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 [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, for use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to 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):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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>
FFTW FUNDS, INC.
200 Park Avenue, New York, New York 10166
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on April 23, 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, U.S. Short-Term Portfolio, Stable
Return Portfolio, Mortgage Total Return Portfolio, Asset-Backed Portfolio,
High-Yield Portfolio, Enhanced Index Portfolio, U.S. Treasury Portfolio, U.S.
Corporate Portfolio, Broad Market Portfolio, Worldwide Portfolio,
Worldwide-Hedged Portfolio, International Portfolio, Global Tactical Exposure
Portfolio, International Opportunities Portfolio, International Corporate
Portfolio, Emerging Markets Portfolio, Global High Yield Portfolio,
Inflation-Indexed Portfolio, and Inflation-Indexed 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, April 23, 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 ______________, 1999.
1. To elect Directors of the Fund;
2. To approve revised Advisory Agreements between the Fund on behalf of
the U.S Short-Term Portfolio, Worldwide Portfolio and Worldwide-Hedged
Portfolio and Fischer Francis Trees & Watts, Inc. (the "Investment
Adviser");
3. To approve revised Sub-Advisory Agreements between the Investment
Adviser on behalf of the Worldwide Portfolio and Worldwide-Hedged
Portfolio and Fischer Francis Trees & Watts (the "Investment
Sub-Adviser");
4. To eliminate or revise certain fundamental investment restrictions
of the Portfolios;
5. 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 March 12,
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
_____________________, 1999
- --------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
FFTW FUNDS, INC.
200 Park Avenue, New York, New York 10166
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on April 23, 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, U.S.
Short-Term Portfolio, Stable Return Portfolio, Mortgage Total Return Portfolio,
Asset-Backed Portfolio, High-Yield Portfolio, Enhanced Index Portfolio, U.S.
Treasury Portfolio, U.S. Corporate Portfolio, Broad Market Portfolio, Worldwide
Portfolio, Worldwide-Hedged Portfolio, International Portfolio, Global Tactical
Exposure Portfolio, International Opportunities Portfolio, International
Corporate Portfolio, Emerging Markets Portfolio, Global High Yield Portfolio,
Inflation-Indexed Portfolio, and Inflation-Indexed 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, April 23, 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
______________, 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, Two, Three and Four, for which the required vote is
a percentage of the shares either outstanding or present at the Meeting.
The Board of Directors has fixed the close of business on March 12,
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 _______________, 1999 are indicated in the following table:
- ------------------------------------------------------------ -------------------
Portfolios Number of Outstanding Voting Shares
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Money Market Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Mortgage LIBOR Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
U.S. Short-Term Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Stable Return Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Mortgage Total Return Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Asset-Backed Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
High-Yield Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Enhanced Index Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
U.S. Treasury Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
U.S. Corporate Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Broad Market Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Worldwide Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Worldwide-Hedged Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
International Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Global Tactical Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
International Opportunities Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
International Corporate Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Emerging Markets Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Global High Yield Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Inflation-Indexed Portfolio
- ------------------------------------------------------------ -------------------
- ------------------------------------------------------------ -------------------
Inflation-Indexed Hedged Portfolio
- ------------------------------------------------------------ -------------------
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 its offices at 200 Park
Avenue, New York, New York 10166, 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.
Approval of the revised Advisory Agreements, as set forth in Proposal Two, will
require a majority vote of the outstanding voting securities of each Portfolio
voting on an Advisory Agreement. The approval of the revised Sub-Advisory
Agreements, as set forth in Proposal Three, requires a majority vote of the
outstanding voting securities of each Portfolio voting on a Sub-Advisory
Agreement. The elimination or revision of certain fundamental investment
restrictions of the Portfolios, as set forth in Proposal Four, 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
Proposals Two, Three and Four, 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.
<PAGE>
TABLE OF PROPOSALS
<TABLE>
<S> <C> <C>
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposals Shareholders Entitled to Vote
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 1 ELECTION OF DIRECTORS All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 2 APPROVAL OF REVISED ADVISORY AGREEMENTS U.S. Short-Term Portfolio,
Worldwide Portfolio and
Worldwide-Hedged Portfolio
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 3 APPROVAL OF REVISED SUB-ADVISORY AGREEMENTS Worldwide Portfolio and
Worldwide-Hedged Portfolio
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposals 4A-4K ELIMINATION OR REVISION OF CERTAIN All or Certain Portfolios -- See Below
FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE
PORTFOLIOS
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4A BORROWING MONEY All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4B ISSUING SENIOR SECURITIES All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4C PURCHASING SECURITIES ON MARGIN All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4D MAKING SHORT SALES OF SECURITIES All Portfolios except
Mortgage LIBOR Portfolio,
Mortgage Total Return Portfolio,
Asset-Backed Portfolio,
High Yield Portfolio,
Enhanced Index Portfolio,
U.S. Corporate Portfolio,
International Opportunities Portfolio,
International Corporate Portfolio,
Global High Yield Portfolio,
Inflation-Indexed Portfolio and
Inflation-Indexed Hedged Portfolio
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4E INVESTING FOR CONTROL All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4F INVESTING IN ISSUERS IN WHICH FUND All Portfolios
MANAGEMENT INVESTS
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4G INVESTING IN OTHER INVESTMENT COMPANIES All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4H INVESTING IN UNSEASONED ISSUERS All Portfolios
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4I DIVERSIFICATION U.S. Short-Term Portfolio
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4J REPURCHASE AGREEMENTS U.S. Short-Term Portfolio,
Worldwide Portfolio and
Worldwide-Hedged Portfolio
- ------------------------- ---------------------------------------------- ----------------------------------------------
- ------------------------- ---------------------------------------------- ----------------------------------------------
Proposal 4K PURCHASING OR SELLING OF COMMODITIES Worldwide Portfolio and
Worldwide-Hedged Portfolio
- ------------------------- ---------------------------------------------- ----------------------------------------------
</TABLE>
<PAGE>
THE PROPOSALS
PROPOSAL 1 : ELECTION OF DIRECTORS
ALL PORTFOLIOS
At the Meeting, two Directors will be elected, each to serve until he
resigns, dies or is removed and until his successor is duly elected and
qualified. The nominees are Stephen P. Casper and Saul H. Hymans 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 March __, 1999. The nominees are not related to one another. The
Board of Directors knows of no reason why either 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 Treasurer
and Managing
Director of the
Fund; 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
- ------------------------------------------------------------ -------------------
</TABLE>
* As of ______________, 19__, 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 Director of the Fund; 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 Director of the Fund; 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**
Chairman of the
Board of Directors
of the Fund (insert
year); Shareholder
and Managing
Director of the
Investment Adviser
(1992-present).
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Stephen P. Casper See Nominee table.
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
Carla E. Dearing Assistant Treasurer of the Fund; President and Director
of Investors Capital Services (1992-present); Vice
President of Morgan Stanley & Co. (1984-1986,
1988-1992).
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
William E. Vastardis Secretary and Treasurer of the Fund; 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 ______________, 19__, 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.
** "Interested person," as defined in the Investment Company Act of 1940.
The Fund's Board, which is currently composed of one interested and
three non-interested Directors, met ____ times during the fiscal year ended
December 31, 1998. It is expected that the Directors will meet at least ____
times a year at regularly scheduled meetings. Each Director attended at least
___% of the aggregate number of Board meetings and meetings of committees on
which he or she served during the twelve months ended _________, 19__.
<PAGE>
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 17, 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 Total Compensation
Retirement Benefits From Registrant and
Accrued As Part of Estimated Annual Fund Complex Paid
Aggregate Fund Expenses Benefits Upon to Directors
Compensation From Retirement
Name of Director Registrant
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
Stephen P. Casper $ $ $ $
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
John C. Head III $ $ $ $
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
Lawrence B. Krause $ $ $ $
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
Onder John Olcay $ $ $ $
- ----------------------------- --------------------- --------------------- --------------------- ---------------------
</TABLE>
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS
APPROVAL OF PROPOSAL 1.
<PAGE>
PROPOSAL 2: APPROVAL OF REVISED ADVISORY AGREEMENTS
U.S. SHORT-TERM PORTFOLIO, WORLDWIDE PORTFOLIO AND WORLDWIDE-HEDGED
PORTFOLIO
Conform to Standard Advisory Agreement
Currently there is one Advisory Agreement, dated August 31, 1991, that
applies to the U.S. Short-Term Portfolio, Worldwide Portfolio, and
Worldwide-Hedged Portfolio. The Investment Adviser is Fischer Francis Trees &
Watts, Inc. The current Advisory Agreement for the U.S. Short-Term Portfolio was
last approved by a majority of its shareholders on April 3, 1991. The current
Advisory Agreements for the Worldwide Portfolio and Worldwide-Hedged Portfolio
were last approved by a majority of their respective shareholders on December
31, 1992. Subject to shareholder approval, the Fund intends to have a separate
Advisory Agreement for each of the three Portfolios. Having a separate Advisory
Agreement for each Portfolio will make it easier and less costly for the Fund to
revise any of the Advisory Agreements, should it need to do so in the future.
Each Advisory Agreement will conform to the standard advisory agreements
utilized by each of the other Portfolios in the Fund. Except as outlined below
under "Remove the Expense Cap," there are no material changes between the
current Advisory Agreement and the standard advisory agreement utilized by each
of the other Portfolios in the Fund. A copy of the three proposed Advisory
Agreements are included as Exhibits B, C, and D.
