1940 Act File No. 811-08375
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. _ 1_ ..................................... X
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DEUTSCHE PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
P.O. Box 501 Cardinal Avenue
Grand Cayman, Cayman Islands, BWI
(Address of Principal Executive Offices)
(416) 216-4293
(Registrant's Telephone Number)
Victor R. Siclari, Esq. Copies to: John T. Bostelman, Esq.
Federated Investors Tower Sullivan & Cromwell
Pittsburgh, PA 15222-3779 125 Broad Street
(Name and Address of Agent for Service) New York, NY 10004
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Explanatory
This Amendment to the Registrant's Registration Statement on Form N-1A (the
"Registration Statement") has been filed by the Registrant pursuant to Section
8(b) of the Investment Company Act of 1940. However, beneficial interests in the
series of the Registrant are not being registered under the Securities Act of
1933 (the "1933 Act"), because such interests will be issued solely in private
placement transactions that do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Registrant's series
may only be made by investment companies, insurance company separate accounts,
common or commingled trust funds or similar organizations or entities that are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any beneficial interests in any series of the
Registrant.
DEUTSCHE PORTFOLIOS
TOP 50 WORLD PORTFOLIO (US DOLLAR)
TOP 50 EUROPE PORTFOLIO (US DOLLAR)
TOP 50 ASIA PORTFOLIO (US DOLLAR)
TOP 50 US PORTFOLIO (US DOLLAR)
PROVESTA PORTFOLIO (US DOLLAR)
INVESTA PORTFOLIO (US DOLLAR)
JAPANESE EQUITY PORTFOLIO (US DOLLAR)
GLOBAL BOND PORTFOLIO (US DOLLAR)
EUROPEAN BOND PORTFOLIO (US DOLLAR)
PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to paragraph 4
of Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
Deutsche Portfolios (the "Trust") is a non-diversified, open-end management
investment company which was organized as a trust under the laws of the State of
New York on June 20, 1997.
Beneficial interests in the Trust are divided into separate series, each
having distinct investment objectives and policies. The Top 50 World Portfolio
(US Dollar), Top 50 Europe Portfolio (US Dollar), Top 50 Asia Portfolio (US
Dollar) and Top 50 US Portfolio (US Dollar) (collectively, the "Top 50
Portfolios"); Provesta Portfolio (US Dollar), Investa Portfolio (US Dollar) and
Japanese Equity Portfolio (US Dollar) (and, together with the Top 50 Portfolios,
the "Equity Portfolios"); and Global Bond Portfolio (US Dollar) and European
Bond Portfolio (US Dollar) (collectively, the "Bond Portfolios") (collectively,
with the Equity Portfolios, the "Portfolios") are described herein. Beneficial
interests in the Portfolios are issued solely in private placement transactions
that do not involve any "public offering" within the meaning of Section 4(2) of
the Securities Act of 1933, as amended (the "1933 Act"). Investments in the
Portfolios may only be made by other investment companies, insurance company
separate accounts, common or commingled trust funds or similar organizations or
entities that are "accredited investors" within the meaning of Regulation D
under the 1933 Act. This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any "security" within the meaning
of the 1933 Act.
Each Portfolio is managed by Deutsche Fund Management, Inc. ("DFM" or the
"Manager"), a registered investment adviser and an indirect subsidiary of
Deutsche Bank AG, a major global financial institution.
The investment objective(s) of each Portfolio follow:
PROVESTA PORTFOLIO (US DOLLAR) ("PROVESTA PORTFOLIO")
This Portfolio seeks primarily to achieve high capital appreciation, and as a
secondary objective, reasonable dividend income. It pursues its investment
objectives by investing primarily in the equity securities of issuers located in
European countries, including those which are member states of the European
Union, those which are party to the Convention on the European Economic Area
("CEEA"), Switzerland, Slovakia, Czech Republic and Hungary.
The Provesta Portfolio seeks investment in companies which the Adviser (as
defined herein) believes may grow at a higher rate than the average of other
European companies. These anticipated higher growth rates may cause the
performance of the Portfolio to be more volatile than that of other equity
portfolios. See "Risk Factors".
Under normal circumstances, at least 65% of the Portfolio's total assets are
invested in European equity securities issued by companies with market
capitalizations of between $115 million and $19 billion.
INVESTA PORTFOLIO (US DOLLAR) ("INVESTA PORTFOLIO")
This Portfolio also seeks primarily to achieve high capital appreciation, and as
a secondary objective, reasonable dividend income. It pursues its investment
objectives by investing primarily in the equity securities of German companies.
Under normal circumstances, at least 65% of the Portfolio's total assets are
invested in equity securities issued by German issuers. In pursuing the
Portfolio's objectives, the Adviser will emphasize German companies that have
some or all of the following attributes: high market capitalization, large
number of publicly held shares, high trading volume, high liquidity, financial
stability, or a widely known name or product/service.
JAPANESE EQUITY PORTFOLIO (US DOLLAR) ("JAPANESE EQUITY PORTFOLIO")
This Portfolio seeks to achieve high capital appreciation. It pursues its
investment objective by investing primarily in the equity securities of Japanese
issuers. Under normal circumstances, at least 65% of the Portfolio's total
assets are invested in equity securities issued by Japanese companies, which may
include, for the purpose of meeting such 65% minimum, up to 5% of the total
assets in securities that grant the right to acquire Japanese securities.
TOP 50 WORLD PORTFOLIO (US DOLLAR) ("TOP 50 WORLD PORTFOLIO")
This Portfolio also seeks primarily to achieve high capital appreciation, and as
a secondary objective, reasonable dividend income. It pursues its investment
objectives by investing at least 65% of its total assets in equity securities.
In selecting securities for the Portfolio, emphasis will be placed on
international diversification. While there are no specific percentage
limitations on investments in any single country, the Portfolio generally
expects to maintain a significant investment in at least three regions around
the world-- e.g., Europe, North America, Asia, etc.
The Portfolio invests in companies with a strong market position, which are
globally competitive, have outstanding growth potential and offer above-average
opportunities to take advantage of one or more of the following global future
trends ("megatrends"):
1. Strong population growth in emerging markets
2. Aging population in industrialized nations, leading to growing demands for
the products and services of healthcare and related industries
3. Transition to an information and communications society
4. Growing demand for brand names
5. Growing oil/energy consumption worldwide
TOP 50 EUROPE PORTFOLIO (US DOLLAR) ("TOP 50 EUROPE PORTFOLIO")
This Portfolio also seeks to achieve high capital appreciation, and as a
secondary objective, reasonable dividend income. It pursues its investment
objectives by investing at least 65% of its total assets in the equity
securities of issuers located in European countries, including those which are
member states of the European Union, those which are party to the CEEA,
Switzerland, Slovakia, Czech Republic, and Hungary.
The Portfolio invests primarily in European companies with above-average
potential for capital gain. The Adviser places strong emphasis on companies that
have clear strategic goals, that concentrate on their core businesses, and whose
management gives appropriate consideration to return on investment.
TOP 50 ASIA PORTFOLIO (US DOLLAR) ("TOP 50 ASIA PORTFOLIO")
This Portfolio also seeks to achieve high capital appreciation, and as a
secondary objective, reasonable dividend income. It pursues its investment
objectives by investing at least 65% of its total assets in the equity
securities of issuers with a domicile or business focus in Asian countries,
including China, Hong Kong, India, Indonesia, Japan, South Korea, Malaysia,
Philippines, Singapore, Taiwan, Thailand. A company has its business focus in
Asia when the majority of its profits or sales are made there.
In selecting securities for the Portfolio, the Adviser will seek companies with
some or all of the following attributes: strong prospects for medium-term
growth, solid market position, with favorable financial performance and
indicators, and high quality management whose aim is toward longer-term
earnings, with a strategic view of their companies and markets.
TOP 50 US PORTFOLIO (US DOLLAR) ("TOP 50 US PORTFOLIO")
This Portfolio also seeks to achieve high capital appreciation, and as a
secondary objective, reasonable dividend income. It pursues its investment
objectives by investing at least 65% of its total assets in the equity
securities of issuers domiciled or headquartered in the United States. These
companies may also conduct a substantial part of their business outside the
United States.
The Portfolio will invest primarily in companies that dominate their markets and
maintain a leadership position through the combination of management talent,
product or service differentiation, economies of scale and financial strength.
These companies, in the opinion of the Adviser, are aggressive and tenacious
companies, generally referred to as "Bulldogs," that are leading-edge U.S.
corporations and have a "no holds barred" attitude geared toward market share
dominance.
The investment style of the Portfolio will also place great emphasis on the
market valuation of a company's earnings (i.e., P/E ratio), as well as the
predictability and durability of its earnings growth. The analysis of industry
trends will also play an important part in the portfolio management process.
Although the assets of the Portfolio are invested primarily in common stocks,
other securities with equity characteristics may be purchased, including
securities convertible into common stock, and warrants. The Portfolio may
participate in initial public offerings from time to time and may only invest in
publicly traded securities.
TOP 50 PORTFOLIOS
The number of issuers of equity securities held in each Top 50 Portfolio is
generally fifty. Each of these Portfolios generally invests only in those
companies that the portfolio managers consider to be of outstanding quality in
their particular field. In selecting the fifty issuers, the Adviser will
emphasize some or all of the following attributes:
strong market position within its respective market
profitability, predictability and duration of earnings growth, reflected
in sound balance sheet ratios and financial statements
high quality of management with an orientation toward strong, long-term
earnings
long-range strategic plans in place
generally publicly held with broad distribution of financial information
related to the company's operations
Companies selected for each Top 50 Portfolio will be monitored on a consistent
basis to detect risk in the form of possible changes in their earnings outlook
and/or financial condition. The Adviser will monitor the annual and interim
financial statements of a broad universe of companies, conduct sector and
industry analysis and maintain company contact, including company visits and
attendance at company meetings and analyst presentations. In addition, the
Adviser will assess macroeconomic and stock market conditions in the various
countries in which the companies held in each of these Portfolios are domiciled
or have their primary stock market listings.
The Adviser will consider the geographic market focus of each Top 50 Portfolio
in considering companies proposed for investment, which may cause modest
differences in style or investment approach among each of the Top 50 Portfolios.
GLOBAL BOND PORTFOLIO (US DOLLAR) ("GLOBAL BOND PORTFOLIO")
This Portfolio seeks to achieve steady, high income. It pursues its investment
objective by investing primarily in the fixed income securities (including
convertible bonds and bonds with warrants) of issuers worldwide.
Under normal circumstances, at least 65% of the Portfolio's total assets are
invested in bonds and the Portfolio will include securities of issuers organized
in at least three different countries.
EUROPEAN BOND PORTFOLIO (US DOLLAR) ("EUROPEAN BOND PORTFOLIO")
This Portfolio also seeks to achieve steady, high income. It pursues its
investment objective by investing primarily in the fixed income securities of
European issuers. Under normal circumstances, at least 65% of the Portfolio's
total assets are invested in fixed income securities and the Portfolio will
include securities issued by European issuers.
Each of the Global Bond Portfolio's and the European Bond Portfolio's investment
in equity securities will not exceed 25% of its net assets. For purposes of the
foregoing investment policies, the term "bonds" includes all fixed income
securities.
Because each Portfolio is classified as "non-diversified" under the 1940 Act,
the performance of each Portfolio may be subject to greater fluctuation than
that of a diversified investment company. See "Fundamental Investment
Restrictions" below.
The investment objective of each Portfolio is a fundamental policy and may be
changed only with the approval of the holders of a "majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Portfolio. However, the
investment policies as described below are not fundamental policies and may be
changed without such approval.
Additional information about the investment policies of each Portfolio
appears in Part B. There can be no assurance that the investment objective(s)
any of the Portfolios will be achieved. The Registrant incorporates by reference
information concerning the Portfolios' investment objectives and policies and
risk factors associated with investments in the Portfolios from the sections
entitled "Investment Objective, Policies and Restrictions," "Risk Factors,"
"Appendix A," and "Appendix B" in the Top 50 World Fund's, Top 50 Europe Fund's,
Top 50 Asia Fund's, Top 50 US Fund's, European Mid-Cap Fund's, German Equity
Fund's, Japanese Equity Fund's, Global Bond Fund's, and European Bond Fund's
(the "Feeder Funds") prospectuses contained in the registration statement on
Form N-1A (File No. 333-07008), as amended, of Deutsche Funds, Inc. (the "Feeder
Funds' Prospectuses").
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ITEM 5. MANAGEMENT OF THE TRUST.
Deutsche Fund Management, Inc. is the investment manager of the Portfolios.
DFM has retained the services of DWS International Portfolio Management GmbH
("DWS Adviser") as the investment adviser of each Portfolio, except the Top 50
US Portfolio. DFM has retained the services of Deutsche Morgan Grenfell
Investment Management Inc. (DMGIM) as investment adviser of the Top 50 US
Portfolio ("DMGIM Adviser") as the investment adviser of Top 50 US Portfolio
(collectively with the DWS Adviser, the "Advisers" and severally as the context
may require, the "Adviser"). DFM and the Advisers are indirect subsidiaries of
Deutsche Bank AG. Federated Services Company is the operations agent of the
Portfolios (the "Operations Agent"). IBT Fund Services (Canada) Inc. is the fund
accounting agent of the Portfolios. IBT Trust Company (Cayman) Ltd. is the
administrative agent of the Portfolios. Investors Bank & Trust Company is the
custodian of the Portfolios ("Custodian"). The Board of Trustees of the Trust
provide broad supervision over the affairs of the Portfolios. A majority of the
Trust's Trustees are not affiliated with the Manager or the Advisers. For
further information about the Trustees of the Trust, see Item 14 in Part B.
Registrant incorporates by reference information concerning the management of
the Portfolios from the section entitled "Management of the Corporation and the
Portfolio Trust" in the Feeder Funds' Prospectuses.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Trust is organized under the laws of the State of New York. Under the
Declaration of Trust, the Trustees are authorized to issue beneficial interests
in separate series of the Trust. Each investor is entitled to a vote in
proportion to the amount of its investment in each Portfolio. The Trust's
Declaration of Trust provides that each investor in a Portfolio (e.g., other
investment companies, insurance company separate accounts and common and
commingled trust funds) are each liable for all obligations of the Portfolio.
However, the risk of an investor in the Portfolios incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.
The Trust reserves the right to create and issue a number of series, in which
case investments in each series would participate equally in earnings and assets
of the particular series. Currently the Trust has ten series.
Investments in the Portfolios have no pre-emptive or conversion rights and are
fully paid and non-assessable, except as set forth below. The Trust is not
required and has no current intention to hold annual meetings of investors, but
the Trust will hold special meetings of investors when in the judgment of the
Trustees it is necessary or desirable to submit matters for an investor vote.
Changes in fundamental policies will be submitted to investors for approval.
