SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A)
of the Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
[] Preliminary Proxy Statement Confidential, for use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
[] Definitive Proxy Statement
[] Definitive additional materials
[] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FFTW FUNDS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of filing fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
FFTW FUNDS, INC.
200 Park Avenue, New York, New York 10166
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on November 19, 1999
---------------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of the following Portfolios of FFTW Funds, Inc. (the "Fund"): Money
Market Portfolio, Mortgage LIBOR Portfolio, Limited Duration Portfolio,
Mortgage-Backed Portfolio, Asset-Backed Portfolio, High-Yield Portfolio,
Enhanced Equity Market Portfolio, U.S. Treasury Portfolio, U.S. Corporate
Portfolio, Broad Market Portfolio, International Portfolio, Global Tactical
Exposure Portfolio, International Opportunities Portfolio, International
Corporate Portfolio, Emerging Markets Portfolio, Global High Yield Portfolio,
Inflation-Indexed Portfolio, Inflation-Indexed Hedged Portfolio, U.S. Short-Term
Portfolio, Worldwide Portfolio, and Worldwide-Hedged Portfolio (each
individually a "Portfolio" and collectively the "Portfolios"), will be held at
the offices of Fischer Francis Trees & Watts, Inc., 200 Park Avenue, New York,
New York 10166, on Friday, November 19, 1999 at 10:00 a.m., Eastern Time. The
purpose of the Special Meeting is to consider and act upon the following
proposals, all of which are more fully described in the accompanying Proxy
Statement dated October 28, 1999.
1. To elect Directors of the Fund;
2. To reclassify, revise or eliminate certain fundamental
investment restrictions of the Portfolios;
3. To ratify the selection of KPMG Peat Marwick LLP as the Fund's
independent auditors;
4. To transact such other business as may properly come before
the Special Meeting or any adjournments thereof.
<PAGE>
The Board of Directors has fixed the close of business on October 18,
1999, as the record date for the determination of the shareholders entitled to
notice of and to vote at the Special Meeting or any adjournments thereof. The
enclosed proxy is being solicited on behalf of the Directors.
By order of the Board of Directors,
William E. Vastardis,
Secretary
New York, New York
October 25, 1999
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YOUR VOTE IS IMPORTANT
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PLEASE INDICATE YOUR VOTING INSTRUCTIONS
ON THE ENCLOSED PROXY CARD, SIGN AND DATE IT, AND
RETURN IT IN THE ENVELOPE PROVIDED, WHICH NEEDS
NO POSTAGE IF MAILED IN THE UNITED STATES. IN
ORDER TO SAVE THE FUND ANY ADDITIONAL EXPENSE OF
FURTHER SOLICITATION, PLEASE MAIL YOUR PROXY
PROMPTLY.
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<PAGE>
PROXY STATEMENT
FFTW FUNDS, INC.
200 Park Avenue, New York, New York 10166
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on November 19, 1999
---------------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies made by, and on behalf of, the Board of Directors of FFTW Funds,
Inc., a Maryland corporation (the "Fund"), to be used at a Special Meeting of
Shareholders of the Money Market Portfolio, Mortgage LIBOR Portfolio, Limited
Duration Portfolio, Mortgage-Backed Portfolio, Asset-Backed Portfolio,
High-Yield Portfolio, Enhanced Equity Market Portfolio, U.S. Treasury Portfolio,
U.S. Corporate Portfolio, Broad Market Portfolio, International Portfolio,
Global Tactical Exposure Portfolio, International Opportunities Portfolio,
International Corporate Portfolio, Emerging Markets Portfolio, Global High Yield
Portfolio, Inflation-Indexed Portfolio, Inflation-Indexed Hedged Portfolio, U.S.
Short-Term Portfolio, Worldwide Portfolio, and Worldwide-Hedged Portfolio (each
individually a "Portfolio" and collectively the "Portfolios"), each a separate
investment Portfolio of the Fund, to be held at the offices of the Fund, 200
Park Avenue, New York, New York 10166 on Friday, November 19, 1999 at 10:00 a.m.
Eastern Time, and at any adjournments thereof (the "Meeting"). The cost of the
solicitation (including printing and mailing this Proxy Statement, Notice of
Meeting and Proxy, as well as any necessary supplementary solicitation) will be
borne by the Portfolios in proportion to their average net assets. The Notice of
Meeting, Proxy Statement and Proxy are being mailed to shareholders on or about
October 28, 1999.