Pursuant to the three proposed Advisory Agreements between the
Investment Adviser and the Fund on behalf of each of the three Portfolios,
respectively, the Investment Adviser shall manage the investment operations of
each Portfolio and the composition of each Portfolio, including the purchase,
retention and disposition of each Portfolio's assets, in accordance with the
investment objectives, policies and restrictions of each Portfolio.
Organized in 1972, the Investment Adviser is a registered investment
adviser and is a New York corporation currently managing over $29 billion in
assets for numerous fixed income portfolios. The Investment Adviser currently
advises over 90 major institutional clients including banks, central banks,
pension funds and other institutional clients. The Investment Adviser, whose
address is 200 Park Avenue, New York, New York 10166, is directly wholly-owned
by Charter Atlantic Corporation. Additional information regarding the principal
executive officer and directors of the Investment Adviser is included as Exhibit
E.
Information regarding comparable funds advised by the Investment
Adviser is included as Exhibit F.
<PAGE>
Remove the Expense Cap
Currently the Advisory Agreement imposes a mandatory obligation
on the Fund to cap the total annual operating expenses of the U.S.
Short-Term Portfolio, Worldwide Portfolio, and Worldwide-Hedged
Portfolio. The Advisory Agreement currently states:
If the aggregate annual operating expenses, including the
Advisor's fee, of [U.S.] Short-Term exceed 0.40% of [U.S.]
Short-Term's average daily net asset value, then the Advisor
shall reimburse [U.S.] Short-Term for any such excess. If the
aggregate annual operating expenses, including the Advisor's
fee, of either Worldwide or Worldwide-Hedged exceed 0.60% of
either Series' average daily net asset value, then the Advisor
shall reimburse such Series for any such excess.
Subject to shareholder approval, the Fund intends to eliminate this
entire provision. However, the Investment Adviser intends to maintain a
voluntary obligation to cap the total annual operating expenses of the three
Portfolios for an indefinite period. This a voluntary fee waiver, and although
the Investment Adviser has no current intention to terminate the expense cap, it
may be terminated or increased at any time by the Investment Adviser. Absent the
expense cap, the current total operating expenses for the three Portfolios would
not exceed the cap; therefore, no fees would be waived by the Investment
Adviser. However, should the total assets of any of the three Portfolios decline
in the future, shareholders of the effected Portfolio(s) may pay higher fees if
the Investment Adviser does not continue to maintain the voluntary waiver.
As shown in the two charts below, the advisory fees paid to the
Investment Adviser and the total operating expenses for each of the three
Portfolios for the fiscal year ended December 31, 1998 would have been the same
if the total operating expense caps had not been in effect.
Current Investment Advisory Fees and Total Operating Expenses
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------ ------------ --------------- -------------- ------------ ---------------- ---------------
Total Total
Advisory Fee Advisory Fee Operating Operating
Paid for Rate Paid for Total Expenses Paid Expenses Rate
the Year Ended the Year Operating for the Year Paid for the
Advisory 12/31/98 Ended Expenses Ended 12/31/981 Year Ended
Portfolios Fee Rate 12/31/98 Rate1 12/31/981
- ------------------------------ ------------ --------------- -------------- ------------ ---------------- ---------------
- ------------------------------ ------------ --------------- -------------- ------------ ---------------- ---------------
U.S. Short-Term Portfolio 0.15%2 $ ____% 0.25%3 $ ____%
- ------------------------------ ------------ --------------- -------------- ------------ ---------------- ---------------
- ------------------------------ ------------ --------------- -------------- ------------ ---------------- ---------------
Worldwide Portfolio 0.40% $ ____% 0.60% $ ____%
- ------------------------------ ------------ --------------- -------------- ------------ ---------------- ---------------
- ------------------------------ ------------ --------------- -------------- ------------ ---------------- ---------------
Worldwide-Hedged Portfolio 0.25% $ ____% 0.60% $ ____%
- ------------------------------ ------------ --------------- -------------- ------------ ---------------- ---------------
</TABLE>
1 Includes investment advisory fees.
2 The Investment Adviser voluntarily lowered the annual advisory fee to 0.15%
from 0.30%. 3 The Investment Adviser voluntarily lowered the annual total
operating expenses to 0.25% from 0.40%.
<PAGE>
Hypothetical Investment Advisory Fees and Total Operating Expenses (assuming
the total operating expense caps had not been in effect)
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------ --------------- -------------- --------------- ----------------
Total Total
Advisory Fee Advisory Fee Operating Operating
Paid for Rate Paid for Expenses Paid Expenses Rate
the Year Ended the Year for the Year Paid for the
12/31/98 Ended Ended Year Ended
Portfolios 12/31/98 12/31/981 12/31/981
- ------------------------------ --------------- -------------- --------------- ----------------
- ------------------------------ --------------- -------------- --------------- ----------------
U.S. Short-Term Portfolio $ ____% $ ____%
- ------------------------------ --------------- -------------- --------------- ----------------
- ------------------------------ --------------- -------------- --------------- ----------------
Worldwide Portfolio $ ____% $ ____%
- ------------------------------ --------------- -------------- --------------- ----------------
- ------------------------------ --------------- -------------- --------------- ----------------
Worldwide-Hedged Portfolio $ ____% $ ____%
- ------------------------------ --------------- -------------- --------------- ----------------
</TABLE>
1 Includes investment advisory fees.
Board Consideration
At a meeting held on February 17, 1999, the Board of Directors,
including the Directors who are not interested parties to the Advisory
Agreements or interested parties of such parties, considered the Advisory
Agreements in connection with the proposed revisions as outlined above and
determined that it would be in the best interests of the three Portfolios to
approve the proposed Advisory Agreements. In coming to that conclusion, the
Directors examined the current and proposed Advisory Agreements for the three
Portfolios and found no material changes between the agreements, except with
respect to the expense cap. The Directors also examined the fees and expenses of
the three Portfolios and the fees paid to the Investment Adviser, noting in
particular that the fees to be paid to the Investment Adviser under the proposed
Advisory Agreements would not represent an increase from the current fee
arrangements.
If approved by a majority vote of the outstanding shares of each
Portfolio voting on a Advisory Agreement, the Advisory Agreements will become
effective on the first business day following shareholder approval and will
remain in force for a period of two years, and from year to year thereafter,
subject to approval annually by the Board of Directors or by a majority vote of
the outstanding shares of each Portfolio, and also, in either event, approval by
a majority of those Directors who are not parties to the Advisory Agreements or
interested persons of any such party at a meeting called for the purpose of
voting on such approval. Accordingly, if the shareholders of one or more of the
Portfolios voting on a Advisory Agreement should fail to approve the Advisory
Agreement for any of the three Portfolios, the proposed Advisory Agreement will
not be put into effect with respect to that Portfolio, and the current Advisory
Agreement, dated [August 31, 1991], shall remain in effect with respect to that
Portfolio.
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS
APPROVAL OF PROPOSAL 2.
<PAGE>
PROPOSAL 3: APPROVAL OF REVISED SUB-ADVISORY AGREEMENTS
WORLDWIDE PORTFOLIO AND WORLDWIDE-HEDGED PORTFOLIO
Currently there is one Sub-Advisory Agreement, dated August 31, 1991,
that applies to the Worldwide Portfolio and Worldwide-Hedged Portfolio. The
Investment Sub-Adviser is Fischer Francis Trees & Watts. The current
Sub-Advisory Agreements for the Worldwide Portfolio and Worldwide-Hedged
Portfolio were last approved by a majority of their respective shareholders on
December 31, 1992. Subject to shareholder approval, the Fund intends to have a
separate Sub-Advisory Agreement for each of the Portfolios. Having a separate
Sub-Advisory Agreement for each Portfolio will make it easier and less costly
for the Fund to revise any of the Sub-Advisory Agreements, should it need to do
so in the future. Each Sub-Advisory Agreement will conform to the standard
sub-advisory agreements utilized by each of the other Portfolios in the Fund.
There are no material changes between the current Sub-Advisory Agreement and the
standard sub-advisory agreement utilized by each of the other Portfolios in the
Fund. A copy of the two proposed Sub-Advisory Agreements are included as
Exhibits G and H.
Pursuant to the two proposed Sub-Advisory Agreements between the
Investment Sub-Adviser and the Investment Adviser on behalf of both of the
Portfolios, respectively, the Investment Sub-Adviser shall coordinate with the
Investment Adviser in managing the investment of each of the Portfolio's foreign
assets, in accordance with the investment objectives, policies and restrictions
of each Portfolio.
The Investment Sub-Adviser, whose address is 3 Royal Court, The Royal
Exchange, London EC 3V 3RA, is a corporate partnership organized under the laws
of the United Kingdom, an affiliate of the Investment Adviser, and the foreign
sub-adviser to the Worldwide Portfolio, Worldwide-Hedged Portfolio,
International Portfolio, Global Tactical Exposure Portfolio, International
Opportunities Portfolio, International Corporate Portfolio, Emerging Markets
Portfolio, Global High Yield Portfolio, Inflation-Indexed Portfolio and
Inflation-Indexed Hedged Portfolio. Organized in 1989, the Investment
Sub-Adviser is a U.S.-registered investment adviser and currently manages
approximately $6 billion in multi-currency fixed income portfolios for
institutional clients. The Investment Sub-Adviser is directly or indirectly
wholly-owned by Charter Atlantic Corporation. Additional information regarding
the principal executive officer and directors of the Investment Sub-Adviser is
included as Exhibit I.
Information regarding comparable funds advised by the Investment
Sub-Adviser is included as Exhibit J.
