has advised the Portfolio that they have no direct
or indirect financial interest in the Portfolio. Representatives of
PricewaterhouseCoopers LLP are not expected to be present at the Special Meet-
ing and, thus, are not expected to make a statement; however one or more repre-
sentatives will be available by telephone to respond to appropriate questions
posed by shareholders or management.
Therefore, after careful consideration, the Board of the Portfolio, includ-
ing the Independent Trustees, recommends that the shareholders of the Fund vote
"FOR" the selection of PricewaterhouseCoopers LLP as independent accountants
for the Portfolio as set forth in this Proposal.
VOTING
Proxy Solicitation
Notice of the Special Meeting and a Proxy accompany this Proxy Statement.
Proxy solicitations will be made primarily by mail, but solicitations may also
be made by telephone, telegraph, through the Internet or in person by officers
or agents of the Portfolio. All costs of solicitation, including (a) printing
and mailing of this Proxy Statement and accompanying material, (b) the reim-
bursement of brokerage firms and others for their expenses in forwarding solic-
itation material to the beneficial owners of the Funds' shares, and (c) supple-
mentary solicitations to submit Proxies, will be borne by Bankers Trust. If the
Fund records votes by telephone or through the Internet, it will use procedures
designed to authenticate shareholders' identities, to allow shareholders to au-
thorize the voting of their shares in accordance with their instructions, and
to confirm that their instructions have been properly recorded. Proxies voted
by telephone or through the Internet may be revoked at any time before they are
voted in the same manner that proxies voted by mail may be revoked.
Shareholder Voting
If the enclosed Proxy is properly executed and returned in time to be voted
at the Special Meeting, the shares represented thereby will be voted in accor-
dance with the instructions marked on the Proxy. Shares of the Fund are enti-
tled
14
<PAGE>
to one vote each at the Special Meeting and fractional shares are entitled to
proportionate shares of one vote. If no instructions are marked on the Proxy
with respect to a specific Proposal, the Proxy will be voted "FOR" the approval
of such Proposal and in accordance with the judgment of the persons appointed
as proxies upon any other matter that may properly come before the Special
Meeting. Any shareholder giving a Proxy has the right to attend the Special
Meeting to vote his/her shares in person (thereby revoking any prior Proxy) and
also the right to revoke the Proxy at any time by written notice received by
the Fund prior to the time it is voted.
In the event that a quorum is not present at the Special Meeting, or if a
quorum is present but sufficient votes to approve a Proposal are not received,
the persons named as proxies may propose one or more adjournments of the Spe-
cial Meeting to permit further solicitation of Proxies with respect to the Pro-
posal. In determining whether to adjourn the Special Meeting, the following
factors may be considered: the nature of the proposals that are the subject of
the Special Meeting, the percentage of votes actually cast, the percentage of
negative votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for the
solicitation. Any adjournment will require the affirmative vote of a majority
of those shares represented at the Special Meeting in person or by Proxy. The
persons named as proxies will vote those Proxies that they are entitled to vote
"FOR" any Proposal in favor of an adjournment and will vote those Proxies re-
quired to be voted "AGAINST" any such Proposal against any adjournment. A
shareholder vote may be taken on one or more of the Proposals in the Proxy
Statement prior to any adjournment if sufficient votes have been received and
it is otherwise appropriate. A quorum of shareholders is constituted by the
presence in person or by proxy of the holders of one-tenth of the outstanding
shares of the Fund entitled to vote at the Special Meeting. For purposes of de-
termining the presence of a quorum for transacting business at the Special
Meeting, abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that these persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular mat-
ter with respect to which the brokers or nominees do not have discretionary
power) will be treated as shares that are present but which have not been vot-
ed. (See "Vote Required" for a discussion of abstentions and broker non-votes.)
Shareholders of record at the close of business on August 6, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Special Meeting.
As of the Record Date, there were 264,907,874 shares of the Fund issued and
outstanding, representing 167,123,767 Investor Class shares and 97,784,107
Service Class shares.