Investors have under certain circumstances (e.g., upon application and
submission of certain specified documents to the Trustees by a specified
percentage of the aggregate value of the Trust's outstanding interests) the
right to communicate with other investors in connection with requesting a
meeting of investors for the purpose of removing one or more Trustees. Investors
also have the right to remove one or more Trustees without a meeting by a
declaration in writing by a specified number of investors. Upon liquidation of a
Portfolio its investors would be entitled to share pro rata in the net assets of
the Portfolio available for distribution to investors.
The net asset value of each Portfolio is determined each day on which the New
York Stock Exchange Inc. ("NYSE") is open for trading ("Portfolio Business
Day"). This determination is made as of the close of regular trading on the NYSE
which is currently 4:00 p.m., New York time, or in the event that the NYSE
closes early, at the time of such early closing (the "Valuation Time").
Each investor in the Portfolios may add to or reduce its investment in the
Portfolio on each day the New York Stock Exchange is open for regular trading.
At 4:00 p.m., New York time on each such business day, the value of each
investor's beneficial interest in a Portfolio is determined by multiplying the
net asset value of the Portfolio by the percentage, effective for that day,
which represents that investor's share of the aggregate beneficial interests in
the Portfolio. Any additions or withdrawals, which are to be effected on that
day, are then effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio is then recomputed as the percentage equal to the
fraction (i) the numerator of which is the value of such investor's investment
in the Portfolio as of 4:00 p.m., New York time on such day plus or minus, as
the case may be, the amount of any additions to or withdrawals from the
investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
4:00 p.m., New York time, on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate investments in
the Portfolio by all investors in the Portfolio. The percentage so determined is
then applied to determine the value of the investor's interest in the Portfolio
as of 4:00 p.m., New York time on the following business day of the Portfolio.
The end of each Portfolio's fiscal year is August 31.
Under the anticipated method of operation of the Portfolios, the Portfolios will
not be subject to any income tax. However, each investor in the Portfolios will
be taxable on its share (as determined in accordance with the governing
instruments of each Portfolio) of a Portfolio's ordinary income and capital gain
in determining its income tax liability. The determination of such share will be
made in accordance with the Internal Revenue Code of 1986, as amended (the
"Code"), and regulations promulgated thereunder.
It is intended that each Portfolio's assets, income and distributions will be
managed in such a way that an investor in a Portfolio will be able to satisfy
the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in a Portfolio.
Investor inquiries may be directed to: 416-216-4293
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolios are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in the Portfolios may only be made by
other investment companies, insurance company separate accounts, common or
commingled trust funds, or similar organizations or entities which are
"accredited investors" as defined in Rule 501 under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
An investment in the Portfolios may be made without a sales load. All
investments are made at net asset value next determined after an order is
received in "good order" by a Portfolio. The net asset value of a Portfolio is
determined each Portfolio Business Day.
There is no minimum initial or subsequent investment in a Portfolios. However,
because each Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the yield on its assets, investments
must be made in federal funds (i.e., monies credited to the account of the
Custodian by a Federal Reserve Bank).
Each Portfolio reserves the right to cease accepting investments at any time or
to reject any investment order.
Registrant incorporates by reference information concerning the brokerage of
the Portfolios from the section entitled "Management of the Corporation and the
Portfolio Trust -- Portfolio Brokerage" in the Feeder Funds' Prospectuses.
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ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Portfolios may reduce all or any portion of its investment at
the net asset value next determined after a request in "good order" is furnished
by the investor to the Portfolio. The proceeds of a reduction will be paid by
the Portfolios in federal funds normally on the next Portfolio Business Day
after the reduction is effected, but in any event within seven days. Investments
in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any reduction may
be suspended or the payment of the proceeds therefrom postponed during any
period in which the New York Stock Exchange is closed (other than weekends or
holidays) or trading on the New York Stock Exchange is restricted or, to the
extent otherwise permitted by the 1940 Act if an emergency exists.
The Portfolio reserves the right under certain circumstances, such as
accommodating requests for substantial withdrawals or liquidations, to pay
distributions in kind to investors (i.e., to distribute portfolio securities as
opposed to cash). If securities are distributed, an investor could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Portfolio.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
DEUTSCHE PORTFOLIOS
TOP 50 WORLD PORTFOLIO (US DOLLAR)
TOP 50 EUROPE PORTFOLIO (US DOLLAR)
TOP 50 ASIA PORTFOLIO (US DOLLAR)
TOP 50 US PORTFOLIO (US DOLLAR)
PROVESTA PORTFOLIO (US DOLLAR)
INVESTA PORTFOLIO (US DOLLAR)
JAPANESE EQUITY PORTFOLIO (US DOLLAR)
GLOBAL BOND PORTFOLIO (US DOLLAR)
EUROPEAN BOND PORTFOLIO (US DOLLAR)
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS.
General Information and History......................1
Investment Objective and Policies....................1
Management of the Trust..............................2
Control Persons and Principal Holders of Securities..2
Investment Advisory and Other Services...............2
Brokerage Allocation and Other Practices.............3
Capital Stock and Other Securities...................3
Purchase, Redemption and Pricing of Securities Being Offered 4
Tax Status...........................................4
Underwriters.........................................5
Calculations of Performance Data.....................5
Financial Statements.............................5
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES.
Part A contains additional information about the investment objectives and
policies of the Top 50 World Portfolio (US Dollar) ("Top 50 World Portfolio"),
Top 50 Europe Portfolio (US Dollar) ("Top 50 Europe Portfolio"), Top 50 Asia
Portfolio (US Dollar) ("Top 50 Asia Portfolio"), Top 50 US Portfolio (US Dollar)
("Top 50 US Portfolio"), Provesta Portfolio (US Dollar)("Provesta Portfolio"),
Investa Portfolio (US Dollar)("Investa Portfolio"), Japanese Equity Portfolio
(US Dollar)("Japanese Equity Portfolio"), Global Bond Portfolio (US
Dollar)("Global Bond Portfolio") and European Bond Portfolio (US
Dollar)("European Bond Portfolio") (collectively, the "Portfolios"). This Part B
should only be read in conjunction with Part A. This section contains
supplemental information concerning the types of securities and other
instruments in which each Portfolio may invest, the investment policies and
portfolio strategies that each Portfolio may utilize and certain risks attendant
to those investments, policies and strategies.
Registrant incorporates by reference information concerning the investment
policies and limitations of the Portfolios from the sections entitled
"Investment Objective and Policies," "The German Securities Markets," "Japanese
Equity Securities Markets," "Investment Restrictions," and "Appendix B" in the
Statement of Additional Information for Top 50 World Fund, Top 50 Europe Fund,
Top 50 Asia Fund, Top 50 US Fund, European Mid-Cap Fund, German Equity Fund,
Japanese Equity Fund, Global Bond Fund, and European Bond Fund (collectively,
the "Feeder Funds") contained in the registration statement on Form N-1A (File
No. 333-07008), as amended, of Deutsche Funds, Inc. (the "Feeder Funds' SAI").
ITEM 14. MANAGEMENT OF THE TRUST.
Registrant incorporates by reference information concerning the management of
the Portfolios from the section entitled "Directors, Trustees, and Officers" in
the Feeder Funds' SAI.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of March 31, 1998, the following funds owned approximately 100% of the
outstanding beneficial interests in each of the Portfolios:
Owner of Beneficial Interest Portfolio
------------------------------------- ------------
Deutsche European Mid-Cap Fund Provesta Portfolio
Deutsche German Equity Fund Investa Portfolio
Deutsche Japanese Equity Fund Japanese Equity Portfolio
Deutsche Global Bond Fund Global Bond Portfolio
Deutsche European Bond Fund European Bond Portfolio
Deutsche Top 50 World Top 50 World Portfolio
Deutsche Top 50 Europe Top 50 Europe Portfolio
Deutsche Top 50 Asia Top 50 Asia Portfolio
Deutsche Top 50 US Top 50 US Portfolio
So long as each Feeder Fund controls its corresponding Portfolio, the Feeder
Fund may take actions without the approval of any other holder of beneficial
interest in the Portfolio.
Each Feeder Fund has informed its corresponding Portfolio that whenever Deutsche
Funds, Inc. is requested to vote on matters pertaining to the Portfolio (other
than a vote by the Portfolio to continue the operation of the Portfolio upon the
withdrawal of another investor in the Portfolio), it will hold a meeting of its
investors and will cast its vote as instructed by those investors.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
Registrant incorporates by reference information concerning the investment
advisory and other services provided for or on behalf of the Portfolios from the
sections entitled "Manager," "Adviser," "Operations Agent," "Administrative
Agent," "Transfer Agent, Custodian and Fund Accountant," and "Independent
Accountants" in the Feeder Funds' SAI, and the section entitled "Expenses" in
the Feeder Funds' Prospectuses.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Registrant incorporates by reference information concerning the brokerage
allocation and other practices of the Portfolios from the section entitled
"Portfolio Transactions" in the Feeder Funds' SAI.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue beneficial
interests in separate series, such as the Portfolios. No series of the Trust has
any preference over any other series. Investors in the Portfolios are entitled
to participate pro rata in distributions of taxable income, loss, gain and
credit of the Portfolio. Upon liquidation or dissolution of the Portfolios,
investors are entitled to share pro rata in the net assets of the Portfolios
available for distribution to investors. Investments in the Portfolios have no
preference, preemptive, conversion or similar rights and are fully paid and
nonassessable, except as set forth below. Investments in the Portfolios may not
be transferred. Certificates representing an investor's beneficial interest in
the Portfolio are issued only upon the written request of an investor.
Each investor in the Portfolios is entitled to a vote in proportion to the
amount of its investment. The Portfolios and other series of the Trust will all
vote together in certain circumstances (e.g., election of the Trust's Trustees
and auditors, as required by the 1940 Act and the rules thereunder). One or more
series of the Trust could control the outcome of these votes. Investors do not
have cumulative voting rights, and investors holding more than 50% of the
aggregate beneficial interests in the Trust, or in a series as the case may be,
may control the outcome of votes and in such event the other investors in the
Portfolios, or in the series, would not be able to elect any Trustee. The Trust
is not required and has no current intention to hold annual meetings of
investors but the Portfolios will hold special meetings of investors when in the
judgment of the Trust's Trustees it is necessary or desirable to submit matters
for an investor vote. No material amendment may be made to the Trust's
Declaration of Trust without the affirmative majority vote of investors (with
the vote of each being in proportion to the amount of its investment).
The Trust, with respect to each Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved by
the vote of two thirds of the Portfolios' investors (with the vote of each being
in proportion to its percentage of the beneficial interests in a Portfolio),
except that if the Trustees of the Trust recommend such sale of assets, the
approval by vote of a majority of the investors (with the vote of each being in
proportion to its percentage of the beneficial interests of each Portfolio) will
be sufficient. A Portfolio may also be terminated (i) upon liquidation and
distribution of its assets if approved by the vote of two thirds of its
investors (with the vote of each being in proportion to the amount of its
investment) or (ii) by the Trustees of the Trust by written notice to its
investors.
The Trust is organized as a trust under the laws of the State of New York.
Investors in the Portfolios or any other series of the Trust will be held
personally liable for its obligations and liabilities, subject, however, to
indemnification by the Trust in the event that there is imposed upon an investor
a greater portion of the liabilities and obligations of the Portfolio than its
proportionate beneficial interest. The Declaration of Trust also provides that
the Trust shall maintain appropriate insurance (for example, fidelity bonding
and errors and omissions insurance) for the protection of the Trust, its
investors, Trustees, officers, employees and agents covering possible tort and
other liabilities. Thus, the risk of an investor incurring financial loss on
account of investor liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations with respect to any series thereof.
The Declaration of Trust further provides that obligations of the Portfolios or
any other series of the Trust are not binding upon the Trustees individually but
only upon the property of the Portfolios or other series of the Trust, as the
case may be, and that the Trustees will not be liable for any action or failure
to act, but nothing in the Declaration of Trust protects a Trustee against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
The Trust reserves the right to create and issue a number of series, in which
case investments in each series would participate equally in the earnings and
assets of the particular series. Investors in each series would be entitled to
vote separately to approve advisory agreements or changes in investment policy,
but investors of all series may vote together in the election or selection of
Trustees, principal underwriters and accountants. Upon liquidation or
dissolution of any series of the Trust, the investors in that series would be
entitled to share pro rata in the net assets of that series available for
distribution to investors. ITEM 19. PURCHASE, REDEMPTION AND PRICING OF
SECURITIES BEING OFFERED.
Beneficial interests in each Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act.
Each Portfolio determines its net asset value once daily on Monday through
Friday as described under "Capital Stock and Other Securities" in Part A.
Registrant incorporates by reference information concerning the method followed
by each Portfolio in determining its net asset value and the timing of such
determinations from the section entitled "Net Asset Value" in the Feeder Funds'
SAI.
ITEM 20. TAX STATUS.
The Trust is organized as a New York trust. Under the anticipated method of
operation of the Trust, the Portfolios will not subject to any income tax.
However, each investor in the Portfolios will be taxable on its share (as
determined in accordance with the governing instruments of the Trust) of a
Portfolio's ordinary income and capital gain in determining its income tax
liability. The determination of such share will be made in accordance with the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
The Trust's taxable year-end is December 31. Although, as describe above, each
Portfolio will not be subject to federal income tax, the Trust will file
appropriate income tax returns with respect to each Portfolio.
It is intended that the assets, income and distributions of the Portfolios will
be managed in such a way that an investor in each Portfolio will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in that Portfolio.
Gains or losses attributable to disposition of foreign currency or to foreign
currency contracts, or to fluctuations in exchange rates between the time a
Portfolio accrues income or receivables or expenses or other liabilities
denominated in a foreign currency and the time a Portfolio actually collects
such income or pays such liabilities, are generally treated as ordinary income
or ordinary loss. Similarly, gains or losses on the disposition of debt
securities held by a Portfolio, if any, denominated in foreign currency, to the
extent attributable to fluctuations in exchange rates between the acquisition
and disposition dates are also treated as ordinary income or loss. These gains
and losses increase or decrease the amount of a Portfolio's net investment
income available for distribution rather than its net capital gains.
Forward currency contracts, options and futures contracts entered into by a
Portfolio may create "straddles" for U.S. federal income tax purposes and this
may affect the character and timing of gains or losses realized by a Portfolio
on forward currency contracts, options and futures contracts or on the
underlying securities. "Straddles" may also result in the loss of the holding
period of underlying securities for purposes of determining compliance with
certain requirements of Subchapter M of the Code, and therefore, a Portfolio's
ability to enter into forward currency contracts, options and futures contracts
may be limited.
<PAGE>
FOREIGN TAXES. The Portfolios may be subject to foreign withholding and other
taxes with respect to income received from sources within certain foreign
countries.
