SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BT INSURANCE FUNDS TRUST
- -----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -----------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
2
<PAGE>
BT INSURANCE FUNDS TRUST
EQUITY 500 INDEX FUND
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, organized under the laws of the Commonwealth of Massachusetts, that is
comprised of Equity 500 Index Fund (the "Fund"), Small Cap Index Fund, EAFE(R)
Equity Index 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,
International 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 management
agreements (each a "New Management Agreement" and
collectively the "New Management Agreements") 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-management
agreement (the "New Sub-management Agreement," which
term, unless otherwise specified, is included within
the meaning of New Management Agreements) among the
Trust, MGI and Bankers Trust under which Bankers Trust
may perform certain of MGI's responsibilities, at
MGI's expense, under the New Management Agreement
between MGI and the Trust upon approval of the
Independent 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
<PAGE>
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,
RESPECTIVELY, 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 APPROVAL 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 GENERALLY 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, ENHANCE THE EFFICIENCY OF THEIR ADMINISTRATION AND PROMOTE
CONSISTENCY OF INTERNAL CONTROLS, COMPLIANCE AND REGULATORY OVERSIGHT. THE
DEFERRAL IN IMPLEMENTING THE NEW MANAGEMENT AGREEMENT WITH MGI 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 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 COMMUNICATIONS CORPORATION AT 1-800-645-1685.
This notice and related proxy material are first being mailed to
shareholders 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,
Elizabeth A. Russell, SECRETARY
New York, New York
August 23, 1999
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION
OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE
PROXY CARD IS MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
BT INSURANCE FUNDS TRUST
EQUITY 500 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 Equity 500 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 Small Cap 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 commenced
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
behalf 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 properly
come before the meeting or any adjournments thereof:
<PAGE>
PROPOSAL I: To approve or disapprove new investment management
agreements (each a "New Management Agreement" and
collectively the "New Management Agreements") for the
Trust:
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 "interested persons" thereof
("Independent Trustees") (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 specified, is included within
the meaning of New Management Agreements) among the
Trust, MGI and Bankers Trust under which Bankers Trust
may perform certain of MGI's responsibilities, at
MGI's expense, under the New Management Agreement
between MGI and the Trust upon approval of the
Independent 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.
-2-
<PAGE>
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
disapprove the New Management Agreements for their respective Fund.
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,
William 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
reimbursement of insurance companies and others for their expenses in forwarding
solicitation 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
SHAREHOLDERS. 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
shareholders 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
outstanding shares of the Fund for the owners of the variable annuities and
variable 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
accordance with the instructions marked on the Proxy. Shares of the Fund are
entitled to one vote each at the Special Meeting and fractional shares are
entitled to proportionate shares of one vote. If no instructions are marked on
the Proxy with respect to a specific Proposal, the Proxy will be voted "FOR" the
approval of such Proposal and in accordance with the judgment of the persons
appointed as proxies upon any other matter that may properly come before the
Special Meeting. Any shareholder giving a Proxy has the right to attend the
Special Meeting to vote his/her shares in person (thereby revoking any prior
Proxy) and also the right to revoke the Proxy at any time by written notice
received by the applicable Insurance Company prior to the time it is voted.
(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-
<PAGE>
In the event that a quorum is not present at the Special Meeting, or if
a quorum is present but sufficient votes to approve a Proposal are not received,
the persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of Proxies with respect to the Proposal.
In determining whether to adjourn the Special Meeting, the following factors may
be considered: the nature of the proposals that are the subject of the Special
Meeting, the percentage of votes actually cast, the percentage of negative votes
actually cast, the nature of any further solicitation and the information to be
provided to shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the Special Meeting in person or by Proxy. The persons named as
proxies will vote those Proxies that they are entitled to vote "FOR" any
Proposal in favor of an adjournment and will vote those Proxies required to be
voted "AGAINST" any such Proposal against any adjournment. A shareholder vote
may be taken on one or more of the Proposals in the Proxy Statement prior to any
adjournment if sufficient votes have been received and it is otherwise
appropriate. A quorum of shareholders is constituted by the presence in person
or by proxy of the holders of 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 persons have not received instructions
from the beneficial owner or other persons entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as shares that are present but which have
not been voted. (See "Vote Required" for a 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, 10,553,770.080 shares of the Fund were issued and
outstanding.
