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 Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PROFUNDS
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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 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>
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, Columbus,
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 organized
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 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 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 advisory
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 resignation or
removal.
PROPOSAL 3: To ratify or reject the selection of
PricewaterhouseCoopers LLP as the Independent
accountants for the Portfolio for the current fiscal
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
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 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 occasioned
by the merger of Circle Acquisition Corporation, a wholly-owned subsidiary of
Deutsche Bank A.G., with and into Bankers Trust Corporation, the parent company
of the Adviser.
<PAGE>
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 material are first being mailed to
shareholders on or about [August 23], 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 23], 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 NEED BE AFFIXED 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
adjournments thereof. This Proxy Statement and accompanying proxy card ("Proxy")
are expected to be mailed to shareholders on or about [August 23], 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
discussed 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
adjournment.
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 simplicity,
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 to the Portfolio. Other feeder funds of the Portfolio also
will vote in accordance with their respective charters and/or other applicable
requirements with respect to the Proposals set forth in this Proxy Statement.
<PAGE>
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.,
located 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"
("Independent 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 Portfolio's
last fiscal year, which ended 12/31/98):
<TABLE>
<S> <C> <C> <C> <C>
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Date of Last Approval By
Portfolio's Fee
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Date of Prior Advisory Trustees Shareholders Contractual Aggregate
Agreement Rate Fees
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4/23/90 3/8/99 4/23/90 0.15% $8,019,093
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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
Acquisition Corporation, a wholly-owned New York subsidiary of Deutsche Bank,
merged with and into BT Corporation on June 4, 1999, with BT Corporation
continuing 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
Corporation, 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
organized 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,
installment 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.
<PAGE>
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
approved 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
assignment. 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
resulted 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 Commission permitting implementation, without obtaining prior
shareholder approval, of the New Advisory 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 shareholders of the Portfolio (the "Interim
Period"). Under the terms of the Exemptive Order, the Adviser was allowed to
receive advisory fees during the Interim Period 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 Portfolio 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 Agreement by the shareholders of the Portfolio has
been obtained. If the New Advisory 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.
<PAGE>
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 expect
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 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 quality.
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 Agreement,
it will remain in effect for an initial term of two years from its effective
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 execution,
effectiveness and initial term, is substantially the same as those of the Prior
Advisory Agreement.
Under the terms of the New Advisory Agreement, as under the Prior Advisory
Agreement, Bankers Trust agrees to furnish the Portfolio with investment
advisory 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. Subject
to the supervision and control of the Portfolio's Board, Bankers Trust agrees to
(a) conform to all applicable rules and regulations of the Commission, 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 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) 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 selected by it, (d)
determine from time to time what securities or other investments 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 reports as they may
request.
<PAGE>
The Advisory Fees. The investment advisory fee rate charged to the
Portfolio 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
services, 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 Portfolio'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 "interested 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 Portfolio (as defined in the
Act) or upon 60 days' written notice by the Adviser.
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 similar
services to other investment companies and other clients (whether or not their
investment objectives and policies are similar to those of the Portfolio) or
from engaging in other activities. In addition, the Adviser is obligated to pay
expenses associated with providing the services contemplated by the New Advisory
Agreement. The Portfolio bears certain other expenses, including the fees of the
Portfolio's Board. The Portfolio also pays any extraordinary expenses incurred.
Under the New Advisory Agreement, the Adviser will exercise its best
judgment 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
Portfolio in connection with the matters to which the New Advisory Agreement
relates, provided that nothing therein shall be deemed to protect or purport to
protect the Adviser against any liability to the Portfolio or to its
shareholders 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 originating loans
and other forms of credit, accepting deposits and arranging financings. Bankers
Trust also engages in trading currencies, securities, derivatives and
commodities. In addition to providing investment advisory services to the
Portfolio, Bankers Trust serves as investment adviser and sub-adviser 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.
<PAGE>
The names, business addresses and principal occupations of the current
directors and chief executive officer of Bankers Trust are set forth below.
Name and Address Principal Occupation
Josef Ackermann Chairman of the Board, Chief Executive Officer and
Deutsche Bank A.G. President, Bankers Trust; Member, Board of Managing
Taunusanlage 12 Directors, Deutsche Bank A.G.
D-60262 Frankfurt am Main
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 Group, Inc., Phillips
29 King Street Petroleum Company, and TIG Holdings Inc.
Chappaqua, NY 10514-3432
William R. Howell Director, Bankers Trust, Exxon Corporation, Halliburten
J.C. Penney Company, Inc. Company, National Organization on Disability, National
P. O. Box 10001 Retail Federation, Southern Methodist University (Chairman),
Dallas, TX 75301 and Warner-Lambert Company; Chairman Emeritus, J.C. Penney
Company, Inc.