As shown below, the annual rates of sub-advisory fees to be paid to the
Investment Sub-Adviser under the proposed Sub-Advisory Agreements are equal to
the annual rates of investment sub-advisory fees which are currently in effect
for each of the Portfolios. The Investment Adviser pays the Investment
Sub-Adviser its advisory fee on a monthly basis from the Investment Adviser's
advisory fee. The Investment Sub-Adviser's advisory fee is equal to the
Investment Adviser's advisory fee for each of the Portfolios.
Current and Proposed Investment Sub-Advisory Fees
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------------ ----------------- ------------------ -------------------- ----------------------
Sub-Advisory Fee Sub-Advisory Fee
Current Proposed Paid for the Year Rate Paid for the
Sub-Advisory Sub-Advisory Ended 12/31/98 Year Ended 12/31/98
Portfolios Fee Rate Fee Rate
- ------------------------------------ ----------------- ------------------ -------------------- ----------------------
- ------------------------------------ ----------------- ------------------ -------------------- ----------------------
Worldwide Portfolio 0.40% 0.40% $ ____%
- ------------------------------------ ----------------- ------------------ -------------------- ----------------------
- ------------------------------------ ----------------- ------------------ -------------------- ----------------------
Worldwide-Hedged Portfolio 0.25% 0.25% $ ____%
- ------------------------------------ ----------------- ------------------ -------------------- ----------------------
</TABLE>
Board Consideration
At a meeting held on February 17, 1999, the Board of Directors,
including the Directors who are not interested parties to the Sub-Advisory
Agreements or interested parties of such parties, considered the Sub-Advisory
Agreements in connection with the proposed revision as outlined above and
determined that it would be in the best interests of the two Portfolios to
approve the proposed Sub-Advisory Agreements. In coming to that conclusion, the
Directors examined the current and proposed Sub-Advisory Agreements for the two
Portfolios and found no material changes between the agreements. The Directors
also examined the fees and expenses of the three Portfolios and the fees paid to
the Investment Sub-Adviser, noting in particular that the fees to be paid to the
Investment Sub-Adviser under the proposed Advisory Agreements would not
represent an increase from the current fee arrangements.
If approved by a majority vote of the outstanding shares of each
Portfolio voting on a Sub-Advisory Agreement, the Sub-Advisory Agreements will
become effective on the first business day following shareholder approval and
will remain in force for a period of two years, and from year to year
thereafter, subject to approval annually by the Board of Directors or by a
majority vote of the outstanding shares of each Portfolio, and also, in either
event, approval by a majority of those Directors who are not parties to the
Sub-Advisory Agreements or interested persons of any such party at a meeting
called for the purpose of voting on such approval. Accordingly, if the
shareholders of one or more of the Portfolios voting on a Sub-Advisory Agreement
should fail to approve the Sub-Advisory Agreement for either of the two
Portfolios, the proposed Sub-Advisory Agreement will not be put into effect with
respect to that Portfolio, and the current Sub-Advisory Agreement, dated August
31, 1991, shall remain in effect with respect to that Portfolio.
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS
APPROVAL OF PROPOSAL 3.
<PAGE>
PROPOSALS 4A THROUGH 4K: ELIMINATION OR REVISION 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 Portfolios' prospectus
or statement of additional information, and which may be changed only with
shareholder approval.
The purposes of this proposal are to eliminate 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 eliminate those
fundamental restrictions that are not legally required. 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 Portfolios' prospectus and statement
of additional information will be revised, as appropriate, 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 4A: 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 1940 Act requires borrowings to have 300% asset coverage, which means,
in effect, that a Portfolio would be permitted to borrow up to an amount equal
to 50% of its net assets under the proposed borrowing restriction. 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. However,
the Board has no current intention of authorizing any of these practices. 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 4B: 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. In order to
provide maximum flexibility to the operations of the Portfolios while ensuring
that the Portfolios' restrictions with respect to issuing senior securities
continue to comply 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.
<PAGE>
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 4C: 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 eliminated. If elimination of this restriction is
approved by 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 4B). 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
4A).
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 4D: Making Short Sales of Securities
Portfolios to which this change applies: All Portfolios except Mortgage
LIBOR Portfolio, Mortgage Total Return Portfolio, Asset-Backed Portfolio, High
Yield Portfolio, Enhanced Index Portfolio, U.S. Corporate Portfolio,
International Opportunities Portfolio, International Corporate Portfolio, Global
High Yield Portfolio, Inflation-Indexed Portfolio and Inflation-Indexed 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. The Portfolios are
not required to make this a fundamental restriction under the 1940 Act.
Therefore, it is proposed that this fundamental restriction be eliminated. If
elimination of this restriction is approved by shareholders, each Portfolio's
potential ability to make short sales of securities would be generally limited
by requirements under the 1940 Act, which requires, 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 4E: 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. Although the Portfolios do not now, or in the
immediate future, intend to invest 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
eliminated.
Current Text
Portfolios may not invest in companies for the purpose of exercising
control or management.
Proposal 4F: 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. In addition, transactions between each Portfolio and an
affiliated person of the Portfolio are regulated under the 1940 Act. Therefore,
it is proposed that this fundamental restriction be eliminated.
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 4G: 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. Although the Portfolios do not now, or
in the immediate future, intend to invest in other investment companies, the
Portfolios are not required to make this a fundamental restriction under the
1940 Act. Therefore, it is proposed that this fundamental restriction be
eliminated. In addition, the 1940 Act limits a Portfolio's ability to invest in
other investment companies.
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 4H: Investing in Unseasoned Issuers
Portfolios to which this change applies: All Portfolios.
Under the Portfolios' fundamental restriction stated below, the
Portfolios are prohibited from investing in issuers with short operational
histories. 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 for
which there is no available market. Therefore, it is proposed that this
fundamental restriction be eliminated.
Current text
Each Portfolio is prohibited from the investment of more than fifteen
percent (15%) of the Fund'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.
Proposal 4I: Diversification
Portfolios to which this change applies: U.S. Short-Term
Portfolio.
Under the U.S. Short-Term Portfolio's diversification restriction
stated below, the Portfolio may not invest more than 5% of its total assets in
the securities of any one issuer. This restriction applies to 100% of the
Portfolio's total assets, which is more restrictive than what is currently
permitted under the 1940 Act. It is proposed that this fundamental restriction
be eliminated in order to permit the Portfolio to invest in issuers to the full
extent permitted under the 1940 Act. The Portfolio is classified as
"diversified" under the 1940 Act. Under the 1940 Act, a "diversified" Portfolio
may not, with respect to 75% of the value of its total assets, invest more than
5% of the value of its total assets in securities issued by any one issuer or
purchase more than 10% of the outstanding voting securities of any one issuer,
except for U.S. Government securities. As a result, the elimination of this
restriction would allow the Portfolio to have less restrictive diversification
requirements. Since the Portfolio is "diversified," it is already subject to the
diversification requirements of the 1940 Act.
Current Text
The Portfolio may not invest more than 5% of its total assets
in the securities of any issuer (other than U.S. Government Securities
and repurchase agreements).
Proposal 4J: Repurchase Agreements
Portfolios to which this change applies: U.S. Short-Term
Portfolio, Worldwide Portfolio and Worldwide-Hedged Portfolio.
Under the following fundamental restriction, each Portfolio is
prohibited from holding more than 25% of its total assets in repurchase
agreements. This provision initially may have been included to limit the
Portfolios' investments in a particular industry. Under the 1940 Act, an
investment company is prohibited from investing more than 25% of its total
assets in a particular industry, unless the investment company has a fundamental
policy of concentrating in that industry. To the extent that repurchase
agreements held by the Portfolio are issued by banks, the 1940 Act would
restrict investments in this industry to 25% of the Portfolio's total assets.
Since the 1940 Act covers the current restriction and does not require that it
be included as a fundamental restriction, it is proposed that this fundamental
restriction be eliminated.
Current Text
The Portfolio may not enter into repurchase agreements if, as a result
thereof, more than 25% of its total assets would be subject to repurchase
agreements.
Proposal 4K: Purchasing or Selling of Commodities
Portfolios to which this change applies: Worldwide Portfolio
and Worldwide-Hedged Portfolio.
Under the Portfolios' fundamental restriction stated below, the
Portfolios are restricted from purchasing or selling commodities or commodity
contracts, but are permitted to purchase and sell futures and options contracts
traded on CFTC-regulated exchanges. The proposed restriction would permit each
Portfolio to purchase and sell futures and options contracts to the full extent
permitted under the 1940 Act. Under the proposed restriction, each Portfolio
would be prohibited from purchasing physical commodities or contracts relating
to physical commodities, but would no longer be limited to exchange-traded
futures and options.
Current Text
Each Portfolio may not purchase or sell commodities or commodity
contracts, except that each Portfolio may utilize up to 5% of its total assets
as margin and premiums to purchase and sell futures and options contracts on
CFTC-regulated exchanges.
Proposed Text
Each Portfolio may not purchase or sell commodities or commodity
contracts, except to the extent permitted under the 1940 Act.
THE BOARD OF DIRECTORS OF THE FUND UNANIMOUSLY RECOMMENDS APPROVAL OF
PROPOSALS 4A THROUGH 4K.