In order that your shares may be represented, you are requested to:
o indicate your instructions on the Proxy;
o date and sign the Proxy; and
o mail the Proxy promptly in the enclosed envelope.
BENEFICIAL OWNERSHIP OF SHARES OF THE FUND
Annex I attached hereto sets forth information as of July 23, 1999
regarding 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
officers 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
indicative of beneficial ownership for any other purpose. Under these rules,
beneficial 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
individual has the right to acquire within 60 days of July 23, 1999 through the
exercise of any stock option or other right. Unless otherwise indicated, each
person has sole investment and voting power (or shares this power with his or
her spouse) with respect to the shares set forth in Annex I. The inclusion
herein of any shares deemed beneficially owned does not constitute an admission
of beneficial ownership of the shares.
-4-
<PAGE>
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.,
located at 3200 Horizon Drive, King of Prussia, Pennsylvania 19406, serves as
the administrator of the Fund. First Data Distributors, Inc., located at 4400
Computer Drive, Westborough, Massachusetts 01581, serves as the principal
underwriter of the Fund.
For the most recently completed fiscal year, the Fund paid no
commissions to "affiliated brokers" (as defined in Schedule 14A under the
Securities Exchange Act of 1934 (the "Exchange Act")).
-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-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 TRUSTEES. 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 GENERALLY 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 APPROVAL 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
investment management agreement between Bankers Trust and the Trust (the "Prior
Management 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
rendered 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
$47,571. The fee incurred and payable had the waiver not been in effect was
$230,358.
THE MERGER. On November 30, 1998, BT Corporation, Deutsche Bank and
Circle Acquisition Corporation entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the terms of the Merger Agreement, Circle
Acquisition Corporation, a wholly owned New York subsidiary of Deutsche Bank,
merged with and into BT Corporation on June 4, 1999, with BT Corporation
continuing as the surviving entity (the "Merger"). Under the terms of the
Merger, each outstanding share of BT Corporation common stock was converted into
the right to receive $93 in cash, without interest. Since the Merger, BT
Corporation, along with its affiliates, has continued to offer the range of
financial products and services, including investment advisory services, that it
offered prior to the Merger.
-6-
<PAGE>
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, installment 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
person to serve or act as investment adviser of a registered investment company,
except pursuant to a written contract, which contract, whether with such
registered company or with an investment adviser of such registered company, has
been approved by the vote of a majority of the outstanding voting securities of
such registered company . . ." Section 15(a)(4) of the Act further requires
that such written contract provide for automatic termination in the event of its
assignment. Section 2(a)(4) of the Act defines "assignment" to include any
direct or indirect transfer of a contract by the assignor.
While it may be argued otherwise, consummation of the Merger may have
resulted in an "assignment" of the Prior 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
obtaining prior shareholder approval, of the New BT Management Agreement during
an interim period commencing on the date of the closing of the Merger and
continuing, for a period of up to 150 days, through the date on which the New BT
Management Agreement is approved or disapproved by the shareholders of the Fund
(the "Interim Period"). Under the terms of the Exemptive Order, Bankers Trust
was allowed to receive advisory fees during the Interim Period pursuant 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
Agreement is not approved by the shareholders by the expiration of the Interim
Period, the fees held in escrow will be remitted to the Trust. As of June 30,
1999, the amount in escrow totaled $3,253.51.
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 approve 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 Trustees.
-7-
<PAGE>
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
advisory 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 majority 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 Agreement and
Sub-management Agreement is attached to this Proxy Statement as Exhibit A.
If shareholders 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 may be renewed annually thereafter by specific approval of the Board or
shareholders 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
Agreement 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
applicable New Management Agreement.
Under the terms of the New Management Agreements, as under the Prior
Management 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 Advisers 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 information 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 AGREEMENT.