The presence in person or by proxy of the holders of record of a
majority of the shares of a Portfolio of the Fund entitled to vote thereat shall
constitute a quorum at the Meeting for that Portfolio. If, however, such quorum
shall not be present or represented at the Meeting or if fewer shares are
present in person or by proxy than the minimum required to take action with
respect to any proposal presented at the Meeting, the holders of a majority of
the shares of the Portfolio present in person or by proxy shall have the power
to adjourn the Meeting with respect to that Portfolio, from time to time,
without notice other than announcement at the Meeting, until the requisite
amount of shares entitled to vote at the Meeting shall be present. At any such
adjourned Meeting, if the relevant quorum is subsequently constituted, any
business may be transacted which might have been transacted at the Meeting as
originally called. For purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions and broker "non-votes" (that
is, proxies from brokers or nominees indicating that such 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. For this reason, abstentions and broker non-votes
will have the effect of a "no" vote for purposes of obtaining the requisite
approval for Proposals One and Two, for which the required vote is a percentage
of the shares either outstanding or present at the Meeting, and will have no
effect on Proposal Three, for which the required vote is a majority of the votes
cast.
The Board of Directors has fixed the close of business on October 18,
1999 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting and at any adjournments thereof. Each share is
entitled to one vote, and each fraction of a share is entitled to a
proportionate fractional vote. The numbers of outstanding voting shares of each
Portfolio as of September 30, 1999 are indicated in the following table:
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Outstanding Voting
Portfolios Shares
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Money Market Portfolio
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Mortgage LIBOR Portfolio
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Limited Duration Portfolio
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Mortgage-Backed Portfolio
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Asset-Backed Portfolio
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High-Yield Portfolio
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Enhanced Equity Market Portfolio
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U.S. Treasury Portfolio
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U.S. Corporate Portfolio
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Broad Market Portfolio
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International Portfolio
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Global Tactical Exposure Portfolio
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International Opportunities Portfolio
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International Corporate Portfolio
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Emerging Markets Portfolio
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Global High Yield Portfolio
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Inflation-Indexed Portfolio
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Inflation-Indexed Hedged Portfolio
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U.S. Short-Term Portfolio
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Worldwide Portfolio
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Worldwide-Hedged Portfolio
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Additional information regarding share ownership of the Portfolios is
included as Exhibit A.
All properly executed proxies received prior to the Meeting will be
voted at the Meeting in accordance with the instructions marked thereon or as
otherwise provided therein. Accordingly, unless instructions to the contrary are
marked, proxies will be voted FOR the matters specified on the proxy card. Any
shareholder may revoke his or her proxy at any time prior to exercise thereof by
giving written notice to the Secretary of the Fund at FFTW Funds, Inc., c/o
Investors Capital Services, Inc., 600 Fifth Avenue, 26th Floor, New York, New
York 10020, or by signing another proxy of a later date or by personally casting
his or her vote at the Meeting.
The most recent annual and semi-annual reports of the Portfolios,
including financial statements, have been previously mailed to shareholders. If
you have not received these reports or would like to receive additional copies
free of charge, please either write to FFTW Funds, Inc., c/o Investors Capital
Services, Inc., 600 Fifth Avenue, 26th Floor, New York, New York 10020 or call
(800) 762-4848 and they will be sent promptly by first-class mail.
To obtain the necessary representation at the Meeting, supplementary
solicitations may be made by mail, telephone, telegraph, facsimile or personal
contact by (i) Directors and officers of the Fund, (ii) Fischer Francis Trees &
Watts, Inc. (the "Investment Adviser"), and/or (iii) Investors Capital Services,
Inc. (the "Administrator").
Votes Required
The election of Directors, as set forth in Proposal One, will require a
vote of the holders of a majority of the total votes present at the Meeting. The
reclassification, revision or elimination of certain fundamental investment
restrictions of the Portfolios, as set forth in Proposal Two, will require a
majority vote of the outstanding voting securities of each Portfolio voting on
elimination or revision of a fundamental investment restriction. For purposes of
Proposal Two, a majority of the outstanding voting securities of a Portfolio
means the lesser of (1) 67% of the shares of that Portfolio present at a meeting
if the holders of more than 50% of the outstanding shares of that Portfolio are
present in person or by proxy, or (2) more than 50% of the outstanding shares of
that Portfolio. Ratification of the selection of the independent auditors, set
forth in Proposal Three, will require a vote of the holders of a majority of the
total votes cast at the Meeting.
