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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BT INSURANCE FUNDS TRUST
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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August 23, 1999
Dear Shareholder:
On June 4, 1999, Bankers Trust merged with Deutsche Bank A.G. As a result
of the merger, we are asking shareholders of BT Mutual Funds to approve new ad-
visory agreements. Enclosed is further information relating to these changes,
including a Questions & Answers section and proxy card(s).
Important information about the changes:
. The merger has no effect on the number of shares you own or the
value of those shares.
. The advisory fees payable under the new advisory agreements have
not increased.
. The investment objective and policies of your mutual fund invest-
ment have not changed.
In addition to the change in advisory agreements, shareholders are also be-
ing asked to approve other changes outlined in the enclosed Proxy Statement.
The Board of Trustees of your BT Mutual Fund believes that the proposals are
important and recommends that you read the enclosed materials carefully and
then vote for all proposals.
What you need to do:
. Read all enclosed materials including the Questions & Answers
section.
. Choose one of the following options to vote:
1. By Mail: Complete the enclosed proxy card and return in
postage-paid envelope provided.
2. Attend Shareholder Meeting (details enclosed).
Please note: if you own shares of more than one Fund, you will receive more
than one proxy card. Please sign and return each proxy card you receive.
Sincerely,
/s/ Daniel O. Hirsch
Daniel O. Hirsch
Assistant Secretary
BT Insurance Funds Trust
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QUESTIONS AND ANSWERS
IMPORTANT NEWS
FOR SHAREHOLDERS OF BT INSURANCE FUNDS TRUST
Here is a brief overview of some matters affecting your Fund which require
a shareholder vote. We encourage you to read the full text of the enclosed
Proxy Statement, and to vote your shares.
Q. What has happened to require a shareholder vote?
A. On June 4, 1999, Bankers Trust became a subsidiary of Deutsche Bank
A.G. The combined entity now ranks as the fourth largest investment
manager in the world with $670-billion in assets in a full range of
active and index strategies.
To ensure that Bankers Trust or an affiliate may continue to serve as
investment adviser of the BT Mutual Funds, we are seeking shareholder
approval of new advisory agreements.
THE BOARD MEMBERS OF YOUR FUND RECOMMEND THAT YOU VOTE FOR THESE PRO-
POSALS.
Q. Why am I being asked to vote on the new advisory agreements?
A. The Investment Company Act, which regulates investment companies in
the United States such as your BT Mutual Fund, requires a shareholder
vote to approve a new advisory agreement following certain types of
business combinations. Each of the new advisory agreements became
effective immediately upon consummation of the merger and will
continue in effect only upon shareholder approval.
Q. How does the merger affect my BT Mutual Fund?
A. Your BT Mutual Fund and its respective investment objectives have not
changed as a result of the merger. You still own the same shares in
the same Fund as you did prior to the merger. Each of the new advisory
agreements contains substantially the same terms and conditions as the
agreement in effect prior to the merger, except for the dates of
execution and termination. If shareholders do not approve the new
advisory agreements, the agreements will no longer continue and the
governing Boards of your Fund will take such action as they deem to be
in the best interests of the Fund, and their respective shareholders.
Q. Have the investment advisory fees remained the same?
A. Yes.
<PAGE>
Q. What are the benefits of the merger?
A. There are several potential positive aspects of the merger you may be
interested in. Most notably, the combined institution will be one of
the largest financial institutions in the world, as well as a leader
in a number of important categories, including asset management. The
financial strength of the combined institution coupled with the
increased breadth and depth of its resources and capabilities are
advantages the acquisition brings. Further, as a truly global
institution, the combined entity will be in a unique position to
provide coverage, services and products.
Q. How does the Board of Trustees of my BT Mutual Fund recommend that I
vote?
A. After careful consideration, the Board of Trustees of your BT Mutual
Fund recommends that you vote in favor of all the proposals on the
enclosed proxy card(s).
Q. Whom do I call for more information?
A. If you need more information, please call Shareholder Communications
Corporation, your Fund's information agent, at 1-800-645-1685.
Q. How can I vote my shares?
A. You may choose from one of the following options to vote your shares:
. By mail, with the enclosed proxy card(s) and return envelope.
. In person at the shareholder meeting (see details enclosed in
proxy statement).
Q. Will my BT Mutual Fund pay for the proxy solicitation and legal costs
associated with this transaction?
A. No, Bankers Trust will bear these costs.
Q. What happens if I own shares in more than one BT Mutual Fund?
A. If you have more than one BT Mutual Fund in your name at the same
address, you will receive separate proxy cards for each Fund but only
one proxy statement for the account.
Please vote all issues on each proxy card that you receive. Thank you for
mailing your proxy card(s) promptly.
2
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BT INSURANCE FUNDS TRUST
Small Cap Index Fund
101 Federal Street Boston, Massachusetts, 02110
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held September 30, 1999
A Special Meeting of shareholders of BT Insurance Funds Trust (the "Trust")
will be held at the offices of BT Alex. Brown Incorporated, One South Street,
30th Floor, Baltimore, Maryland 21202, on September 30, 1999 at 2:00 p.m. (the
"Special Meeting"). The Trust is an open-end management investment company, or-
ganized under the laws of the Commonwealth of Massachusetts, that is comprised
of Small Cap Index Fund (the "Fund"), Equity 500 Index Fund, EAFE(R) Equity In-
dex Fund, U.S. Bond Index Fund, Small Cap Fund, International Equity Fund and
Managed Assets Fund. Only the Fund is addressed in the accompanying Proxy
Statement ("Proxy Statement"). The U.S. Bond Index Fund, Small Cap Fund, Inter-
national Equity Fund and Managed Assets Fund have not commenced operations.
The Special Meeting is being held to consider and vote on the following
matters for the Fund, as indicated below and more fully described under the
corresponding Proposals in the Proxy Statement, and such other matters as may
properly come before the meeting or any adjournments thereof:
PROPOSAL I: To approve or disapprove new investment manage-
ment agreements (each a "New Management Agree-
ment" and collectively the "New Management Agree-
ments") for the Trust:
A. To approve or disapprove a New Management
Agreement between the Trust and Bankers Trust
Company ("Bankers Trust").
B. To approve or disapprove a New Management
Agreement between the Trust and Morgan Grenfell
Inc. ("MGI") to be implemented within two years
of the date of the Special Meeting upon approval
of the Members of the Trust's Board of Trustees
who are not "interested persons" ("Independent
Trustees") (as defined in the Investment Company
Act of 1940, as amended).
C. To approve or disapprove a new sub-manage-
ment agreement (the "New Sub-management
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Agreement," which term, unless otherwise speci-
fied, is included within the meaning of New Man-
agement Agreements) among the Trust, MGI and
Bankers Trust under which Bankers Trust may per-
form certain of MGI's responsibilities, at MGI's
expense, under the New Management Agreement be-
tween MGI and the Trust upon approval of the In-
dependent Trustees.
PROPOSAL II: To elect six Trustees of the Trust to hold office
until their respective successors have been duly
elected and qualified or until their earlier res-
ignation or removal.
PROPOSAL III: To ratify or reject the selection of Ernst &
Young LLP as the independent accountants for the
Fund for the current fiscal year.
The appointed proxies will vote in their discretion on any other business
as may properly come before the Special Meeting or any adjournment thereof.
The New Management Agreements described in Proposals IA, IB and IC, respec-
tively, will contain substantially the same terms and conditions, except for
the parties and the dates of execution, effectiveness and initial term, as the
prior investment management agreement pursuant to which services were provided
to the Fund. In addition, the form of New Sub-management Agreement authorizes
the applicable investment adviser to adjust the duties, the amount of assets to
be managed and the fees paid to the investment subadviser with and upon the ap-
proval of the Board and the Independent Trustees. As more fully discussed in
the accompanying Proxy Statement, approval of the New Management Agreements,
which provide for the same services to be provided at the same fees, is gener-
ally occasioned by the merger of Circle Acquisition Corporation, a wholly owned
subsidiary of Deutsche Bank A.G. ("Deutsche Bank") with and into Bankers Trust
Corporation, the parent company of Bankers Trust. MGI is, and as a result of
this transaction, Bankers Trust became, an indirect wholly owned subsidiary of
Deutsche Bank. The New Management Agreement with MGI described in Proposal IB
and the New Sub-management Agreement with Bankers Trust described in Proposal
IC will permit Deutsche Bank, upon the approval of the Independent Trustees, to
simplify the organizational structure of its U.S. mutual fund operations, en-
hance the efficiency of their administration and promote consistency of inter-
nal controls, compliance and regulatory oversight. The deferral in implementing
the New Management Agreement with MGI is needed to permit Deutsche Bank a suf-
ficient amount of time to plan, prepare and institute the necessary arrange-
ments for MGI to consolidate Deutsche Bank's U.S. mutual fund operations.
2
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The close of business on August 6, 1999 has been fixed as the record date
for the determination of the shareholders of the Fund entitled to notice of,
and to vote at, the Special Meeting. You are cordially invited to attend the
Special Meeting.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT SHAREHOLDER COM-
MUNICATIONS CORPORATION AT 1-800-645-1685.
This notice and related proxy material are first being mailed to sharehold-
ers on or about August 23, 1999. This proxy is being solicited on behalf of the
Board of Trustees of the Trust.
By Order of the Board of Trustees,
/s/ Elizabeth A. Russell
Elizabeth A. Russell, Secretary
New York, New York
August 23, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEET- ING, PLEASE COM-
PLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO
POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED
STATES.
3
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BT Insurance Funds Trust
Small Cap Index Fund
101 Federal Street
Boston, Massachusetts, 02110
PROXY STATEMENT FOR THE SPECIAL MEETING OF SHAREHOLDERS
September 30, 1999
This Proxy Statement ("Proxy Statement") is being furnished in connection
with the solicitation of proxies by the Board of Trustees of BT Insurance
Funds Trust (the "Trust") with respect to Small Cap Index Fund (the "Fund")
for use at the special meeting of the Trust to be held at the offices of BT
Alex. Brown Incorporated, One South Street, 30th Floor, Baltimore, Maryland
21202, on September 30, 1999 at 2:00 p.m. (the "Special Meeting") and at any
adjournments thereof. This Proxy Statement and accompanying proxy card
("Proxy") are expected to be mailed to shareholders on or about August 23,
1999.