A Portfolio's gains and losses from the sale of securities will generally be
treated as derived from U.S. sources, however, and certain foreign currency
gains and losses likewise will be treated as derived from U.S. sources. The
limitation on the foreign tax credit is applied separately to foreign source
"passive income," such as the portion of dividends received from a Portfolio
that qualifies as foreign source income. In addition, the foreign tax credit is
allowed to offset only 90% of the alternative minimum tax imposed on
corporations and individuals.
FOREIGN INVESTORS. Allocations of U.S. source dividend income to an investor
who, as to the United States, is a foreign trust or estate, foreign corporation
or foreign partnership (a "foreign investor") will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) unless the dividends
are effectively connected with a U.S. trade or business of the investor, in
which case the dividends will be subject to tax on a net income basis at the
graduated rates applicable to U.S. individuals or domestic corporations.
Allocations of Portfolio interest or short term or net long term capital gains
to foreign investors will not be subject to U.S. tax unless the allocations are
effectively connected with the investor's trade or business in the United States
or, in the case of an investor who is a non-resident alien individual, the
investor was present in the United States for more than 182 days during the
taxable year and certain other conditions are met.
The foregoing discussion is based on U.S. federal tax laws in effect on the date
hereof. These laws are subject to change by legislative or administrative
action, possibly with retroactive effect.
ITEM 21. UNDERWRITERS.
The exclusive placement agent for the Trust is Edgewood Services, Inc. which
receives no additional compensation for serving in this capacity. Investment
companies, insurance company separate accounts, common and commingled trust
funds and similar organizations and entities may continuously invest in each
Portfolio.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
Registrant incorporates by reference the financial statements of the
Portfolios from the sections entitled "Deutsche Portfolios Statement of Assets &
Liabilities," "Deutsche Portfolios Notes to Financial Statement," and "Report of
Independent Accountants" in the Feeder Funds' SAI.
DEUTSCHE PORTFOLIOS
US MONEY MARKET PORTFOLIO (US DOLLAR)
PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to paragraph 4
of Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
Deutsche Portfolios (the "Trust") is a non-diversified, open-end management
investment company which was organized as a trust under the laws of the State of
New York on June 20, 1997.
Beneficial interests in the Trust are divided into separate series, each having
distinct investment objectives and policies. US Money Market Portfolio (US
Dollar)(the "Portfolio") is described herein. Beneficial interests in the
Portfolio are issued solely in private placement transactions that do not
involve any "public offering" within the meaning of Section 4(2) of the
Securities Act of 1933, as amended (the "1933 Act"). Investments in the
Portfolio may only be made by other investment companies, insurance company
separate accounts, common or commingled trust funds or similar organizations or
entities that are "accredited investors" within the meaning of Regulation D
under the 1933 Act. This Registration Statement does not constitute an offer to
sell, or the solicitation of an offer to buy, any "security" within the meaning
of the 1933 Act.
The Portfolio is managed by Deutsche Fund Management, Inc. ("DFM" or the
"Manager"), a registered investment adviser and an indirect subsidiary of
Deutsche Bank AG, a major global financial institution.
The investment objective of the Portfolio is to achieve as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. The policies employed by the Portfolio in its efforts
to achieve this objective are described below.
Additional information about the investment policies of the Portfolio appears in
Part B under "Investment Objectives and Policies." There can be no assurance
that the investment objective of the Portfolio will be achieved. The Registrant
incorporates by reference information concerning the Portfolio's investment
objectives, policies and restrictions associated with investments in the
Portfolio from the section entitled "Investment Objective, Policies and
Restrictions," in the US Money Market Fund's and the Institutional US Money
Market Fund's (the "Feeder Funds") prospectuses (the "Feeder Funds'
Prospectuses") contained in the registration statement on Form N-1A (File No.
333-07008), as amended, of Deutsche Funds, Inc.
ITEM 5. MANAGEMENT OF THE TRUST.
Deutsche Fund Management, Inc. is the investment manager of the Portfolio. DFM
has retained the services of Deutsche Morgan Grenfell Investment Management Inc.
(DMGIM) as investment adviser of the Portfolio (the "Adviser"). DFM and the
Adviser are indirect subsidiaries of Deutsche Bank AG. Federated Services
Company is the operations agent of the Portfolio (the "Operations Agent"). IBT
Fund Services (Canada) Inc. ("IBT (Canada)") is the fund accounting agent of the
Portfolio ("Fund Accounting Agent"). IBT Trust Company (Cayman) Ltd. ("IBT
(Cayman)") is the administrative agent of the Portfolio ("Administrative
Agent"). Investors Bank & Trust Company ("IBT") is the custodian of the
Portfolio ("Custodian"). The Board of Trustees of the Trust provide broad
supervision over the affairs of the Portfolio. A majority of the Trust's
Trustees are not affiliated with the Manager or the Adviser. For further
information about the Trustees of the Trust, see Item 14 in Part B.
Registrant incorporates by reference information concerning the management of
the Portfolio from the section entitled "Management of the Corporation and the
Portfolio Trust" in the Feeder Funds' Prospectuses.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Trust is organized under the laws of the State of New York. Under the
Declaration of Trust, the Trustees are authorized to issue beneficial interests
in separate series of the Trust. Each investor is entitled to a vote in
proportion to the amount of its investment in the Portfolio. The Trust's
Declaration of Trust provides that each investor in the Portfolio (e.g., other
investment companies, insurance company separate accounts and common and
commingled trust funds) are each liable for all obligations of the Portfolio.
However, the risk of an investor in the Portfolio incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.
The Trust reserves the right to create and issue a number of series, in which
case investments in each series would participate equally in earnings and assets
of the particular series. Currently the Trust has ten series.
Investments in the Portfolio have no pre-emptive or conversion rights and are
fully paid and non-assessable, except as set forth below. The Trust is not
required and has no current intention to hold annual meetings of investors, but
the Trust will hold special meetings of investors when in the judgment of the
Trustees it is necessary or desirable to submit matters for an investor vote.
Changes in fundamental policies will be submitted to investors for approval.
Investors have under certain circumstances (e.g., upon application and
submission of certain specified documents to the Trustees by a specified
percentage of the aggregate value of the Trust's outstanding interests) the
right to communicate with other investors in connection with requesting a
meeting of investors for the purpose of removing one or more Trustees. Investors
also have the right to remove one or more Trustees without a meeting by a
declaration in writing by a specified number of investors. Upon liquidation of
the Portfolio investors in the Portfolio would be entitled to share pro rata in
the net assets of the Portfolio available for distribution to investors.
The net asset value of the Portfolio is determined once daily at 3:00 p.m.
(Eastern time) on Monday through Friday, except on the holidays listed under
"Net Asset Value" in Part B. The Portfolio's assets are valued by using the
amortized cost method of valuation. This method involves valuing a security at
its cost at the time of purchase and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. The market value of the
securities held by the Portfolio fluctuates on the basis of the creditworthiness
of the issuers of such securities and on the levels of interest rates generally.
While the amortized cost method provides certainty in valuation, it may result
in periods when the value so determined is higher or lower than the price the
Portfolio would receive if the security were sold. (See "Net Asset Value" in
Part B.)
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each day the New York Stock Exchange is open for regular trading
and the Federal Reserve Bank is open for business. At 4:00 p.m. (Eastern time)
on each such business day, the value of each investor's beneficial interest in
the Portfolio is determined by multiplying the net asset value of the Portfolio
by the percentage, effective for that day that represents that investor's share
of the aggregate beneficial interests in the Portfolio. Any additions or
withdrawals, which are to be effected on that day, are then effected. The
investor's percentage of the aggregate beneficial interests in the Portfolio is
then recomputed as the percentage equal to the fraction (i) the numerator of
which is the value of such investor's investment in the Portfolio as of 4:00
p.m. (Eastern time) on such day plus or minus, as the case may be, the amount of
any additions to or withdrawals from the investor's investment in the Portfolio
effected on such day, and (ii) the denominator of which is the aggregate net
asset value of the Portfolio as of 4:00 p.m. (Eastern time) on such day plus or
minus, as the case may be, the amount of the net additions to or withdrawals
from the aggregate investments in the Portfolio by all investors in the
Portfolio. The percentage so determined is then applied to determine the value
of the investor's interest in the Portfolio as of 4:00 p.m. (Eastern time) on
the following business day of the Portfolio.
The end of the Portfolio's fiscal year is August 31.
Under the anticipated method of operation of the Portfolio, the Portfolio will
not be subject to any income tax. However, each investor in the Portfolio will
be taxable on its share (as determined in accordance with the governing
instruments of the Portfolio) of the Portfolio's ordinary income and capital
gain in determining its income tax liability. The determination of such share
will be made in accordance with the Internal Revenue Code of 1986, as amended
(the "Code"), and regulations promulgated thereunder.
It is intended that the Portfolio's assets, income and distributions will be
managed in such a way that an investor in the Portfolio will be able to satisfy
the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in the Portfolio.
Investor inquiries may be directed to: 416-216-4293.
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in the Portfolio may only be made by
other investment companies, insurance company separate accounts, common or
commingled trust funds, or similar organizations or entities which are
"accredited investors" as defined in Rule 501 under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
An investment in the Portfolio may be made without a sales load. All investments
are made at net asset value next determined after an order is received in "good
order" by the Portfolio. The net asset value of the Portfolio is determined once
daily at 3:00 p.m. (Eastern time) on Monday through Friday, except on the
holidays listed under "Net Asset Value" in Part B.
There is no minimum initial or subsequent investment in the Portfolio. However,
because the Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the yield on its assets, investments
must be made in federal funds (i.e., monies credited to the account of the
Custodian by a Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any time or
to reject any investment order.
Registrant incorporates by reference information concerning the brokerage of
the Portfolios from the section entitled "Management of the Corporation and the
Portfolio Trust -- Portfolio Transactions" in the Feeder Funds' Prospectuses.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Portfolio may reduce all or any portion of its investment at
the net asset value next determined after a request in "good order" is furnished
by the investor to the Portfolio. The proceeds of a reduction will be paid by
the Portfolio in federal funds normally on the next Portfolio business day after
the reduction is effected, but in any event within seven days. Investments in
the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any reduction may
be suspended or the payment of the proceeds therefrom postponed during any
period in which the New York Stock Exchange is closed (other than weekends or
holidays) or trading on the New York Stock Exchange is restricted or, to the
extent otherwise permitted by the 1940 Act if an emergency exists.
The Portfolio reserves the right under certain circumstances, such as
accommodating requests for substantial withdrawals or liquidations, to pay
distributions in kind to investors (i.e., to distribute portfolio securities as
opposed to cash). If securities are distributed, an investor could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, distribution in kind may result in a less diversified portfolio of
investments or adversely affect the liquidity of the Portfolio.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
DEUTSCHE PORTFOLIOS
US MONEY MARKET PORTFOLIO (US DOLLAR)
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS.
General Information and History .....................1
Investment Objective and Policies ...................1
Management of the Trust .............................1
Control Persons and Principal Holders of Securities .2
Investment Advisory and Other Services .............2
Brokerage Allocation and Other Practices ...........2
Capital Stock and Other Securities .................2
Purchase, Redemption and Pricing of Securities Being Offered 3
Tax Status .........................................4
Underwriters .......................................4
Calculations of Performance Data ...................4
Financial Statements ...........................4
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES.
Part A contains additional information about the investment objective and
policies of the US Money Market Portfolio (US Dollar)(the "Portfolio"). This
Part B should only be read in conjunction with Part A. This section contains
supplemental information concerning the types of securities and other
instruments in which the Portfolio may invest, the investment policies and
portfolio strategies that the Portfolio may utilize and certain risks attendant
to those investments, policies and strategies.
Registrant incorporates by reference information concerning the investment
policies and limitations of the Portfolio from the section entitled "Investment
Objective and Policies," "Investment Restrictions" and "Appendix B" in the
Statement of Additional Information for US Money Market Fund and Institutional
US Money Market Fund (collectively, the "Feeder Funds") contained in the
registration statement on Form N-1A (File No. 333-07008), as amended, of
Deutsche Funds, Inc. (the "Feeder Funds' SAI").
ITEM 14. MANAGEMENT OF THE TRUST.
Registrant incorporates by reference information concerning the management of
the Portfolio from the section entitled "Directors, Trustees, and Officers" in
the Feeder Funds' SAI.
<PAGE>
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of March 20, 1998, the Deutsche US Money Market Fund and the Deutsche
Institutional US Money Market Fund (the "Funds") each owned approximately 50% of
the outstanding beneficial interests in the Portfolio. So long as a Fund
controls the Portfolio, the Fund may take actions without the approval of any
other holder of beneficial interest in the Portfolio.
Each Fund has informed the Portfolio that whenever it is requested to vote on
matters pertaining to the Portfolio (other than a vote by the Portfolio to
continue the operation of the Portfolio upon the withdrawal of another investor
in the Portfolio), it will hold a meeting of its investors and will cast its
vote as instructed by those investors.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
Registrant incorporates by reference information concerning the investment
advisory and other services provided for or on behalf of the Portfolios from the
sections entitled "Manager," "Adviser," "Operations Agent," "Administrative
Agent," "Transfer Agent, Custodian and Fund Accountant" and "Independent
Accountants" in the Feeder Funds' SAI, and the section entitled "Management of
the Corporation and the Portfolio Trust -- Expenses" in the Feeder Funds'
Prospectus.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Registrant incorporates by reference information concerning the brokerage
allocation and other practices of the Portfolio from the section entitled
"Portfolio Transactions" in the Feeder Funds' SAI.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue beneficial
interests in separate series, such as the Portfolio. No series of the Trust has
any preference over any other series. Investors in the Portfolio are entitled to
participate pro rata in distributions of taxable income, loss, gain and credit
of the Portfolio. Upon liquidation or dissolution of the Portfolio, investors
are entitled to share pro rata in the net assets of the Portfolio available for
distribution to investors. Investments in the Portfolio have no preference,
preemptive, conversion or similar rights and are fully paid and nonassessable,
except as set forth below. Investments in the Portfolio may not be transferred.
Certificates representing an investor's beneficial interest in the Portfolio are
issued only upon the written request of an investor.
Each investor in the Portfolio is entitled to a vote in proportion to the amount
of its investment. The Portfolio and other series of the Trust will all vote
together in certain circumstances (e.g., election of the Trust's Trustees and
auditors, as required by the 1940 Act and the rules thereunder). One or more
series of the Trust could control the outcome of these votes. Investors do not
have cumulative voting rights, and investors holding more than 50% of the
aggregate beneficial interests in the Trust, or in a series as the case may be,
may control the outcome of votes and in such event the other investors in the
Portfolio, or in the series, would not be able to elect any Trustee. The Trust
is not required and has no current intention to hold annual meetings of
investors but the Portfolio will hold special meetings of investors when in the
judgment of the Trust's Trustees it is necessary or desirable to submit matters
for an investor vote. No material amendment may be made to the Trust's
Declaration of Trust without the affirmative majority vote of investors (with
the vote of each being in proportion to the amount of its investment).