<PAGE>
TABLE OF PROPOSALS
<TABLE>
<S> <C> <C>
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposals Shareholders Entitled to Vote
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 1 ELECTION OF DIRECTORS All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposals 2A-2H RECLASSIFICATION, REVISION OR ELIMINATION OF All or Certain Portfolios -- See Below
CERTAIN FUNDAMENTAL INVESTMENT RESTRICTIONS
OF THE PORTFOLIOS
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 2A BORROWING MONEY All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 2B ISSUING SENIOR SECURITIES All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 2C PURCHASING SECURITIES ON MARGIN All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 2D MAKING SHORT SALES OF SECURITIES Money Market Portfolio, Limited Duration
Portfolio, U.S. Treasury Portfolio, Broad
Market Portfolio, International Portfolio,
Global Tactical Exposure Portfolio,
Emerging Markets Portfolio, U.S. Short-Term
Portfolio, Worldwide Portfolio, and
Worldwide-Hedged Portfolio
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 2E INVESTING FOR CONTROL All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 2F INVESTING IN ISSUERS IN WHICH FUND All Portfolios
MANAGEMENT INVESTS
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 2G INVESTING IN OTHER INVESTMENT COMPANIES All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 2H INVESTING IN UNSEASONED ISSUERS OR All Portfolios
RESTRICTED SECURITIES
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 3 RATIFICATION OF SELECTION OF INDEPENDENT All Portfolios
AUDITORS
- ------------------------- ---------------------------------------------- ----------------------------------------------
</TABLE>
<PAGE>
THE PROPOSALS
PROPOSAL 1 : ELECTION OF DIRECTORS
ALL PORTFOLIOS
At the Meeting, three Directors will be elected, each to serve until he
or she resigns, dies or is removed and until his or her successor is duly
elected and qualified. The nominees are Stephen P. Casper, Saul H. Hymans, and
Andrea Redmond who, if elected, will each serve for an indefinite term. It is
the intention of the persons named in the enclosed proxy to nominate and vote in
favor of the nominees.
Each of the nominees has consented to serve as a Director. Stephen P.
Casper is currently a Director of the Fund. Saul H. Hymans has not been a
Director of the Fund, although he has been a non-voting advisory director of the
Fund since February 19, 1999. Andrea Redmond has not been a Director of the
Fund. The nominees are not related to one another. The Board of Directors knows
of no reason why any of the nominees would be unable to serve, but in the event
of such unavailability, the proxies received will be voted for such substitute
nominees as the Board of Directors may recommend.
Certain information concerning the nominees is set forth as follows:
<TABLE>
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Principal Occupations During the Past Five Years and
Nominees (Age) * Other Directorships/Trusteeships
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Stephen P. Casper (49) Treasurer of the Fund (1998-present); Shareholder and
Managing Director of the Investment Adviser
(1991-present); Chief Financial Officer of the
Investment Adviser (1990-present); Treasurer of
Rockefeller & Company (1984-1990).
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Saul H. Hymans (61) Professor of Economics at the University of Michigan
(1964-present).
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Andrea Redmond (43) Managing Director, Russell Reynolds Associates, Inc.
( - present
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
* As of September 30, 1999, the nominees beneficially owned less than 1% of the
shares of common stock of each of the Portfolios.
<PAGE>
The following table provides information concerning each of the current
Directors and officers of the Fund:
<TABLE>
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Positions with the Fund, Principal Occupations During
the Past Five Years and Other
Names (Age) * Directorships/Trusteeships
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
John C. Head, III (50) Director of the Fund (1989-present); Managing Member of
Head & Company L.L.C. (1987-present); Chairman of the
Board of ESG Re Limited; Director of PartnerRe Ltd.,
Kiln Capital plc and other private companies.
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Lawrence B. Krause (69) Director of the Fund (1991-present); Professor of
International Relations and Pacific Studies at the
University of California at San Diego (1987-present);
Member of the Editorial Advisory Board of the Political
Science Quarterly; Member of the Council on Foreign
Relations; Vice-Chairman of the U.S. National Committee
for Pacific Economic Cooperation; Senior Fellow of the
Brookings Institution (1969-1986).
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Onder John Olcay (62)** Chairman of the Board of Directors of the Fund
(1989-present); Shareholder and Managing Director of
the Investment Adviser (1992-present).
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Stephen P. Casper (49)** See Nominee table.
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Carla E. Dearing (36) Assistant Treasurer of the Fund (1992-present);
President and Director of Investors Capital Services
(1992-present); Vice President of Morgan Stanley & Co.
(1984-1986, 1988-1992).
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
William E. Vastardis (43) Secretary and Treasurer of the Fund (1992-present);
Managing Director and Head of Fund Administration for
Investors Capital Services (1992-present); Vice
President and Head of Fund Administration for the
Vanguard Group, Inc.'s private label administration
unit (1985-1992) and fund accounting operations
(1979-1985).
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
* As of September 30, 1999, the Directors and officers of the Fund as a group
beneficially owned less than 1% of the shares of common stock of each of the
Portfolios.
** Mr. Olcay and Mr. Casper are "interested persons",
as defined in the Investment Company Act of 1940, due
to their affiliation with the Investment Adviser.