The Trust is comprised of several series. The Fund is a separate series of
the Trust, along with Equity 500 Index Fund and EAFE(R) Equity Index Fund (the
"Other Funds"), which are active and will vote on the matters set forth herein
pursuant to separate proxy statements, and U.S. Bond Index Fund, Small Cap
Fund, International Equity Fund and Managed Assets Fund, which have not com-
menced operations.
For simplicity, actions are described in this Proxy Statement as being
taken by the Fund, although all actions are actually taken by the Trust on be-
half of the Fund.
The Special Meeting is being held to consider and vote on the following
matters for the Fund, as indicated below and described more fully under the
corresponding Proposals discussed herein, and such other matters as may prop-
erly come before the meeting or any adjournments thereof:
PROPOSAL I: To approve or disapprove new investment
management agreements (each a "New Management
Agreement" and collectively the "New Management
Agreements") for the Trust:
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A. To approve or disapprove a New Management
Agreement between the Trust and Bankers Trust
Company ("Bankers Trust") (the "New BT Management
Agreement").
B. To approve or disapprove a New Management
Agreement between the Trust and Morgan Grenfell
Inc. ("MGI" and, together with Bankers Trust, the
"Advisers") (the "New MGI Management Agreement")
to be implemented within two years of the date of
the Special Meeting upon approval of the members
of the Trust's Board of Trustees who are not "in-
terested persons" thereof ("Independent Trust-
ees") (as defined in the Investment Company Act
of 1940, as amended (the "Act")).
C. To approve or disapprove a new sub-
management agreement (the "New Sub-management
Agreement," which term, unless otherwise speci-
fied, is included within the meaning of New Man-
agement Agreements) among the Trust, MGI and
Bankers Trust under which Bankers Trust may per-
form certain of MGI's responsibilities, at MGI's
expense, under the New Management Agreement be-
tween MGI and the Trust upon approval of the In-
dependent Trustees.
PROPOSAL II: To elect six Trustees of the Trust to hold office
until their respective successors have been duly
elected and qualified or until their earlier
resignation or removal.
PROPOSAL III: To ratify or reject the selection of Ernst &
Young LLP as the independent accountants for the
Fund for the current fiscal year.
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournment thereof.
The Fund's shareholders are to consider the approval of New Management
Agreements. Although the New Management Agreements are between the Trust and
Bankers Trust or MGI, as applicable, the shareholders of the Fund and the
shareholders of each of the Other Funds will vote separately to approve or dis-
approve the New Management Agreements for their respective Fund.
2
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The shareholders of the Trust are also to consider the election of Robert
R. Coby, Desmond G. FitzGerald, James S. Pasman, Jr., Edward C. Schmults, Wil-
liam E. Small and Werner Walbrol (the "Trustee Nominees") as Trustees of the
Trust. Messrs. Coby, FitzGerald, Pasman and Small currently serve on the Board
of the Trust (the "Board")./1/
Notice of the Special Meeting and a Proxy accompany this Proxy Statement.
Proxy solicitations will be made primarily by mail, but solicitations may also
be made by telephone, telegraph, through the Internet or in person by officers
or agents of the Fund. All costs of solicitation, including (a) printing and
mailing of this Proxy Statement and accompanying material, (b) the reimburse-
ment of insurance companies and others for their expenses in forwarding solici-
tation material to the beneficial owners of the Fund's shares, (c) payment to
Shareholder Communications Corporation for its services in soliciting proxies
and (d) supplementary solicitations to submit Proxies, will be borne by Bankers
Trust.
The Annual Report of the Fund containing audited financial statements for
the fiscal year ended December 31, 1998, as well as the Semi-Annual Report of
the Fund (each a "Report"), have previously been furnished to the Fund's share-
holders. An additional copy of each Report will be furnished to the Fund's
shareholders without charge upon request by calling 1-800-730-1313.
Certain insurance companies (the "Insurance Companies") are the owners of
all of the shares of the Fund and as such have the right to vote upon certain
matters that are required by the Act to be approved or ratified by the share-
holders and to vote upon any other matter that may be voted upon at the Special
Meeting. Each of the Insurance Companies, as applicable, will vote the out-
standing shares of the Fund for the owners of the variable annuities and vari-
able life insurance contracts issued by it (the "Contracts") in accordance with
the voting instructions received from the policy owners. Interests in Contracts
for which no timely instructions are received will be voted in proportion to
the instructions which are received from other Contract owners. The Insurance
Companies, as applicable, will also vote any shares in separate accounts that
they own and which are not attributable to Contracts in the same proportion.
If the enclosed Proxy is properly executed and returned in time to be voted
at the Special Meeting, the shares represented thereby will be voted in accor-
dance with the instructions marked on the Proxy. Shares of the Fund are enti-
tled to one vote each at the Special Meeting and fractional shares are entitled
to proportionate shares of one vote. If no instructions are marked on the Proxy
with respect to a specific Proposal, the Proxy will be voted "FOR" the approval
of such
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/1/The shareholders of the Fund, together with the shareholders of the Other
Funds voting in the aggregate on a Trust-wide basis, will vote to elect the
six Trustees of the Trust.
3
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Proposal and in accordance with the judgment of the persons appointed as prox-
ies upon any other matter that may properly come before the Special Meeting.
Any shareholder giving a Proxy has the right to attend the Special Meeting to
vote his/her shares in person (thereby revoking any prior Proxy) and also the
right to revoke the Proxy at any time by written notice received by the appli-
cable Insurance Company prior to the time it is voted.
In the event that a quorum is not present at the Special Meeting, or if a
quorum is present but sufficient votes to approve a Proposal are not received,
the persons named as proxies may propose one or more adjournments of the Spe-
cial Meeting to permit further solicitation of Proxies with respect to the
Proposal. In determining whether to adjourn the Special Meeting, the following
factors may be considered: the nature of the proposals that are the subject of
the Special Meeting, the percentage of votes actually cast, the percentage of
negative votes actually cast, the nature of any further solicitation and the
information to be provided to shareholders with respect to the reasons for the
solicitation. Any adjournment will require the affirmative vote of a majority
of those shares represented at the Special Meeting in person or by Proxy. The
persons named as proxies will vote those Proxies that they are entitled to
vote "FOR" any Proposal in favor of an adjournment and will vote those Proxies
required to be voted "AGAINST" any such Proposal against any adjournment. A
shareholder vote may be taken on one or more of the Proposals in the Proxy
Statement prior to any adjournment if sufficient votes have been received and
it is otherwise appropriate. A quorum of shareholders is constituted by the
presence in person or by proxy of the holders of a majority of the outstanding
shares of the Trust or a Fund thereof (as applicable) entitled to vote at the
Special Meeting. For purposes of determining the presence of a quorum for
transacting business at the Special Meeting, abstentions and broker "non-
votes" (that is, proxies from brokers or nominees indicating that these per-
sons have not received instructions from the beneficial owner or other persons
entitled to vote shares on a particular matter with respect to which the bro-
kers or nominees do not have discretionary power) will be treated as shares
that are present but which have not been voted. (See "Vote Required" for a
further discussion of abstentions and broker non-votes.)
Shareholders of record at the close of business on August 6, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Special Meeting.
As of the Record Date, 3,481,688.120 shares of the Fund were issued and out-
standing.
In order that your shares may be represented, you are requested to:
.indicate your instructions on the Proxy;
.date and sign the Proxy; and
.mail the Proxy promptly in the enclosed envelope.
4
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Beneficial Ownership of Shares of the Fund
Annex I attached hereto sets forth information as of July 23, 1999 regard-
ing the beneficial ownership of the Fund's and the Other Funds' shares by (i)
the only persons known by the Fund or the Other Funds to beneficially own more
than five percent of the outstanding shares of the Fund or the Other Funds, as
applicable, (ii) the Trustees and Trustee Nominees, (iii) the executive offi-
cers of the Fund, and (iv) the Trustees and executive officers of the Fund as a
group. The number of shares beneficially owned by each Trustee, Trustee Nominee
or executive officer is determined under rules of the Securities and Exchange
Commission (the "Commission"), and the information is not necessarily indica-
tive of beneficial ownership for any other purpose. Under these rules, benefi-
cial ownership includes any shares as to which the individual has the sole or
shared voting power or investment power and also any shares which the individ-
ual has the right to acquire within 60 days of July 23, 1999 through the exer-
cise of any stock option or other right. Unless otherwise indicated, each per-
son has sole investment and voting power (or shares this power with his or her
spouse) with respect to the shares set forth in Annex I. The inclusion herein
of any shares deemed beneficially owned does not constitute an admission of
beneficial ownership of the shares.
Collectively, the Trustees and officers of the Trust own less than 1% of
the Fund's outstanding shares.
Background
The Fund. As indicated earlier, the Fund is a separate series of the Trust.
Bankers Trust, a banking corporation organized under the laws of the State of
New York, located at 130 Liberty Street (One Bankers Trust Plaza), New York,
New York 10006, serves as the investment adviser and custodian of the Fund.
Bankers Trust is a wholly owned subsidiary of Bankers Trust Corporation ("BT
Corporation"), located at 130 Liberty Street (One Bankers Trust Plaza), New
York, New York 10006, a registered bank holding company organized under the
laws of the State of New York. As discussed later in this Proxy Statement, as a
result of the Merger (as defined herein), BT Corporation became a wholly owned
subsidiary of Deutsche Bank, A.G. ("Deutsche Bank"), located at 31 West 52
Street, New York, New York 10019. First Data Investor Services Group, Inc., lo-
cated at 3200 Horizon Drive, King of Prussia, Pennsylvania 19406, serves as the
administrator of the Fund. First Data Distributors, Inc., located at 4400 Com-
puter Drive, Westborough, Massachusetts 01581, serves as the principal under-
writer of the Fund.