15
<PAGE>
In order that your shares may be represented, you are requested to (unless
you are voting by telephone or through the Internet):
. indicate your instructions on the Proxy;
. date and sign the Proxy; and
. mail the Proxy promptly in the enclosed envelope.
Vote Required
In view of the master-feeder structure discussed earlier, approval of Pro-
posal I with respect to the Portfolio's New Advisory Agreement requires the af-
firmative vote of a "majority" of the outstanding shares of the Portfolio's
various feeder funds as shareholders of the Portfolio. "Majority" (as defined
in the Act) means (as of the Record Date) the lesser of: (a) 67% or more of the
shares of the Portfolio present at the special meeting, if the holders of more
than 50% of the outstanding shares of the Portfolio are present in person or by
proxy, or (b) more than 50% of the outstanding shares of the Portfolio. Because
abstentions and broker non-votes are treated as shares present but not voting,
any abstentions and broker non-votes will have the effect of votes against Pro-
posal I, which requires the approval of a specified percentage of the outstand-
ing shares of the Portfolio.
Approval of Proposal II with respect to the Trustee Nominees of the Portfo-
lio requires the affirmative vote of a plurality of the votes cast in person or
by proxy at the special meetings of shareholders of all the Portfolio's various
feeder funds voting collectively. Because abstentions and broker non-votes are
not treated as shares voted, abstentions and broker non-votes will have no im-
pact on Proposal II.
Approval of Proposal III with respect to the selection of the independent
accountants of the Portfolio requires the affirmative vote of a majority of the
votes cast in person or by proxy at the special meetings of shareholders of all
the Portfolio's various feeder funds. Because abstentions and broker non-votes
are not treated as shares voted, abstentions and broker non-votes will have no
impact on Proposal III.
Beneficial Ownership of Shares of the Fund
Annex II attached hereto sets forth information as of August 6, 1999 re-
garding the beneficial ownership of the Fund's shares by the only persons known
by the Fund to beneficially own more than five percent of any class of the out-
standing shares of the Fund. Unless otherwise indicated, each person has sole
investment and voting power (or shares this power with his or her spouse) with
respect to the shares set forth in Annex II. The inclusion herein of any shares
deemed beneficially owned does not constitute an admission of beneficial owner-
ship of the shares.
Collectively, the Trustees and officers of the Trust own less than 1% of
the Fund's outstanding shares.
16
<PAGE>
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES OF THE PORTFOLIO, INCLUDING THE INDEPENDENT
TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF
PROPOSALS I, II, AND III. ANY UNMARKED PROXIES WILL BE SO VOTED.
- --------------------------------------------------------------------------------
The Board of Trustees of the Trust is not aware of any other matters that
will come before the Special Meeting. Should any other matter properly come
before the Special Meeting, it is the intention of the persons named in the
accompanying Proxy to vote the Proxy in accordance with their judgment on such
matters.
The Annual Report of the Trust containing audited financial statements for
the fiscal year ended December 31, 1998, has previously been furnished to the
Fund's shareholders. An additional copy of this Report, as well as any suc-
ceeding Semi-Annual Report, will be furnished without charge upon request by
writing to the Trust at the address set forth on the cover of this Proxy
Statement or by calling (888) 776-3637.
17
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund does not hold regular shareholders' meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent share-
holders' meeting should send their written proposals to the Secretary of the
Trust at the address set forth on the cover of this Proxy Statement.
Proposals must be received at a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the materials for the
Fund's meeting. Timely submission of a proposal does not, however, necessarily
mean that such proposal will be included. Persons named as proxies for any sub-
sequent shareholders' meeting will vote in their discretion with respect to
proposals submitted on an untimely basis.
- --------------------------------------------------------------------------------
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING AND
WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE (UNLESS THEY ARE
VOTING BY TELEPHONE OR THROUGH THE INTERNET). NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
By Order of the Board of Trustees,
Louis Mayberg, Secretary
August 25, 1999
- --------------------------------------------------------------------------------
SHAREHOLDERS ARE ENCOURAGED TO ATTEND THE SPECIAL MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE (UNLESS YOU ARE VOTING BY
TELEPHONE OR THROUGH THE INTERNET).