Hermann-Josef Lamberti Director, Bankers Trust; Member, Board of Managing
Deutsche Bank A.G. Directors, Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
John A. Ross Director, Bankers Trust; Regional Chief Executive Officer,
Deutsche Bank A.G. Deutsche Bank Americas Holding Corp.
31 West 52nd Street
New York, New York 10019
Ronaldo H. Schmitz Director, Bankers Trust; Member, Board of Managing
Deutsche Bank A.G. Directors, Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
<PAGE>
In addition to serving as investment adviser to the Portfolio, Bankers
Trust also serves as administrator, transfer agent and custodian of the
Portfolio. 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.
Section 15(f) of the Act
Section 15(f) of the Act provides that when a change of control of an
investment adviser to an investment company occurs, the investment adviser or
any of its affiliated persons may receive an amount or benefit in connection
therewith as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the investment company as a
result 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 "unfair
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 received
and appropriately considered the relevant factors and, after consultation 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.
<PAGE>
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 authorities.
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 activities of
Bankers Trust or its affiliates.
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. However,
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 appropriate
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,
unanimously approved the New Advisory Agreement. In reaching this conclusion,
the Board obtained from BT Corporation, Deutsche Bank and the Adviser such
information as it deemed reasonably necessary to approve the Adviser as
investment adviser to the Portfolio and considered a number of factors,
including, among other things, the continuity of the management of the Portfolio
after the Merger; 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 Adviser'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 Advisory 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
discussed above and the exemptive relief sought by Bankers Trust.
Therefore, after careful consideration, the Board of the Portfolio,
including 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.
<PAGE>
If the New Advisory Agreement is approved by the shareholders of the
Portfolio, the agreement will continue in effect as described above. If the New
Advisory Agreement is not approved by the shareholders, the advisory fees held
in escrow with respect 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 action is appropriate based upon the interests of the
shareholders of the Portfolio 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 family 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 Section 2(a)(19) of
the Act) of the Portfolio following the Merger and the approval 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
election 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
persons named in the Proxy will vote Proxies for such other person as the Board
of the Portfolio may recommend.
<PAGE>
The following table sets forth the names, ages, position with the
Portfolio, and principal occupation of each Trustee Nominee:
TRUSTEE NOMINEES
Memberships on the Board of
Other Registered Investment
Position with Principal Occupations During Companies and Other
Name and Age Portfolio Last Five Years Publicly Held Companies
Charles P. Biggar Trustee of the Retired; formerly Vice President of None.
Age: 68 Portfolio Since International Business Machines and
Inception President of the National Services and
(1990) the Field Engineering Divisions of IBM
S. Leland Dill Trustee of the Retired; formerly Partner of KPMG Peat Director, Coutts (U.S.A.)
Age: 69 Portfolio Since Marwick; General Partner of Pemco (an International; Director, Phoenix
Inception investment company registered under the - Zweig Trust and Phoenix -
(1990) Act) Euclid Market Neutral Fund;
Director, Vintners International
Company Inc.; Director, Coutts
Trust Holdings Ltd; Director,
Coutts Group.
Martin J. Gruber Nomura Professor of Finance, Leonard L. Trustee, TIAA (pension fund),
Age: 62 Stern School of Business, New York Cowen Mutual Funds, Japan Equity
University (since 1964) Funds, Taiwan Equity Fund.
Richard Hale* Managing Director, Deutsche Asset Director, Flag Investors Funds
Age: 54 Management (Americas) (registered investment
companies); Director and
President, Investment Company
Capital Corp. (registered
investment adviser).
Richard J. Herring Jacob Safra Professor of International None.
Age: 53 Banking, Professor of Finance, Finance
Department, and Vice Dean, The Wharton
School, University of Pennsylvania (since
1972)
Bruce E. Langton Retired; Member, Investment Committee, Trustee, Allmerica Financial
Age: 68 Unilever U.S. Corporation Pension and Mutual Funds; Director, TWA
Thrift Plans (1989 to present). Directed Account/401(k) Plan
(1988 to present).
Philip Saunders, Jr. Trustee of the Principal, Philip Saunders Associates None.
Age: 63 Portfolio Since (Economic and Financial Analysis);
Inception President, John Hancock Home Mortgage
(1990) Corporation; and Senior Vice President of
Treasury and Financial Services, John
Hancock Mutual Life Insurance Company,
Inc.