For the most recently completed fiscal year, the commissions paid by the
Fund to "affiliated brokers" (as defined in Schedule 14A under the Securities
Exchange Act of 1934 (the "Exchange Act")) were $108.00 paid to Bankers Trust,
which amounted to approximately 0.47% of the aggregate brokerage commissions
paid by the Fund. Bankers Trust is an affiliated broker because it is the in-
vestment adviser of the Fund.
5
<PAGE>
PROPOSALS IA, IB AND IC
APPROVAL OF NEW MANAGEMENT AGREEMENTS
The New Management Agreements will contain substantially the same terms and
conditions, except for the parties and the dates of execution, effectiveness
and initial term, as the prior investment management agreement pursuant to
which services were provided to the Fund. In addition, the form of New Sub-man-
agement Agreement authorizes the applicable investment adviser to adjust the
duties, the amount of assets to be managed and the fees paid to the investment
subadviser with and upon the approval of the Board and the Independent Trust-
ees. As more fully discussed below, approval of the New Management Agreements,
which provide for the same services to be provided at the same fees, is gener-
ally occasioned by the Merger (as defined herein) pursuant to which Bankers
Trust became an indirect subsidiary of Deutsche Bank. The New MGI Management
Agreement described in Proposal IB and the New Sub-management Agreement with
Bankers Trust described in Proposal IC will permit Deutsche Bank, upon the ap-
proval of the Independent Trustees of the Trust, to simplify the organizational
structure of its U.S. mutual fund operations, enhance the efficiency of their
administration and promote consistency of internal controls, compliance and
regulatory oversight. The deferral in implementing the New MGI Management
Agreement is needed to permit Deutsche Bank a sufficient amount of time to
plan, prepare and institute the necessary arrangements for MGI to consolidate
Deutsche Bank's U.S. mutual fund operations.
The Prior Management Agreement.
The Prior Management Agreement. Prior to June 4, 1999, Bankers Trust served
as investment adviser to the Fund (as discussed earlier) pursuant to an invest-
ment management agreement between Bankers Trust and the Trust (the "Prior Man-
agement Agreement"). The Prior Management Agreement was initially approved by
the Board, including a majority of the Independent Trustees.
The date of the Prior Management Agreement was August 15, 1997. The Prior
Management Agreement was most recently approved by the Fund's Trustees on July
16, 1996. The Fund has an agreement with Bankers Trust whereby Bankers Trust
has contractually waived a portion of the fees payable to it for services ren-
dered pursuant to the Prior Management Agreement by the Fund. The fee paid by
the Fund to Bankers Trust after such waiver for the Fund's last fiscal year was
$80,592. The fee incurred and payable had the waiver not been in effect was
$295,312.
The Merger. On November 30, 1998, BT Corporation, Deutsche Bank and Circle
Acquisition Corporation entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the terms of the Merger Agreement,
6
<PAGE>
Circle Acquisition Corporation, a wholly owned New York subsidiary of Deutsche
Bank, merged with and into BT Corporation on June 4, 1999, with BT Corporation
continuing as the surviving entity (the "Merger"). Under the terms of the
Merger, each outstanding share of BT Corporation common stock was converted
into the right to receive $93 in cash, without interest. Since the Merger, BT
Corporation, along with its affiliates, has continued to offer the range of
financial products and services, including investment advisory services, that
it offered prior to the Merger.
As a result of the Merger, BT Corporation became a wholly owned subsidiary
of Deutsche Bank. Deutsche Bank is a banking company with limited liability
organized under the laws of the Federal Republic of Germany. Deutsche Bank is
the parent company of a group consisting of banks, capital markets companies,
fund management companies, mortgage banks, a property finance company, in-
stallment financing and leasing companies, insurance companies, research and
consultancy companies and other domestic and foreign companies (the "Deutsche
Bank Group"). At March 31, 1999, the Deutsche Bank Group had total assets of
US$727 billion. The Deutsche Bank Group's capital and reserves at March 31,
1999, were US$19.6 billion.
Impact of the Merger on the Prior Management Agreement. Section 15(a) of
the Act provides, in pertinent part, that "[i]t shall be unlawful for any per-
son to serve or act as investment adviser of a registered investment company,
except pursuant to a written contract, which contract, whether with such reg-
istered company or with an investment adviser of such registered company, has
been approved by the vote of a majority of the outstanding voting securities
of such registered company . . . .." Section 15(a)(4) of the Act further re-
quires that such written contract provide for automatic termination in the
event of its assignment. Section 2(a)(4) of the Act defines "assignment" to
include any direct or indirect transfer of a contract by the assignor.
While it may be argued otherwise, consummation of the Merger may have re-
sulted in an "assignment" of the Prior Management Agreement within the meaning
of the Act, terminating the agreement according to its terms and the Act as of
June 4, 1999. Specifically, as Bankers Trust is a wholly owned subsidiary of
BT Corporation, the merger of Circle Corporation with and into BT Corporation
could be deemed to have resulted in an "assignment" of the Prior Management
Agreement with Bankers Trust.
On May 25, 1999, Bankers Trust was granted an exemptive order (the
"Exemptive Order") by the Commission permitting implementation, without ob-
taining prior shareholder approval, of the New BT Management Agreement during
an interim period commencing on the date of the closing of the Merger and con-
tinuing, for a period of up to 150 days, through the date on which the New BT
Management Agreement is approved or disapproved by the shareholders of the
Fund (the "Interim Period"). Under the terms of the Exemptive Order, Bank-
7
<PAGE>
ers Trust was allowed to receive advisory fees during the Interim Period pursu-
ant to the New BT Management Agreement, provided that these fees would be held
in escrow pending shareholder approval of the New BT Management Agreement. In
accordance with the Exemptive Order, the advisory fees charged to the Fund and
paid to Bankers Trust under the New BT Management Agreement have been held in
an interest-bearing escrow account and the Trust expects to continue to deposit
these fees in such account until approval of the New BT Management Agreement by
the shareholders of the Fund has been obtained. If the New BT Management Agree-
ment is not approved by the shareholders by the expiration of the Interim Peri-
od, the fees held in escrow will be remitted to the Trust. As of June 30, 1999,
the amount in escrow totaled $0.00.
The shareholders of the Fund are not being asked to approve or disapprove
the Merger or the Merger Agreement; rather, they are being asked under these
Proposals to approve and continue the New BT Management Agreement and to ap-
prove the New Management Agreements for the Trust. Other than the parties and
the dates of execution, effectiveness, and initial term of the agreement, the
New Management Agreements contain substantially the same terms and conditions
as the Prior Management Agreement. In addition, the form of New Sub-management
Agreement authorizes the applicable investment adviser to adjust the duties,
the amount of assets to be managed and the fees paid to the investment
subadviser with and upon the approval of the Board and the Independent Trust-
ees. The advisory fee rate charged to the Fund under the Prior Management
Agreement has continued to apply under the New BT Management Agreement and
would continue to apply under the New MGI Management Agreement. MGI, and not
the Trust or the Fund, would be solely responsible for paying the sub-advisory
fees, which may vary from time to time as approved by the Independent Trustees.
The investment management fee payable under the New Sub-management Agreement
would be paid by MGI directly to the subadviser. In addition, the Advisers have
advised the Fund that it can expect to continue to receive the same level and
quality of services under the New Management Agreements as it received under
the Prior Management Agreement. The Advisers have represented to the Board that
in the event of any material change in the investment management personnel of
the Advisers responsible for providing services to the Fund, the Advisers will
apprise and consult with the Board to ensure that the Board, including a major-
ity of its Independent Trustees, is satisfied that the services provided by the
Advisers will not be diminished in scope and quality.
The New Management Agreements
The New Management Agreements. The form of New Management and Sub-manage-
ment Agreement is attached to this Proxy Statement as Exhibit A. If sharehold-
ers approve the New Management Agreements, each of the agreements will remain
in effect for an initial term of two years from its effective date, and
8
<PAGE>
may be renewed annually thereafter by specific approval of the Board or share-
holders of the Trust, provided that they are also approved by a majority of
the Independent Trustees. The New BT Management Agreement became effective as
of June 4, 1999, the date of the consummation of the Merger.
If the New MGI Management Agreement and/or the New Sub-management Agree-
ment is approved, Bankers Trust will continue to perform its advisory duties
under the New BT Management Agreement until the New MGI Management Agreement
and/or the New Sub-management Agreement is implemented. MGI, as Adviser, and
Bankers Trust, as subadviser, would perform its respective advisory duties and
be paid its respective advisory fees only upon implementation of the applica-
ble New Management Agreement.
Under the terms of the New Management Agreements, as under the Prior Man-
agement Agreement, each of the Advisers agrees to act as the Fund's investment
adviser, to oversee the administration of all aspects of the Fund's business
affairs and to supervise the performance of professional services provided by
others, including the administrator, transfer agent, custodian and distributor
to the Fund. Subject to the supervision and direction of the Board, the Advis-
ers will have general responsibility for the investment and management of the
Fund's assets. The Advisers agree to keep the Fund informed of developments
materially affecting the Fund's portfolio and to furnish the Trust with infor-
mation the Trust may reasonably request with respect to its investments.
The Advisory Fees. The investment advisory fee rate charged to the Fund
under the New BT Management Agreement and the New MGI Management Agreement is
the same as the advisory fee rate charged under the Prior Management Agree-
ment. As noted above, the investment advisory fee payable under the New Sub-
management Agreement would be paid by MGI, not the Trust or the Fund, and may
vary from time to time, subject to the approval of the Board, including a ma-
jority of its Independent Trustees.
Bankers Trust is paid a fee under the New BT Management Agreement for its
services, calculated daily and paid monthly, equal, on an annual basis, to
0.35% of the Fund's average daily net assets.