<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 is not required to 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. Ernst & Young LLP, 787 Seventh Avenue, New York, New
York 10019, is the independent auditor for the Fund. Ernst & Young also provides
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 Worldwide Portfolio, Worldwide-Hedged Portfolio,
International Portfolio, Global Tactical Exposure Portfolio, International
Opportunities Portfolio, International Corporate Portfolio, Emerging Markets
Portfolio, Global High Yield Portfolio, Inflation-Indexed Portfolio and
Inflation-Indexed Hedged Portfolio. Their offices are located at 3 Royal Court,
The Royal Exchange, London EC 3V 3RA. 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
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
B Proposed Advisory Agreement for the U.S. Short-Term
Portfolio
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
C Proposed Advisory Agreement for the Worldwide Portfolio
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
D Proposed Advisory Agreement for the Worldwide-Hedged
Portfolio
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
E Additional Information Regarding Principal Executive
Officer and Directors of the Investment Adviser
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
F Information Regarding Comparable Funds Advised by the
Investment Adviser
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
G Proposed Sub-Advisory Agreement for the Worldwide
Portfolio
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
H Proposed Sub-Advisory Agreement for the
Worldwide-Hedged Portfolio
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
I Additional Information Regarding Principal Executive
Officer and Directors of the Investment Sub-Adviser
- ------------------------------------------------------------ ---------------------------------------------------------
- ------------------------------------------------------------ ---------------------------------------------------------
J Information Regarding Comparable Funds Advised by the
Investment Sub-Adviser
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
<PAGE>
FFTW FUNDS, INC.
Money Market Portfolio Worldwide Portfolio
Mortgage LIBOR Portfolio Worldwide-Hedged Portfolio
U.S. Short-Term Portfolio International Portfolio
Stable Return Portfolio Global Tactical Portfolio
Mortgage Total Return Portfolio International Opportunities Portfolio
Asset-Backed Portfolio International Corporate Portfolio
High-Yield Portfolio Emerging Markets Portfolio
Enhanced Index Portfolio Global High Yield Portfolio
U.S. Treasury Portfolio Inflation-Indexed Portfolio
U.S. Corporate Portfolio Inflation-Indexed Hedged Portfolio
Broad Market Portfolio
SPECIAL MEETING OF SHAREHOLDERS, APRIL 23, 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, April 23, 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.
<TABLE>
<S> <C> <C> <C> <C>
1. Election of Directors. (All Portfolios)
[ ] FOR THE NOMINEES [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) (to vote for all nominees listed below)
Stephen P. Casper and Saul H. Hymans
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the line provided
below.)
------------------------------------------------------------------------------------------------
2. Approval of Revised Advisory Agreement between FFTW Funds, Inc. and Fischer Francis Trees & Watts, Inc. (U.S. Short-Term
Portfolio, Worldwide Portfolio, and Worldwide-Hedged Portfolio only)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of Revised Sub-Advisory Agreement between Fischer Francis Trees & Watts, Inc. and Fischer Francis Trees & Watts.
(Worldwide Portfolio and Worldwide-Hedged Portfolio only)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4A. Approval of revision of the fundamental restriction
on borrowing money. (All Portfolios) FOR [ ]
AGAINST [ ] ABSTAIN [ ]
4B. Approval of revision of the fundamental restriction on issuing senior securities. (All Portfolios)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4C. Approval of elimination of the fundamental restriction on purchasing securities on margin. (All Portfolios)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4D. Approval of elimination of the fundamental restriction on making short sales of securities. (All Portfolios except
Mortgage LIBOR Portfolio, Mortgage Total Return Portfolio, Asset-Backed Portfolio, High Yield Portfolio, Enhanced Index Portfolio,
U.S. Corporate Portfolio, International Opportunities Portfolio, International Corporate Portfolio, Global High Yield Portfolio,
Inflation-Indexed Portfolio and Inflation-Indexed Hedged Portfolio)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4E. Approval of elimination of the fundamental restriction of investing for control. (All Portfolios)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4F. Approval of elimination of the fundamental restriction of investing in issuers in which fund management invests. (All
Portfolios)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4G. Approval of elimination of the fundamental restriction of investing in other investment companies. (All Portfolios)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4H. Approval of elimination of the fundamental restriction of investing in unseasoned issuers. (All Portfolios)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4I. Approval of elimination of the fundamental restriction on diversification. (U.S. Short-Term Portfolio only)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4J. Approval of elimination of the fundamental restriction on repurchase agreements. (U.S. Short-Term Portfolio, Worldwide
Portfolio, and Worldwide-Hedged Portfolio only)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4K. Approval of revision of the fundamental restriction on the purchasing or selling of commodities. (Worldwide Portfolio
and Worldwide-Hedged Portfolio only)
FOR [ ] AGAINST [ ] ABSTAIN [ ]
</TABLE>
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 2, 3, and 4A through 4K.
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)
<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
any Portfolio of the Fund:
<TABLE>
<S> <C> <C> <C>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Percentage of Outstanding
Name and Address of Number of Shares Shares Owned
Shareholder Name of Portfolio Beneficially Owned
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
<PAGE>
EXHIBIT B
ADVISORY AGREEMENT
ADVISORY AGREEMENT, dated _______________, 1999, between FFTW
Funds, Inc., a Maryland corporation (the "Fund") and Fischer Francis Trees &
Watts, Inc., a New York corporation (the "Adviser"),
In consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Attorney-in-Fact. The Fund appoints the Adviser as its attorney-in-fact to
invest and reinvest the assets of the U.S. Short-Term Portfolio (the
"Portfolio"), as fully as the Fund itself could do. The Adviser hereby accepts
this appointment.
2. Duties of the Adviser. (a) The Adviser shall be responsible for
managing the investment portfolio of the Portfolio,
including, without limitation, providing investment research, advice and
supervision, determining which portfolio securities shall be purchased
or sold by the Portfolio, purchasing and selling securities on behalf of
the Portfolio and determining how voting and other rights with respect
to portfolio securities of the Portfolio shall be exercised, subject in
each case to the control of the Board of Directors of the Fund (the
"Board") and in accordance with the objectives, policies and principles
of the Portfolio set forth in the Registration Statement, as amended, of
the Fund, the requirements of the Investment Company Act of 1940, as
amended, (the "Act") and other applicable law. In performing such
duties, the Adviser shall provide such office space, and such executive
and other personnel as shall be necessary for the operations of the
Portfolio. In managing the Portfolio in accordance with the
requirements set forth in this paragraph 2, the Adviser shall be
entitled to act upon advice of counsel to the Fund or counsel to the
Adviser.
(b) Subject to Section 36 of the Act, the Adviser shall not be
liable to the Fund for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Portfolio and the performance of its duties under this Agreement except for
losses arising out of the Adviser's bad faith, willful misfeasance or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement. It is agreed that
the Adviser shall have no responsibility or liability for the accuracy or
completeness of the Fund's Registration Statement under the Act and the
Securities Act of 1933 except for information supplied by the Adviser for
inclusion therein about the Adviser. The Fund agrees to indemnify the Adviser
for any claims, losses, costs, damages, or expenses (including fees and
disbursements of counsel, but excluding the ordinary expenses of the Adviser
arising from the performance of its duties and obligations under this Agreement)
whatsoever arising out of the performance of this Agreement except for those
claims, losses, costs, damages and expenses resulting from the Adviser's bad
faith, willful misfeasance or gross negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and duties under this
Agreement.
(c) The Adviser and its officers may act and continue to act
as investment advisers and managers for others (including, without limitation,
other investment companies), and nothing in this Agreement will in any way be
deemed to restrict the right of the Adviser to perform investment management or
other services for any other person or entity, and the performance of such
services for others will not be deemed to violate or give rise to any duty or
obligation to the Fund.
(d) Except as provided in Paragraph 5, nothing in this
Agreement will limit or restrict the Adviser or any of its officers, affiliates
or employees from buying, selling or trading in any securities for its or their
own account or accounts. The Fund acknowledges that the Adviser and its
officers, affiliates or employees, and its other clients may at any time have,
acquire, increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of for the account of the Portfolio.
The Adviser will have no obligation to acquire for the Portfolio a position in
any investment which the Adviser, its officers, affiliates or employees may
acquire for its or their own accounts or for the account of another client, if
in the sole discretion of the Adviser, it is not feasible or desirable to
acquire a position in such investment for the account of the Portfolio.
3. Expenses. The Adviser shall pay all of its expenses arising from the
performance of its obligations under this Agreement
and shall pay any salaries, fees and expenses of the Directors and
officers of the Fund who are employees of the Adviser or its
affiliates. Except as provided below, the Adviser shall not be required
to pay any other expenses of the Fund, including, without limitation,
organization expenses of the Fund (including out-of-pocket expenses, but
not including the Adviser's overhead or employee costs); brokerage
commissions; maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Fund;
telephone, telex, facsimile, postage and other communications expenses;
expenses relating to investor and public relations; freight, insurance
and other charges in connection with the shipment of the Fund's
portfolio securities; indemnification of Directors and officers of the
Fund; travel expenses (or an appropriate portion thereof) of Directors
and officers of the Fund who are directors, officers or employees of the
Adviser to the extent that such expenses relate to attendance at
meetings of the Board of Directors of the Fund or any committee thereof
or advisors thereto held outside of New York, New York; interest, fees
and expenses of independent attorneys, auditors, custodians, accounting
agents, transfer agents, dividend disbursing agents and registrars;
payment for portfolio pricing or valuation service to pricing agents,
accountants, bankers and other specialists, if any; taxes and government
fees; cost of stock certificates and any other expenses (including
clerical expenses) of issue, sale, repurchase or redemption of shares;
expenses of registering and qualifying shares of the Fund under Federal
and state laws and regulations; expenses of printing and distributing
reports, notices, dividends and proxy materials to existing
stockholders; expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of printing and
distributing prospectuses; expenses of annual and special stockholders'
meetings; costs of stationery, fees and expenses (specifically including
travel expenses relating to Fund business) of Directors of the Fund who
are not employees of the Adviser or its affiliates; membership dues in
the Investment Company Institute; insurance premiums and extraordinary
expenses such as litigation expenses.