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 MAJORITY OF ITS
INDEPENDENT TRUSTEES.
-8-
<PAGE>
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
0.20% of the Fund's average daily net assets.
GENERALLY. If approved, the New Management Agreements will remain in
effect for an initial two year period (unless sooner terminated), and shall
remain 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
securities 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
Agreements 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.
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
relate, 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
Corporation. 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 banking 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
investment 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.
The names, businesses addresses and principal occupations of the
current directors and chief executive officer of Bankers Trust are set forth
below.
-9-
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
<S> <C>
Josef Ackermann Chairman of the Board, Chief Executive Officer and
Deutsche Bank A.G. President, Bankers Trust Company; Member, Board of Managing
Taunusanlage 12 Directors, Deutsche Bank A.G.
D-60262 Frankfurt am 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.; Director, Phillips
29 King Street Petroleum Company; Director, TIG Holdings Inc.
Chappaqua, NY 10514-3432
Mr. William R. Howell Chairman Emeritus, J.C. Penney Company, Inc.; Director,
J.C. Penney Company, Inc. Exxon Corporation; Director, Halliburton Company; Director,
P.O. Box 10001 National Organization on Disability; Director, National
Dallas, TX 75301-1109 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 Americas
Deutsche Bank A.G. 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 $69,806 in fees for this service.
MGI. MGI is a corporation organized under the laws of the State of
Delaware and is a registered investment adviser under the Advisers Act. It is
located at 885 Third Avenue, 32nd Floor,
-10-
<PAGE>
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, London, 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 worldwide. (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
directors and chief executive officer of MGI are set forth below. Except as
otherwise indicated, the business address of the individuals named below is 885
Third Avenue, 32nd Floor, New York, NY 10022 and their positions at MGI
constitute their principal occupation.
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL OCCUPATION
<S> <C>
Richard Marin President and Director
280 Park Avenue Morgan Grenfell Inc.;
New York, NY 10017 Managing Director,
Bankers Trust 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 Jones Executive Vice President, Portfolio 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
investment adviser to an investment company occurs, the investment adviser or
any of its affiliated persons may receive an amount or benefit in connection
therewith as long as two conditions are satisfied.
-11-
<PAGE>
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 or 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 result in an
unfair burden being imposed on the Trust. After conducting its reviews of the
Advisers and of Bankers Trust's performance, and after reviewing materials
specifically provided by Bankers Trust as a result of the termination 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
current 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
agreement with the United States Attorney's Office in the Southern District of
New York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record-keeping problems that occurred between 1994
and early 1996. Bankers Trust pleaded guilty to misstating entries in the bank's
books and records and agreed to pay a $63.5 million fine to state and federal
authorities. On July 26, 1999, the federal criminal proceedings were concluded
with Bankers Trust's formal sentencing. The events leading up to the guilty
pleas did not arise out of the investment advisory or mutual fund management
activities of Bankers Trust or its affiliates.
As a result of the plea, absent an order from the Commission, Bankers
Trust would not be able to continue to provide investment advisory services to
the 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 provide investment advisory services to registered investment companies, and
Bankers Trust, pursuant to Section 9(c) of the Act, has filed an application for
a permanent order. On May 7, 1999, the Commission extended the temporary order
under Section 9(c) of the Act until the Commission takes final action on the
application for a permanent order or, if earlier, November 8, 1999. However,
there is no assurance that the Commission will grant a permanent order. If the
Commission refuses to grant a permanent order, shareholders will receive
supplemental proxy materials requesting approval to release any amounts held in
escrow up to the time of the refusal and such other action as deemed appropriate
by the Board.
-12-
<PAGE>
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 reasonably necessary to approve Bankers Trust as investment adviser to
the Fund and considered a number of factors, including, among other things, the
continuity of the management of the Fund after the Merger; the nature, scope and
quality of services that Bankers Trust would likely provide to the Fund; the
quality of the personnel of Bankers Trust; Bankers Trust's commitment to
continue to provide these services in the future; the maintenance of the
identical advisory fee rates; and the fact that the New BT Management Agreement
contains substantially 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
Trustees, unanimously approved the New MGI Management Agreement and the New
Sub-management 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
services, 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 factors, 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 investment 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 thereof. With respect to the last factor, the Board considered that
the proposed organizational structure may simplify the organizational structure
of Deutsche Bank's U.S. mutual fund operations, enhance the efficiency of their
administration 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
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 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 Trustees based on information they then deemed necessary to consider
adequately these arrangements.