Harry Van Benschoten Retired (since 1987); Director, Canada None.
Age: 71 Life Insurance Corporation of New York
- ------------------
* "Interested Person" within the meaning of Section 2(a)(19) of the Act.
Mr. Hale is a Managing Director of Deutsche Asset Management (Americas).
<PAGE>
The Board has established an Audit Committee that meets with the
Portfolio's independent accountants to review the financial statements of the
Portfolio, the adequacy of internal controls and the accounting procedures and
policies of the Portfolio, and reports on these matters to the Board. The
Independent Trustees of the Board, who constitute 100% of the membership of the
current Board, select and nominate the new trustee nominees who are not
"interested persons", as defined under the Act, of the Trust. The Board does not
have compensation or nominating committees. During 1998, the Board held four
meetings and the Audit Committee held two meetings. No Trustee attended less
than 75% of the applicable meetings. If Richard 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.
- -----------------------------------------------------------------------------------------------------------------------------------
Total Compensation From
Estimated the Bankers Trust Fund
Pension or Retirement Annual Complex*
Aggregate Compensation from Benefits Accrued as Benefits Paid to Trustees
Name of Trustee the Portfolio Part of Portfolio upon
Expenses Retirement
- ------------------------------- ------------------------------- ------------------------- -------------- -------------------------
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 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
- ------------------------------- ------------------------------- ------------------------- -------------- -------------------------
* The "Bankers Trust Fund Complex" consists of the Portfolio, as well as BT
Investment Portfolios, Intermediate Tax Free Portfolio, Tax Free Money
Portfolio, NY Tax Free Money Portfolio, Treasury Money Portfolio, International
Equity Portfolio, Equity 500 Index Portfolio, Capital Appreciation Portfolio,
Asset Management Portfolio, BT Investment Funds, BT Institutional Funds, BT
Pyramid Mutual Funds, BT Advisor Funds and BT Insurance Funds Trust.
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 Trust.
Name and Age Position with Portfolio and Principal Occupations
John A. Keffer President and Chief Executive Officer since December 1998; President, Forum
Age: 58 Financial Group, L.L.C.; President, ICC Distributors, Inc.*
Daniel O. Hirsch Secretary since December 1998; Director, Deutsche Asset Management (Americas)
Age: 45 since July 1998; Associate General Counsel, Office of General Counsel, United
States Securities and Exchange Commission, 1993-1998.
Charles A. Rizzo Treasurer since July 1998; Vice President and Department Head, Deutsche Asset
Age: 42 Management (Americas) since April 1998; Senior Manager, PricewaterhouseCoopers
LLP from October 1993 to April 1998.
- -------------
* Principal underwriter of the Portfolio.
<PAGE>
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
quality of services that the Trustee Nominees would likely provide to the
Portfolio; 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,
including 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
Nominee 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.
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
Trustees, have approved the selection of PricewaterhouseCoopers LLP to serve as
independent accountants for the Portfolio for the current fiscal year.
PricewaterhouseCoopers LLP has served as independent accountants of the
Portfolio 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 Meeting
and, thus, are not expected to make a statement; however one or more
representatives will be available by telephone to respond to appropriate
questions posed by shareholders or management.
Therefore, after careful consideration, the Board of the Portfolio,
including 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.
<PAGE>
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
reimbursement of brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of the Funds' shares, and (c)
supplementary 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 authorize 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
accordance with the instructions marked on the Proxy. Shares of the Fund are
entitled 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 Special
Meeting to permit further solicitation of Proxies with respect to the Proposal.
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 required 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 determining 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 matter 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 voted. (See "Vote
Required" for a discussion of abstentions and broker non-votes.)
<PAGE>
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.
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
Proposal I with respect to the Portfolio's New Advisory Agreement requires the
affirmative 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
Proposal I, which requires the approval of a specified percentage of the
outstanding shares of the Portfolio.
Approval of Proposal II with respect to the Trustee Nominees of the
Portfolio 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 impact 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.
<PAGE>
Beneficial Ownership of Shares of the Fund
Annex II attached hereto sets forth information as of August 6, 1999
regarding 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
outstanding 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
ownership of the shares.
Collectively, the Trustees and officers of the Trust own less than 1% of the
Fund's outstanding shares.
- --------------------------------------------------------------------------------
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
succeeding 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.
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
shareholders' 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
subsequent 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 23], 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).