Generally. If approved, the New Management Agreements will remain in ef-
fect for an initial two year period (unless sooner terminated), and shall re-
main in effect from year to year thereafter if approved annually (1) by the
Board or by the holders of a majority of the Fund's outstanding voting securi-
ties and (2) by a majority of the Independent Trustees who are not parties to
such contract or agreement, or "interested persons" (as defined in the Act) of
any such party. Like the Prior Management Agreement, the New Management Agree-
ments will terminate upon assignment by any party and are terminable, without
penalty, on 60 days' written notice by the Board or by a "majority" vote of
the shareholders of the Fund (as defined in the Act) or upon 60 days' written
notice by the applicable Adviser.
9
<PAGE>
The services of the Advisers are not deemed to be exclusive and nothing in
the New Management Agreements prevents them or their affiliates from providing
similar services to other investment companies and other clients (whether or
not their investment objectives and policies are similar to those of the Fund)
or from engaging in other activities. In addition, the Advisers are obligated
to pay expenses associated with providing the services contemplated by the New
Management Agreements. The Trust bears certain other expenses including the
fees of the Board. The Trust also pays any extraordinary expenses incurred.
Under the New Management Agreements, the Advisers will exercise their best
judgment in rendering their advisory services. The Advisers shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Fund in connection with the matters to which the New Management Agreements re-
late, provided that nothing therein shall be deemed to protect or purport to
protect the Advisers against any liability to the Fund or to its shareholders
to which the Advisers could otherwise be subject by reason of bad faith or
gross negligence on their part in the performance of their duties.
The Advisers
Bankers Trust. Bankers Trust is the principal banking subsidiary of BT Cor-
poration. Bankers Trust is a bank and, therefore, not required to register as
an investment adviser under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"). Bankers Trust provides a broad range of commercial bank-
ing and financial services, including originating loans and other forms of
credit, accepting deposits and arranging financing. Bankers Trust also engages
in trading currencies, securities, derivatives and commodities. In addition to
providing investment advisory services to the Fund, Bankers Trust serves as in-
vestment adviser to 31 other investment companies and as investment subadviser
to 34 other investment companies. (See Annex II for a list of those investment
companies that Bankers Trust advises that have investment objectives similar to
those of the Fund, together with information regarding the fees charged to
those companies.) As of June 30, 1999, Bankers Trust had over $313 billion of
assets under management, including approximately $200.6 million of assets in
the Fund and the Other Funds, collectively.
10
<PAGE>
The names, businesses addresses and principal occupations of the current
directors and chief executive officer of Bankers Trust are set forth below.
<TABLE>
<S> <C>
<CAPTION>
Name and Address Principal Occupation
- -----------------------------------------------------------------
<S> <C>
Josef Ackermann Chairman of the Board, Chief Executive
Deutsche Bank A.G. Officer and President, Bankers Trust
Taunusanlage 12 Company; Member, Board of Managing
D-60262 Frankfurt am Directors, Deutsche Bank A.G.
Main
Federal Republic of
Germany
Hans Angermueller Shearman & Sterling, of counsel
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Mr. George B. Beitzel Director, Computer Task Group, Inc.;
29 King Street Director, Phillips Petroleum Company;
Chappaqua, NY 10514-3432 Director, TIG Holdings Inc.
Mr. William R. Howell Chairman Emeritus, J.C. Penney Company,
J.C. Penney Company, Inc.; Director, Exxon Corporation;
Inc. Director, Halliburton Company; Director,
P.O. Box 10001 National Organization on Disability;
Dallas, TX 75301-1109 Director, National Retail Federation;
Director and Chairman, Southern
Methodist University Board of Trustees;
Director, Warner-Lambert Company;
Director, The Williams Companies, Inc.
Hermann-Josef Lamberti Member, Board of Managing Directors,
Deutsche Bank A.G. Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am
Main
Federal Republic of
Germany
John A. Ross Regional Chief Executive Officer,
Deutsche Bank A.G. Deutsche Bank Americas Holding Corp.
31 West 52nd Street
New York, NY 10019
Ronaldo H. Schmitz Member, Board of Managing Directors,
Deutsche Bank A.G. Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am
Main
Federal Republic of
Germany
- -----------------------------------------------------------------
</TABLE>
In addition to serving as investment adviser to the Fund, Bankers Trust
also serves as the custodian of the Fund and the Other Funds. This service will
continue to be provided by Bankers Trust after approval of the New Management
Agreements. For the most recently completed fiscal year, the Fund paid Bankers
Trust $86,590 in fees for this service.
11
<PAGE>
MGI. MGI is a corporation organized under the laws of the State of Dela-
ware and is a registered investment adviser under the Advisers Act. It is lo-
cated at 885 Third Avenue, 32nd Floor, New York, NY 10022. MGI provides a full
range of investment advisory services to institutional clients. MGI serves as
investment adviser to ten other investment companies and as investment
subadviser to five other investment companies. MGI is a subsidiary of Morgan
Grenfell Asset Management Ltd. ("MGAM"), located at 20 Finsbury Circus, Lon-
don, England, a wholly owned subsidiary of Deutsche Morgan Grenfell Group PLC,
located at 23 Great Winchester Street, London, England, an investment holding
company, which is, in turn, a wholly owned subsidiary of Deutsche Bank. MGAM
currently manages approximately $16.5 billion for a wide range of pension,
corporate, insurance, local authority, government and private clients world-
wide. (See Annex II for a list of those investment companies that MGI advises
that have investment objectives similar to those of the Fund, together with
information regarding the fees charged to those companies.)
The names, business addresses and principal occupations of the current di-
rectors and chief executive officer of MGI are set forth below. Except as oth-
erwise indicated, the business address of the individuals named below is 885
Third Avenue, 32nd Floor, New York, NY 10022 and their positions at MGI con-
stitute their principal occupation.
<TABLE>
<CAPTION>
Name and Address Principal Occupation
- -----------------------------------------------------------------
<S> <C>
Richard Marin President and Director, Morgan Grenfell
280 Park Avenue Inc.; Managing Director, Bankers Trust
New York, NY 10017 Company
David Westover Baldt Executive Vice President and Director,
Morgan Grenfell Inc.
Joan A. Binstock Chief Operating Officer, Secretary,
Treasurer and Director, Morgan Grenfell
Inc.
Audrey Mary Theresa Executive Vice President, Portfolio
Jones Manager and Director, Morgan Grenfell
Inc.
Robert H. Smith Chairman and Director, Morgan Grenfell
Inc.; Chief Executive Officer, Morgan
Grenfell Asset Management; Chairman and
Chief Executive Officer, Morgan Grenfell
Development Capital
Steven Schneider Managing Director, Bankers Trust Company
280 Park Avenue
New York, NY 10017
- -----------------------------------------------------------------
</TABLE>
Section 15(f) of the Act
Section 15(f) of the Act provides that when a change of control of an in-
vestment adviser to an investment company occurs, the investment adviser or
any of
12
<PAGE>
its affiliated persons may receive an amount or benefit in connection there-
with as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the change of control, or any express or
implied terms, conditions or understandings applicable thereto. As defined in
the Act, the term "unfair burden" includes any arrangement during the two (2)
year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any "interested person" (as defined in
the Act) of the adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its security holders
(other than fees for bona fide investment advisory or other services), or from
any person in connection with the purchase or sale of other property to, or on
behalf of the investment company (other than fees for bona fide brokerage and
principal underwriting services). The Advisers have advised the Board that
they are unaware of any circumstances arising from the Merger that might re-
sult in an unfair burden being imposed on the Trust. After conducting its re-
views of the Advisers and of Bankers Trust's performance, and after reviewing
materials specifically provided by Bankers Trust as a result of the termina-
tion of the Prior Management Agreement and its request that the Board approve
the New Management Agreements, the Board was satisfied that it had received
and appropriately considered the relevant factors and, after consultation with
counsel, the Board determined to approve the New Management Agreements.
The second condition is that, during the three (3) year period immediately
following the Merger, at least 75% of the members of the Board must not be
"interested persons" of the Advisers within the meaning of the Act. All cur-
rent members of the Board are not, and have continued not to be since the
Merger, "interested persons" of the Advisers.
Additional Information
On March 11, 1999, Bankers Trust announced that it had reached an agree-
ment with the United States Attorney's Office in the Southern District of New
York to resolve an investigation concerning inappropriate transfers of un-
claimed funds and related record-keeping problems that occurred between 1994
and early 1996. Bankers Trust pleaded guilty to misstating entries in the
bank's books and records and agreed to pay a $63.5 million fine to state and
federal authorities. On July 26, 1999, the federal criminal proceedings were
concluded with Bankers Trust's formal sentencing. The events leading up to the
guilty pleas did not arise out of the investment advisory or mutual fund man-
agement activities of Bankers Trust or its affiliates.
As a result of the plea, absent an order from the Commission, Bankers
Trust would not be able to continue to provide investment advisory services to
the
13
<PAGE>
Fund. The Commission has granted Bankers Trust a temporary order under Section
9(c) of the Act to permit Bankers Trust and its affiliates to continue to pro-
vide investment advisory services to registered investment companies, and Bank-
ers Trust, pursuant to Section 9(c) of the Act, has filed an application for a
permanent order. On May 7, 1999, the Commission extended the temporary order
under Section 9(c) of the Act until the Commission takes final action on the
application for a permanent order or, if earlier, November 8, 1999. However,
there is no assurance that the Commission will grant a permanent order. If the
Commission refuses to grant a permanent order, shareholders will receive sup-
plemental proxy materials requesting approval to release any amounts held in
escrow up to the time of the refusal and such other action as deemed appropri-
ate by the Board.
Recommendation of the Board
At a meeting of the Board held on February 25, 1999 called for the purpose
of, among other things, voting on approval of the New BT Management Agreement,
the Board, including the Independent Trustees, unanimously approved the New BT
Management Agreement. In reaching this conclusion, the Board obtained from BT
Corporation, Deutsche Bank and Bankers Trust such information as it deemed rea-
sonably necessary to approve Bankers Trust as investment adviser to the Fund
and considered a number of factors, including, among other things, the continu-
ity of the management of the Fund after the Merger; the nature, scope and qual-
ity of services that Bankers Trust would likely provide to the Fund; the qual-
ity of the personnel of Bankers Trust; Bankers Trust's commitment to continue
to provide these services in the future; the maintenance of the identical advi-
sory fee rates; and the fact that the New BT Management Agreement contains sub-
stantially the same terms and conditions as the Prior Management Agreement.