-13-
<PAGE>
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,
including the Independent Trustees, also was apprised of the guilty pleas
discussed above and the exemptive relief sought by Bankers Trust.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE "FOR"
THE APPROVAL 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 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.
-14-
<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 names, ages, position with the
Trust, principal occupation and memberships on the board of other registered
investment companies and other publicly held companies of each Trustee Nominee:
<TABLE>
<CAPTION>
TRUSTEE NOMINEES
NAME AND AGE POSITION WITH TRUST PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------------ --------------------- -------------------------------------------------------------
<S> <C> <C>
Robert R. Coby+ Trustee since Independent Consultant (April 1999-present); President of Lynch & Mayer,
Age: 47 inception of the Trust 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. FitzGerald+ Trustee since Chairman of North American Properties Group (1987-present); Advisory
Age: 55 inception of the Trust Director, Bank of New York; Director, Hilliard Farber & Co.
James S. Pasman, Jr.+ Trustee since Retired Trustee since inception of the Trust, Tyco International Ltd.
Age: 68 inception of the Trust 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. Schmults(1) N/A Director, GreenPoint Financial Corp 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. Small+* Trustee since Independent Consultant (1996-Present); Executive Vice President of First
Age: 57 inception of the Trust Data Investor Services Group, Inc. ("Investor Services Group") (1993-96).**
-15-
<PAGE>
Werner Walbrol(1) N/A President and Chief Executive Officer, German American Chamber of Commerce,
Age: 61 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.
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, select
and nominate the new Trustee nominees who are not "interested persons," as
defined under the Act, of the Trust. The Board does not have 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
meetings.
The following table sets forth the compensation received by the Trustee
Nominees for their services to the Trust and the Fund Complex (as defined below)
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>
---------------------- ------------------ ------------------ ----------------- ---------------------
Pension or
Retirement
Aggregate Benefits Accrued Estimated Total Compensation
Compensation as Part of Trust Annual Benefits from the Complex*
Name of Trustee from the Trust Expenses upon Retirement Paid to Trustee
---------------------- ------------------ ------------------ ----------------- ---------------------
<S> <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
---------------------- ------------------ ------------------ ----------------- ---------------------
* The "Fund Complex" consists of the Trust, Deutsche Funds, Inc. and Deutsche Portfolios Trust.
</TABLE>
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.
-16-
<PAGE>
<TABLE>
<CAPTION>
NAME AND AGE POSITION WITH TRUST AND PRINCIPAL OCCUPATIONS
------------ ---------------------------------------------
<S> <C>
Elizabeth A. Russell* Secretary; Counsel of Investor Services Group since 1994;
Age: 37 Assistant Vice President and Counsel, the Boston Company
Advisors, Inc. (1993-94).
Gerald J. Holland* President; Vice President of Investor Services Group
Age: 48 since 1994.
Brian J. O'Neill* Treasurer; Manager of Investor Services Group's
Age: 31 Financial Reporting Department since 1994; Supervisor,
Accounting Services Unit of Investor Services Group
(1992-94).
- ------------------
* 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.
</TABLE>
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
obtained from the Trustee Nominees such information as it deemed reasonably
necessary to approve the Trustee Nominees and considered a number of factors,
including, among other things, the nature, scope and quality of services that
the Trustee Nominees would likely provide to the Trust and the desirability of
maintaining adherence to Section 15(f) of the Act. Based on the factors
discussed above and others, the Board determined that the election of the
Trustee Nominees is in the best interest of the Trust and its shareholders.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE "FOR"
THE ELECTION OF THE TRUSTEE NOMINEES AS SET FORTH IN THIS PROPOSAL.