The Fund's Board, which is currently composed of two interested and two
non-interested Directors, met four times during the fiscal year ended December
31, 1998. It is expected that the Directors will meet at least four times a year
at regularly scheduled meetings. The Board has an Audit Committee which met
twice during the during the fiscal year ended December 31, 1998. Audit Committee
members include Directors John C. Head, III and Lawrence B. Krause. The Board
does not have nominating or compensation committees. Each Board member attended
all of the Board and Audit Committee meetings (if such Director served on the
Audit Committee) during the fiscal year ended December 31, 1998. The Audit
Committee reviews reports prepared by the Fund's independent auditors,
recommends approval of audit services and fees, evaluates the independence of
the independent auditors, and recommends whether to retain the independent
auditors.
Compensation of Directors
No employee of the Investment Adviser nor the Administrator receives
compensation from the Fund for acting as an officer or director of the Fund. For
the fiscal year ended December 31, 1998, the Fund paid each Director who was not
a director, officer or employee of the Investment Adviser or the Administrator
or any of their affiliates, a fee of $1,000 for each meeting attended, and each
of the Directors received an annual retainer of $20,000 which was paid in
quarterly installments. At the February 19, 1999 Board of Directors Meeting, the
Board approved an increase in compensation of each of the Directors to a flat
annual fee of $35,000 with no per meeting attendance fee. In addition, in the
event that any Director does not serve as a member of the Board for an entire
year, such Director's annual fee payment shall be pro-rated.
For the fiscal year ended December 31, 1998, the Directors received the
following compensation from the Fund:
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
Pension or
Retirement Benefits Total Compensation
Accrued As Part of Estimated Annual From Registrant
Aggregate Fund Expenses Benefits Upon Paid to Directors*
Compensation From Retirement
Name of Director Registrant
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
John C. Head III $27,000 $0 $0 $27,000
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
Lawrence B. Krause $27,000 $0 $0 $27,000
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
</TABLE>
* FFTW Funds, Inc. is a registered investment
company composed of 21 portfolios.
THE BOARD OF DIRECTORS OF THE FUND
UNANIMOUSLY RECOMMENDS APPROVAL OF PROPOSAL 1.
<PAGE>
PROPOSALS 2A THROUGH 2H: ELIMINATION OR CHANGE OF
CERTAIN FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE
PORTFOLIOS
ALL PORTFOLIOS (Certain changes are proposed for all
Portfolios, but some changes apply only to certain Portfolios
as indicated below)
Pursuant to the Investment Company Act of 1940 (the "1940 Act"), each
of the Portfolios has adopted certain fundamental investment restrictions
("fundamental restrictions"), which are set forth in the Fund's prospectus or
statement of additional information, and which may be changed only with
shareholder approval.
The purpose of these proposals is to remove the requirement of
shareholder approval to change those restrictions that are not required under
the 1940 Act to be fundamental restrictions and to provide the maximum permitted
flexibility in other restrictions that do require shareholder approval. Some of
the Portfolios' fundamental restrictions that are not required to be such under
the 1940 Act were adopted in the past as a result of now rescinded state
regulatory requirements and no longer serve any useful purpose. Other
fundamental restrictions are unnecessary because the provisions of the 1940 Act
and the disclosure requirements of the federal securities laws otherwise provide
adequate safeguards for a Portfolio and its shareholders.
Accordingly, the Board has approved revisions to the Portfolios'
fundamental restrictions in order to simplify, modernize and make more uniform
those restrictions that are required to be fundamental, and to reclassify those
fundamental restrictions that are not legally required as non-fundamental
restrictions. Non-fundamental restrictions require Board approval to be changed,
but not shareholder approval. By reducing to a minimum those policies that can
be changed only by shareholder vote, the Board believes that the Portfolios
would be able to minimize the costs and delay associated with holding future
shareholder meetings to revise fundamental policies that become outdated or
inappropriate. The proposed changes in investment restrictions reflect the
current industry custom and practice of placing authority over those investment
restrictions not required by the 1940 Act with the Board rather than with the
shareholders. Although the proposed changes in fundamental restrictions will
allow the Portfolios greater investment flexibility to respond to future
investment opportunities, the Board does not anticipate that the changes,
individually or in the aggregate, will result at this time in a material change
in the level of investment risk associated with an investment in any Portfolio.
If the proposed changes are approved by the shareholders of the
respective Portfolios at the Meeting, the Fund's prospectus and statement of
additional information will be revised to reflect those changes.
The text and a summary description of each proposed change to the
Portfolios' fundamental restrictions are set forth below.
<PAGE>
Proposal 2A: Borrowing Money
Portfolios to which this change applies:
All Portfolios.
Under the Portfolios' fundamental restriction stated below, the
Portfolios are restricted from borrowing money for the purpose of leveraging the
Portfolio's investments. The proposed restriction would permit each Portfolio to
engage in borrowing in a manner and to the full extent permitted under the 1940
Act. The Board has no current intention of authorizing any of these practices.