- --------------------------------------------------------------------------------
18
<PAGE>
Annex I
Bankers Trust Company Proprietary Money Market Fund
<TABLE>
<CAPTION>
Net Assets Under
Management Advisory Fee
Fund 3-31-99 Payable to BT(a)
- --------------------------------------------------------------------------
<S> <C> <C>
Cash Management Portfolio (b) $6,243,061,668 0.15%
Includes the following feeder funds:
Money Market ProFund 158,016,083
Investment Cash Management Fund (d) 282,029,503
Institutional Cash Management Fund (c) 2,339,280,645
Investment Money Market Fund (d) 443,515,615
Institutional Cash Reserves Fund (c) 3,020,219,821
Liquid Assets Portfolio (b)
Includes the following feeder fund:
Institutional Liquid Asset Fund (c) 3,441,403,916 0.15%
Institutional Daily Assets Fund (e) 7,186,934,497 0.10%
</TABLE>
- -----------
(a) Information pertaining to advisory fees is shown before expense waivers
and/or reimbursements, if any, are applied.
(b) Master portfolio not available for direct retail purchase.
(c) Feeder fund available to institutional investors through BT.
(d) Feeder fund available to retail investors through BT.
(e) Shares of the fund are offered only to investors who qualify as both: (1)
accredited investors as defined under Regulation D under the Securities
Act of 1933, as amended; and (2) institutional investors.
<PAGE>
Annex II
<TABLE>
<CAPTION>
Service Class Shares
Names and Address Beneficially Owned Percent Ownership
- -------------------------------------------------------------------
<S> <C> <C>
Independent Trust Corp. 8,804,048.511 9.0036%
Funds 966
15255 S 94th Ave. 3rd Floor
Orland Park, IL 60462
Morris Harris 6,051,854.415 6.1890%
4260 Bryn Wood Dr.
Naples, FL 34119
</TABLE>
<PAGE>
EXHIBIT A
[FORM OF INVESTMENT ADVISORY AGREEMENT]
AGREEMENT made as of [ ] by and between [Trust Name], a (state of or-
ganization) (herein called the "Trust") and [ ] (herein called the "Invest-
ment Adviser").
WHEREAS, the Trust is registered as an open-end management investment com-
pany under the Investment Company Act of 1940;
WHEREAS, the Trust desires to retain the Investment Adviser to render in-
vestment advisory and other services to the Trust with respect to certain of
its series of shares of beneficial interests as may currently exist or be cre-
ated in the future (each, a "Fund") as listed on Exhibit A hereto, and the In-
vestment Adviser is willing to so render such services on the terms hereinaf-
ter set forth;
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the promises and mutual covenants herein contained, it
is agreed between the parties hereto as follows:
1. Appointment. The [Trust] [Investment Adviser] hereby appoints the In-
vestment Adviser to act as investment adviser to each Fund for the period and
on the terms set forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to render the services herein set forth for the compen-
sation herein provided.
2. Management. Subject to the supervision of the [Board of Trustees of the
Trust] [Investment Adviser], the Investment Adviser will provide a continuous
investment program for the Fund, including investment research and management
with respect to all securities, investments, cash and cash equivalents in the
Fund. The Investment Adviser will determine from time to time what securities
and other investments will be purchased, retained or sold by each Fund. The
Investment Adviser will provide the services rendered by it hereunder in ac-
cordance with the investment objective(s) and policies of each Fund as stated
in the Fund's then-current prospectus and statement of additional information
(or the Fund's then current registration statement on Form N-1A as filed with
the Securities and Exchange Commission (the "SEC") and the then-current offer-
ing memorandum if the Fund is not registered under the Securities Act of 1933,
as amended ("1933 Act"). The Investment Adviser further agrees that:
(a) it will conform with all applicable rules and regulations of the
SEC (herein called the "Rules") and with all applicable provisions of the
1933
A-1
<PAGE>
Act; as amended, the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the Investment Company Act of 1940, as amended (the "1940
Act"); and the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and will, in addition, conduct its activities under this Agreement
in accordance with applicable regulations of the Board of Governors of the
Federal Reserve System pertaining to the investment advisory activities of
bank holding companies and their subsidiaries;
(b) it will place orders pursuant to its investment determinations for
each Fund either directly with the issuer or with any broker or dealer se-
lected by it. In placing orders with brokers and dealers, the Investment
Adviser will use its reasonable best efforts to obtain the best net price
and the most favorable execution of its orders, after taking into account
all factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commis-
sion, if any, both for the specific transaction and on a continuing basis.