IF THE TRUSTEE NOMINEES ARE ELECTED BY THE SHAREHOLDERS 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
APPROPRIATE BASED UPON THE INTERESTS OF THE TRUST'S SHAREHOLDERS.
-17-
<PAGE>
PROPOSAL III
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT
ACCOUNTANTS FOR 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,
therefore, are not expected to make a statement; however, one or more
representatives will be available by telephone to respond to appropriate
questions posed by shareholders or management.
Therefore, after careful consideration, the Board, including the
Independent Trustees, recommends that the shareholders of the Fund vote "FOR"
the ratification of the independent accountants as set forth in this Proposal.
-18-
<PAGE>
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 outstanding
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
collectively. Because abstentions and broker non-votes are not treated as shares
voted, abstentions and broker non-votes will have no impact on Proposal II.
Approval of Proposal III with respect to the selection of the
independent accountants of the 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.
- --------------------------------------------------------------------------------
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
Special Meeting. Should any other matter properly come before the Special
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote the Proxy in accordance with their judgment on such matters.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund does not hold regular shareholders' meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the Trust at the address set forth on the cover of this Proxy Statement.
Proposals must be received at a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the materials for the
Fund's meeting. Timely submission of a proposal does not, however, necessarily
mean that such proposal will be included.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding at least 10% of the Fund's outstanding voting
securities (as defined in the Act) may require the calling of a meeting of
shareholders for the purpose of voting on the removal of any Trustee of the
Fund. Meetings 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.
-19-
<PAGE>
IF YOU HAVE ANY QUESTIONS CONCERNING THIS PROXY STATEMENT OR THE
PROCEDURES TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT
SHAREHOLDER COMMUNICATIONS 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,
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 ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE.
- --------------------------------------------------------------------------------
-20-
<PAGE>
ANNEX I
(i) 5% SHAREHOLDERS
SMALL CAP INDEX FUND:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED PERCENT OWNERSHIP
OF OUTSTANDING SHARES
<S> <C> <C>
Connecticut General Life Insurance Company 1,349,170 39.20
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
USA Life Insurance Company 390,028 11.33
9800 Fredericksburg
San Antonio, TX 78288
National Integrity Life Insurance Company 374,248 10.88
515 West Market Street
8th Floor
Louisville, KY 40202
<PAGE>
EAFE(R) EQUITY INDEX FUND:
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED PERCENT OWNERSHIP
OF OUTSTANDING SHARES
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
EQUITY 500 INDEX FUND:
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED PERCENT OWNERSHIP
OF OUTSTANDING SHARES
-2-
<PAGE>
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>
-3-
<PAGE>
* 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.
-4-
<PAGE>
ANNEX II
EQUITY 500 INDEX FUND
BANKERS TRUST
<TABLE>
<CAPTION>
<S> <C> <C>
Net Assets as of Most Advisory
Recently Completed Fee as
Fiscal Year Percentage of
Average Daily
Net Assets
Equity 500 Index Portfolio: 0.08%
Includes the following feeder funds:
BT Institutional Equity 500 Index Fund $2,288,969,859.00
Scudder S & P 500 Index Fund $244,805,518.35
American Aadvantage S & P 500 Index Fund $322,610,586.01
USAA S & P 500 Index Fund $2,713,859,248.97
American Aadvantage S&P 500 Index Mileage Fund $3,632,960.16
BT Investment Equity 500 Index Fund $929,474,411.08
Quantitative Equity Fund N/A(1) 0.50%
American Skandia Trust - AST Bankers Trust Enhanced 500 $452,128,871.00 NOTE D
Portfolio
Security Equity Fund - Enhanced Index Series (Security $15,785,667.21 NOTE E
Benefit)
American General Series Portfolio - MidCap Index Fund $814,774,297.65 NOTE A
(VALIC)
American General Series Portfolio - Stock Index Fund $4,624,973,419.19 NOTE A
(VALIC)
American General Series Portfolio Company 2 - Stock Index Fund $12,489,608.16 NOTE A
(VALIC)
American General Series Portfolio Company 2 - MidCap Index Fund $6,585,995.57 NOTE A
EQ Advisors Trust - BT Equity 500 Index Portfolio (Equitable) $392,561,486.32 0.05%
Variable Insurance Products Fund II - Index 500 Portfolio $4,624,170,180.40 At an annual
(Fidelity) rate of 0.006%
(0.6 basis
points)
Fidelity Concord Street Trust - Spartan U.S. Equity Index $17,202,394,585.66 At an annual
Fund rate of 0.006%
(0.6 basis
points)
Pacific Select Fund - Equity Index Portfolio (Pacific Mutual) $1,808,280,989.82 NOTE B
AARP U.S. Stock Index Fund (Scudder) $464,922,428.55 NOTE C
- --------------------
(1)The fund commenced operations on March 31, 1999. Accordingly, the fund does not have a full fiscal
year of operations to report.