Based on the factors discussed above and others, the Board determined that the
New BT Management Agreement is fair and reasonable and in the best interest of
the Fund and its shareholders.
At a meeting of the Board held on July 27, 1999 called for the purpose of,
among other things, voting on approval of the New MGI Management Agreement and
the New Sub-management Agreement, the Board, including the Independent Trust-
ees, unanimously approved the New MGI Management Agreement and the New Sub-man-
agement Agreement. In reaching this conclusion, the Board obtained from
Deutsche Bank and MGI such information as they deemed reasonably necessary to
approve MGI as an investment adviser to the Trust. Representatives of Deutsche
Bank and MGI made detailed presentations with respect to, among other factors,
the organizational structure, assets under management, asset management servic-
es, financial condition and business plan of MGI. The Board considered the same
factors described above for the New BT Management Agreement with regard to the
New MGI Management Agreement and the New Sub-management Agreement. The Board
also considered a number of other fac-
14
<PAGE>
tors, including the capacity of MGI to perform its duties under the New MGI
Management Agreement; the high degree of continuity of investment management
personnel expected to be available to the Trust because most of the personnel
of Bankers Trust who provided services under the Prior Management Agreement
will be employed by MGI; the financial standings of Deutsche Bank and MGI; the
benefits to the Fund from technological advances being instituted by Deutsche
Bank on a world-wide basis; the experience and expertise of MGI as an invest-
ment adviser, as reflected in its amount of assets under management, and the
new organizational structure proposed to be created as a component of the
Merger and the benefits that may accrue to the shareholders as a result there-
of. With respect to the last factor, the Board considered that the proposed or-
ganizational structure may simplify the organizational structure of Deutsche
Bank's U.S. mutual fund operations, enhance the efficiency of their administra-
tion and promote consistency of internal controls, compliance and regulatory
oversight. Additionally, the eventual implementation of the New MGI Management
Agreement will provide the Fund with an investment adviser registered under the
Advisers Act.
The Board was apprised that the deferral in implementing the New MGI Man-
agement Agreement is needed to permit Deutsche Bank a sufficient amount of time
to plan, prepare and institute the necessary arrangements for MGI to consoli-
date Deutsche Bank's U.S. mutual fund operations. The Advisers also emphasized
to the Board that the New MGI Management Agreement and the New Sub-management
Agreement would be implemented only upon the approval of the Independent Trust-
ees based on information they then deemed necessary to consider adequately
these arrangements.
Based on the factors discussed above and others, the Board determined that
the New MGI Management Agreement and New Sub-management Agreement are fair and
reasonable and in the best interest of the Fund and its shareholders.
In addition, at meetings held on March 24 and June 3, 1999, the Board, in-
cluding the Independent Trustees, also was apprised of the guilty pleas dis-
cussed above and the exemptive relief sought by Bankers Trust.
Therefore, after careful consideration, the Board, including the Indepen-
dent Trustees, recommends that the shareholders of the Fund vote "FOR" the ap-
proval of the New Management Agreements as set forth in these Proposals.
If the New BT Management Agreement is approved by the shareholders, the
agreement will continue in effect as described above. If the New BT Management
Agreement is not approved by the shareholders, the advisory fees held in escrow
with respect to the New BT Management Agreement will be paid over to the Fund.
In such event, the Board will consider what other action is appropriate based
upon the interests of the shareholders. If the New MGI Management Agreement
and/or New Sub-management Agreement are not approved
15
<PAGE>
by the shareholders, the New BT Management Agreement, if it has been approved
by the shareholders, will continue in effect in accordance with its term while
the Board considers whether and the extent to which other action is appropriate
based upon the interests of the shareholders.
16
<PAGE>
PROPOSAL II
ELECTION OF BOARD OF TRUSTEES OF THE TRUST
Six Trustees, constituting the entire Board of Trustees of the Trust, are
to be elected at the Special Meeting to serve until their successors have been
duly elected and qualified or until their earlier resignation or removal. The
Trustee Nominees were recently selected by the Independent Trustees of the
Board and nominated by the full Board at a meeting held on July 27, 1999. The
names and ages of the Trustee Nominees, their principal occupations during the
past five years and certain of their other affiliations are provided below. Of
the six Trustee Nominees, Robert R. Coby, Desmond G. FitzGerald, James S.
Pasman, Jr. and William E. Small are currently Trustees of the Trust. No
Trustee or Trustee Nominee of the Trust serves or will serve as an officer of
the Trust. Each of the Trustee Nominees has agreed to serve if elected at the
Special Meeting. It is the intention of the persons designated as proxies in
the Proxy, unless otherwise directed therein, to vote at the Special Meeting
for the election of the Trustee Nominees named below as the entire Board of
Trustees of the Trust. If any Trustee Nominee is unable or unavailable to
serve, the persons named in the Proxies will vote the Proxies for such other
person as the Board may recommend.
The following table sets forth the name, age, position with the Trust,
principal occupation and memberships on the boards of other registered invest-
ment companies and other publicly held companies of each Trustee Nominee:
TRUSTEE NOMINEES
<TABLE>
<CAPTION>
Principal Occupations
Name and Age Position with Trust During Last Five Years
- -------------------------------------------------------------------------------
<C> <C> <S>
Robert R. Coby+ Trustee since inception Independent Consultant (April 1999-
Age: 47 of the Trust present); President of Lynch &
Mayer, Inc. 1996-99); President,
Leadership Capital Inc. (1995-96);
Chief Operating Officer, CS First
Boston Investment Management, Inc.
(1994-95); President of Blackhawk
L.P. (1993-94).
Desmond G. Trustee since inception Chairman of North American
FitzGerald+ of the Trust Properties Group (1987-present);
Age: 55 Advisory Director, Bank of New York;
Director, Hilliard Farber & Co.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Principal Occupations
Name and Age Position with Trust During Last Five Years
- -------------------------------------------------------------------------------
<C> <C> <S>
James S. Pasman, Trustee since inception Retired; Director, Tyco
Jr.+ Age: 68 of the Trust International Ltd. Conglomerate(2);
Director, Education Management
Corporation(2); Director, CSAM
Income Fund Inc.(3); Director, CSAM
Global Strategic Inc.(3); Director
and Trustee, Warburg Pincus
Funds(3).
Edward C. N/A Director, GreenPoint Financial Corp
Schmults(1) and its subsidiary, GreenPoint
Age: 68 Bank(2); Director, Destia
Communications, Inc.(2); Chairman of
the Board of Trustees, The Edna
McConnell Clark Foundation; Senior
Vice President--External Affairs and
General Counsel, GTE Corporation
(1984-94); Director, The Germany
Fund, Inc.(3); Director, The Central
European Equity Fund, Inc.(3);
Director, Deutsche Funds, Inc.(3);
Director, Deutsche Portfolios
Trust(3).
William E. Trustee since inception Independent Consultant (1996-
Small+* Age: of the Trust Present); Executive Vice President
57 of First Data Investor Services
Group, Inc. ("Investor Services
Group") (1993-96).**
Werner N/A President and Chief Executive
Walbrol(1) Officer, German American Chamber of
Age: 61 Commerce, Inc.; President and Chief
Executive Officer, European American
Chamber of Commerce, Inc.; Member,
United States German Youth Exchange
Council; Director, TUV Rheinland of
North America, Inc.; President and
Director, German American
Partnership Program; Director, AXA
Nordstern Art Insurance Corporation;
Director, DB New World Fund, Limited
and LDC; Director, The Germany Fund,
Inc.(3); Director, The Central
European Equity Fund, Inc.(3);
Director, Deutsche Funds, Inc.(3);
Director, Deutsche Portfolios
Trust(3).
</TABLE>
- -----------
+ Member of the Audit Committee.
* While currently deemed non-interested, Mr. Small was deemed an "interested
person" within the meaning of Section 2(a)(19) of the Act until December 31,
1998 as a result of his employment until December 1996 by Investor Services
Group.
** Administrator of the Fund.
(1) Holds two other directorships in the Fund Complex, as defined herein.
(2) A publicly held company with securities registered pursuant to Section 12
of the Exchange Act.
(3) An investment company registered under the Act.
18
<PAGE>
The Board has established an Audit Committee that meets with the Trust's
independent accountants to review the financial statements of the Trust, the
adequacy of internal controls and the accounting procedures and policies of
the Trust, and reports on these matters to the Board. The Independent Trustees
of the Board, who constitute 100% of the membership of the current Board, se-
lect and nominate the new Trustee nominees who are not "interested persons,"
as defined under the Act, of the Trust. The Board does not have a compensation
committee. During 1998, the Board held four meetings and the Audit Committee
held three meetings. No Trustee attended less than 75% of the applicable meet-
ings.
The following table sets forth the compensation received by the Trustee
Nominees for their services to the Trust and the Fund Complex (as defined be-
low) during the most recent fiscal year. In addition to the fees listed below,
the Trustees are also reimbursed for all reasonable expenses incurred during
the execution of their duties for the Trust.
<TABLE>
<CAPTION>
Estimated
Aggregate Pension or Retirement Annual Total Compensation
Compensation Benefits Accrued as Benefits upon From the Complex*
Name of Trustee from the Trust Part of Trust Expenses Retirement Paid to Trustees
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert R.
Coby...... $15,000 N/A N/A $15,000
Desmond G.
FitzGerald.. $15,000 N/A N/A $15,000
James S.
Pasman,
Jr........ $15,000 N/A N/A $15,000
Edward C.
Schmults.. N/A N/A N/A $45,750
William E.