Consistent with this obligation, the Investment Adviser may, to the extent
permitted by law, purchase and sell portfolio securities to and from bro-
kers and dealers who provide brokerage and research services (within the
meaning of Section 28(e) of the 1934 Act) to or for the benefit of any
fund and/or other accounts over which the Investment Adviser or any of its
affiliates exercises investment discretion. Subject to the review of the
[Trust's Board of Trustees] [Investment Adviser] from time to time with
respect to the extent and continuation of the policy, the Investment Ad-
viser is authorized to pay to a broker or dealer who provides such broker-
age and research services a commission for effecting a securities transac-
tion which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Investment
Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by
such broker or dealer, viewed in terms of either that particular transac-
tion or the overall responsibilities of the Investment Adviser with re-
spect to the accounts as to which it exercises investment discretion; and
(c) it will maintain books and records with respect to the securities
transactions of each Fund and will render to the [Trust's Board of Trust-
ees] [Investment Adviser] such periodic and special reports as the Board
may request.
3. Services Not Exclusive. The investment advisory services rendered by the
Investment Adviser hereunder are not to be deemed exclusive, and the Investment
Adviser shall be free to render similar services to others so long as its serv-
ices under this Agreement are not impaired thereby.
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<PAGE>
4. Books and Records. In compliance with the requirements of Rule 31a-3 of
the Rules under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the [Trust] [Investment Adviser] any
of such records upon request of the [Trust] [Investment Adviser]. The Invest-
ment Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act and to comply in full with the requirements of Rule 204-2
under the Advisers Act pertaining to the maintenance of books and records.
5. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of purchasing securities (including broker-
age commissions, if any) for the Fund.
6. Compensation. For the services provided and the expenses assumed pursu-
ant to this Agreement, [ ] will pay the Investment Adviser, and the Invest-
ment Adviser will accept as full compensation therefor, fees, computed daily
and payable monthly, on an annual basis equal to the percentage set forth on
Exhibit A hereto of that Fund's average daily net assets.
7. Limitation of Liability of the Investment Adviser Indemnification.
(a) The Investment Adviser shall not be liable for any error of judg-
ment or mistake of law or for any loss suffered by a Fund in connection
with the matters to which this Agreement relates, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensa-
tion for services or a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Investment Adviser in the perfor-
mance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement;
(b) Subject to the exceptions and limitations contained in Section
7(c) below:
(i) the Investment Adviser (hereinafter referred to as a "Covered
Person") shall be indemnified by the respective Fund to the fullest
extent permitted by law, against liability and against all expenses
reasonably incurred or paid by him in connection with any claim, ac-
tion, suit or proceeding in which he becomes involved, as a party or
otherwise, by virtue of his being or having been the Investment Ad-
viser of the Fund, and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal
or other, including appeals), actual or threatened while in office or
thereafter, and
A-3
<PAGE>
the words "liability" and "expenses" shall include, without limita-
tion, attorneys' fees, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a Covered Per-
son:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the [Trust] [In-
vestment Adviser] or to one or more Funds' investors by reason of
willful misfeasance, bad faith, gross negligence or reckless disre-
gard of the duties involved in the conduct of his office, or (B) not
to have acted in good faith in the reasonable belief that his action
was in the best interest of a Fund; or
(ii) in the event of a settlement, unless there has been a deter-
mination that such Covered Person did not engage in willful misfea-
sance, bad faith, gross negligence or reckless disregard of the du-
ties involved in the conduct of his office;
(A) by the court or other body approving the settlement; or
(B) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a
full trial-type inquiry); or
(C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a full
trial-type inquiry); provided, however, that any investor in a
Fund may, by appropriate legal proceedings, challenge any such
determination by the Trustees or by independent counsel.