<PAGE>
The Trust, with respect to the Portfolio, may enter into a merger or
consolidation, or sell all or substantially all of its assets, if approved by
the vote of two thirds of the Portfolio's investors (with the vote of each being
in proportion to its percentage of the beneficial interests in a Portfolio),
except that if the Trustees of the Trust recommend such sale of assets, the
approval by vote of a majority of the investors (with the vote of each being in
proportion to its percentage of the beneficial interests of the Portfolio) will
be sufficient. A Portfolio may also be terminated (i) upon liquidation and
distribution of its assets if approved by the vote of two thirds of its
investors (with the vote of each being in proportion to the amount of its
investment) or (ii) by the Trustees of the Trust by written notice to its
investors.
The Trust is organized as a trust under the laws of the State of New York.
Investors in the Portfolio or any other series of the Trust will be held
personally liable for its obligations and liabilities, subject, however, to
indemnification by the Trust in the event that there is imposed upon an investor
a greater portion of the liabilities and obligations of the Portfolio than its
proportionate beneficial interest. The Declaration of Trust also provides that
the Trust shall maintain appropriate insurance (for example, fidelity bonding
and errors and omissions insurance) for the protection of the Trust, its
investors, Trustees, officers, employees and agents covering possible tort and
other liabilities. Thus, the risk of an investor incurring financial loss on
account of investor liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations with respect to any series thereof.
The Declaration of Trust further provides that obligations of the Portfolio or
any other series of the Trust are not binding upon the Trustees individually but
only upon the property of the Portfolio or other series of the Trust, as the
case may be, and that the Trustees will not be liable for any action or failure
to act, but nothing in the Declaration of Trust protects a Trustee against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
The Trust reserves the right to create and issue a number of series, in which
case investments in each series would participate equally in the earnings and
assets of the particular series. Investors in each series would be entitled to
vote separately to approve advisory agreements or changes in investment policy,
but investors of all series may vote together in the election or selection of
Trustees, principal underwriters and accountants. Upon liquidation or
dissolution of any series of the Trust, the investors in that series would be
entitled to share pro rata in the net assets of that series available for
distribution to investors.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act.
The Portfolio determines its net asset value once daily on Monday through
Friday as described under "Capital Stock and Other Securities" in Part A. The
net asset value will not be computed on the day the following legal holidays are
observed: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's Day,
Thanksgiving Day, and Christmas Day. On days when U.S. trading markets close
early in observance of these holidays, the Portfolio would expect to close for
purchases and redemptions at the same time. The days on which net asset value is
determined are the Portfolio's business days.
<PAGE>
ITEM 20. TAX STATUS.
The Trust is organized as a New York trust. Under the anticipated method of
operation of the Trust, the Portfolio will not subject to any income tax.
However, each investor in the Portfolio will be taxable on its share (as
determined in accordance with the governing instruments of the Trust) of a
Portfolio's ordinary income and capital gain in determining its income tax
liability. The determination of such share will be made in accordance with the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations
promulgated thereunder.
The Trust's taxable year-end is December 31. Although, as describe above, the
Portfolio will not be subject to federal income tax, the Trust will file
appropriate income tax returns with respect to the Portfolio.
It is intended that the assets, income and distributions of the Portfolio will
be managed in such a way that an investor in the Portfolio will be able to
satisfy the requirements of Subchapter M of the Code, assuming that the investor
invested all of its assets in that Portfolio.
The foregoing discussion is based on U.S. federal tax laws in effect on the date
hereof. These laws are subject to change by legislative or administrative
action, possibly with retroactive effect.
ITEM 21. UNDERWRITERS.
The exclusive placement agent for the Trust is Edgewood Services, Inc. which
receives no additional compensation for serving in this capacity. Investment
companies, insurance company separate accounts, common and commingled trust
funds and similar organizations and entities may continuously invest in the
Portfolio.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
Registrant incorporates by reference the financial statements of the
Portfolio from the sections entitled "Deutsche Portfolios Statement of Assets &
Liabilities," "Deutsche Portfolios Notes to Financial Statement," and "Report of
Independent Accountants" in the Feeder Funds' SAI.
PART C. OTHER INFORMATION
Responses to Items 24(b)(6), 24(b)(10), 24(b)(11), and 24(b)(12) have been
omitted pursuant to paragraph 4 of Instruction F of the General Instructions to
Form N-1A.
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
......(a) FINANCIAL STATEMENTS:
...... Incorporated herein by reference to the Semi-Annual Reports
and Supplements to Prospectuses, dated April 30, 1998,
pursuant to Rule 411 under the Securities Act of 1933
...... (File Nos. 333-7008 and 811-8227)
......(b) EXHIBITS
......(1) Amended and Restated Declaration of Trust; (1)
......(2) By-Laws of the Registrant; (1)
......(3) Not applicable
......(4) Not applicable
......(5) (i) Form of Management Agreement between Registrant and
Deutsche Fund Management, Inc. ("DFM"); +
...... (ii) Form of Investment Advisory Agreement between DFM, DWS
International Portfolio Management GmbH and Deutsche
Morgan Grenfell Investment Management Inc.; +
......(6) Not applicable
......(7) Not applicable
......(8) (i) Form of Custodian Contract between the Registrant and
Investors Bank & Trust Company; +
......(9) (i) Form of Fund Accounting Agreement between the
Registrant and IBT Fund Services (Canada) Inc.; +
...... (ii) Form of Administration Agreement between the
Registrant and IBT Trust Company (Cayman), Ltd.; +
...... (iii) Conformed copy of Operations Agency Agreement between
the Registrant and Federated Services Company; +
...... (iv) Conformed copy of Exclusive Placement Agency Agreement
between the Registrant and Edgewood Services, Inc.; +
......(10) Not applicable
......(11) Not applicable
......(12) Not applicable
......(13) Investment representation letters of initial investors; (1)
......(14) Not applicable
......(15) Not applicable
......(16) Not applicable
- -------------------------------
+ All exhibits have been filed electronically
1. Incorporated by reference to Amendment No. 1 to Registrant's
Registration Statement as filed with the Commission on September 23,
1997.
<PAGE>
......(17) Financial Data Schedules; + ......(18) Not applicable ......(19)
Conformed copy of Power of Attorney; +
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
......As of March 20, 1998, Federated Administrative Services, a Delaware
business trust, owned 48.51%, 37.00%, 74.75%, 78.69%, and 100% of the
outstanding shares of Deutsche Top 50 Asia, Deutsche German Equity Fund,
Deutsche Japanese Equity Fund, Deutsche European Bond Fund, and Deutsche
Institutional U.S. Money Market Fund, respectively. Federated Administrative
Services, may, therefore, be deemed to control the Registrant. The following
entities may therefore be deemed to be under common control with these
Registrants:
Advanced Information Services, a Delaware business trust Edgewood Services,
Inc., a New York corporation Federated Bank and Trust, a New Jersey bank
Federated Shareholder Services Company, a Delaware business trust Retirement
Plan Services Company of America, a Delaware business trust Federated
Administrative Services, Inc., a Pennsylvania corporation FS Holdings Inc., a
Delaware corporation Federated Services Company, a Pennsylvania corporation FII
Holdings Inc., a Delaware corporation Federated Shareholder Services, a Delaware
business trust FFSI Insurance Agency Inc., a Massachusetts corporation Federated
Investors Insurance Inc., a Pennsylvania corporation Federated International
Management Limited, an Irish limited liability company Federated Global Research
Corp., a Delaware corporation Federated Investment Counseling, a Delaware
business trust Federated Research, a Delaware business trust Federated
Management, a Delaware business trust Federated Research Corp., a Maryland
corporation Federated Advisers, a Delaware business trust Federated Investors
Building Corp., a Pennsylvania corporation Federated Financial Services, Inc., a
Pennsylvania corporation Federated Funding 1997-1, Inc. Federated Securities
Corp., a Pennsylvania corporation Exchange Fund Research Corp., a Pennsylvania
corporation Federated Investors Management Company, a Pennsylvania corporation
Federated Investors, Inc., a Pennsylvania corporation Passport Research, Ltd.
- -------------------------------
+ All exhibits have been filed electronically
<PAGE>
Each listed entity is wholly owned by or wholly owned by a subsidiary of,
Federated Investors, a Delaware business trust. Each listed entity is included
in the consolidated financial statements of Federated Investors.
As of March 20, 1998, Deutsche Morgan Grenfell Investment Management Bank, a
Delaware Corporation, and a wholey owned subsidiary of Deutsche Bank AG, owned
84.71% of the outstanding shares of Deutsche Top 50 US. Deutsche Morgan Grenfell
may therefore be deemed to control Deutsche Top 50 US. The entities listed as
(a), (b), (d) and (e) in response to Item 28 herein, are deemed to be under
common control with Deutsche Top 50 US.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
Number of Record Holders TITLE OF CLASS (AS OF MARCH 20, 1998)
Provesta Portfolio (US Dollar) 1
Investa Portfolio (US Dollar) 1
Japanese Equity Portfolio (US Dollar) 1
Global Bond Portfolio (US Dollar) 1
European Bond Portfolio (US Dollar) 1
Top 50 World Portfolio (US Dollar) 1
Top 50 Europe Portfolio (US Dollar) 1
Top 50 Asia Portfolio (US Dollar) 1
Top 50 US Portfolio (US Dollar) 1
US Money Market Portfolio (US Dollar) 2
ITEM 27. INDEMNIFICATION: (1)
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
(a) Deutsche Fund Management, Inc. ("DFM"), DWS International Portfolio
Management GmbH ("DWS-IPM") and Deutsche Morgan Grenfell Investment
Management Inc. ("DMGIM") are each indirect subsidiaries of Deutsche Bank
AG.
(b) Deutsche Fonds Holding GmbH ("DFH"), a holding company organized under
German law, 93% owned by Deutsche Bank AG; sole shareholder of DFM (since
1/97); sole shareholder of DWS-IPM (since 5/97).
(c) Deutsche Bank AG, a publicly-held global financial institution, trading on
the Frankfurt Stock Exchange); sole shareholder of DFH (since 9/94).
- -------------------------------
1. Incorporated by reference to Amendment No. 1 to Registrant's Registration
Statement as filed with the Commission on September 23, 1997.
<PAGE>
(d) Deutsche Bank North America Holding Corp. ("DBNAH"), a holding company
organized under US law, 100% owned by Deutsche Bank AG; sole shareholder
of Deutsche Bank U.S. Financial Markets Holding Corporation.
(e) Deutsche Bank U.S. Financial Markets Holding Corporation, a holding company
organized under US law, 100% owned by DBNAH; sole shareholder of DMGIM.
(f) Brian A. Lee, President and Managing Director of DFM (since 1/97);
President and Chief Operating Officer of Deutsche Bank Trust Company
("DBTC")(prior to 1997).
(g) Christian Strenger, Chairman of the Board of Directors of DFM (since
1/97); Managing Director/Spokesman of DFH (since 9/94); Managing
Director/Spokesman of DWS-IPM (since 5/97); Managing Director/Spokesman of
DWS Deutsche Gesellschaft fuer Wertpapiersparen mbH ("DWS-DGW)(since
8/91).
(h) Udo Behrenwaldt, Director of DFM (since (5/97); Managing Director of DFH
(since 9/94); Manager Director of DWS-IPM (since 5/97); Executive Director
of DB Investment Management, S.A. (since 7/87); Managing Director of
DWS-DGW (since 11/75).
(i) Holger Naumann, Director of DFM (since 1/97); Head of Participations at
DWS-DGW (since 12/95); Group Strategy Department at Deutsche Bank AG
(prior to 12/95).
(j) Bernd-Albrecht von Maltzan, Director of DFM (since 5/97); Divisional Board
Member of Deutsche Bank AG (since 7/96); Managing Director of Deutsche
Morgan Grenfell in Frankfurt and London (prior to 7/96).
(k) Michael C. Lowengrub, Treasurer of DFM (since 1/97); Treasurer of DBTC
(since 4/95); Director and Comptroller - Private Banking at Deutsche Bank
AG-New York Branch (since 10/92).
(l) Thomas A. Curtis, Secretary of DFM (since 1/97); Secretary of CB
Management Corp. (since 2/96); Director and Counsel of Deutsche Bank
AG-New York Branch (since 7/95).
(m) Axel-Guenther Benkner, Managing Director of DWS-IPM (since 5/97); Managing
Director of DFH (since 9/94); Managing Director of Deutsche
Vermoegensbildungsgesellschaft mbH (since 12/90); Managing Director of
DWS-DGW (since 2/91).
(n) Heinz-Wilheim Fesser, Senior Portfolio Manager of DWS-IPM (since 5/97);
Fixed Income-Global at DWS-DGW (since 12/??).
(o) Klaus Kaldmorgen, Senior Portfolio Manager of DWS-IPM (since 5/97);
Equities-Global at DWS-DGW (since 12/??).
(p) Klaus Martini, Senior Portfolio Manager of DWS-IPM (since 6/97); Head of
Equities - Europe at DWS-DGW (since 7/84).
(q) Elisabeth Weisenhorn, Senior Portfolio Manager of DWS-IPM (since 6/97);
Head of Equities - Germany at DWS-DGW (since 11/85).
(r) Reinhold Volk, Chief Financial Officer of DWS-IPM (since 6/97); Head of
Controlling at DWS-DGW (sincec 10/86).
(s) Mathias Geuckler, Chief Compliance Officer of DWS-IPM (since 6/97), Chief
Compliance Officer of DWS-DGW (since 11/92).
(t) Gerhard Seifried, Chief Operations Officer of DWS-IPM (since 6/97); Head of
Fund Administration at DWS-DGW (since 10/85).
(u) Guy Richard Stamberger, President, Chief Executive Officer and Director of
DMGIM (since 10/94); Director of DBTC (since 4/95); Managing Director of
Deutsche Bank Securities Corporation (prior to 10/94).
(v) David Alan Zornitsky, Secretary and Treasurer of DMGIM (since 10/94);
Assistant Vice President at Deutsche Bank Securities Corporation (prior to
10/94).
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Edgewood Services, Inc. the Placement Agent for shares of the
Registrant, acts as principal underwriter for the following open-end
investment companies, including the Registrant: BT Advisor Funds, BT
Institutional Funds, BT Investment Funds, BT Pyramid Mutual Funds,
Deutsche Funds, Inc., Excelsior Funds, Excelsior Funds, Inc., (formerly,
UST Master Funds, Inc.), Excelsior Institutional Trust, Excelsior
Tax-Exempt Funds, Inc. (formerly, UST Master Tax-Exempt Funds, Inc.),
FTI Funds, FundManager Portfolios, Great Plains Funds, Marketvest Funds,
Marketvest Funds, Inc., Old Westbury Funds, Inc., Robertsons Stephens
Investment Trust, WesMark Funds and WCT Funds.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Lawrence Caracciolo Director, President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Arthur L. Cherry Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
J. Christopher Donahue Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
Thomas P. Schmitt Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas P. Sholes Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas J. Ward Assistant Secretary, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Kenneth W. Pegher, Jr. Treasurer, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940, as amended, and the Rules
thereunder are maintained at the offices of:
Deutsche Portfolios
P.O. Box 501
Cardinal Avenue
Grand Cayman, Cayman Islands, BWI
Deutsche Fund Management, Inc.