</TABLE>
<PAGE>
NOTE A) 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 excess over $150 million of
the Small Cap Index Fund.
NOTE B) A fee is paid at the beginning of each calendar quarter, based on an
annual percentage of the combined daily net assets of the Equity Index and
Small-Cap Index Portfolios, according to the following schedule, subject to a
minimum annual fee of $100,000: 0.08% on first $100 million; 0.04% on next $100
million; 0.02% on excess.
NOTE C) The fee paid to the Sub-Adviser is calculated on a quarterly basis and
depends on the level of total assets in the AARP U.S. Stock Index Fund. The fee
rate decreases as the level of total assets for the Fund increases. The fee rate
for each level of assets is: 0.07% of the first $100 million of average daily
net assets, 0.03% of such assets in excess of $100 million, and 0.01% of such
assets in excess of $200 million with a minimum annual fee of $75,000.
NOTE D) An annual rate of .17% of the portion of thea verage daily net assets of
the Portfolio not in excess of $300 million plus .13% of the portion of the net
assets over $300 million.
NOTE E) An annual rate of .20% of the combined average daily net assets of the
Enhanced Index Funds of $100 million or less; and an annual rate of .15% of the
combined average daily net assets of the Enhanced Index Funds of more than $100
million but less than $300 million; and an annual rate of .13% of the combined
average daily net assets of the Enhanced Index Funds of more than $300 million.
Subject to the following minimum fees: (i) in the first year from the date the
Enhanced Index Series of Security Equity Fund is seeded (the "Seeding Date"), no
minimum fee; (ii) in the second year from the Seeding Date, $100,000 minimum and
(iii) in the third year from the Seeding Date and each year thereafter, $200,000
minimum. If at the end of the second year from the Seeding Date the total amount
of the fees paid by the Advisor to the Sub-Advisor for services to the Enhanced
Index Funds is collectively less than $100,000, then the Advisor will pay any
such difference in a lump-sum to the Dub-Advisor. If at the end of the third
year from the Seeding Date, and each year thereafter that this Agreement is in
effect, the total amount of the fees paid by the Advisor to the Sub-Advisor for
services to the Enhanced Index Funds is collectively less than $200,000, then
the Advisor will pay any such difference in a lump-sum to the Sub-Advisor.
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 management 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 investment 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
"Statement") 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 performance 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 under and pursuant to this Agreement may be adjusted from
time to time by the Investment Manager with and upon the
<PAGE>
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)
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 accordance 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 Index 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 determine and monitor the investments of the Funds' investment
portfolios accordingly.
Information Provided to the Trust
[The Manager/Sub-manager] will keep the Funds informed of
developments materially 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-manager] 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 reasonable attorneys' fees), losses, damages, charges,
payments and liabilities of any sort or kind which may be
(1) Provision contained in the form of Investment Sub-management Agreement only.
-2-
<PAGE>
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"), 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 hereunder.
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 presents 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 respect 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 thereupon 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 respect 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 consent. 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 Secretary 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 computed 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 prorated 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
** Small Cap Index Fund 0.35%
EAFE(R) Equity Index Fund 0.45%
Equity 500 Index Fund 0.20%
-3-
<PAGE>
shall be computed at the times and in the manner specified in the Funds'
Prospectuses and/or the Statement."