4. Compensation. (a) As compensation for the services performed
and the facilities and personnel provided by the Adviser
pursuant to this Agreement, the Fund will pay to the Adviser promptly at
the end of each calendar month, a fee, calculated on each day during
such month, at an annual rate of 0.30% of the Portfolio's average daily
net assets. The Adviser shall be entitled to receive during any month
such interim payments of its fee hereunder as the Adviser shall request,
provided that no such payment shall exceed 50% of the amount of such fee
then accrued on the books of the Portfolio and unpaid.
(b) If the Adviser shall serve hereunder for less than the
whole of any month, the fee payable hereunder shall be prorated.
(c) For purposes of this Section 4, the "average daily net
assets" of the Portfolio shall mean the average of the values placed on the
Portfolio's net assets on each day pursuant to the applicable provisions of the
Fund's Registration Statement, as amended.
5. Purchase and Sale of Securities. The Adviser or an agent of the
Adviser shall purchase securities from or through and sell
securities to or through such persons, brokers or dealers as the Adviser
shall deem appropriate in order to carry out the policy with respect to
the allocation of portfolio transactions as set forth in the
Registration Statement of the Fund, as amended, or as the Board may
direct from time to time. The Adviser will use its reasonable best
efforts to execute all purchases and sales with dealers and banks on a
best net price basis.
Neither the Adviser nor any of its officers, affiliates, or
employees will act as principal or receive any compensation from the Portfolio
in connection with the purchase or sale of investments for the Portfolio other
than the fee referred to in Paragraph 4 hereof.
6. Term of Agreement. This Agreement shall continue in full force and
effect until two years from the date hereof, and will
continue in effect from year to year thereafter if such continuance is
approved in the manner required by the Act, provided that this Agreement
is not otherwise terminated. The Adviser may terminate this Agreement
at any time, without payment of penalty, upon 60 days' written notice to
the Fund. The Fund may terminate this Agreement with respect to the
Portfolio at any time, without payment of penalty, on 60 days' written
notice to the Adviser by vote of either the Board or a majority of the
outstanding stockholders of the Portfolio. This Agreement will
automatically terminate in the event of its assignment (as defined by
the Act).
7. Right of Adviser In Corporate Name. The Adviser and the Fund each
agree that the phrase "FFTW", which comprises a component
of the Fund's corporate name, is a property right of the Adviser. The
Fund agrees and consents that: (i) it will only use the phrase "FFTW" as
a component of its corporate name and for no other purpose; (ii) it will
not purport to grant to any third party the right to use the phrase
"FFTW" for any purpose; (iii) the Adviser or any corporate affiliate of
the Adviser may use or grant to others the right to use the phrase
"FFTW" or any combination or abbreviation thereof, as all or a portion
of a corporate or business name or for any commercial purpose, including
a grant of such right to any other investment company, and at the
request of the Adviser, the Fund will take such action as may be
required to provide its consent to such use or grant; and (iv) upon the
termination of any investment advisory agreement into which the Adviser
and the Fund may enter, the Fund shall, upon request by the Adviser,
promptly take such action, at its own expense, as may be necessary to
change its corporate name to one not containing the phrase "FFTW" and
following such a change, shall not use the phrase "FFTW" or any
combination thereof, as part of its corporate name or for any other
commercial purpose, and shall use its best efforts to cause its
officers, directors and stockholders to take any and all actions which
the Adviser may request to effect the foregoing and recovery to the
Adviser any and all rights to such phrase.
8. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require or to
impose any duty upon either of the parties to do anything in violation of any
applicable laws or regulations.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
written above.
ATTEST FFTW FUNDS, INC.
By: By:
Eric Nachimovsky William E. Vastardis
Secretary
ATTEST FISCHER FRANCIS TREES & WATTS, INC.
By: By:
Stephen Francis Stephen P. Casper
CFO
<PAGE>
EXHIBIT C
ADVISORY AGREEMENT
ADVISORY AGREEMENT, dated _______________, 1999, between FFTW
Funds, Inc., a Maryland corporation (the "Fund") and Fischer Francis Trees &
Watts, Inc., a New York corporation (the "Adviser").
In consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Attorney-in-Fact. The Fund appoints the Adviser as its
attorney-in-fact to invest and reinvest the assets of the Worldwide Portfolio
(the "Portfolio"), as fully as the Fund itself could do. The Adviser hereby
accepts this appointment.
2. Duties of the Adviser. (a) The Adviser shall be responsible
for managing the investment portfolio of the Portfolio, including, without
limitation, providing investment research, advice and supervision, determining
which portfolio securities shall be purchased or sold by the Portfolio,
purchasing and selling securities on behalf of the Portfolio and determining how
voting and other rights with respect to portfolio securities of the Portfolio
shall be exercised, subject in each case to the control of the Board of
Directors of the Fund (the "Board") and in accordance with the objectives,
policies and principles of the Portfolio set forth in the Registration
Statement, as amended, of the Fund, the requirements of the Investment Company
Act of 1940, as amended, (the "Act") and other applicable law. In performing
such duties, the Adviser shall provide such office space, and such executive and
other personnel as shall be necessary for the operations of the Portfolio. In
managing the Portfolio in accordance with the requirements set forth in this
paragraph 2, the Adviser shall be entitled to act upon advice of counsel to the
Fund or counsel to the Adviser.
(b) Subject to Section 36 of the Act, the Adviser shall not be
liable to the Fund for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Portfolio and the performance of its duties under this Agreement except for
losses arising out of the Adviser's bad faith, willful misfeasance or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement. It is agreed that
the Adviser shall have no responsibility or liability for the accuracy or
completeness of the Fund's Registration Statement under the Act and the
Securities Act of 1933 except for information supplied by the Adviser for
inclusion therein about the Adviser. The Fund agrees to indemnify the Adviser
for any claims, losses, costs, damages, or expenses (including fees and
disbursements of counsel, but excluding the ordinary expenses of the Adviser
arising from the performance of its duties and obligations under this Agreement)
whatsoever arising out of the performance of this Agreement except for those
claims, losses, costs, damages and expenses resulting from the Adviser's bad
faith, willful misfeasance or gross negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and duties under this
Agreement.
(c) The Adviser and its officers may act and continue to act
as investment advisers and managers for others (including, without limitation,
other investment companies), and nothing in this Agreement will in any way be
deemed to restrict the right of the Adviser to perform investment management or
other services for any other person or entity, and the performance of such
services for others will not be deemed to violate or give rise to any duty or
obligation to the Fund.
(d) Except as provided in Paragraph 5, nothing in this
Agreement will limit or restrict the Adviser or any of its officers, affiliates
or employees from buying, selling or trading in any securities for its or their
own account or accounts. The Fund acknowledges that the Adviser and its
officers, affiliates or employees, and its other clients may at any time have,
acquire, increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of for the account of the Portfolio.
The Adviser will have no obligation to acquire for the Portfolio a position in
any investment which the Adviser, its officers, affiliates or employees may
acquire for its or their own accounts or for the account of another client, if
in the sole discretion of the Adviser, it is not feasible or desirable to
acquire a position in such investment for the account of the Portfolio.
3. Expenses. The Adviser shall pay all of its expenses arising
from the performance of its obligations under this Agreement and shall pay any
salaries, fees and expenses of the Directors and officers of the Fund who are
employees of the Adviser or its affiliates. Except as provided below, the
Adviser shall not be required to pay any other expenses of the Fund, including,
without limitation, organization expenses of the Fund (including out-of-pocket
expenses, but not including the Adviser's overhead or employee costs); brokerage
commissions; maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Fund; telephone,
telex, facsimile, postage and other communications expenses; expenses relating
to investor and public relations; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; indemnification
of Directors and officers of the Fund; travel expenses (or an appropriate
portion thereof) of Directors and officers of the Fund who are directors,
officers or employees of the Adviser to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Fund or any committee
thereof or advisors thereto held outside of New York, New York; interest, fees
and expenses of independent attorneys, auditors, custodians, accounting agents,
transfer agents, dividend disbursing agents and registrars; payment for
portfolio pricing or valuation service to pricing agents, accountants, bankers
and other specialists, if any; taxes and government fees; cost of stock
certificates and any other expenses (including clerical expenses) of issue,
sale, repurchase or redemption of shares; expenses of registering and qualifying
shares of the Fund under Federal and state laws and regulations; expenses of
printing and distributing reports, notices, dividends and proxy materials to
existing stockholders; expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of printing and
distributing prospectuses; expenses of annual and special stockholders'
meetings; costs of stationery, fees and expenses (specifically including travel
expenses relating to Fund business) of Directors of the Fund who are not
employees of the Adviser or its affiliates; membership dues in the Investment
Company Institute; insurance premiums and extraordinary expenses such as
litigation expenses.
4. Compensation. (a) As compensation for the services
performed and the facilities and personnel provided by the Adviser pursuant to
this Agreement, the Fund will pay to the Adviser promptly at the end of each
calendar month, a fee, calculated on each day during such month, at an annual
rate of 0.40 % of the Portfolio's average daily net assets. The Adviser shall be
entitled to receive during any month such interim payments of its fee hereunder
as the Adviser shall request, provided that no such payment shall exceed 50% of
the amount of such fee then accrued on the books of the Portfolio and unpaid.