31 West 52nd Street
New York, NY 10019
(Investment Manager)
DWS International Portfolio Management GmbH
Gruenburgweg 113-115, 60323
Frankfurt am Main, Germany
(Investment Adviser for each Portfolio, except US Money Market Portfolio (US
Dollar)and Top 50 US Portfolio (US DOllar))
<PAGE>
Deutsche Morgan Grenfell Investment Management Inc.
31 West 52nd Street
New York, NY 10019
(Investment Adviser for US Money Market Portfolio (US Dollar) and
and Top 50 US Portfolio (US Dollar))
Federated Services Company
Federated Investors Tower
Pittsburgh, PA 15222-3779
(Operations Agent)
IBT Fund Services (Canada) Inc.
One First Place
King Street West, Suite 2800
P.O. Box 231
Toronto, Ontario M5X1C8
(Fund Accounting Agent)
IBT Trust Company (Cayman) Ltd.
P.O. Box 501
Cardinal Avenue
Grand Cayman, Cayman Islands, BWI
(Administrative Agent)
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
Deutsche Portfolios has duly caused this registration statement on Form N-1A to
be signed on its behalf by the undersigned, thereto duly authorized, in
Frankfurt, Germany on the 30th day of April, 1998.
DEUTSCHE PORTFOLIOS
By: /s/ Christian Strenger
Christian Strenger
Trustee
Deutsche Portfolios Page 27 1997
Exhibit 5(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
The Deutsche Portfolios
INVESTMENT MANAGEMENT AGREEMENT
Agreement, made this 28th day of July, 1997, between the Deutsche
Portfolios, a trust organized under New York law (the "Trust"), and Deutsche
Fund Management, Inc., a Delaware corporation (the "Investment Manager"),
registered as an investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act").
W I T N E S S E T H:
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and consists initially of the ten sub-trusts listed on Schedule A to this
Agreement (each such sub-trust, together with each other sub-trust of the Trust
hereafter established by the Trustees of the Trust and made subject to this
Agreement in accordance with Section 13 hereof, individually a "Portfolio" and,
collectively, the "Portfolios"); and
WHEREAS, the Board of Trustees of the Trust desires to retain the
Investment Manager to render various investment management services to each
Portfolio, and the Investment Manager is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual
promises hereinafter set forth, the parties hereto agree as follows:
The Trust hereby appoints the Investment
Manager to act as investment manager to each of the Portfolios for the period
and the terms set forth in this Agreement, with the understanding that it may
appoint an adviser to perform certain services relating to the management of the
investment operations of the Portfolios as set forth in Section 4. The
Investment Manager accepts such appointment and agrees to render or provide the
services herein set forth, for the compensation herein provided.
The activities of the Investment Manager or
any adviser appointed hereunder shall at all times be
subject to the supervision of the Trustees of the Trust.
The Investment Manager shall manage, or appoint an adviser to
manage, the investment operations of the Portfolios and the composition of each
Portfolio's holdings of securities and investments, including cash, the
purchase, retention and disposition thereof and agreements relating thereto, in
accordance with such Portfolio's investment objectives and policies as stated in
the Registration Statement (as defined in paragraph 6(d) of this Agreement). The
Investment Manager, or in case it appoints an adviser, such adviser, shall
perform such services (the person performing such services being referred to
herein as the "Adviser") subject to the following understandings:
The Adviser in the performance of its duties and
obligations under this Agreement, shall act in conformity with the
Declaration of Trust and By-Laws of the Trust and the Registration
Statement and with the instructions and directions of the Trustees of
the Trust and will conform to and comply with the requirements of the
1940 Act and all other applicable federal and state laws and
regulations;
the Adviser shall furnish a continuous investment program
for each Portfolio and determine from time to time what securities,
instruments and other investments, including futures contracts, will be
purchased, retained, sold or lent by such Portfolio, and what portion of
the assets will be invested or held uninvested as cash;
the Adviser shall use the same skill and care in the
management of each Portfolio's investments as it uses in the
administration of other accounts for which it has investment
responsibility as agent;
the Adviser shall determine the securities or other
investments to be purchased, sold or lent by each Portfolio and as agent
for each Portfolio will effect portfolio transactions pursuant to its
determinations either directly with the issuer or with any broker and/or
dealer in such securities, including a broker affiliated with the
Adviser; in placing orders with brokers and/or dealers the Adviser
intends to seek best price and execution for purchases and sales; the
Adviser shall also determine whether or not a Portfolio shall enter into
repurchase or reverse repurchase agreements;
On occasions when the Adviser deems the purchase or sale of a
security or other investment to be in the best interest of a Portfolio
as well as other customers
-2-
of the Adviser, the Adviser may, to the extent permitted by applicable
laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased on behalf of such Portfolio and
such other customer of the Adviser in order to obtain best execution,
including lower brokerage commissions, if applicable. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its
fiduciary obligations to a Portfolio;
the Adviser shall maintain a set of books and records with
respect to each Portfolio's securities and other investment transactions
as required by the Advisers Act and other applicable laws and
regulations and shall render to the Trustees of the Trust such periodic
and special reports as the Trustees may reasonably request; and
the services of the Adviser to the Trust under this
Agreement are not to be deemed exclusive, and the Adviser shall be free
to render similar services to others.
The Investment Manager is authorized to
appoint an investment adviser to carry out the aforementioned investment
operations of each Portfolio, as Adviser, on the above terms pursuant to an
investment advisory contract conforming to the requirements of the 1940 Act and
subject to approval of the Board of Trustees and the holders of beneficial
interests in the Trust as required by the 1940 Act. Any such investment advisory
contract shall provide that the Adviser is not authorized to make any business,
operational or management decisions on behalf of the Trust or any Portfolio
other than with respect to the investment operations and composition of a
Portfolio's holdings of securities and other investments as set forth herein.
The compensation of any such Adviser will be paid by the Investment Manager.
The Investment Manager shall also provide
certain supervisory and administrative services to the
Trust, including:
negotiating, maintaining, evaluating and coordinating
contractual arrangements with third-party service providers, including,
but not limited to, administrators, custodians, transfer agents, fund
-3-
accounting agents, independent accountants, attorneys,
printers and insurers;
assisting the various third-party service providers
retained by or for the Trust by, among other things, providing any
information to such service providers as the Trustees of the Trust deem
appropriate, including information concerning Portfolio performance and
administration;
reviewing agendas for and minutes of meetings of Trustees
and committees of Trustees; and preparing such supporting documents for
such meetings as the Trustees may request the Investment Manager to
prepare;
arranging, if desired by the Trust, for directors,
officers or employees of the Investment Manager to serve as Trustees,
officers or agents of the Trust if duly elected or appointed to such
positions and subject to their individual consent and to any limitations
imposed by law; and
reviewing all registration statements, amendments thereto
and other documents as may be required for compliance by the Trust and
each Portfolio with all applicable laws and regulations and preparing
such portions thereof as the Trustees of the Trust may request the
Investment Manager to prepare.
Notwithstanding the foregoing, the Investment Manager shall not
be deemed to have assumed any duties under this Agreement with respect to, and
shall not be responsible for, functions specifically assumed by any
administrator, fund accounting agent custodian, private placement agent or
transfer agent of the Trust.
The Trust has delivered copies of each of the
following documents to the Investment Manager and will promptly notify and
deliver to it all future amendments and supplements, if any:
Declaration of Trust of the Trust (such Declaration of
Trust, as presently in effect and as amended from time to time, is
herein called the "Declaration of Trust");
By-Laws of the Trust (such By-Laws, as presently in effect
and as amended from time to time, are herein called the "By-Laws");
-4-
Certified resolutions of the Trustees of the Trust
authorizing the appointment of the Investment Manager and approving the
form of this Agreement;
The Trust's Notification of Registration on Form N-8A
under the 1940 Act, its Registration Statement on Form N-1A under the
1940 Act (No. ______) and the Registration Statement on Form N-1A of
Deutsche Funds, Inc. (No. 333-27709) under the Securities Act of 1933,
as amended, and the 1940 Act, as filed with the Securities and Exchange
Commission (the "Commission") on May 23, 1997, including all amendments
thereto (together with the Registration Statement of the Trust, the
"Registration Statement").
The Adviser shall keep the books and records
required to be maintained by it pursuant to paragraph 3(e). The Investment
Manager agrees that all records which it maintains for the Trust are the
property of the Trust and it will promptly surrender any of such records to the
Trust upon request. The Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 of the Commission under the 1940 Act any such records
as are required to be maintained by the Adviser with respect to the Portfolios
by Rule 31a-2 of the Commission under the 1940 Act.
During the term of this Agreement the
Investment Manager will pay all expenses, including personnel costs and
overhead, incurred by it in connection with the performance of its obligations
under this Agreement other than the cost of securities and investments purchased
for each Portfolio (including taxes and brokerage commissions, if any) and
extraordinary expenses and shall pay the salaries of Trustees and officers of
the Trust who are affiliated persons (as defined in the 1940 Act) of the
Investment Manager. The Investment Manager shall not be required to pay expenses
of any activity which is intended primarily to result in sales of shares of the
Portfolio.
For the services provided and the expenses
borne pursuant to this Agreement, each Portfolio will pay to the Investment
Manager as full compensation therefor a fee, computed daily and paid monthly in
arrears, at an annual rate equal to the percentage of the average daily net
assets of such Portfolio specified in Schedule A hereto.
The Investment Manager shall not be liable
for any error of judgment or mistake of law or for any loss or expense suffered
by the Trust or any Portfolio in connection with the matters to which this
Agreement relates, except a loss or expense resulting from willful misfeasance,
-5-
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
This Agreement shall continue in effect until
the date two years after its execution and shall continue in effect from year to
year thereafter with respect to each Portfolio if such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act; provided, however, that this Agreement may be terminated by the
Trust in its entirety or with respect to any Portfolio, at any time, without the
payment of any penalty, by vote of a majority of all the Trustees of the Trust
or by vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Trust or such Portfolio, as the case may be, on 60 days'
written notice to the Investment Manager, or by the Investment Manager at any
time, without the payment of any penalty, on 90 days' written notice to the
Trust. This Agreement will automatically and immediately terminate in the event
of its assignment (as defined in the 1940 Act).
The Investment Manager shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Trustees of the Trust from time
to time, have no authority to act for or represent the Trust or any Portfolio in
any way or otherwise be deemed an agent of the Trust or any Portfolio.
This Agreement may be amended by mutual
consent, but the consent of the Trust must be approved (a) by vote of a majority
of those Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such amendment, and (b) by vote of a majority of the
outstanding voting securities of the Trust or, in the case of an amendment to
this Agreement affecting only one or several Portfolios, a majority of the
outstanding voting securities of each such Portfolio. In the event that the
Trustees of the Trust establish one or more additional sub-trusts with respect
to which they wish to retain the Investment Manager to act as investment
manager, the Trust and the Investment Manager may amend Schedule A hereto to add
each such sub-trust and specify the fee payable to the Investment Manager in
respect thereof, in which event such sub-trust shall become subject to the
provisions of this Agreement and be deemed a "Portfolio" hereunder to the same
extent as the existing Portfolios, except to the extent that such provisions may
be modified with respect to any additional Portfolio in writing by the
-6-
Trust and the Investment Manager at the time of the addition of the Portfolio.
Notices of any kind to be given to the
Investment Manager by the Trust shall be in writing and shall be duly given if
mailed or delivered to the Investment Manager at 31 West 52nd Street, New York,
New York 10019, Attention: President and Managing Director, or at such other
address or to such other individual as shall be specified by the Investment
Manager to the Trust. Notices of any kind to be given to the Trust by the
Investment Manager shall be in writing and shall be duly given if mailed or
delivered to the Trust at Cardinal Avenue, Grand Cayman, Cayman Islands, BWI or
at such other address or to such other individual as shall be specified by the
Trust to the Investment Manager.
The Trustees of the Trust have authorized the
execution of this Agreement in their capacity as Trustees and not individually
and the Investment Manager agrees that neither the holders of interests in the
Trust nor the Trustees nor any officer, employee, representative or agent of the
Trust shall be personally liable upon, or shall resort be had to their private
property for the satisfaction of, obligations given, executed or delivered on
behalf of or by the Trust or any Portfolio, that the interest holders of the
Portfolios and the trustees, officers, employees, representatives and agents of
the Trust shall not be personally liable hereunder, and that the Investment
Manager shall look solely to the property of the Trust for the satisfaction of
any claim hereunder.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an
original.
-7-
This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the 28th day
of July, 1997.
DEUTSCHE PORTFOLIOS
By:__________________________________
Trustee
DEUTSCHE FUND MANAGEMENT, INC.
By:__________________________________
President and Managing Director
-8-
Schedule A
Fee (annualized
% of average
daily net assets)
Portfolio
Top 50 World Portfolio 1.00%
Top 50 Europe Portfolio 1.00
Top 50 Asia Portfolio 1.00
Top 50 US Portfolio 1.00
Provesta Portfolio 0.85
Investa Portfolio 0.85
Japanese Equity Portfolio 0.85
Global Bond Portfolio 0.75
European Bond Portfolio 0.75
US Money Market Portfolio 0.15
-9-
Exhibit 5(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
The Deutsche Portfolios
INVESTMENT ADVISORY AGREEMENT
Agreement made as of July 28, 1997 by and among Deutsche Fund
Management, Inc., a Delaware corporation (the "Investment Manager"), DWS
Portfolio Management GmbH, a company organized under the laws of the Federal
Republic of Germany (hereinafter called the "DWS Adviser"), and Deutsche Morgan
Grenfell Investment Management Inc., a Delaware corporation (hereinafter called
the "DMGIM Adviser").
W I T N E S S E T H:
WHEREAS, the Investment Manager has entered into an Investment
Management Agreement dated July 28, 1997 (the "Investment Management Agreement")
with the Deutsche Portfolios, an open-end management investment company
registered under the Investment Company Act of 1940 (the "1940 Act") and
organized as a trust under the laws of the State of New York (the "Trust") on
behalf of its ten non-diversified sub-trusts named herein (each such sub-trust,
together with each sub- trust hereafter established by the Trustees of the Trust
and made subject to this Agreement in accordance with Section 11 hereof,
individually a "Portfolio" and, collectively, the "Portfolios"), pursuant to
which the Investment Manager will act as investment manager to the sub-trusts
named in the Investment Management Agreement;
WHEREAS, the Investment Management Agreement contemplates that
the Investment Manager may appoint an adviser to perform certain services
relating to the management of the investment operations of the sub-trusts of the
Trust, and the each of the DWS Adviser and the DMGIM Adviser is willing to
render such investment advisory services to the respective Portfolios designated
herein; and
WHEREAS, each of the DWS Adviser and the DMGIM Adviser is
registered as an investment adviser under the Investment Advisers Act of 1940.