The 1940 Act requires borrowings to have 300% asset coverage, which
means, in effect, that a Portfolio would be permitted to have gross assets equal
to 150% of its net assets. Additionally, under the proposed restriction, each
Portfolio would not be limited to borrowing for temporary or emergency purposes,
could borrow for leverage, and could purchase securities for investment while
borrowings are outstanding. If the Board authorized a Portfolio to borrow for
leverage, such borrowings would increase the Portfolio's volatility and the risk
of loss in a declining market.
Current Text
Portfolios may not borrow money, except by engaging in reverse
repurchase agreements (reverse repurchase agreements and dollar roll
transactions that are covered pursuant to SEC regulations or staff positions,
will not be considered borrowing) or dollar roll transactions or from a bank as
a temporary measure for the reasons enumerated in "INVESTMENT RESTRICTIONS"
provided that a Portfolio will not borrow, more than an amount equal to
one-third of the value of its assets, nor will it borrow for leveraging purposes
(i.e., a Portfolio will not purchase securities while temporary bank borrowings
in excess of 5% of its total assets are outstanding).
Proposed Text
Portfolios may not borrow money, except in conformity with the limits
set forth in the 1940 Act; notwithstanding the foregoing, short-term credits
necessary for settlement of securities of transactions are not considered
borrowings.
Proposal 2B: Issuing Senior Securities
Portfolios to which this change applies:
All Portfolios.
Under the 1940 Act and the Portfolios' fundamental restriction stated
below, the Portfolios are restricted from issuing senior securities, with
certain exceptions. A "senior security" is an obligation of a Portfolio with
respect to its earnings or assets that takes precedence over the claims of the
Portfolio's shareholders with respect to the same earnings or assets. The 1940
Act generally prohibits a Portfolio from issuing senior securities, in order to
limit the use of leverage. In general, a Portfolio uses leverage when it enters
into securities transactions without being required to make payment until a
later time. SEC staff interpretations regarding the 1940 Act allow a Portfolio
to engage in a number of types of transactions which might otherwise be
considered creating "senior securities" or "leverage," so long as the Portfolio
meets certain collateral requirements designed to protect shareholders. In order
to ensure that the Portfolios' restrictions with respect to issuing senior
securities are consistent with the provisions of the 1940 Act, it is proposed
that the restriction on issuing senior securities be revised to state that the
Portfolios may not issue senior securities, except to the extent permitted under
the 1940 Act.
Current Text
Portfolios may not issue senior securities (other than as specified in
clause a [borrowing money]).
Proposed Text
Portfolios may not issue senior
securities, except to the extent permitted under
the 1940 Act.
Proposal 2C: Purchasing Securities on Margin
Portfolios to which this change applies:
All Portfolios.
Each Portfolio is currently prohibited from purchasing securities on
margin, except to obtain short-term credits necessary for clearance of
transactions, and in the case of margin deposits, in connection with financial
futures and options transactions. The Portfolios are not required to make this a
fundamental restriction under the 1940 Act. Therefore, it is proposed that this
fundamental restriction be reclassified as a non-fundamental restriction.
Although such a reclassification would give the Board the power to subsequently
modify the restriction, the Board has no current intention of making such a
modification. If reclassification of this restriction is approved by the
shareholders, each Portfolio's potential use of margin transactions beyond
transactions in futures and options and for the clearance of purchases and sales
of securities, including the use of margin in ordinary securities transactions,
would be generally limited under the 1940 Act because they create senior
securities. (See Proposal 2B.) Margin transactions involve the purchase of
securities with money borrowed from a broker, with cash or eligible securities
being used as collateral against the loan. Each Portfolio's ability to engage in
margin transactions is also limited by its borrowing restrictions, which permit
a Portfolio to borrow money only as permitted by applicable law. (See Proposal
2A.)
Current Text
Portfolios may not purchase securities on margin (although deposits
referred to as "margin" will be made in connection with investments in futures
contracts, as explained above, and a Portfolio may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities).
Proposal 2D: Making Short Sales of Securities
Portfolios to which this change applies:
Money Market Portfolio, Limited Duration Portfolio,
U.S. Treasury Portfolio, Broad Market Portfolio,
International Portfolio, Global Tactical Exposure
Portfolio, Emerging Markets Portfolio, U.S.
Short-Term Portfolio, Worldwide Portfolio, and
Worldwide-Hedged Portfolio.
Each Portfolio is currently prohibited from making short sales of
securities, except that this restriction does not limit transactions in options,
futures, options on futures or forward currency contracts. Short sales of
securities involve the sale of a security or futures contract not owned by the
seller, generally for the purpose of profiting from an expected decline in the
price. The Portfolios are not required to make this a fundamental restriction
under the 1940 Act or for hedging other portfolio risks. Therefore, it is
proposed that this fundamental restriction be eliminated. If elimination of this
restriction is approved by the shareholders, the Portfolios intend to engage in
such transactions, but would be generally limited in doing so by requirements
under the 1940 Act, which require, among other things, that a segregated account
of liquid assets be maintained to "cover" the portfolio's exposure under short
sales.