(b) If the Adviser shall serve hereunder for less than the
whole of any month, the fee payable hereunder shall be prorated.
(c) For purposes of this Section 4, the "average daily net
assets" of the Portfolio shall mean the average of the values placed on the
Portfolio's net assets on each day pursuant to the applicable provisions of the
Fund's Registration Statement, as amended.
5. Purchase and Sale of Securities. The Adviser or an agent of
the Adviser shall purchase securities from or through and sell securities to or
through such persons, brokers or dealers as the Adviser shall deem appropriate
in order to carry out the policy with respect to the allocation of portfolio
transactions as set forth in the Registration Statement of the Fund, as amended,
or as the Board may direct from time to time. The Adviser will use its
reasonable best efforts to execute all purchases and sales with dealers and
banks on a best net price basis. Neither the Adviser nor any of its officers,
affiliates, or employees will act as principal or receive any compensation from
the Portfolio in connection with the purchase or sale of investments for the
Portfolio other than the fee referred to in Paragraph 4 hereof.
6. Term of Agreement. This Agreement shall continue in full
force and effect until two years from the date hereof, and will continue in
effect from year to year thereafter if such continuance is approved in the
manner required by the Act, provided that this Agreement is not otherwise
terminated. The Adviser may terminate this Agreement at any time, without
payment of penalty, upon 60 days' written notice to the Fund. The Fund may
terminate this Agreement with respect to the Portfolio at any time, without
payment of penalty, on 60 days' written notice to the Adviser by vote of either
the Board or a majority of the outstanding stockholders of the Portfolio. This
Agreement will automatically terminate in the event of its assignment (as
defined by the Act).
7. Right of Adviser In Corporate Name. The Adviser and the
Fund each agree that the phrase "FFTW", which comprises a component of the
Fund's corporate name, is a property right of the Adviser. The Fund agrees and
consents that: (i) it will only use the phrase "FFTW" as a component of its
corporate name and for no other purpose; (ii) it will not purport to grant to
any third party the right to use the phrase "FFTW" for any purpose; (iii) the
Adviser or any corporate affiliate of the Adviser may use or grant to others the
right to use the phrase "FFTW" or any combination or abbreviation thereof, as
all or a portion of a corporate or business name or for any commercial purpose,
including a grant of such right to any other investment company, and at the
request of the Adviser, the Fund will take such action as may be required to
provide its consent to such use or grant; and (iv) upon the termination of any
investment advisory agreement into which the Adviser and the Fund may enter, the
Fund shall, upon request by the Adviser, promptly take such action, at its own
expense, as may be necessary to change its corporate name to one not containing
the phrase "FFTW" and following such a change, shall not use the phrase "FFTW"
or any combination thereof, as part of its corporate name or for any other
commercial purpose, and shall use its best efforts to cause its officers,
directors and stockholders to take any and all actions which the Adviser may
request to effect the foregoing and recovery to the Adviser any and all rights
to such phrase.
8. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything herein
to the contrary notwithstanding, this Agreement shall not be construed to
require or to impose any duty upon either of the parties to do anything in
violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
written above.
ATTEST FFTW FUNDS, INC.
By: By:
Eric Nachimovsky William E. Vastardis
Secretary
ATTEST FISCHER FRANCIS TREES & WATTS, INC.
By: By:
Stephen Francis Stephen P. Casper
CFO
<PAGE>
EXHIBIT D
ADVISORY AGREEMENT
ADVISORY AGREEMENT, dated _______________, 1999, between FFTW
Funds, Inc., a Maryland corporation (the "Fund") and Fischer Francis Trees &
Watts, Inc., a New York corporation (the "Adviser").
In consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Attorney-in-Fact. The Fund appoints the Adviser as its
attorney-in-fact to invest and reinvest the assets of the Worldwide-Hedged
Portfolio (the "Portfolio"), as fully as the Fund itself could do. The Adviser
hereby accepts this appointment.
2. Duties of the Adviser. (a) The Adviser shall be responsible
for managing the investment portfolio of the Portfolio, including, without
limitation, providing investment research, advice and supervision, determining
which portfolio securities shall be purchased or sold by the Portfolio,
purchasing and selling securities on behalf of the Portfolio and determining how
voting and other rights with respect to portfolio securities of the Portfolio
shall be exercised, subject in each case to the control of the Board of
Directors of the Fund (the "Board") and in accordance with the objectives,
policies and principles of the Portfolio set forth in the Registration
Statement, as amended, of the Fund, the requirements of the Investment Company
Act of 1940, as amended, (the "Act") and other applicable law. In performing
such duties, the Adviser shall provide such office space, and such executive and
other personnel as shall be necessary for the operations of the Portfolio. In
managing the Portfolio in accordance with the requirements set forth in this
paragraph 2, the Adviser shall be entitled to act upon advice of counsel to the
Fund or counsel to the Adviser.
(b) Subject to Section 36 of the Act, the Adviser shall not be
liable to the Fund for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the management of
the Portfolio and the performance of its duties under this Agreement except for
losses arising out of the Adviser's bad faith, willful misfeasance or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement. It is agreed that
the Adviser shall have no responsibility or liability for the accuracy or
completeness of the Fund's Registration Statement under the Act and the
Securities Act of 1933 except for information supplied by the Adviser for
inclusion therein about the Adviser. The Fund agrees to indemnify the Adviser
for any claims, losses, costs, damages, or expenses (including fees and
disbursements of counsel, but excluding the ordinary expenses of the Adviser
arising from the performance of its duties and obligations under this Agreement)
whatsoever arising out of the performance of this Agreement except for those
claims, losses, costs, damages and expenses resulting from the Adviser's bad
faith, willful misfeasance or gross negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and duties under this
Agreement.
(c) The Adviser and its officers may act and continue to act
as investment advisers and managers for others (including, without limitation,
other investment companies), and nothing in this Agreement will in any way be
deemed to restrict the right of the Adviser to perform investment management or
other services for any other person or entity, and the performance of such
services for others will not be deemed to violate or give rise to any duty or
obligation to the Fund.
(d) Except as provided in Paragraph 5, nothing in this
Agreement will limit or restrict the Adviser or any of its officers, affiliates
or employees from buying, selling or trading in any securities for its or their
own account or accounts. The Fund acknowledges that the Adviser and its
officers, affiliates or employees, and its other clients may at any time have,
acquire, increase, decrease or dispose of positions in investments which are at
the same time being acquired or disposed of for the account of the Portfolio.
The Adviser will have no obligation to acquire for the Portfolio a position in
any investment which the Adviser, its officers, affiliates or employees may
acquire for its or their own accounts or for the account of another client, if
in the sole discretion of the Adviser, it is not feasible or desirable to
acquire a position in such investment for the account of the Portfolio.
3. Expenses. The Adviser shall pay all of its expenses arising
from the performance of its obligations under this Agreement and shall pay any
salaries, fees and expenses of the Directors and officers of the Fund who are
employees of the Adviser or its affiliates. Except as provided below, the
Adviser shall not be required to pay any other expenses of the Fund, including,
without limitation, organization expenses of the Fund (including out-of-pocket
expenses, but not including the Adviser's overhead or employee costs); brokerage
commissions; maintenance of books and records which are required to be
maintained by the Fund's custodian or other agents of the Fund; telephone,
telex, facsimile, postage and other communications expenses; expenses relating
to investor and public relations; freight, insurance and other charges in
connection with the shipment of the Fund's portfolio securities; indemnification
of Directors and officers of the Fund; travel expenses (or an appropriate
portion thereof) of Directors and officers of the Fund who are directors,
officers or employees of the Adviser to the extent that such expenses relate to
attendance at meetings of the Board of Directors of the Fund or any committee
thereof or advisors thereto held outside of New York, New York; interest, fees
and expenses of independent attorneys, auditors, custodians, accounting agents,
transfer agents, dividend disbursing agents and registrars; payment for
portfolio pricing or valuation service to pricing agents, accountants, bankers
and other specialists, if any; taxes and government fees; cost of stock
certificates and any other expenses (including clerical expenses) of issue,
sale, repurchase or redemption of shares; expenses of registering and qualifying
shares of the Fund under Federal and state laws and regulations; expenses of
printing and distributing reports, notices, dividends and proxy materials to
existing stockholders; expenses of printing and filing reports and other
documents filed with governmental agencies, expenses of printing and
distributing prospectuses; expenses of annual and special stockholders'
meetings; costs of stationery, fees and expenses (specifically including travel
expenses relating to Fund business) of Directors of the Fund who are not
employees of the Adviser or its affiliates; membership dues in the Investment
Company Institute; insurance premiums and extraordinary expenses such as
litigation expenses.
4. Compensation. (a) As compensation for the services
performed and the facilities and personnel provided by the Adviser pursuant to
this Agreement, the Fund will pay to the Adviser promptly at the end of each
calendar month, a fee, calculated on each day during such month, at an annual
rate of 0.40% of the Portfolio's average daily net assets. The Adviser shall be
entitled to receive during any month such interim payments of its fee hereunder
as the Adviser shall request, provided that no such payment shall exceed 50% of
the amount of such fee then accrued on the books of the Portfolio and unpaid.
(b) If the Adviser shall serve hereunder for less than the
whole of any month, the fee payable hereunder shall be prorated.
(c) For purposes of this Section 4, the "average daily net
assets" of the Portfolio shall mean the average of the values placed on the
Portfolio's net assets on each day pursuant to the applicable provisions of the
Fund's Registration Statement, as amended.