Small..... -0- N/A N/A -0-
Werner
Walbrol... N/A N/A N/A $47,250
</TABLE>
- -----------
* The "Fund Complex" consists of the Trust, Deutsche Funds, Inc. and Deutsche
Portfolios Trust.
19
<PAGE>
The following table sets forth the names, ages, position with the Trust
and length of service in such position, and principal occupations during the
past five years, of the officers of the Trust.
<TABLE>
<CAPTION>
Position with Trust and Principal
Name and Age Occupations
- ------------------------------------------------------------------
<S> <C>
Elizabeth A. Russell* Secretary; Counsel of Investor Services
Age: 37 Group since 1994; Assistant Vice President
and Counsel, the Boston Company Advisors,
Inc. (1993-94).
Gerald J. Holland* President; Vice President of Investor
Age: 48 Services Group since 1994.
Brian J. O'Neill* Treasurer; Manager of Investor Services
Age: 31 Group's Financial Reporting Department
since 1994; Supervisor, Accounting Services
Unit of Investor Services Group (1992-94).
</TABLE>
- -----------
* Mr. Holland, Ms. Russell and Mr. O'Neill also hold similar positions for
other investment companies for which First Data Distributors, Inc., the
principal underwriter of the Fund and a subsidiary of Investor Services
Group, the administrator of the Fund, or an affiliate thereof serves as the
principal underwriter.
Recommendation of the Board
At a meeting of the Board held on July 27, 1999, the Board, based on a
recommendation of the incumbent Independent Trustees, unanimously approved the
nomination of the Trustee Nominees. In reaching this conclusion, the Board ob-
tained from the Trustee Nominees such information as it deemed reasonably nec-
essary to approve the Trustee Nominees and considered a number of factors, in-
cluding, among other things, the nature, scope and quality of services that
the Trustee Nominees would likely provide to the Trust and the desirability of
maintaining adherence to Section 15(f) of the Act. Based on the factors dis-
cussed above and others, the Board determined that the election of the Trustee
Nominees is in the best interest of the Trust and its shareholders.
Therefore, after careful consideration, the Board, including the Indepen-
dent Trustees, recommends that the shareholders of the Fund vote "FOR" the
election of the Trustee Nominees as set forth in this Proposal.
If the Trustee Nominees are elected by the shareholders of the Fund and
the Other Funds, each Trustee Nominee will serve until his successor is duly
elected and qualified or until his earlier resignation or removal. If the
Trustee Nominees are not elected, the Board will consider what action is ap-
propriate based upon the interests of the Trust's shareholders.
20
<PAGE>
PROPOSAL III
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT
ACCOUNTANTSFOR THE FUND
The Board, including a majority of the Independent Trustees, has approved
the selection of Ernst & Young LLP to serve as independent accountants for the
Fund for the current fiscal year. Ernst & Young LLP has served as independent
accountants of the Fund since 1997 and has advised the Trust that they have no
direct or indirect financial interest in the Fund. Representatives of Ernst &
Young LLP are not expected to be present at the Special Meeting and, there-
fore, are not expected to make a statement; however, one or more representa-
tives will be available by telephone to respond to appropriate questions posed
by shareholders or management.
Therefore, after careful consideration, the Board, including the Indepen-
dent Trustees, recommends that the shareholders of the Fund vote "FOR" the
ratification of the independent accountants as set forth in this Proposal.
VOTE REQUIRED
Approval of each of Proposals IA, IB and IC with respect to the Fund's New
Management Agreements requires the affirmative vote of a "majority" of the
outstanding shares of the Fund. "Majority" (as defined in the Act) means (as
of the Record Date) the lesser of (a) 67% or more of the shares of the Fund
present at the special meeting, if the holders of more than 50% of the out-
standing shares of the Fund are present in person or by proxy, or (b) more
than 50% of the outstanding shares of the Fund. Because abstentions and broker
non-votes are treated as shares present but not voting, any abstentions and
broker non-votes will have the effect of votes against Proposals IA, IB and
IC, which require the approval of a specified percentage of the outstanding
shares of the Fund.
Approval of Proposal II with respect to the Trustee Nominees of the Trust
requires the affirmative vote of a plurality of the votes cast in person or by
proxy at the Special Meeting for the Fund and the Other Funds voting collec-
tively. Because abstentions and broker non-votes are not treated as shares
voted, abstentions and broker non-votes will have no impact on Proposal II.
Approval of Proposal III with respect to the selection of the independent
accountants of the Fund requires the affirmative vote of a majority of the
votes cast in person or by proxy at the Special Meeting for the Fund and the
Other Funds, taken together. Because abstentions and broker non-votes are not
treated as shares voted, abstentions and broker non-votes will have no impact
on Proposal III.
21
<PAGE>
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" APPROVAL OF PROPOSALS IA, IB, IC, II
AND III. ANY UNMARKED PROXIES WILL BE SO VOTED.
The Board is not aware of any other matters that will come before the Spe-
cial Meeting. Should any other matter properly come before the Special Meeting,
it is the intention of the persons named in the accompanying Proxy to vote the
Proxy in accordance with their judgment on such matters.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund does not hold regular shareholders' meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent share-
holders' meeting should send their written proposals to the Secretary of the
Trust at the address set forth on the cover of this Proxy Statement.
Proposals must be received at a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the materials for the
Fund's meeting. Timely submission of a proposal does not, however, necessarily
mean that such proposal will be included.
22
<PAGE>
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding at least 10% of the Fund's outstanding voting securi-
ties (as defined in the Act) may require the calling of a meeting of sharehold-
ers for the purpose of voting on the removal of any Trustee of the Fund. Meet-
ings of shareholders for any other purpose also shall be called by the Board
when requested in writing by shareholders holding at least 10% of the shares
then outstanding.
IF YOU HAVE ANY QUESTIONS CONCERNING THIS PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT SHAREHOLDER COM-
MUNICATIONS CORPORATION AT 1-800-645-1685.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL
MEETING AND WHO WISH TO HAVE THEIR SHARES VOTED ARE
REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE.
By Order of the Board of Trustees,
/s/ Elizabeth A. Russell
Elizabeth A. Russell, Secretary
August 23, 1999
THE BOARD OF TRUSTEES OF THE TRUST HOPES THAT SHAREHOLDERS WILL
ATTEND THE SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND,
YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE EN-
CLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
23
<PAGE>
Annex I
(i) 5% Shareholders
SMALL CAP INDEX FUND:
<TABLE>
<CAPTION>
Name and Address of Beneficial Shares Beneficially Percent Ownership
Owner Owned of Outstanding Shares
- -----------------------------------------------------------------------------
<S> <C> <C>
Connecticut General Life Insurance 1,349,170 39.20
Company
Separate Account FE
900 Cottage Grove Road
Hartford, CT 06152
Travelers Insurance Company 663,206 19.27
One Tower Square
Hartford, CT 06183
Integrity Life Insurance Company 430,997 12.52
515 West Market Street
8th Floor
Louisville, KY 40202
USAA Life Insurance Company 390,028 11.33
9800 Fredericksburg
San Antonio, TX 78288
National Integrity Life Insurance 374,248 10.88
Company
515 West Market Street
8th Floor
Louisville, KY 40202
</TABLE>
EAFE(R) EQUITY INDEX FUND:
<TABLE>
<CAPTION>
Name and Address of Beneficial Shares Beneficially Percent Ownership
Owner Owned of Outstanding Shares
- -----------------------------------------------------------------------------
<S> <C> <C>
Connecticut General Life Insurance
Company 1,988,363 61.17
Separate Account FE
900 Cottage Grove Road
Hartford, CT 06152
Connecticut General Life Insurance
Company 640,141 19.69
Separate Account PG
280 Trumbull Street
Hartford, CT 06104
Integrity Life Insurance Company 228,151 7.02
515 West Market Street
8th Floor
Louisville, KY 40202
</TABLE>
<PAGE>
EQUITY 500 INDEX FUND:
<TABLE>
<CAPTION>
Shares Beneficially Percent Ownership
Name and Address of Beneficial Owner Owned of Outstanding Shares
- -------------------------------------------------------------------------------
<S> <C> <C>
Integrity Life Insurance Company 2,485,300 24.87
515 West Market Street
8th Floor
Louisville, KY 40202
USAA Life Insurance Company 1,784,090 17.85
9800 Fredericksburg
San Antonio, TX 78288
Lincoln National Life Insurance
Company 1,658,967 16.60
Lincoln Life Variable Annuity
Account
1300 South Clinton Street
Fort Wayne, IN 46801
Lincoln National Life Insurance
Company 1,448,640 14.49
Lincoln Life Separate Account
1300 South Clinton Street
Fort Wayne, IN 46801
National Integrity Life Insurance
Company 997,632 9.98
515 West Market Street
8th Floor
Louisville, KY 40202
Lincoln National Life Insurance
Company 569,212 5.70
Lincoln Life Flexible Premium
Variable Life Account
1300 South Clinton Street
Fort Wayne, IN 46801
(ii) Trustees and Trustee Nominees *
Robert R. Coby *
Desmond G. Fitzgerald *
James S. Pasman, Jr. *
Edward C. Schmults *
William E. Small *
Werner Walbrol *
(iii) Executive Officers *
Elizabeth A. Russell *
Gerald J. Holland *
Brian J. O'Neill *
(iv) Trustees and Executive Officers
as a Group *
</TABLE>
- -----------
* The Trustees, the Trustee Nominees, the executive officers of the Trust, and
the Trustees and executive officers as a group own less than 1% of the
Fund's outstanding shares.