Current text
Portfolios may not make short sales of securities (does not include
options, futures, options on futures or forward currency contracts).
Proposal 2E: Investing for Control
Portfolios to which this change applies:
All Portfolios.
Under the Portfolios' fundamental restriction stated below, the
Portfolios are prohibited from investing in companies for the purpose of
exercising control or management. The Portfolios are not required to make this a
fundamental restriction under the 1940 Act. It was originally adopted in
response to state law restrictions or interpretations that no longer apply to
the Portfolios. Therefore, it is proposed that this fundamental restriction be
reclassified as a non-fundamental restriction. Although the Portfolios do not
now, or in the immediate future, intend to invest in companies for the purpose
of exercising control or management, such a reclassification would permit the
Board to modify the restriction so as to permit such investment. Should the
Board make such a subsequent modification, such investments may result in the
increased volatility associated with company or industry specific investment
strategies, increased exposure to liquidity risks, and/or increased exposure to
state corporate governance regulatory schemes.
Current Text
Portfolios may not invest in companies for the purpose of exercising
control or management.
Proposal 2F: Investing in Issuers in which Fund
Management Invests
Portfolios to which this change applies:
All Portfolios.
The Portfolios' fundamental restriction stated below was originally
adopted in response to state law restrictions or interpretations that no longer
apply to the Portfolios. Therefore, it is proposed that this fundamental
restriction be reclassified as a non-fundamental restriction. Although such a
reclassification would give the Board the power to subsequently modify the
restriction, the Board has no current intention of making such a modification.
In addition, transactions between each Portfolio and an affiliated person of the
Portfolio, which present potential conflict of interest issues, are regulated
under the 1940 Act.
Current Text
Each Portfolio is prohibited from purchasing or retaining securities of
any issuer if the officers, directors or trustees of the Fund, or its advisors,
or managers own beneficially more than one half of one percent of the securities
of an issuer, or together own beneficially more than five percent of the
securities of that issuer.
Proposal 2G: Investing in Other Investment Companies
Portfolios to which this change applies:
All Portfolios.
The fundamental restriction stated below prohibits the Portfolios from
investing in other investment companies, with certain exceptions. The 1940 Act
limits the ability of an investment company to purchase the shares of another
investment company, but does not require the investment company to make this a
fundamental restriction. Therefore, it is proposed that this fundamental
restriction be eliminated. If elimination of this restriction is approved by the
shareholders, the Portfolios intend to engage in such transactions, but would be
generally limited in doing so by requirements under the 1940 Act. Those
requirements are intended to ensure that mutual fund shareholders do not pay
significant duplicate expenses of the other investment company, including
investment advisory, administration, and custodian fees.
Current text
Each Portfolio is prohibited from the investment in securities of other
investment companies, except by purchase in the open market where no commission
or profit to a sponsor or dealer results from the purchase other than the
customary broker's commission, or except when the purchase is part of a plan of
merger, consolidation, reorganization or acquisition.
Proposal 2H: Investing in Unseasoned Issuers or
Restricted Securities
Portfolios to which this change applies:
All Portfolios.
Under the Portfolios' fundamental restriction stated below, the
Portfolios are prohibited from investing more than 15% of total assets in
issuers with short operational histories or securities of issuers which are
restricted as to disposition. Unseasoned issuers generally have been in
operation for less than three years, therefore, securities issued by them
generally are subject to greater volatility and may be less liquid than
securities of more established companies. Restricted securities are subject to
legal or contractual restrictions on resale, and may be less liquid than
securities that are not subject to such restrictions. This fundamental
restriction is not required under the 1940 Act. It was originally adopted in
response to state law restrictions or interpretations that no longer apply to
the Portfolios. In addition, under the 1940 Act, each Portfolio is currently
prohibited from investing more than 15% of its net assets in illiquid
securities, which includes securities of unseasoned issuers or restricted
securities for which there is no liquid market. Therefore, it is proposed that
this fundamental restriction be reclassified as a non-fundamental restriction.
Although such a reclassification would give the Board the power to subsequently
modify the restriction, the Board has no current intention of making such a
modification.
Current text
Each Portfolio is prohibited from the investment of more than fifteen
percent (15%) of [the Portfolio's] total assets in the securities of issuers
which together with any predecessors have a record of less than three years
continuous operation or securities of issuers which are restricted as to
disposition.
THE BOARD OF DIRECTORS OF THE FUND
UNANIMOUSLY RECOMMENDS APPROVAL OF PROPOSALS 2A
THROUGH 2H.