5. Purchase and Sale of Securities. The Adviser or an agent of
the Adviser shall purchase securities from or through and sell securities to or
through such persons, brokers or dealers as the Adviser shall deem appropriate
in order to carry out the policy with respect to the allocation of portfolio
transactions as set forth in the Registration Statement of the Fund, as amended,
or as the Board may direct from time to time. The Adviser will use its
reasonable best efforts to execute all purchases and sales with dealers and
banks on a best net price basis.
Neither the Adviser nor any of its officers, affiliates, or
employees will act as principal or receive any compensation from the Portfolio
in connection with the purchase or sale of investments for the Portfolio other
than the fee referred to in Paragraph 4 hereof.
6. Term of Agreement. This Agreement shall continue in full
force and effect until two years from the date hereof, and will continue in
effect from year to year thereafter if such continuance is approved in the
manner required by the Act, provided that this Agreement is not otherwise
terminated. The Adviser may terminate this Agreement at any time, without
payment of penalty, upon 60 days' written notice to the Fund. The Fund may
terminate this Agreement with respect to the Portfolio at any time, without
payment of penalty, on 60 days' written notice to the Adviser by vote of either
the Board or a majority of the outstanding stockholders of the Portfolio. This
Agreement will automatically terminate in the event of its assignment (as
defined by the Act).
7. Right of Adviser In Corporate Name. The Adviser and the
Fund each agree that the phrase "FFTW", which comprises a component of the
Fund's corporate name, is a property right of the Adviser. The Fund agrees and
consents that: (i) it will only use the phrase "FFTW" as a component of its
corporate name and for no other purpose; (ii) it will not purport to grant to
any third party the right to use the phrase "FFTW" for any purpose; (iii) the
Adviser or any corporate affiliate of the Adviser may use or grant to others the
right to use the phrase "FFTW" or any combination or abbreviation thereof, as
all or a portion of a corporate or business name or for any commercial purpose,
including a grant of such right to any other investment company, and at the
request of the Adviser, the Fund will take such action as may be required to
provide its consent to such use or grant; and (iv) upon the termination of any
investment advisory agreement into which the Adviser and the Fund may enter, the
Fund shall, upon request by the Adviser, promptly take such action, at its own
expense, as may be necessary to change its corporate name to one not containing
the phrase "FFTW" and following such a change, shall not use the phrase "FFTW"'
or any combination thereof, as part of its corporate name or for any other
commercial purpose, and shall use its best efforts to cause its officers,
directors and stockholders to take any and all actions which the Adviser may
request to effect the foregoing and recovery to the Adviser any and all rights
to such phrase.
8. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything herein
to the contrary notwithstanding, this Agreement shall not be construed to
require or to impose any duty upon either of the parties to do anything in
violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
written above.
ATTEST FFTW FUNDS, INC.
By: By:
Eric Nachimovsky William E. Vastardis
Secretary
ATTEST FISCHER FRANCIS TREES & WATTS, INC.
By: By:
Stephen Francis Stephen P. Casper
CFO
<PAGE>
EXHIBIT E
Additional Information Regarding Principal Executive Officer
and Directors of the Investment Adviser
<TABLE>
<S> <C> <C>
- ------------------------------- ------------------------------------------------ ----------------------------
Name and Address Position with the Investment Adviser Principal Occupation
- ------------------------------- ------------------------------------------------ ----------------------------
- ------------------------------- ------------------------------------------------ ----------------------------
- ------------------------------- ------------------------------------------------ ----------------------------
- ------------------------------- ------------------------------------------------ ----------------------------
- ------------------------------- ------------------------------------------------ ----------------------------
</TABLE>
<PAGE>
EXHIBIT F
Information Regarding Comparable Funds Advised by the Investment Adviser
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Size of Fund Rate Paid
(in 000s) Current Advisory for Year Proposed
as of Fee Rate Ended Advisory
Name of Fund 12/31/98 12/31/98 Fee Rate
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>
<PAGE>
EXHIBIT G
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT, dated _______________, 1999, between
Fischer Francis Trees & Watts, Inc., a New York corporation (the "Adviser") and
Fischer Francis Trees & Watts, a corporation organized under the laws of the
United Kingdom (the "Sub-Adviser").
In consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Attorney-in-Fact. The Adviser appoints the Sub-Adviser as
its attorney-in-fact to invest and reinvest the assets of the Worldwide
Portfolio (the "Portfolio") of FFTW Funds, Inc. (the "Fund"), as fully as the
Adviser could do. The Sub-Adviser hereby accepts this appointment.
2. Duties of the Sub-Adviser. (a) The Sub-Adviser shall be
responsible for coordinating with the Adviser in managing the investment
portfolio of the Portfolio, including, without limitation, providing investment
research, advice and supervision, determining with the Adviser which portfolio
securities shall be purchased or sold by the Portfolio, purchasing and selling
securities on behalf of the Portfolio and determining with the Adviser how
voting and other rights with respect to portfolio securities of the Portfolio
shall be exercised, subject in each case to the control of the Board of
Directors of the Fund (the "Board") and in accordance with the objectives,
policies and principles of the Portfolio set forth in the Registration
Statement, as amended, of the Fund, the requirements of the Investment Company
Act of 1940, as amended, (the "Act") and other applicable law. In performing
such duties, the Sub-Adviser shall provide such office space, and such executive
and other personnel as shall be necessary for the operations of the Portfolio.
In managing the Portfolio in accordance with the requirements set forth in this
paragraph 2, the Sub-Adviser shall be entitled to act upon advice of counsel to
the Fund, counsel to the Adviser or counsel to the Sub-Adviser.
(b) Subject to Section 36 of the Act, the Sub-Adviser shall
not be liable to the Adviser or the Fund for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or omission in
the management of the Portfolio and the performance of its duties under this
Agreement except for losses arising out of the Sub-Adviser's bad faith, willful
misfeasance or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement. It is
agreed that the Sub-Adviser shall have no responsibility or liability for the
accuracy or completeness of the Fund's Registration Statement under the Act and
the Securities Act of 1933 except for information supplied by the Sub-Adviser
for inclusion therein about the Sub-Adviser. The Adviser agrees to indemnify the
Sub-Adviser for any claims, losses, costs, damages, or expenses (including fees
and disbursements of counsel, but excluding the ordinary expenses of the
Sub-Adviser arising from the performance of its duties and obligations under
this Agreement) whatsoever arising out of the performance of this Agreement
except for those claims, losses, costs, damages and expenses resulting from the
Sub-Adviser's bad faith, willful misfeasance or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(c) The Sub-Adviser and its officers may act and continue to
act as investment advisers and managers for others (including, without
limitation, other investment companies), and nothing in this Agreement will in
any way be deemed to restrict the right of the Sub-Adviser to perform investment
management or other services for any other person or entity, and the performance
of such services for others will not be deemed to violate or give rise to any
duty or obligation to the Fund.
(d) Except as provided in Paragraph 5, nothing in this
Agreement will limit or restrict the Sub-Adviser or any of its officers,
affiliates or employees from buying, selling or trading in any securities for
its or their own account or accounts. The Adviser acknowledges that the
Sub-Adviser and its officers, affiliates or employees, and its other clients may
at any time have, acquire, increase, decrease or dispose of positions in
investments which are at the same time being acquired or disposed of for the
account of the Portfolio. The Sub-Adviser will have no obligation to acquire for
the Portfolio a position in any investment which the Sub-Adviser, its officers,
affiliates or employees may acquire for its or their own accounts or for the
account of another client, if in the sole discretion of the Sub-Adviser, it is
not feasible or desirable to acquire a position in such investment for the
account of the Portfolio.
3. Expenses. The Sub-Adviser shall pay all of its expenses
arising from the performance of its obligations under this Agreement except as
provided in Section 2(b) of this Agreement.
4. Compensation. (a) As compensation for the services
performed and the facilities and personnel provided by the Sub-Adviser pursuant
to this Agreement, the Adviser will pay to the Sub-Adviser promptly at the end
of each calendar month, a fee, calculated on each day during such month, at an
annual rate of 0.40% of the Portfolio's average daily net assets. The
Sub-Adviser shall be entitled to receive during any month such interim payments
of its fee hereunder as the Sub-Adviser shall request, provided that no such
payment shall exceed 50% of the amount of such fee then accrued on the books of
the Adviser and unpaid.
(b) If the Sub-Adviser shall serve hereunder for less than the
whole of any month, the fee payable hereunder shall be prorated.
(c) For purposes of this Section 4, the "average daily net
assets" of the Portfolio shall mean the average of the values placed on the
Portfolio's net assets on each day pursuant to the applicable provisions of the
Fund's Registration Statement, as amended.
5. Purchase and Sale of Securities. The Sub-Adviser shall
purchase securities from or through and sell securities to or through such
persons, brokers or dealers as the Sub-Adviser shall deem appropriate in order
to carry out the policy with respect to the allocation of portfolio transactions
as set forth in the Registration Statement of the Fund, as amended, or as the
Board may direct from time to time. The Sub-Adviser will use its reasonable best
efforts to execute all purchases and sales with dealers and banks on a best net
price basis. Neither the Sub-Adviser nor any of its officers, affiliates, or
employees will act as principal or receive any compensation from the Portfolio
in connection with the purchase or sale of investments for the Portfolio other
than the fee referred to in Paragraph 4 hereof.