NOW, THEREFORE, in consideration of the premises and mutual
promises hereinafter set forth, the parties hereto agree as follows:
1 The Investment Manager hereby appoints (a) the DWS Adviser to act as adviser
to the Portfolios set forth under its name on Schedule A and (b) the DMGIM
Adviser to act as adviser to the Portfolios set forth under its name on Schedule
A, in each case for the period and on the terms set forth in this Agreement.
Each of the DWS Adviser and the DMGIM Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided. In this Agreement, the term "Adviser" shall hereinafter refer to the
DWS
Adviser, with respect to the Portfolios for which it is appointed to act as
adviser under this Section 1, and to the DMGIM Adviser, with respect to the
Portfolios for which it is appointed to act as adviser under this Section 1.
1 Subject to the general supervision of the Trustees of the Trust and the
Investment Manager, the Adviser shall manage the investment operations of each
Portfolio and the composition of each Portfolio's holdings of securities and
other investments, including cash, the purchase, retention and disposition
thereof and agreements relating thereto, in accordance with such Portfolio's
investment objective and policies as stated in the Registration Statement (as
defined in paragraph 3(d) of this Agreement) and subject to the following
understandings:
1 The Adviser, in the performance of its duties and obligations under this
Agreement, shall act in conformity with the Declaration of Trust and By-Laws of
the Trust and the Registration Statement and with the instructions and
directions of the Trustees of the Trust and will conform to and comply with the
requirements of the 1940 Act and all other applicable federal and state laws and
regulations;
1 the Adviser shall furnish a continuous investment program for each Portfolio
and determine from time to time what securities, instruments and other
investments including future contracts will be purchased, retained, sold or lent
by such Portfolio, and what portion of the assets will be invested or held
uninvested as cash;
1 the Adviser shall use the same skill and care in the management of each
Portfolio's investments as it uses in the administration of other accounts for
which it has investment responsibility as agent;
1 the Adviser shall determine the securities or other investments to be
purchased, sold or lent by the Portfolio and as agent for each Portfolio will
effect portfolio transactions pursuant to its determinations either directly
with the issuer or with any broker and/or dealer in such securities, including a
broker affiliated with the Adviser; in placing orders with brokers and/or
dealers the Adviser intends to seek best price and execution for purchases and
sales; the Adviser shall also determine whether or not a Portfolio shall enter
into repurchase or reverse repurchase agreements;
On occasions when the Adviser deems the purchase or sale of a
security or other investment to be in the best interest of a Portfolio as well
as other customers of the Adviser, the Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased on behalf of such Portfolio and such other
customer of the Adviser in order to obtain best execution, including lower
brokerage commissions, if applicable. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made
by the Adviser in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to a Portfolio;
1 the Adviser shall maintain a set of books and records with respect to each
Portfolio's securities transactions as required by the Advisers Act and other
applicable laws and regulations and shall render to the Trustees of the Trust
such periodic and special reports as the Trustees may reasonably request; and
1 the services of the Adviser to the Trust under this Agreement are not to be
deemed exclusive, and the Adviser shall be free to render similar services to
others.
Notwithstanding the foregoing, the Adviser is not authorized, and shall not be
deemed to have assumed any duties under this Agreement, to make any business,
operational or management decisions on behalf of the Trust or any Portfolio
other than with respect to the investment operations and composition of a
Portfolio's holdings of securities and other investments as set forth herein.
1 The Investment Manager has delivered copies of each of the following documents
to the Adviser and will promptly notify and deliver to it all future amendments
and supplements, if any:
(a) Declaration of Trust of the Trust (such
Declaration of Trust, as presently in effect and as amended from time to time,
is herein called the "Declaration of Trust");
(b) By-laws of the Trust (such By-laws, as presently
in effect and as amended from time to time, are herein called the "By-
laws");
(c) Certified resolutions of the Trustees of the
Trust authorizing the appointment of the Adviser and approving the form
of this Agreement;
(d) The Trust's Notification of Registration on
Form N-8A under the 1940 Act, its Registration Statement on Form N-1A under the
1940 Act (No. _______) and the Registration Statement on Form N-1A of Deutsche
Funds, Inc. (No. 333-27709) under the Securities Act of 1933, as amended, and
the 1940 Act, as filed with the Securities and Exchange Commission (the
"Commission") on May 23, 1997, including all amendments thereto (together with
the Registration Statement of the Trust, the "Registration Statement").
1 The Adviser shall keep the books and records required to be maintained by it
pursuant to paragraph 2(e) of this Agreement. The Adviser agrees that all
records that it maintains for the Trust are the property of the Trust and it
will promptly surrender any of such records to the Trust or to the Investment
Manager upon request. The Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 of the Commission under the 1940 Act any such records
as are required to be maintained by the Adviser with respect to the Portfolios
by Rule 31a-2 of the Commission under the 1940 Act.
1 During the term of this Agreement, the Adviser will pay all expenses,
including personnel costs and overhead, incurred by it in connection with its
activities under this Agreement, other than the cost of securities and
investments purchased or sold for the Portfolios (including taxes and brokerage
commissions, if any) and extraordinary expenses.
1 The Investment Manager shall continue to have responsibility for all services
to be provided to the Portfolios pursuant to the Investment Management Agreement
and shall oversee and review the Adviser's performance of its duties under this
Agreement.
1 For the services provided and the expenses borne pursuant to this Agreement,
the Investment Manager will pay to the Adviser, as full compensation therefor a
fee, calculated daily and payable monthly in arrears, at an annual rate equal to
the percentage of the average daily net assets of each Portfolio specified in
Schedule A hereto.
1 The Adviser shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Investment Manager, the Trust or any Portfolio in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
1 This Agreement shall continue in effect until the date two years after the
date of its execution and shall continue in effect from year to year thereafter
with respect to each Portfolio if such continuance is specifically approved at
least annually in conformity with the requirements of the 1940 Act; provided,
however, that this Agreement may be terminated with respect to the Trust in its
entirety or with respect to any Portfolio, at any time, without the payment of
any penalty,(a) by the Investment Manager or (b) by the Trust, by vote of a
majority of all the Trustees of the Trust or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Trust or such
Portfolio, as the case may be, in each case on 60 days' written notice to the
Adviser, or by the Adviser with respect to its respective Portfolios, at any
time, without the payment of any penalty, on 90 days' written notice to the
Investment Manager and to the Trust. This
Agreement will automatically and immediately terminate in the event of its
"assignment" (as defined in the 1940 Act) or upon termination of the Investment
Management Agreement.
1 The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided herein or authorized
by the Trustees of the Trust and the Investment Manager from time to time, have
no authority to act for or represent the Trust or any Portfolio in any way or
otherwise be deemed an agent of the Trust or any Portfolio.
1 This Agreement may be amended by the mutual consent of the parties. Any such
amendment shall also require the consent of the Trust, which must be approved
(a) by vote of a majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment, and (b) by vote of a
majority of the outstanding voting securities of the Trust or, in the case of
any such amendment affecting only one or several Portfolios, a majority of the
outstanding voting securities of each such Portfolio. In the event that the
Trustees of the Trust establish one or more additional sub-trusts with respect
to which they retain the Investment Manager to act as investment manager, the
Investment Manager and the DWS Adviser or the DMGIM Adviser, as the case may be,
may amend Schedule A hereto to add each such sub-trust and specify the fee
payable to such Adviser in respect thereof, in which event such sub-trust shall
become subject to the provisions of this Agreement and be deemed a "Portfolio"
hereunder to the same extent as the existing Portfolios, except to the extent
that such provisions may be modified with respect to any additional Portfolio in
writing by the Investment Manager and such Adviser at the time of the addition
of the Portfolio.
1 Notices of any kind to be given hereunder shall be in writing and shall be
duly given if mailed or delivered as follows: (a) to the Adviser at
Grueneburgweg 113-115, Frankfurt am Main 60323, Germany, Attention: President,
with a copy to the Investment Manager; (b) to the Investment Manager at 31 West
52nd Street, New York, New York 10019, Attention: President and Managing
Director; (c) to the Trust at Cardinal Avenue, George Town, Grand Cayman, Cayman
Islands, BWI; or (d) at such other address or to such other individual as any of
the foregoing shall designate by notice to the others.
1 This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the 28th day
of July, 1997.
DEUTSCHE FUND MANAGEMENT, INC.
By: ________________________________
President and Managing Director
DWS PORTFOLIO MANAGEMENT GmbH
By: _________________________________
DEUTSCHE MORGAN GRENFELL INVESTMENT MANAGEMENT INC.
By: ________________________________
Acknowledged and Confirmed.
DEUTSCHE PORTFOLIOS
By:________________________
<PAGE>
Schedule A
Fee (annualized
% of average
Portfolio daily net assets)
- - --------- -----------------
DWS ADVISER
Top 50 World Portfolio 0.75%
Top 50 Europe Portfolio 0.75
Top 50 Asia Portfolio 0.75
Provesta Portfolio 0.60
Investa Portfolio 0.60
DWS Japan Portfolio 0.60
Inter-Renta Portfolio 0.50
German Bond Portfolio 0.50
DMGIM ADVISER
Top 50 US Portfolio 0.75%
US Money Market Portfolio 0.1125
Exhibit 8(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
CUSTODIAN AGREEMENT
BETWEEN
DEUTCHE PORTFOLIOS
AND
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
PAGE
1. Bank Appointed Custodian................................... 1
2. Definitions................................................ 1
2.1 Authorized Person ....................... 1
2.2 Board ................................ 1
2.3 Security ................................ 1
2.4 Portfolio Security ...................... 1
2.5 Officers' Certificate ................... 1
2.6 Book-Entry System ...................... 2
2.7 Depository.............................. 2
2.8 Proper Instructions .................... 2
3. Separate Accounts ............................................. 2
4. Certification as to Authorized Persons .................. 2
5. Custody of Cash ....................................... 3
5.1 Purchase of Securities................. 3
5.2 Redemptions ...................... 3
5.3 Distributions and Expenses of Fund..... 3
5.4 Payment in Respect of Securities....... 3
5.5 Repayment of Loans .................... 3
5.6 Repayment of Cash ..................... 3
5.7 Foreign Exchange Transactions.......... 4
5.8 Other Authorized Payments.............. 4
5.9 Termination............................ 4
6. Securities .............................................. 4
6.1 Segregation and Registration........... 4
6.2 Voting and Proxies .................... 5
6.3 Corporate Action ...................... 5
6.4 Book-Entry System ..................... 5
6.5 Use of a Depository ................... 6
6.6 Use of Book-Entry System for Commercial Paper... 7
6.7 Use of Immobilization Programs.................. 8
6.8 Eurodollar CDs ...................... 8
6.9 Options and Futures Transactions......... 8
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter.... . 8
(b) Puts, Calls, and Futures Traded
on Commodities Exchanges....... 9
6.10 Segregated Account ..................... 9
<PAGE>
PAGE
6.11 Interest Bearing Call or Time Deposits.............10
6.12 Transfer of Securities.............................11
7. Redemptions ...................................................12
8. Merger, Dissolution, etc. of Fund ................................. 12
9. Actions of Bank Without Prior Authorization....................... 12
10. Collection and Defaults........................................... 13
11. Maintenance of Records..............................................13
12. [Reserved]
13. Additional Services .........................................13
14. Duties of the Bank .........................................14
14.1 Performance of Duties and
Standard of Care .................................14
14.2 Agents and Subcustodians with Respect to Property
of the Fund Held in the United States.............14
14.3 Duties of the Bank with Respect to Property
Held Outside of the United States.................15
14.4 Insurance.........................................16
14.5 Fees and Expenses of Bank.........................16
14.6 Advances by Bank ................................16
14.7 Property of the Fund and Confidentiality..........17
14.8 Relief............................................18
15. Limitation of Liability..................................................18
16. Termination.........................................................19
17. Confidentiality of Bank Information.................................20
18. Notices ...........................................................20
19. Amendments..........................................................20
20. Parties ...........................................................20
21. Governing Law.......................................................21
<PAGE>
PAGE
22. Counterparts........................................................ 21
23. Entire Agreement.................................................... 21
24. Limitation of Liability............................................. 21
25. Signature License................................................... 21
APPENDICES
Appendix A ................................... Portfolios
Appendix B ................................... Fee Schedule
Appendix C ................................... Additional Services
<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this 28th day of September, 1997, between the
Deutsche Portfolios , a New York business trust (the "Fund"), and Investors Bank
& Trust Company, a Massachusetts trust company (the "Bank").
The Fund, an open-end management investment company, desires, on behalf
of the portfolios listed in APPENDIX A hereto, to place and maintain all of its
portfolio securities and cash in the custody of the Bank. The Bank has at least
the minimum qualifications required by Section 17(f)(1) of the Investment
Company Act of 1940 (the "1940 Act") to act as custodian of the portfolio
securities and cash of the Fund, and has indicated its willingness to so act,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. BANK APPOINTED CUSTODIAN. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth. For the services rendered pursuant to this
Agreement the Fund agrees to pay to the Bank the fees set forth on APPENDIX B
hereto.
2. DEFINITIONS. Whenever used herein, the terms listed below will have
the following meaning:
2.1 AUTHORIZED PERSON. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Fund by appropriate resolution of its Board, and set forth in a
certificate as required by Section 4 hereof.
2.2 BOARD. Board will mean the Board of Directors or the Board of
Trustees of the Fund, as the case may be.
2.3 SECURITY. The term security as used herein will have the same
meaning assigned to such term in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.4 PORTFOLIO SECURITY. Portfolio Security will mean any security
owned by the Fund.
2.5 OFFICERS' CERTIFICATE. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
2.6 BOOK-ENTRY SYSTEM. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.7 DEPOSITORY. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.8 PROPER INSTRUCTIONS. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the Fund
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by an
Authorized Person. Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by an Authorized Person.
The Fund shall cause all oral instructions to be promptly confirmed in writing.
The Bank shall act upon and comply with any subsequent Proper Instruction which
modifies a prior instruction and the sole obligation of the Bank with respect to
any follow-up or confirmatory instruction shall be to make reasonable efforts to
detect any discrepancy between the original instruction and such confirmation
and to report such discrepancy to the Fund. The Fund shall be responsible, at
the Fund's expense, for taking any action, including any reprocessing, necessary
to correct any such discrepancy or error, and to the extent such action requires
the Bank to act, the Fund shall give the Bank specific Proper Instructions as to
the action required. Upon receipt by the Bank of an Officers' Certificate as to
the authorization by the Board accompanied by a detailed description of
procedures approved by the Fund, Proper Instructions may include communication
effected directly between electro-mechanical or electronic devices provided that
the Board and the Bank agree in writing that such procedures afford adequate
safeguards for the Fund's assets.