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)
organization 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 Dividend 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
expenses of printing, preparing, distributing and mailing proxies, stock
certificates and all reports required by the Securities and Exchange Commission
and State securities administrations, including the Funds' prospectuses,
Statements, 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
registration of the Funds' shares with the Securities and Exchange Commission
and State securities administrations; (m) the expenses of holding shareholder
meetings; (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) litigation 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 affiliates 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
equitable 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-manager] 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 contained in this
Agreement shall be deemed to limit or restrict the right of [the
Manager/Sub-manager] or any affiliate 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.
-4-
<PAGE>
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 periods, 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 thereof.
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,
-5-
<PAGE>
[SIGNATORY]
AGREED TO AND ACCEPTED:
[SIGNATORIES]
By: _________________________
-6-
<PAGE>
FORM OF PROXY CARD
<PAGE>
<TABLE>
FORM OF PROXY CARD
<S> <C>
[BANKERS TRUST LOGO] BT INSURANCE FUNDS TRUST
BT ALEX. BROWN EQUITY 500 INDEX FUND
MUTUAL FUND SERVICES -- LEGAL DEPARTMENT
MS 1-18-8 101 Federal Street
Boston, Massachusetts 02110
One South Street
Baltimore, Maryland 21202-3220 PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
2:00 p.m., Eastern Daylight 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 VOTES 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.
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>
<TABLE>
<CAPTION>
<S> <C>
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Equity 500 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.)
VOTE ON TRUSTEES
II. Election of Messrs. (01) Coby, (02) FitzGerald, (03) For All Withhold All For All Except: To withhold authority
Pasman, (04) Schmults, (05) Small and (06) Walbrol as to vote, mark "For
Trustees of the Board. All Except" and write
the nominee's number
on the line below.
------------------
VOTE ON PROPOSALS
IA. Approval of New III. Ratification of the
Investment Management selection of Ernst &
Agreement with Bankers Young LLP as the independent
Trust Company FOR AGAINST ABSTAIN accountants of the Fund. FOR [ ] AGAINST [ ] ABSTAIN [ ]
IB. Approval of New Investment The appointed proxies will vote on any other business as may properly come
Management Agreement with Morgan before the Special Meeting
Grenfell Inc. FOR AGAINST ABSTAIN
IC. Approval of New Investment Receipt of the Notice and the Proxy Statement, dated August 23,
Sub-management Agreement with 1999 (the "Proxy Statement"), is hereby acknowledged.
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) Schmults, 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>
<PAGE>
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
PROPOSALS.
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.
<PAGE>
Q. HAVE THE INVESTMENT ADVISORY FEES REMAINED THE SAME?
A. Yes.
Q. WHAT ARE THE BENEFITS OF THE MERGER?
A. There are several potential positive aspects of the merger you may be
interested in. Most notably, the combined institution will be one of
the largest financial institutions in the world, as well as a leader in
a number of important categories, including asset management. The
financial strength of the combined institution coupled with the
increased breadth and depth of its resources and capabilities are
advantages the acquisition brings. Further, as a truly global
institution, the combined entity will be in a unique position to
provide coverage, services and products.
Q. HOW DOES THE BOARD OF TRUSTEES OF 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:
o By mail, with the enclosed proxy card(s) and return envelope.
o 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-
<PAGE>
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 advisory
agreements. Enclosed is further information relating to these changes, including
a Questions & Answers section and proxy card(s).
IMPORTANT INFORMATION ABOUT THE CHANGES:
o The merger has no effect on the number of shares you own or the value of
those shares.
o The advisory fees payable under the new advisory agreements have not
increased.
o The investment objective and policies of your mutual fund investment have not
changed.
In addition to the change in advisory agreements, shareholders are also being
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:
o Read all enclosed materials including the Questions & Answers section.
o 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,
[INSERT MR. HIRSCH'S SIGNATURE]
Daniel O. Hirsch
Assistant Secretary
BT Insurance Funds Trust
<PAGE>
CUSIP#05576E607