6. Term of Agreement. This Agreement shall continue in full
force and effect until two years from the date hereof, and will continue in
effect from year to year thereafter if such continuance is approved in the
manner required by the Act, provided that this Agreement is not otherwise
terminated. The Sub-Adviser and the Adviser may terminate this Agreement at any
time, without payment of penalty, upon 60 days' written notice to any other
party hereto. The Fund may terminate this Agreement with respect to the
Portfolio at any time, without payment of penalty, on 60 days' written notice to
the Sub-Adviser by vote of either the Board or a majority of the outstanding
stockholders of the Portfolio. This Agreement will automatically terminate in
the event of its assignment (as defined by the Act).
7. Fee Waivers. The Sub-Adviser agrees to waive all or a
portion of its fee to the extent necessary to meet the expense cap stated in the
Fund's Registration Statement, as amended, based on a formula whereby the
Adviser, Sub-Adviser and Administrator share in the waiving of fees on a pro
rata basis (based on their relative fee schedules) so long as the Adviser and
Administrator continues to voluntarily waive its fees.
8. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything herein
to the contrary notwithstanding, this Agreement shall not be construed to
require or to impose any duty upon either of the parties to do anything in
violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have
caused this Agreement to be executed by their duly authorized officers as of the
date first written above.
ATTEST FISCHER FRANCIS TREES & WATTS
By: By:
Simon G. Hard
General Manager
ATTEST FISCHER FRANCIS TREES & WATTS, INC.
By: By:
Stephen Francis Stephen P. Casper
CFO
<PAGE>
EXHIBIT H
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT, dated _______________, 1999, between
Fischer Francis Trees & Watts, Inc., a New York corporation (the "Adviser") and
Fischer Francis Trees & Watts, a corporation organized under the laws of the
United Kingdom (the "Sub-Adviser").
In consideration of the mutual agreements herein made, the
parties hereto agree as follows:
1. Attorney-in-Fact. The Adviser appoints the Sub-Adviser as
its attorney-in-fact to invest and reinvest the assets of the Worldwide-Hedged
Portfolio (the "Portfolio") of FFTW Funds, Inc. (the "Fund"), as fully as the
Adviser could do. The Sub-Adviser hereby accepts this appointment.
2. Duties of the Sub-Adviser. (a) The Sub-Adviser shall be
responsible for coordinating with the Adviser in managing the investment
portfolio of the Portfolio, including, without limitation, providing investment
research, advice and supervision, determining with the Adviser which portfolio
securities shall be purchased or sold by the Portfolio, purchasing and selling
securities on behalf of the Portfolio and determining with the Adviser how
voting and other rights with respect to portfolio securities of the Portfolio
shall be exercised, subject in each case to the control of the Board of
Directors of the Fund (the "Board") and in accordance with the objectives,
policies and principles of the Portfolio set forth in the Registration
Statement, as amended, of the Fund, the requirements of the Investment Company
Act of 1940, as amended, (the "Act") and other applicable law. In performing
such duties, the Sub-Adviser shall provide such office space, and such executive
and other personnel as shall be necessary for the operations of the Portfolio.
In managing the Portfolio in accordance with the requirements set forth in this
paragraph 2, the Sub-Adviser shall be entitled to act upon advice of counsel to
the Fund, counsel to the Adviser or counsel to the Sub-Adviser.
(b) Subject to Section 36 of the Act, the Sub-Adviser shall
not be liable to the Adviser or the Fund for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or omission in
the management of the Portfolio and the performance of its duties under this
Agreement except for losses arising out of the Sub-Adviser's bad faith, willful
misfeasance or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Agreement. It is
agreed that the Sub-Adviser shall have no responsibility or liability for the
accuracy or completeness of the Fund's Registration Statement under the Act and
the Securities Act of 1933 except for information supplied by the Sub-Adviser
for inclusion therein about the Sub-Adviser. The Adviser agrees to indemnify the
Sub-Adviser for any claims, losses, costs, damages, or expenses (including fees
and disbursements of counsel, but excluding the ordinary expenses of the
Sub-Adviser arising from the performance of its duties and obligations under
this Agreement) whatsoever arising out of the performance of this Agreement
except for those claims, losses, costs, damages and expenses resulting from the
Sub-Adviser's bad faith, willful misfeasance or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
(c) The Sub-Adviser and its officers may act and continue to
act as investment advisers and managers for others (including, without
limitation, other investment companies), and nothing in this Agreement will in
any way be deemed to restrict the right of the Sub-Adviser to perform investment
management or other services for any other person or entity, and the performance
of such services for others will not be deemed to violate or give rise to any
duty or obligation to the Fund.
(d) Except as provided in Paragraph 5, nothing in this
Agreement will limit or restrict the Sub-Adviser or any of its officers,
affiliates or employees from buying, selling or trading in any securities for
its or their own account or accounts. The Adviser acknowledges that the
Sub-Adviser and its officers, affiliates or employees, and its other clients may
at any time have, acquire, increase, decrease or dispose of positions in
investments which are at the same time being acquired or disposed of for the
account of the Portfolio. The Sub-Adviser will have no obligation to acquire for
the Portfolio a position in any investment which the Sub-Adviser, its officers,
affiliates or employees may acquire for its or their own accounts or for the
account of another client, if in the sole discretion of the Sub-Adviser, it is
not feasible or desirable to acquire a position in such investment for the
account of the Portfolio.
3. Expenses. The Sub-Adviser shall pay all of its expenses
arising from the performance of its obligations under this Agreement except as
provided in Section 2(b) of this Agreement.
4. Compensation. (a) As compensation for the services
performed and the facilities and personnel provided by the Sub-Adviser pursuant
to this Agreement, the Adviser will pay to the Sub-Adviser promptly at the end
of each calendar month, a fee, calculated on each day during such month, at an
annual rate of 0.40% of the Portfolio's average daily net assets. The
Sub-Adviser shall be entitled to receive during any month such interim payments
of its fee hereunder as the Sub-Adviser shall request, provided that no such
payment shall exceed 50% of the amount of such fee then accrued on the books of
the Adviser and unpaid.
(b) If the Sub-Adviser shall serve hereunder for less than the
whole of any month, the fee payable hereunder shall be prorated.
(c) For purposes of this Section 4, the "average daily net
assets" of the Portfolio shall mean the average of the values placed on the
Portfolio's net assets on each day pursuant to the applicable provisions of the
Fund's Registration Statement, as amended.
5. Purchase and Sale of Securities. The Sub-Adviser shall
purchase securities from or through and sell securities to or through such
persons, brokers or dealers as the Sub-Adviser shall deem appropriate in order
to carry out the policy with respect to the allocation of portfolio transactions
as set forth in the Registration Statement of the Fund, as amended, or as the
Board may direct from time to time. The Sub-Adviser will use its reasonable best
efforts to execute all purchases and sales with dealers and banks on a best net
price basis. Neither the Sub-Adviser nor any of its officers, affiliates, or
employees will act as principal or receive any compensation from the Portfolio
in connection with the purchase or sale of investments for the Portfolio other
than the fee referred to in Paragraph 4 hereof.
6. Term of Agreement. This Agreement shall continue in full
force and effect until two years from the date hereof, and will continue in
effect from year to year thereafter if such continuance is approved in the
manner required by the Act, provided that this Agreement is not otherwise
terminated. The Sub-Adviser and the Adviser may terminate this Agreement at any
time, without payment of penalty, upon 60 days' written notice to any other
party hereto. The Fund may terminate this Agreement with respect to the
Portfolio at any time, without payment of penalty, on 60 days' written notice to
the Sub-Adviser by vote of either the Board or a majority of the outstanding
stockholders of the Portfolio. This Agreement will automatically terminate in
the event of its assignment (as defined by the Act).
7. Fee Waivers. The Sub-Adviser agrees to waive all or a
portion of its fee to the extent necessary to meet the expense cap stated in the
Fund's Registration Statement, as amended, based on a formula whereby the
Adviser, Sub-Adviser and Administrator share in the waiving of fees on a pro
rata basis (based on their relative fee schedules) so long as the Adviser and
Administrator continues to voluntarily waive its fees.
8. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. Anything herein
to the contrary notwithstanding, this Agreement shall not be construed to
require or to impose any duty upon either of the parties to do anything in
violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have
caused this Agreement to be executed by their duly authorized officers as of the
date first written above.
ATTEST FISCHER FRANCIS TREES & WATTS
By: By:
Simon G. Hard General Manager
ATTEST FISCHER FRANCIS TREES & WATTS, INC.
By: By:
Stephen Francis Stephen P. Casper
CFO
<PAGE>
EXHIBIT I
Additional Information Regarding Principal Executive Officer
and Directors of the Investment Sub-Adviser
<TABLE>
<S> <C> <C>
- ------------------------------- ------------------------------------------------------ -----------------------------
Name and Address Position with the Investment Sub-Adviser Principal Occupation
- ------------------------------- ------------------------------------------------------ -----------------------------
- ------------------------------- ------------------------------------------------------ -----------------------------
- ------------------------------- ------------------------------------------------------ -----------------------------
- ------------------------------- ------------------------------------------------------ -----------------------------
- ------------------------------- ------------------------------------------------------ -----------------------------
</TABLE>
EXHIBIT J
Information Regarding Comparable Funds Advised by the Investment Sub-Adviser
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
Size of Fund Rate Paid
(in 000s) Current for Year Proposed
as of Advisory Ended Advisory
Name of Fund 12/31/98 Fee Rate 12/31/98 Fee Rate
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
- ------------------------- ---------------------- ---------------------- ----------------------- ----------------------
</TABLE>
<PAGE>