3. SEPARATE ACCOUNTS. If the Fund has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all investment
earnings thereon). Unless the context otherwise requires, any reference in this
Agreement to any actions to be taken by the Fund shall be deemed to refer to the
Fund acting on behalf of one or more of its series, any reference in this
Agreement to any assets of the Fund, including, without limitation, any
portfolio securities and cash and earnings thereon, shall be deemed to refer
only to assets of the applicable series, any duty or obligation of the Bank
hereunder to the Fund shall be deemed to refer to duties and obligations with
respect to such individual series and any obligation or liability of the Fund
hereunder shall be binding only with respect to such individual series, and
shall be discharged only out of the assets of such series.
4. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund will sign a new or amended certification setting forth the
change and the new, additional or omitted names or signatures. The Bank will be
entitled to rely and act upon any Officers' Certificate given to it by the Fund
which has been signed by Authorized Persons named in the most recent
certification received by the Bank.
5. CUSTODY OF CASH. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of the Fund or in the name
of the Bank, as Custodian of the Fund, and will deposit to the account of the
Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Sections 14.2 or 14.3 hereof, including borrowed funds,
delivered to the Bank, subject only to draft or order by the Bank acting
pursuant to the terms of this Agreement. Pursuant to the Bank's internal
policies regarding the management of cash accounts, the Bank may segregate
certain portions of the cash of the Fund into a separate savings deposit account
upon which the Bank reserves the right to require seven (7) days notice prior to
withdrawal of cash from such an account. Upon receipt by the Bank of Proper
Instructions (which may be continuing instructions) or in the case of payments
for redemptions and repurchases of outstanding shares of common stock of the
Fund, notification from the Fund's transfer agent as provided in Section 7,
requesting such payment, designating the payee or the account or accounts to
which the Bank will release funds for deposit, and stating that it is for a
purpose permitted under the terms of this Section 5, specifying the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Fund, insofar as funds are available for that purpose, only as permitted in
subsections 5.1-5.9 below.
5.1 PURCHASE OF SECURITIES. Upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the Bank or against
delivery of such securities to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs registered in the name of the Fund or in the name of, or
properly endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (or transaction report in the case of Book Entry Paper (as
that term is defined in Section 6.6 hereof)) of purchase of the securities
received by the Bank before such payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment is made.
5.2 REDEMPTIONS. In such amount as may be necessary for the
repurchase or redemption of common shares of the Fund offered for repurchase or
redemption in accordance with Section 7 of this Agreement.
5.3 DISTRIBUTIONS AND EXPENSES OF FUND. For the payment on the
account of the Fund of dividends or other distributions to shareholders as may
from time to time be declared by the Board, interest, taxes, management or
supervisory fees, distribution fees, fees of the Bank for its services hereunder
and reimbursement of the expenses and liabilities of the Bank as provided
hereunder, fees of any transfer agent, fees for legal, accounting, and auditing
services, or other operating expenses of the Fund.
5.4 PAYMENT IN RESPECT OF SECURITIES. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Fund held by or to be delivered to the Bank.
5.5 REPAYMENT OF LOANS. To repay loans of money made to the Fund,
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;
5.6 REPAYMENT OF CASH. To repay the cash delivered to the Fund for
the purpose of collateralizing the obligation to return to the Fund certificates
borrowed from the Fund representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
5.7 FOREIGN EXCHANGE TRANSACTIONS.
(a) For payments in connection with foreign exchange contracts
or options to purchase and sell foreign currencies for spot and future delivery
(collectively, "Foreign Exchange Agreements")which may be entered into by the
Bank on behalf of the Fund upon the receipt of Proper Instructions, such Proper
Instructions to specify the currency broker or banking institution (which may be
the Bank, or any other subcustodian or agent hereunder, acting as principal)
with which the contract or option is made, and the Bank shall have no duty with
respect to the selection of such currency brokers or banking institutions with
which the Fund deals or for their failure to comply with the terms of any
contract or option.
(b) In order to secure any payments in connection with Foreign
Exchange Agreements which may be entered into by the Bank pursuant to Proper
Instructions, the Fund agrees that the Bank shall have a continuing lien and
security interest, to the extent of any payment due under any Foreign Exchange
Agreement, in and to any property at any time held by the Bank for the Fund's
benefit or in which the Fund has an interest and which is then in the Bank's
possession or control (or in the possession or control of any third party acting
on the Bank's behalf). The Fund authorizes the Bank, in the Bank's sole
discretion, at any time to charge any such payment due under any Foreign
Exchange Agreement against any balance of account standing to the credit of the
Fund on the Bank's books.
5.8 OTHER AUTHORIZED PAYMENTS. For other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper Fund purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose.
5.9 TERMINATION: Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 16 of this Agreement.
6. SECURITIES.
6.1 SEGREGATION AND REGISTRATION. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to Sections 14.2 or 14.3 hereof, the Bank as custodian will receive and
hold pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of the Fund. All such Portfolio Securities will be held or disposed of
by the Bank for, and subject at all times to, the instructions of the Fund
pursuant to the terms of this Agreement. Subject to the specific provisions
herein relating to Portfolio Securities that are not physically held by the
Bank, the Bank will register all Portfolio Securities (unless otherwise directed
by Proper Instructions or an Officers' Certificate), in the name of a registered
nominee of the Bank as defined in the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, and will execute and deliver all
such certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state.
The Fund will from time to time furnish to the Bank
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of the Fund.
6.2 VOTING AND PROXIES. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Fund all notices, proxies
and proxy soliciting materials delivered to the Bank with respect to such
Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
6.3 CORPORATE ACTION. If at any time the Bank is notified that an
issuer of any Portfolio Security has taken or intends to take a corporate action
(a "Corporate Action") that affects the rights, privileges, powers, preferences,
qualifications or ownership of a Portfolio Security, including without
limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response or action on
the part of the holder of such Portfolio Security (a "Response"), the Bank shall
notify the Fund promptly of the Corporate Action, the Response required in
connection with the Corporate Action and the Bank's deadline for receipt from
the Fund of Proper Instructions regarding the Response (the "Response
Deadline"). If possible, the Response Deadline shall be at least three business
days after such notification to the Fund, provided that in no event shall the
Response Deadline be later than 48 hours prior to the Response expiration time
set by the depository processing such Corporate Action. The Bank shall forward
to the Fund via telecopier and/or overnight courier all notices, information
statements or other materials relating to the Corporate Action within
twenty-four (24) hours of receipt of such materials by the Bank.
(a) The Bank shall act upon a required Response only after
receipt by the Bank of Proper Instructions from the Fund no later than 5:00 p.m.
on the date specified as the Response Deadline and only if the Bank (or its
agent or subcustodian hereunder) has actual possession of all necessary
Securities, consents and other materials no later than 5:00 p.m. on the date
specified as the Response Deadline.
(b) The Bank shall have no duty to act upon a required
Response if Proper Instructions relating to such Response and all necessary
Securities, consents and other materials are not received by and in the
possession of the Bank no later than 5:00 p.m. on the date specified as the
Response Deadline. Notwithstanding, the Bank may, in its sole discretion, use
its best efforts to act upon a Response for which Proper Instructions and/or
necessary Securities, consents or other materials are received by the Bank after
5:00 p.m. on the date specified as the Response Deadline, it being acknowledged
and agreed by the parties that any undertaking by the Bank to use its best
efforts in such circumstances shall in no way create any duty upon the Bank to
complete such Response prior to its expiration.
(c) In the event that the Fund notifies the Bank of a
Corporate Action requiring a Response and the Bank has received no other notice
of such Corporate Action, the Response Deadline shall be 48 hours prior to the
Response expiration time set by the depository processing such Corporate Action.
(d) Section 14.3(g) of this Agreement shall govern any
Corporate Action involving Foreign Portfolio Securities held by a Selected
Foreign Sub-Custodian.
6.4 BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of
Fund assets in the Book-Entry System, and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect
to the Fund's participation in the Book-Entry System through the Bank (or any
such agent) will identify by book entry the Portfolio Securities which are
included with other securities deposited in the Account and shall at all times
during the regular business hours of the Bank (or such agent) be open for
inspection by duly authorized officers, employees or agents of the Fund. Where
securities are transferred to the Fund's account, the Bank shall also, by book
entry or otherwise, identify as belonging to the Fund a quantity of securities
in a fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities purchased
for the account of the Fund or shall pay cash collateral against the return of
Portfolio Securities loaned by the Fund upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Fund. The Bank (or its agent)
shall transfer securities sold or loaned for the account of the Fund upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of securities loaned by the Fund has been transferred to the
Account; and
(ii) the making of an entry on the records of the
Bank (or its agent) to reflect such transfer and payment for the account of the
Fund. Copies of all advices from the Book-Entry System of transfers of
securities for the account of the Fund shall identify the Fund, be maintained
for the Fund by the Bank and shall be provided to the Fund at its request. The
Bank shall send the Fund a confirmation, as defined by Rule 17f-4 of the 1940
Act, of any transfers to or from the account of the Fund;
(d) The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System;
(e) Anything to the contrary in this Agreement
notwithstanding, the Bank shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Book-Entry System by reason of any
negligence, willful misfeasance or misconduct of the Bank or of any of its
employees or from any negligent failure by the Bank of its duty to undertake
reasonable efforts to enforce effectively such rights as it may have against the
Book-Entry System; at the election of the Fund, it shall be entitled to be
subrogated to the Bank in any claim against the Book-Entry System or any other
person which the Bank may have as a consequence of any such loss or damage if
and to the extent that the Fund has not been made whole for any loss or damage.
6.5 USE OF A DEPOSITORY. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of the Fund all income and other payments thereon and to
take all steps necessary and proper in connection with the collection thereof;
(b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the account
of the Fund and the Fund shall pay cash collateral against the return of
Portfolio Securities loaned by the Fund only upon delivery of the Securities to
or for the account of the Fund; and upon any sale of Portfolio Securities,
delivery of the Securities will be made only against payment therefor or, in the
event Portfolio Securities are loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or for the account of the
Fund; and
(d) The Bank shall be subject to the same liability and duty
to the Fund and its shareholders with respect to all securities of the Fund, and
all cash, stock dividends, rights and items of like nature to which the Fund is
entitled, held or received by a central securities system as agent for the Bank,
pursuant to the foregoing authorization, as if the same were held or received by
the Bank at its own offices. In this connection, without limiting the foregoing
duty or liability, the Bank shall use its best efforts to provide that:
(i) The Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Bank upon its request;
(ii) Proxy materials received by a Depository with
respect to Portfolio Securities deposited with such Depository are forwarded
immediately to the Bank for prompt transmittal to the Fund;
(iii) Such Depository promptly forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Fund's account;
(iv) Such Depository prepares and delivers to the
Bank such records with respect to the performance of the Bank's obligations and
duties hereunder as may be necessary for the Fund to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and
(v) Such Depository delivers to the Bank all internal
accounting control reports, whether or not audited by an independent public
accountant, as well as such other reports as the Fund may reasonably request in
order to verify the Portfolio Securities held by such Depository.
6.6 USE OF BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of
Proper Instructions and upon receipt of confirmation from an Issuer (as defined
below) that the Fund has purchased such Issuer's Book-Entry Paper, the Bank
shall issue and hold in book-entry form, on behalf of the Fund, commercial paper
issued by issuers with whom the Bank has entered into a book-entry agreement
(the "Issuers"). In maintaining procedures for Book-Entry Paper, the Bank agrees
that:
(a) The Bank will maintain all Book-Entry Paper held
by the Fund in an account of the Bank that includes only assets held by it for
customers;
(b) The records of the Bank with respect to the Fund's
purchase of Book-Entry Paper through the Bank will identify, by book-entry,
commercial paper belonging to the Fund which is included in the Book-Entry
System and shall at all times during the regular business hours of the Bank be
open for inspection by duly authorized officers, employees or agents of the
Fund;
(c) The Bank shall pay for Book-Entry Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of advice from the Issuer
that such sale of Book-Entry Paper has been effected, and (ii) the making of an
entry on the records of the Bank to reflect such payment and transfer for the
account of the Fund;
(d) The Bank shall cancel such Book-Entry Paper obligation
upon the maturity thereof upon contemporaneous (i) receipt of advice that
payment for such Book-Entry Paper has been transferred to the Fund, and (ii) the
making of an entry on the records of the Bank to reflect such payment for the
account of the Fund; and
(e) The Bank will send to the Fund such reports on its system
of internal accounting control with respect to the Book-Entry Paper as the Fund
may reasonably request from time to time.
.
6.7 USE OF IMMOBILIZATION PROGRAMS. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.8 EURODOLLAR CDS. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Portfolio Securities are identified on the books of the Bank
as belonging to the Fund and that the books of the Bank identify the European
Branch holding such Portfolio Securities. Notwithstanding any other provision of
this Agreement to the contrary, except as stated in the first sentence of this
subsection 6.8, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Fund.
6.9 OPTIONS AND FUTURES TRANSACTIONS.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ
or Over-the-Counter.
(i) The Bank shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements (i) in accordance with the provisions of
any agreement entered into upon receipt of Proper Instructions among the Bank,
any broker-dealer registered with the National Association of Securities
Dealers, Inc. (the "NASD"), and, if necessary, the Fund, relating to the
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations.
(ii) Unless another agreement requires it to do so,
the Bank shall be under no duty or obligation to see that the Fund has deposited
or is maintaining adequate margin, if required, with any broker in connection
with any option, nor shall the Bank be under duty or obligation to present such
option to the broker for exercise unless it receives Proper Instructions from
the Fund. The Bank shall have no responsibility for the legality of any put or
call purchased or sold on behalf of the Fund, the propriety of any such purchase
or sale, or the adequacy of any collateral delivered to a broker in connection
with an option or deposited to or withdrawn from a Segregated Account (as
defined in subsection 6.10 below). The Bank specifically, but not by way of
limitation, shall not be under any duty or obligation to: (i) periodically check
or notify the Fund that the amount of such collateral held by a broker or held
in a Segregated Account is sufficient to protect such broker or the Fund against
any loss; (ii) effect the return of any collateral delivered to a broker; or
(iii) advise the Fund that any option it holds, has or is about to expire. Such
duties or obligations shall be the sole responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
(i) The Bank shall take action as to puts, calls and
futures contracts ("Futures") purchased or sold by the Fund in accordance with
the provisions of any agreement entered into upon the receipt of Proper
Instructions among the Fund, the Bank and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account deposits in
connection with transactions by the Fund.
(ii) The responsibilities of the Bank as to futures,
puts and calls traded on commodities exchanges, any Futures Commission Merchant
account and the Segregated Account shall be limited as set forth in subparagraph
(a)(2) of this Section 6.8 as if such subparagraph referred to Futures
Commission Merchants rather than brokers, and Futures and puts and calls thereon
instead of options.