I-2
<PAGE>
Annex II
SMALL CAP INDEX FUND
BANKERS TRUST
Small Cap Index Portfolio
<TABLE>
<S> <C> <C>
Includes the following feeder funds:
BT Small Cap Index Fund $115,475,476.00 0.25%
American General Series Portfolio--Small Cap Index $223,185,980.64 NOTE A
Fund (VALIC)
American General Series Portfolio 2--Small Cap Index $ 6,109,550.02 NOTE B
Fund (VALIC)
American General Series Portfolio 2--Small Cap Value $ 2,904,138.62 NOTE B
Fund (VALIC)
EQ Advisors Trust--Small Company Index Fund $ 41,807,938.79 0.05%s
(Equitable)
</TABLE>
NOTE A) A monthly fee computed at the annual rate of 0.03% on the first
$300 million and 0.02% on assets over $300 million for the MidCap Index Fund,
0.02% on the first $2 billion and 0.01% on assets over $2 billion for the
Stock Index Fund and 0.03% on the first $150 million and 0.02% on assets over
$150 million for the Small Cap Index Fund. Notwithstanding the above provi-
sion, VALIC is required to pay a minimum annual sub-advisory fee of $50,000 to
BTC for the Small Cap Index Fund. There are no minimum sub-advisory fees for
the Stock Index Fund, MidCap Index Fund. The Investment Sub-Advisory Agree-
ments require that each Sub-Adviser promptly reduce its monthly fee by the
amount of any commission, tender and exchange offer solicitation fees, other
fees or similar payments received by the Sub-Adviser, or any affiliated person
of the Sub-Adviser, in connection with Sub-Advised Fund portfolio transac-
tions.
NOTE B) A monthly fee computed at the annual rate of 0.03% of the average
daily net asset values of the portion of the Small Cap Value Fund portfolio
that BT manages. With respect to the Stock Index Fund, VALIC shall pay to
Bankers Trust, a monthly fee computed at the annual rate of 0.02% of the first
$2 billion and 0.01% of average daily net asset values on the excess over $2
billion. VALIC shall pay Bankers Trust, a monthly fee computed at the annual
rate of 0.03% of the first $300 million and 0.02% of average daily net asset
values on the excess over $300 million of the Mid Cap Index Fund, and 0.03% of
the first $150 million and 0.02% of average daily net asset values on the ex-
cess over $150 million of the Small Cap Index Fund.
MORGAN GRENFELL INC.
None.
<PAGE>
EXHIBIT A
INVESTMENT MANAGEMENT AND
SUB-MANAGEMENT AGREEMENT
, 1999
[ ]
[Address]
Dear Sirs:
BT Insurance Funds Trust, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), hereby confirms its agreement with
(the "Manager") [and (the "Sub-manager")] regarding investment man-
agement services to be provided by the [Manager/Submanager] to the Small Cap
Index Fund, EAFE(R) Equity Index Fund and Equity 500 Index Fund (each, a "Fund"
and collectively, the "Funds").
Investment Description; Appointment
The Trust anticipates that each Fund will employ its capital by investing
and reinvesting in investments of the kind and in accordance with the invest-
ment objective, policies and limitations specified in its Declaration of Trust,
dated January 19, 1996, as amended from time to time (the "Declaration of
Trust"), its By-laws, as amended from time to time, in the Funds' prospectuses
(the "Prospectus") and the statement of additional information (the "State-
ment") filed with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the Securities Act of
1933, as amended, as part of the Trust's Registration Statement on Form N-1A,
as amended from time to time, and in the manner and to the extent as may from
time to time be approved in the manner set forth in the Declaration of Trust.
Copies of the Funds' Prospectuses, Statement, Declaration of Trust and By-laws
have been or will be submitted to [the Manager/Sub-manager]. [Each Fund [and
the Manager]] desires to employ and hereby appoints [the Manager/Sub-manager]
to act as their investment [adviser/subadviser], to oversee the administration
of all aspects of the Funds' business and affairs and to supervise the perfor-
mance of professional services provided by others, including the administrator,
transfer agent, custodian and distributor to the Funds.
[Subject to the provisions of this Agreement, the duties of the Investment
Submanager, the portion of portfolio assets that the Submanager shall manage,
and the fees to be paid the Investment Submanager by the Investment Manager un-
der and pursuant to this Agreement may be adjusted from time to time by the In-
vestment Manager with and upon the approval of the Board and the members of the
Trust's Board of Trustees who are not "interested persons," as defined in the
Act.]/1/
- ----------
1 Provision contained in the form of Investment Sub-management Agreement only.
<PAGE>
Services
Subject to the overall supervision and direction of the Board of Trustees
of the Trust, [the Manager/Sub-manager] shall have general responsibility for
the investment and management of the Funds' assets, subject to and in accor-
dance with each Fund's investment objective, policies and restrictions as
stated in the Prospectus and Statement, as from time to time in effect, and
the Declaration of Trust and By-laws, the 1940 Act and the Investment Advisors
Act of 1940, as the same may from time to time be amended. In discharging its
responsibility, [the Manager/Sub-manager] shall seek to replicate as closely
as possible the performance of the Russell 2000 Small Stock Index with respect
to the Small Cap Index Fund, EAFE(R) Index with respect to EAFE(R) Equity In-
dex Fund and Standard & Poor's 500 Composite Stock Price Index with respect to
the Equity 500 Index Fund, before the deduction of Fund expenses and shall de-
termine and monitor the investments of the Funds' investment portfolios ac-
cordingly.
Information Provided to the Trust
[The Manager/Sub-manager] will keep the Funds informed of developments ma-
terially affecting the Funds' portfolios and, in addition to providing the
[Trust/Manager] with whatever statistical or other information the
[Trust/Manager] may reasonably request with respect to its investments, [the
Manager/Sub-manager] will, on its own initiative, furnish the [Trust/Manager]
from time to time with whatever information [the Manager/Sub-manager] believes
is appropriate for this purpose.
Standard of Care
[The Manager/Sub-manager] shall exercise its best judgment in rendering
the services listed in paragraph 2 above. [The Manager/Sub-manager] shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Trust in connection with the matters to which this Agreement relates,
provided that nothing in this Agreement shall be deemed to protect or purport
to protect [the Manager/Sub-manager] against any liability to the Trust or to
holders of the Funds' shares ("Shareholders") to which [the Manager/Sub-manag-
er] would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or by reason of
[the Manager/Sub-manager]'s reckless disregard of its obligations and duties
under this Agreement.
Indemnification/Liability
The [Trust/Manager] shall indemnify and hold [the Manager/Sub-manager]
harmless from and against any and all claims, costs, expenses (including rea-
sonable attorneys' fees), losses, damages, charges, payments and liabilities
of any sort or kind which may be asserted against [the Manager/Sub-manager] or
for which [the Manager/Sub-manager] may be held to be liable in connection
with this Agreement or [the Manager/Sub-manager]'s performance hereunder (a
"Claim"),
EX-2
<PAGE>
unless such Claim resulted from a grossly negligent act or omission to act or
bad faith by [the Manager/Sub-manager] in the performance of its duties hereun-
der.
In any case in which the [Trust/Manager] may be asked to indemnify or hold
[the Manager/Sub-manager] harmless, [the Manager/Sub-manager] will notify the
[Trust/Manager] promptly after identifying any situation which it believes pre-
sents or appears likely to present a claim for indemnification against the
[Trust/Manager], although the failure to do so shall not prevent recovery by
[the Manager/Sub-manager], and shall keep the [Trust/Manager] advised with re-
spect to all developments concerning such situation. The [Trust/Manager] shall
have the option to defend [the Manager/Sub-manager] against any Claim which may
be the subject of this indemnification, and, in the event that the
[Trust/Manager] so elects, such defense shall be conducted by counsel chosen by
the [Trust/Manager] and satisfactory to [the Manager/Sub-manager], and there-
upon the [Trust/Manager] shall take over complete defense of the Claim and [the
Manager/Sub-manager] shall sustain no further legal or other expenses in re-
spect of such Claim. [The Manager/Sub-manager] will not confess any Claim or
make any compromise in any case in which the [Trust/Manager] will be asked to
provide indemnification, except with the [Trust/Manager]'s prior written con-
sent. The obligations of the parties hereto under this Section 5 shall survive
the termination of this Agreement.
A copy of the Declaration of Trust of the Funds is on file with the Secre-
tary of the Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Funds as Trustees and
not individually and that the obligations of this instrument are not binding
upon any of the Trustees or Shareholders individually but are binding only upon
the assets and property of the Funds.
Compensation
In consideration of the services rendered pursuant to this Agreement, [each
Fund/the Manager] will pay [the Manager/Sub-manager] a fee at the annual rate
of ** based on the Funds' average daily net assets. These fees shall be com-
puted daily and shall be payable on the first business day of each month for
services performed the preceding month. Upon any termination of this Agreement
before the end of a month, the fee for such part of that month shall be pro-
rated according to the proportion that such period bears to the full monthly
period and shall be payable upon the date of termination of this Agreement. For
the purpose of determining fees payable to [the Manager/Sub-manager], the value
of the Funds' net assets shall be computed at the times and in the manner spec-
ified in the Funds' Prospectuses and/or the Statement."
<TABLE>
<S> <C>
**Small Cap Index Fund 0.35%
---------------------------------
EAFE(R) Equity Index Fund 0.45%
---------------------------------
Equity 500 Index Fund 0.20%
---------------------------------
</TABLE>
EX-3
<PAGE>
Expenses
[The Manager/Sub-manager] will bear all expenses in connection with the
performance of its services under this Agreement. The Trust will bear certain
other expenses to be incurred in its operation, including: (a) payment of the
fees payable to [the Manager/Sub-manager] under paragraph 6 hereof; (b) organi-
zation expenses; (c) brokerage fees and commissions; (d) taxes; (e) interest
charges on borrowings; (f) the costs of liability insurance or fidelity bond
coverage for the Trust's officers and employees, and directors' and officers'
errors and omissions insurance coverage; (g) legal, auditing and accounting
fees and expenses; (h) charges of the Trust's Custodian and Transfer and Divi-
dend Disbursing Agent; (i) the Trust's pro rata portion of dues, fees and
charges of any trade association of which the Trust is a member; (j) the ex-
penses of printing, preparing, distributing and mailing proxies, stock certifi-
cates and all reports required by the Securities and Exchange Commission and
State securities administrations, including the Funds' prospectuses, State-
ments, and notices to shareholders; (k) filing fees for the registration or
qualification of the Funds and their shares under federal or state securities
laws; (l) the fees and expenses involved in registering and maintaining regis-
tration of the Funds' shares with the Securities and Exchange Commission and
State securities administrations; (m) the expenses of holding shareholder meet-
ings; (n) the compensation, including fees, of any of the Trust's unaffiliated
directors, officers or employees; (o) all expenses of computing the Funds' net
asset value per share, including any equipment or services obtained solely for
the purpose of pricing shares or valuing the Funds' investment portfolios; (p)
expenses of personnel performing shareholder servicing functions; and (q) liti-
gation and other extraordinary or non-recurring expenses and other expenses
properly payable by the Trust or the Funds.