<PAGE>
PROPOSAL 3: RATIFICATION OF THE SELECTION OF
INDEPENDENT AUDITORS
At a meeting of the Board held on August 13, 1999, the Board, including
a majority of the directors who are not "interested persons" as defined in the
1940 Act, as well as a majority of the directors who are members of the Audit
Committee, selected the accounting firm of KPMG Peat Marwick LLP to act as the
independent auditors to the Fund for the fiscal year ending December 31, 1999.
Ernst & Young LLP previously served as the independent auditors for the
Fund with respect to its financial statements for the fiscal year ending
December 31, 1998 and prior years. The Board considered the services of Ernst &
Young LLP to have been satisfactory. However, based upon a recommendation from
the Fund's Audit Committee, the Board deemed it appropriate at the meeting on
August 13, 1999 to select KPMG Peat Marwick LLP as the independent auditors. The
Board selected KPMG Peat Marwick LLP after considering that firm's experience as
independent auditors to investment companies.
The former independent auditors resigned as independent auditors to the
Fund. The independent auditor's report on the Fund's financial statements for
either of the past two years has not contained an adverse opinion or disclaimer
of opinion, and was not qualified or modified as to uncertainty, audit scope, or
accounting principles. During the Fund's two most recent fiscal years, there
were no disagreements with the former independent auditors on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
that firm, would have caused it to make reference to the subject matter of the
disagreement(s) in connection with its report.
KPMG Peat Marwick LLP are independent auditors and have no direct
financial or material indirect financial interest in the Fund. Representatives
of KPMG Peat Marwick LLP are not expected to be at the Meeting but have been
given the opportunity to make a statement if they wish, and will be available
should any matter arise requiring their presence.
THE BOARD OF DIRECTORS OF THE FUND
UNANIMOUSLY RECOMMENDS APPROVAL OF PROPOSAL 3.
<PAGE>
Other Matters
The Fund does not know of any matters to be presented at the Meeting
other than those mentioned in this Proxy Statement. If any of the persons listed
above is unavailable for election as Director, an event not now anticipated, or
if any other matters properly come before the Meeting, the shares represented by
proxies will be voted with respect thereto in accordance with the best judgment
of the person or persons voting the proxies.
The Fund does not usually hold annual meetings of its shareholders.
Shareholder proposals to be included in the proxy statement for any subsequent
meeting must be received at the Fund's offices, 200 Park Avenue, New York, New
York 10166, within a reasonable amount of time prior to the mailing of proxy
materials for a meeting of shareholders. The submission of a proposal by a
shareholder for inclusion in the proxy statement does not guarantee that it will
be included. Shareholder proposals are subject to certain regulations under the
federal securities laws. The Directors shall call a special meeting of the Fund
upon written request of shareholders owning at least 10% of the Fund's
outstanding shares.
If the accompanying form of proxy is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. However, if no instructions are specified, shares
will be voted for the election of the Directors and for the other proposals.
INFORMATION ABOUT THE FUND
The Independent Auditors. KPMG Peat Marwick LLP, 345 Park Avenue, New York, New
York, 10154, are the independent auditors to the Fund. Ernst & Young LLP, 787
Seventh Avenue, New York, New York 10019, served as the independent auditors to
the Fund with respect to its financial statements for the fiscal year ending
December 31, 1998 and prior years. KPMG Peat Marwick LLP currently does not
provide accounting services to the Investment Adviser.
The Investment Adviser. The Investment Adviser of the Fund is Fischer Francis
Trees & Watts, Inc., located at 200 Park Avenue, New York, New York 10166.
Pursuant to an investment management advisory agreement, the Investment Adviser
manages the investment and reinvestment of the assets of the Portfolios. The
Investment Manager is directly wholly-owned by Charter Atlantic Corporation.
The Investment Sub-Adviser. Fischer Francis Trees & Watts is the Investment
Sub-Adviser to the International Portfolio, Global Tactical Exposure Portfolio,
International Opportunities Portfolio, International Corporate Portfolio,
Emerging Markets Portfolio, Global High Yield Portfolio, Inflation-Indexed
Portfolio, Inflation-Indexed Hedged Portfolio, Worldwide Portfolio, and
Worldwide-Hedged Portfolios of the Fund. Their offices are located at 3 Royal
Court, The Royal Exchange, London EC 3V 3RA, England. Pursuant to an investment
management sub-advisory agreement, the Investment Sub-Adviser coordinates with
the Investment Adviser in managing the investment and reinvestment of the
foreign assets of the Portfolios. The Investment Sub-Adviser is an affiliate of
the Investment Adviser. The Investment Sub-Adviser is directly or indirectly
wholly-owned by Charter Atlantic Corporation.