- --------------------------------------------------------------------------------
<PAGE>
Annex I
Bankers Trust Company Proprietary Money Market Fund
- ---------------------------------------------------------------------------------------------------------------
Net Assets Under Advisory Fee
Fund Management 3-31-99 Payable to BT(a)
- ---------------------------------------------------------------------------------------------------------------
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: 3,441,403,916 0.15%
Institutional Liquid Asset Fund(c)
- ------------------------------------------------------ ---------------------------- -------------------------
Institutional Daily Assets Fund (e) 7,186,934,497 0.10%
- ------------------------------------------------------ ---------------------------- -------------------------
(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
Service Class Shares
Names and Address Beneficially Owned Percent Ownership
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
<PAGE>
EXHIBIT A
[FORM OF INVESTMENT ADVISORY AGREEMENT]
AGREEMENT made as of [_________________] by and between [Trust Name], a
(state of organization) (herein called the "Trust") and [________________]
(herein called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940;
WHEREAS, the Trust desires to retain the Investment Adviser to render
investment 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
created in the future (each, a "Fund") as listed on Exhibit A hereto, and the
Investment Adviser is willing to so render such services on the terms
hereinafter 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
Investment 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
compensation 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
accordance 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 offering
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
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;
<PAGE>
(b) it will place orders pursuant to its investment determinations for
each Fund either directly with the issuer or with any broker or dealer selected
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 commission, 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 brokers 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
Adviser is authorized to pay to a broker or dealer who provides such brokerage
and research services a commission for effecting a securities transaction 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 transaction or the overall responsibilities of
the Investment Adviser with respect 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 Trustees]
[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
services under this Agreement are not impaired thereby.
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 Investment
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 brokerage
commissions, if any) for the Fund.
<PAGE>
6. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, [_________] will pay the Investment Adviser, and the
Investment 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
judgment 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 compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance 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, action, suit or proceeding in which
he becomes involved, as a party or otherwise, by virtue of his being or having
been the Investment Adviser 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 the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(c) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the [Trust] [Investment
Adviser] or to one or more Funds' investors by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard 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
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office;
<PAGE>
(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 contained herein shall affect any
rights to indemnification to which Trust personnel and any other persons, other
than a Covered Person, may be entitled 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 Person
that such amount will be paid over by him to the [Trust] [Investment Adviser] on
behalf of the respective Fund if it is ultimately determined 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 Interested 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 believe that
such Covered Person 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 Agreement
shall have been approved by the Board of Trustees of the Trust with respect 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 herein, 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 specifically
approved at least annually (a) by the vote of a majority of those members of the
Board of Trustees of the Trust who are not parties to this Agreement 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 Majority 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] [Investment
Adviser] at any time, without payment of any penalty, on 90 days' written notice
to the [Trust] [Investment Adviser]. This Agreement will immediately terminate
in the event of its assignment (as used in this Agreement, the terms "Vote of a
Majority of the Outstanding Voting Securities," "Interested Person" and
"Assignment" shall have the same meanings as such terms have in the 1940 Act and
the rules and regulatory constructions thereunder.)
<PAGE>
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
represents and warrants as follows:
(a) [The Investment Adviser is exempt from registration under the 1940
Act:]
(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
accordance 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
registered 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 subject.
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.
<PAGE>
14. Miscellaneous. The captions in this Agreement are included for
convenience 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]
<PAGE>
EXHIBIT A
TO
INVESTMENT ADVISORY AGREEMENT
MADE AS OF _______________________
BETWEEN
[Trust Name] AND [________________]
<PAGE>
FORM OF PROXY CARD
<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>
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 ___
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.
</TABLE>
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
(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).
<PAGE>
QUESTIONS AND ANSWERS
[August 23], 1999
IMPORTANT NEWS
FOR SHAREHOLDERS OF MONEY MARKET PROFUND
While we encourage you to read the full text of the enclosed
Proxy Statement, 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 Kingdom 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
effective 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 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.
<PAGE>
Q. Have the investment advisory fees remained the same?
A. Yes.
Q. What are the benefits of the merger?
A. There are several potential 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. o 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.
Please vote all issues on the proxy card that you receive. Thank you for voting
your shares promptly.
<PAGE>
ProFunds
7900 Wisconsin Avenue, Suite 300
Bethesda, Maryland 20814
[August 23], 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
master portfolio in which the Money Market ProFund invests its assets, are being
asked to approve a new advisory agreement. Enclosed is further information
relating 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 corresponding 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 proposals
are important and recommends that you read the enclosed materials carefully 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,
[INSERT MR. SAPIR'S SIGNATURE]
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.