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the [Trust] [Investment Adviser], shall
be severable, shall not be exclusive of or affect any other rights to
which any Covered Person may now or hereafter be entitled, shall continue
as to a person who has ceased to be a Covered Person and shall inure to
the benefit of the successors and assigns of such person. Nothing con-
tained herein shall affect any rights to indemnification to which Trust
personnel and any other persons, other than a Covered Person, may be enti-
tled by contract or otherwise under law.
(e) Expenses in connection with the preparation and presentation of a
defense to any claim, suit or proceeding of the character described in
subsection (b) of this Section 7 may be paid by the [Trust] [Investment
Adviser] on behalf of the respective Fund from time to time prior to final
disposition thereto upon receipt of an undertaking by or on behalf of such
Covered
A-4
<PAGE>
Person that such amount will be paid over by him to the [Trust] [Invest-
ment Adviser] on behalf of the respective Fund if it is ultimately deter-
mined that he is not entitled to indemnification under this Section 7;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking or (ii) the [Trust] [Investment
Adviser] shall be insured against losses arising out of any such advance
payments, or (iii) either a majority of the Trustees who are neither In-
terested Persons of the Trust nor parties to the matter, or independent
legal counsel in a written opinion, shall have determined, based upon a
review of readily available facts as opposed to a trial-type inquiry or
full investigation, that there is reason to beieve that such Covered Per-
son will be entitled to indemnification under this Section 7.
8. Duration and Termination. This Agreement shall be effective as to a
Fund as of the date the Fund commences investment operations after this Agree-
ment shall have been approved by the Board of Trustees of the Trust with re-
spect to that Fund and the Investor(s) in the Fund in the manner contemplated
by Section 15 of the 1940 Act and, unless sooner terminated as provided here-
in, shall continue until the second anniversary of such date. Thereafter, if
not terminated, this Agreement shall continue in effect as to such Fund for
successive periods of 12 months each, provided such continuance is specifi-
cally approved at least annually (a) by the vote of a majority of those mem-
bers of the Board of Trustees of the Trust who are not parties to this Agree-
ment or Interested Persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, or (b) by Vote of a Major-
ity of the Outstanding Voting Securities of the Trust; provided, however, that
this Agreement may be terminated by the Trust at any time, without the payment
of any penalty, by the Board of Trustees of the Trust, by Vote of a Majority
of the Outstanding Voting Securities of the Trust on 60 days' written notice
to the Investment Adviser, or by the Investment Adviser as to the [Trust] [In-
vestment Adviser] at any time, without payment of any penalty, on 90 days'
written notice to the [Trust] [Investment Adviser]. This Agreement will imme-
diately terminate in the event of its assignment (as used in this Agreement,
the terms "Vote of a Majority of the Outstanding Voting Securities," "Inter-
ested Person" and "Assignment" shall have the same meanings as such terms have
in the 1940 Act and the rules and regulatory constructions thereunder.)
9. Amendment of this Agreement. No material term of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of a material term of
this Agreement shall be effective with respect to a Fund, until approved by
Vote of a Majority of the Outstanding Voting Securities of that Fund.
10. Representations and Warranties. The Investment Adviser hereby repre-
sents and warrants as follows:
(a) [The Investment Adviser is exempt from registration under the 1940
Act:]
A-5
<PAGE>
(b) The Investment Adviser has all requisite authority to enter into,
execute, deliver and perform its obligations under this Agreement;
(c) This Agreement is legal, valid and binding, and enforceable in ac-
cordance with its terms; and
(d) The performance by the Investment Adviser of its obligations under
this Agreement does not conflict with any law to which it is subject.
11. Covenants. The Investment Adviser hereby covenants and agrees that, so
long as this Agreement shall remain in effect:
(a) The Investment Adviser shall remain either exempt from, or regis-
tered under, the registration provisions of the Advisers Act; and
(b) The performance by the Investment Adviser of its obligations under
this Agreement shall not conflict with any law to which it is then sub-
ject.
12. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, (a) to the Investment Adviser, Mutual Funds Services, 130 Liberty
Street (One Bankers Trust Plaza), New York, New York 10006, and (b) to the
Trust, c/o BT Alex. Brown, Incorporated, One South Street, Baltimore, Maryland
21202.
13. Waiver. With full knowledge of the circumstances and the effect of its
action, the Investment Adviser hereby waives any and all rights which it may
acquire in the future against the property of any investor in a Fund, other
than shares in that Fund, which arise out of any action or inaction of the
[Trust] [Investment Adviser] under this Agreement.
14. Miscellaneous. The captions in this Agreement are included for conve-
nience of reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by the
laws of the , without reference to principles of conflicts of law. The
Trust is organized under the laws of pursuant to a dated .
No Trustee, officer or employee of the Trust shall be personally bound by or
liable hereunder, nor shall resort be had to their private property for the
satisfaction of any obligation or claim hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
[SIGNATORIES]
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<PAGE>
FORM OF PROXY CARD
ProFunds
7900 Wisconsin Avenue, Suite 300
Bethesda, Maryland 20814
Proxy for the Special Meeting of Shareholders
of the Money Market ProFund
10:00 a.m., Eastern time, on September 29, 1999
The undersigned hereby appoints James Smith, John Danko and Curtis Barnes,
and each of them, with full power of substitution, as proxies of the undersigned
to vote all shares of beneficial interest that the undersigned is entitled in
any capacity to vote at the above-stated special meeting, and at any and all
adjournments or postponements thereof (the "Special Meeting"), on the matters
set forth on this Proxy Card, and, in their discretion, upon all matters
incident to the conduct of the Special Meeting and upon such other matters as
may properly be brought before the Special Meeting. This proxy revokes all prior
proxies given by the undersigned.
All properly executed proxies will be voted as directed. If no instructions
are indicated on a properly executed proxy, the proxy will be voted FOR approval
of Proposals I, II and III. All ABSTAIN votes will be counted in determining the
existence of a quorum at the Special Meeting, and for Proposal I, as votes
"AGAINST" the Proposal.
This proxy is solicited by the Board of Trustees with respect to the Money
Market ProFund.
The Board of Trustees of the Cash Management Portfolio recommends
a vote FOR Proposals I, II and III.
---
Please mark boxes in blue or black ink.
I. Approval of New Investment Advisory Agreement
with Bankers Trust Company FOR [_] AGAINST [_] ABSTAIN [_]
________________________________________________________________________________
Please sign and date on the reverse side and mail this proxy card promptly using
the enclosed envelope (unless you are voting by telephone or through the
Internet).
<PAGE>
<TABLE>
<S> <C> <C> <C>
II. Election of Messrs. Biggar, Dill, Gruber, Hale,
Herring, Langton, Saunders, and Van Benschoten
as Trustees of the Cash Management Portfolio. FOR [_] AGAINST [_] ABSTAIN [_]
Instruction: To withhold the authority to vote for any individual nominee(s), strike a line through the
nominee's name in the list above.
III. Ratification of the selection of PricewaterhouseCoopers LLP FOR [_] AGAINST [_] ABSTAIN [_]
</TABLE>
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournment thereof.
Receipt of the Notice and the Proxy Statement is hereby acknowledged.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
DO NOT RETURN YOUR PROXY CARD IF YOU VOTE BY PHONE OR INTERNET.
__________________________________________
(Title or Authority)
__________________________________________
(Signature)
__________________________________________
(Signature)
Dated: _______________________, 1999
<PAGE>
(Joint owners should EACH sign. Please sign
EXACTLY as your name(s) appears on this card.
When signing as attorney, trustee, executor,
administrator, guardian or corporate officer,
please give your FULL title below.)
________________________________________________________________________________
Your vote is important. Please sign, date and mail this proxy card
promptly using the enclosed envelope (unless you are voting by telephone or
through the Internet).
117316.5.03