The Administrator. The administrator of the Fund
is Investors Capital Services, Inc. with offices at
600 Fifth Avenue, New York, New York 10020.
Pursuant to an administration agreement, Investors
Capital assists in managing and supervising all
aspects of the general day-to-day business
activities and operations of the Fund other than
the investment advisory activities, including:
custodial, transfer agent, dividend disbursing,
accounting, auditing, compliance and related
services.
The Principal Underwriter. The principal underwriter of the Fund is AMT Capital
Securities, LLC with offices at 600 Fifth Avenue, New York, New York 10020.
Pursuant to a distribution agreement, AMT Capital distributes shares of the
Fund.
By order of the Board of Directors,
William E. Vastardis
Secretary
New York, New York
________ ___, 1999
<PAGE>
TABLE OF EXHIBITS
<TABLE>
<S> <C>
- ------------------------------------------------------------ ---------------------------------------------------------
Exhibit Description
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
A Share Ownership of the Portfolios
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
Share Ownership of the Portfolios
The following table sets forth the information concerning beneficial
ownership, as of ________ ___, 1999, of the Portfolios' shares by each person
who beneficially owns more than five percent of the voting securities of each of
the Portfolios:
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------ ------------------------ --------------------- ----------------------
Number of Shares
Beneficially Owned Percentage of
Outstanding Shares
Name and Address of Shareholder Name of Portfolio Owned
- ------------------------------------------------ ------------------------ --------------------- ----------------------
- ------------------------------------------------ ------------------------ --------------------- ----------------------
- ------------------------------------------------ ------------------------ --------------------- ----------------------
- ------------------------------------------------ ------------------------ --------------------- ----------------------
- ------------------------------------------------ ------------------------ --------------------- ----------------------
</TABLE>
<PAGE>
FFTW FUNDS, INC.
Money Market Portfolio Broad Market Portfolio
Mortgage LIBOR Portfolio International Portfolio
Limited Duration Portfolio Global Tactical Exposure Portfolio
Mortgage-Backed Portfolio International Opportunities Portfolio
Asset-Backed Portfolio International Corporate Portfolio
High-Yield Portfolio Emerging Markets Portfolio
Enhanced Equity Market Portfolio Global High Yield Portfolio
U.S. Treasury Portfolio Inflation-Indexed Portfolio
U.S. Corporate Portfolio Inflation-Indexed Hedged Portfolio
U.S. Short-Term Portfolio Worldwide Portfolio
Worldwide-Hedged Portfolio
SPECIAL MEETING OF SHAREHOLDERS, NOVEMBER 19, 1999
PLEASE VOTE PROMPTLY
This Proxy is Solicited on behalf of the Board of
Trustees
The undersigned hereby appoints CARLA E. DEARING and WILLIAM E.
VASTARDIS, and each of them, with full power of substitution, as proxies to vote
for and in the name, place and stead of the undersigned at the Special Meeting
of Shareholders of FFTW Funds, Inc. (the "Fund") to be held at the offices of
Fischer Francis Trees & Watts, Inc., 200 Park Avenue, New York, New York 10166,
on Friday, November 19, 1999 at 10:00 a.m., Eastern Time, and at any adjournment
thereof, according to the number of votes and as fully as if personally present.
<PAGE>
Please mark boxes | or x in blue or black ink.
1. Election of Directors. (All Portfolios)
[] FOR THE NOMINEES [] WITHHOLD AUTHORITY
(except as marked to (to vote for all nominees listed below)
the contrary below)
Stephen P. Casper,
Saul H. Hymans, and
Andrea Redmond
(INSTRUCTION: To withhold authority to vote
for any individual nominee, write that
nominee's name on the line provided below.)
-----------------------------------------------------------------------
2. Approval of all changes to the fundamental investment
restrictions.
FOR [] AGAINST [] ABSTAIN []
(INSTRUCTION: To vote against the proposed changes to one or more of
the fundamental investment restrictions, but to approve all others,
indicate the proposal number(s) of the investment restriction(s) you do
not want to change on the line provided below. Please see Proposals 2A
through 2H of the proxy statement for a description of each proposal
and which portfolios are affected by each proposal.)
-----------------------------------------------------------------------
3. Ratification of selection of KPMG Peat Marwick LLP as
independent auditors.
FOR [] AGAINST [] ABSTAIN []
This Proxy when properly executed will be voted in the manner (or not voted) as
specified. If no specification is made, the Proxy will be voted FOR all nominees
for Directors in Proposal 1 and FOR Proposals 2A through 2H, and 3.
Please sign personally and exactly as your name appears on the Proxy. If the
shares are registered in more than one name, each joint owner or each fiduciary
should sign personally. Only authorized officers should sign for corporations.
When signing as an attorney, administrator, trustee, or corporate officer,
please give your full title.
Dated ______________________________ ___________________________________
Signature and Title (if applicable)
-----------------------------------
Signature and Title (if applicable)