Service to Other Companies or Accounts
The [Trust/Manager] understands that [the Manager/Sub-manager] and its af-
filiates may act as investment manager to fiduciary and other managed accounts
and to one or more other investment companies, and the [Trust/Manager] has no
objection to their so acting, provided that whenever the Trust and one or more
other clients advised by [the Manager/Sub-manager] and its affiliates have
available funds for investment, investments suitable and appropriate for each
will be allocated in a manner believed by [the Manager/Sub-manager] to be equi-
table to each client. The [Trust/Manager] recognizes that in some cases this
procedure may adversely affect whether a particular security is available to
the Trust, the size of the position obtainable for the Trust or the price at
which that position may be obtained or disposed. In addition, the
[Trust/Manager] understands that the persons employed by [the Manager/Sub-man-
ager] to assist in the performance of [the Manager/Sub-manager]'s duties under
this Agreement will not devote their full time to such service and nothing con-
tained in this Agreement shall be deemed to limit or restrict the right of [the
Manager/Sub-manager] or any affiliate
EX-4
<PAGE>
of [the Manager/Sub-manager] to engage in and devote time and attention to
other businesses or to render services of any kind or nature.
Term of Agreement
This Agreement shall become effective on the date hereof, shall continue in
effect for two years and thereafter shall continue for successive annual peri-
ods, provided such continuance is specifically approved at least annually by
(i) the Trust's Trustees or (ii) a vote of a "majority" (as defined in the 1940
Act) of each Fund's outstanding voting securities (as defined in the 1940 Act),
provided that in either event the continuance is also approved by a majority of
the Trustees who are not "interested persons" (as defined in the 1940 Act) of
any party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable with respect
to each Fund, without penalty, on 60 days' written notice, by the Trust's
Trustees or by vote of holders of a majority of each Fund's outstanding voting
securities, or upon 60 days' written notice, by [the Manager/Sub-manager]. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act).
Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York giving effect to the conflict of law rules there-
of.
If the foregoing is in accordance with your understanding, kindly indicate
your acceptance of this Agreement by signing and returning the enclosed copy of
this Agreement.
Very truly yours,
[SIGNATORY]
AGREED TO AND ACCEPTED:
[SIGNATORIES]
By: ______________________________
EX-5
<PAGE>
CUSIP #05576E409
<PAGE>
FORM OF PROXY CARD
<TABLE>
<CAPTION>
<S> <C>
[BANKERS TRUST LOGO] BT Insurance Funds Trust
DEUTSCHE BANK ALEX.BROWN Small Cap Index Fund
MUTUAL FUND SERVICES
MS 1-18-8 101 Federal Street
Boston, Massachusetts 02110
One South Street PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
Baltimore, Maryland 21202-3220 2:00 p.m., Eastern time, on September 30, 1999
The undersigned hereby appoints Elizabeth A.
Russell and Daniel O. Hirsch and each of them,
with full power of substitution, as proxies of the
undersigned to vote all shares of stock that the
undersigned is entitled in any capacity to vote at
the above-stated special meeting, and at any and
all adjournments or postponements thereof (the
"Special Meeting"), on the matters set forth on
this Proxy Card, and, in their discretion, upon all
matters incident to the conduct of the Special
Meeting and upon such other matters as may
properly be brought before the Special Meeting.
This proxy revokes all prior proxies given by
the undersigned.
All properly executed proxies will be
voted as directed. If no instructions are indicated
on a properly executed proxy, the proxy will be
voted FOR approval of Proposals IA, IB, IC, II and
III. All ABSTAIN v otes will be counted in
determining the existence of a quorum at the
Special Meeting and, for Proposals IA, IB and IC,
as votes AGAINST the applicable Proposal.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF TRUSTEES WITH RESPECT TO YOUR FUND.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR
PROPOSALS IA, IB, IC, II AND III.
UNLESS VOTING BY TELEPHONE OR INTERNET, PLEASE
SIGN AND DATE BELOW AND MAIL THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set
forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website WWW.PROXYVOTE.COM.
3) Enter the 12-digit control number set
forth on the Proxy card and follow the
simple instructions.
DO NOT RETURN YOUR PROXY CARD IF YOU VOTE BY
PHONE OR INTERNET.
TO VOTE, MARK BLOCKS IN BLUE OR BLACK INK AS
FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS.
<PAGE>
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
SMALL CAP INDEX FUND
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Joint owners should EACH sign. Please sign EXACTLY as your name(s) appears on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your FULL title below.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Vote on Trustees
II. Election of Messrs. (01) Coby, For All Withhold All For All Except: To withhold authority
(02) FitzGerald, (03) Pasman, (04) |_| |_| |_| to vote, mark "For All
Schmults, (05) Small and (06) Walbroel Except" and write the
as Trustees of the Board. nominee's number on the
line below.
Vote on Proposals
IA. Approval of New Investment III. Ratification of the
Management Agreement with selection of Ernst &
Bankers Trust Company FOR |_| AGAINST |_| ABSTAIN |_| Young LLP as the
independent accountants
of the Fund. FOR [] AGAINST [] ABSTAIN []
IB. Approval of New Investment
Management Agreement with The appointed proxies will vote on any
Morgan Grenfell Inc. FOR |_| AGAINST |_| ABSTAIN |_| other business as may properly come before
the Special Meeting or any adjournment thereof.
IC. Approval of New Receipt of the Notice and the Proxy Statement is
Investment Sub- hereby acknowledged.
management Agreement
with Bankers Trust
Company FOR |_| AGAINST |_| ABSTAIN |_|
- --------------------------------------------- ----------------------------------
- --------------------------------------------- ----------------------------------
Signature (Please sign within box) Date Signature (Joint Owners) Date
</TABLE>
-2-
<PAGE>
- --------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
IN THE ENCLOSED ENVELOPE AND MAIL TO:
BT INSURANCE FUNDS TRUST
+Please fold and detach card at perforation before mailing.+
BT INSURANCE COMPANY NAME PRINTS HERE PROXY CARD
FUND NAME PRINTS HERE
THESE VOTING INSTRUCTIONS ARE SOLICITED BY THE BOARD OF TRUSTEES OF BT INSURANCE
FUNDS TRUST IN CONNECTION WITH SHARES TO BE VOTED AT THE SPECIAL MEETING OF
SHAREHOLDERS (THE "MEETING").
This Proxy Card is solicited by the above named Insurance Company (the
"Company") from its contractholders and contract participants who hold
accumulation unit values in the Separate Account Funds of the Company that
invest in the above named Fund of the BT Insurance Funds Trust and who are
entitled to instruct the Company on how to vote the shares held by the Separate
Account.
The undersigned contractholder or participant instructs the Company to vote, at
the Special Meeting of Shareholders of the Fund scheduled for September 30,
1999, at 2:00 p.m., Eastern time, and at any adjournments thereof, all shares of
the Fund attributable to his or her contract or interest therein as directed on
the reverse side of this card. The undersigned acknowledges receipt of the
Notice of Meeting and accompanying Proxy Statement.
IF YOU FAIL TO RETURN THIS PROXY CARD, THE COMPANY WILL VOTE ALL
SHARES ATTRIBUTABLE TO YOUR ACCOUNT VALUE IN PROPORTION TO THE VOTING
INSTRUCTIONS FOR THE FUND ACTUALLY RECEIVED FROM PARTICIPANTS AND
CONTRACTHOLDERS IN YOUR SEPARATE ACCOUNT.
If you sign below but do not mark the instruction on
the reverse, the Company will vote all shares of the
Fund attributable to your account value "FOR" the
proposal.
Date ____________________, 1999
Please sign exactly as your name appears hereon. If
shares are held in the name of joint owners, each
should sign.
---------------------------------------------------------
---------------------------------------------------------
Signature (owner, joint owners, trustee, custodian, etc.)
BANKERS TRUST
<PAGE>
- --------------------------------------------------------------------------------
Please refer to the Proxy Statement discussion of each of these matters. IF NO
SPECIFICATION IS MADE, THE PROXY CARD SHALL BE VOTED FOR THE PROPOSALS. As to
any other matter, said attorneys shall vote in accordance with their best
judgment. THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING:
+Please fold and detach card at perforation before mailing.+
<TABLE>
<CAPTION>
PLEASE VOTE BY FILLING IN THE BOXES BELOW.
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C>
IA. Approval of New Investment Management Agreement with Bankers Trust Company [ ] [ ] [ ] IA.
IB. Approval of New Investment Management Agreement with Morgan Grenfell Inc. [ ] [ ] [ ] IB.
IC. Approval of New Investment Sub-management Agreement with Bankers Trust [ ] [ ] [ ] IC.
Company.
FOR ALL WITHHOLD
NOMINEES AUTHORITY TO
LISTED (EXCEPT VOTE FOR
AS MARKED TO ALL NOMINEES
THE CONTRARY
AT LEFT)
II. Election of Messrs. 01) Coby, 02) Fitzgerald, 03) Pasman, 04) Schmulla, 05) [ ] [ ] [ ] II.
Small and 06) Walbrol as Trustees of the Board.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), WRITE * * *
THE NAME(S) OF THE NOMINEE(S) ON THE LINE BELOW.
- -----------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
III. Ratification of the selection of Ernst & Young LLP as the Independent [ ] [ ] [ ] III.
Accountants of the Fund.
BANKERS TRUST
</TABLE>