6.10 SEGREGATED ACCOUNT. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Fund.
(a) Cash and/or Portfolio Securities may be transferred into a
Segregated Account upon receipt of Proper Instructions in the following
circumstances:
(i) in accordance with the provisions of any
agreement among the Fund, the Bank and a broker-dealer registered under the
Exchange Act and a member of the NASD or any Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Options Clearing Corporation, the rules, policies and
interpretations of the Securities and Exchange Commission, and the rules of any
registered national securities exchange or the Commodity Futures Trading
Commission or any registered Contract Market, or of any similar organizations
regarding escrow or other arrangements in connection with transactions by the
Fund;
(ii) for the purpose of segregating cash or
securities in connection with options purchased or written by the Fund or
commodity futures purchased or written by the Fund;
(iii) for the deposit of liquid assets, such as cash,
U.S. Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Fund's then
outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Fund's then outstanding commitments
under reverse repurchase agreements entered into with broker-dealer firms;
(iv) for the purposes of compliance by the Fund with
the procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;
(v) for other proper corporate purposes, but only, in
the case of this clause (e), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board, or of the executive
committee of the Board signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes of
such Segregated Account and declaring such purposes to be proper corporate
purposes.
(b) Cash and/or Portfolio Securities may be withdrawn from a
Segregated Account pursuant to Proper Instructions in the following
circumstances:
(i) with respect to assets deposited in accordance
with the provisions of any agreements referenced in (a)(i) or (a)(ii) above, in
accordance with the provisions of such agreements;
(ii) with respect to assets deposited pursuant to
(a)(iii) or (a)(iv) above, for sale or delivery to meet the Fund's obligations
under outstanding forward commitment or when-issued agreements for the purchase
of Portfolio Securities and under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal
or greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding
forward commitment or when-issued agreements for the purchase of portfolio
securities or reverse repurchase agreements are sold to other parties or the
Fund's obligations thereunder are met from assets of the Fund other than those
in the Segregated Account;
(v) for delivery upon settlement of a forward
commitment or when-issued agreement for the sale of Portfolio Securities; or
(vi) with respect to assets deposited pursuant to (e)
above, in accordance with the purposes of such account as set forth in Proper
Instructions.
6.11 INTEREST BEARING CALL OR TIME DEPOSITS. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Fund of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Fund and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Fund.
6.12 TRANSFER OF SECURITIES. The Bank will transfer, exchange,
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section only upon receipt of
Proper Instructions. The Proper Instructions shall state that such transfer,
exchange or delivery is for a purpose permitted under the terms of this Section
6.11, and shall specify the applicable subsection, or describe the purpose of
the transaction with sufficient particularity to permit the Bank to ascertain
the applicable subsection. After receipt of such Proper Instructions, the Bank
will transfer, exchange, deliver or release Portfolio Securities only in the
following circumstances:
(a) Upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor in full,
or, unless the Bank has received Proper Instructions providing otherwise for any
specific jurisdiction, against payment to the Bank in accordance with generally
accepted settlement practices and customs in the jurisdiction or market in which
the transaction occurs, each such payment to be in the amount of the sale price
shown in a broker's confirmation of sale received by the Bank before such
payment is made, as confirmed in the Proper Instructions received by the Bank
before such payment is made;
(b) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided, however, that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are received by
the Bank at least two business days prior to the date required for tender, and
unless the Bank (or its agent or subcustodian hereunder) has actual possession
of such Security at least two business days prior to the date of tender;
(c) Upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) For the purpose of redeeming in-kind shares of the Fund
upon authorization from the Fund;
(e) In the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(f) When such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) For the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Fund by
any bank, including the Bank; provided, however, that such Portfolio Securities
will be released only upon payment to the Bank for the account of the Fund of
the moneys borrowed, provided further, however, that in cases where additional
collateral is required to secure a borrowing already made, and such fact is made
to appear in the Proper Instructions, Portfolio Securities may be released for
that purpose without any such payment. In the event that any pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Fund from the lender in accordance with the
normal procedures of the lender and any loan agreement between the Fund and the
lender that an event of deficiency or default on the loan has occurred, the Bank
may deliver such pledged Portfolio Securities to or for the account of the
lender as provided in such loan agreement;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Fund
to a bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Fund and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Fund;
(j) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Fund (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
(k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 16 of this Agreement.
As to any deliveries made by the Bank pursuant to this Section 6.12,
securities or cash receivable in exchange therefor shall be delivered to the
Bank.
7. REDEMPTIONS. In the case of payment of assets of the Fund held by
the Bank in connection with redemptions and repurchases by the Fund of
outstanding common shares, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles of Incorporation or Declaration of Trust
and By-laws of the Fund (the "Articles"), from assets available for said
purpose.
8. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company, the
sale by the Fund of all, or substantially all, of its assets to another
investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Fund set
forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Board authorizing any of the foregoing transactions. Upon
completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Bank, this Agreement will terminate and the
Bank shall be released from any and all obligations hereunder.
9. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, the Bank will take the following actions without
prior authorization or instruction of the Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name
of the Fund all checks, drafts, or other negotiable or transferable instruments
or other orders for the payment of money received by it for the account of the
Fund and hold for the account of the Fund all income, dividends, interest and
other payments or distributions of cash with respect to the Portfolio Securities
held thereunder;
9.2 Present for payment all coupons and other income items held by
it for the account of the Fund which call for payment upon presentation and hold
the cash received by it upon such payment for the account of the Fund;
9.3 Receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Fund all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code or
the regulations of the Treasury Department issued thereunder, or by the laws of
any state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Fund; and
9.6 Exchange interim receipts or temporary securities for definitive
securities.
10. COLLECTIONS AND DEFAULTS. The Bank will use reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Fund notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Fund in writing of any default or refusal to pay within
two business days from the day on which it receives knowledge of such default or
refusal. The Bank shall provide to the Fund a monthly report, in a form agreed
to by the Bank and the Fund, listing, among other things, overdue or uncollected
items.
11. MAINTENANCE OF RECORDS AND ACCOUNTING SERVICES. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act. The books and records of
the Bank pertaining to its actions under this Agreement and reports by the Bank
or its independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Fund and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the 1940 Act.
12. [Reserved]
13. ADDITIONAL SERVICES. The Bank shall perform the additional
services for the Fund as are set forth on APPENDIX C hereto. APPENDIX C may
be amended from time to time upon agreement of the
parties to include further additional services to be provided by the Bank to the
Fund, at which time the fees set forth in APPENDIX B shall be appropriately
increased.
14. DUTIES OF THE BANK.
14.1 PERFORMANCE OF DUTIES AND STANDARD OF CARE. In performing its
duties hereunder and any other duties listed on any Schedule hereto, if any, the
Bank will be entitled to receive and act upon the advice of independent counsel
of its own selection, which may be counsel for the Fund, and will be without
liability for any action taken or thing done or omitted to be done in accordance
with this Agreement in good faith in conformity with such advice.
The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or
for the Fund or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of
the Fund or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the
Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the
Fund or the legality of the distribution of any Portfolio Securities as payment
in kind of such dividend; and
(f) any property or moneys of the Fund unless and until
received by it, and any such property or moneys delivered or paid by it pursuant
to the terms hereof.
Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Fund are such as may properly be held by the Fund
under the provisions of its Articles, By-laws, any federal or state statutes or
any rule or regulation of any governmental agency.
14.2 AGENTS AND SUBCUSTODIANS WITH RESPECT TO PROPERTY OF THE FUND
HELD IN THE UNITED STATES. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder. Without limiting the foregoing,
certain duties of the Bank hereunder may be performed by one or more affiliates
of the Bank.
Upon receipt of Proper Instructions, the Bank may employ
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as a
custodian of the Fund's assets with respect to property of the Fund held in the
United States. The Bank shall have no liability to the Fund or any other person
by reason of any act or omission of any subcustodian and the Fund shall
indemnify the Bank and hold it harmless from and against any and all actions,
suits and claims, arising directly or indirectly out of the performance of any
subcustodian, provided, however, that this provision shall not protect the Bank
in the event of the Bank's own negligence, willful misfeasance or misconduct or
from any negligent disregard of its own duties hereunder. Upon request of the
Bank, the Fund shall assume the entire defense of any action, suit, or claim
subject to the foregoing indemnity. The Fund shall pay all fees and expenses of
any subcustodian.
14.3 DUTIES OF THE BANK WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES.
(a) APPOINTMENT OF FOREIGN SUB-CUSTODIANS. Pursuant to a
Delegation Agreement of even date herewith by and between the Bank and the Fund
(the "Delegation Agreement"), the Fund has delegated certain responsibilities
concerning the Fund's Portfolio Securities and other assets maintained outside
the United States, including the selection of Eligible Foreign Subcustodians (as
defined in the Delegation Agreement (each, a "Selected Foreign Sub-Custodian").
The terms of the Delegation Agreement shall control as to the items set forth
therein.
(b) SEGREGATION OF SECURITIES. The Bank shall identify on its
books as belonging to the Fund the Foreign Portfolio Securities held by each
Selected Foreign Sub-Custodian. Each agreement pursuant to which the Bank
employs a foreign banking institution shall require that such institution
establish a custody account for the Bank and hold in that account Foreign
Portfolio Securities and other assets of the Fund, and, in the event that such
institution deposits Foreign Portfolio Securities in a foreign securities
depository, that it shall identify on its books as belonging to the Bank the
securities so deposited.
(c) TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. Transactions with
respect to the assets of the Fund held by a Selected Foreign Sub-Custodian shall
be effected pursuant to Proper Instructions from the Fund to the Bank and shall
be effected in accordance with the applicable Foreign Sub-Custodian Agreement.
If at any time any Foreign Portfolio Securities shall be registered in the name
of the nominee of the Selected Foreign Sub-Custodian, the Fund agrees to hold
any such nominee harmless from any liability by reason of the registration of
such securities in the name of such nominee.
Notwithstanding any provision of this Agreement to
the contrary, settlement and payment for Foreign Portfolio Securities received
for the account of the Fund and delivery of Foreign Portfolio Securities
maintained for the account of the Fund may be effected in accordance with the
customary established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction occurs,
including, if applicable, delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such securities from such
purchaser or dealer unless the Bank receives Proper Instructions prohibiting
delivery against expectation of later payment in any applicable jurisdiction.
In connection with any action to be taken with
respect to the Foreign Portfolio Securities held hereunder, including, without
limitation, the exercise of any voting rights, subscription rights, redemption
rights, exchange rights, conversion rights or tender rights, or any other action
in connection with any other right, interest or privilege with respect to such
Securities (collectively, the "Rights"), the Bank shall promptly transmit to the
Fund such information in connection therewith as is made available to the Bank
by the Foreign Sub-Custodian, and shall promptly forward to the applicable
Foreign Sub-Custodian any instructions, forms or certifications with respect to
such Rights, and any instructions relating to the actions to be taken in
connection therewith, as the Bank shall receive from the Fund pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Fund is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Fund or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(d) LIABILITY OF SELECTED FOREIGN SUB-CUSTODIANS. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Fund (each, a "Foreign Sub-Custodian Agreement")shall require the institution to
exercise reasonable care in the performance of its duties and to indemnify, and
hold harmless, the Bank and each Fund from and against certain losses, damages,
costs, expenses, liabilities or claims arising out of or in connection with the
institution's performance of such obligations, all as set forth in the
applicable Foreign Sub-Custodian Agreement. At the election of the Fund, it
shall be entitled to be subrogated to the rights of the Bank with respect to any
claims against a subcustodian as a consequence of any such loss, damage, cost,
expense liability or claim, if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense liability or claim. The Fund
acknowledges that the Bank, as a participant in Euro-clear, is subject to the
Terms and Conditions Governing the Euro-Clear System, a copy of which has been
made available to the Fund. The Fund acknowledges that pursuant to such Terms
and Conditions, Morgan Guaranty Brussels shall have the sole right to exercise
or assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Fund's securities and
other assets.
(e) TAX LAW. The Bank shall have no responsibility or
liability for any obligations now or hereafter imposed on the Fund or the Bank
as custodian of the Fund by the tax laws of any jurisdiction, and it shall be
the responsibility of the Fund to notify the Bank of the obligations imposed on
the Fund or the Bank as the custodian of the Fund by the tax law of any non-U.S.
jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The Bank shall administer the tax reclaim process and shall work with
the Selected Foreign Sub-custodian to pursue any claim for exemption or refund
under the tax law of jurisdictions for which the Fund has provided information
regarding obligations imposed on the Fund.
14.4 INSURANCE. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Fund held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Fund.
14.5. FEES AND EXPENSES OF THE BANK. The Fund will pay or reimburse
the Bank from time to time for any transfer taxes payable upon transfer of
Portfolio Securities made hereunder, and for all necessary proper disbursements,
expenses and charges made or incurred by the Bank in the performance of this
Agreement (including any duties listed on any Schedule hereto, if any) including
any indemnities for any loss, liabilities or expense to the Bank as provided
above. For the services rendered by the Bank hereunder, the Fund will pay to the
Bank such compensation or fees at such rate and at such times as shall be agreed
upon in writing by the parties from time to time. The Bank will also be entitled
to reimbursement by the Fund for all reasonable expenses incurred in conjunction
with termination of this Agreement.
14.6 ADVANCES BY THE BANK. The Bank may, in its sole
discretion, advance funds on behalf of the Fund to make any payment permitted by
this Agreement upon receipt of any proper authorization required by this
Agreement for such payments by the Fund. Should such a payment or payments, with
advanced funds, result in an overdraft (due to insufficiencies of the Fund's
account with the Bank, or for any other reason) this Agreement deems any such
overdraft or related indebtedness a loan made by the Bank to the Fund payable on
demand. Such overdraft shall bear interest at the current rate charged by the
Bank for such loans unless the Fund shall provide the Bank with agreed upon
compensating balances. The Fund agrees that the Bank shall have a continuing
lien and security interest to the extent of any overdraft or indebtedness, in
and to any property at any time held by it for the Fund's benefit or in which
the Fund has an interest and which is then in the Bank's possession or control
(or in the possession or control of any third party acting on the Bank's
behalf). The Fund authorizes the Bank, in the Bank's sole discretion, at any
time to charge any overdraft or indebtedness, together with interest due
thereon, against any balance of account standing to the credit of the Fund on
the Bank's books.
14.7 PROPERTY OF THE FUND AND CONFIDENTIALITY. The Fund's records,
including all those maintained hereunder by the Bank, whether in magnetic media,
hard copy, film form or other format, shall be the Fund's property for all
purposes, and the Bank shall treat confidentially and as proprietary information
of the fund all such records and other information relative to the Fund which is
not independently available to the Bank or in the public domain, and shall use
such records only in connection with the performance of its duties hereunder and
for no other purpose. In particular, the Bank agrees:
(a) that all information and data so acquired by it or its
employees, agents or contractors under this Agreement, or in contemplation
thereof, shall be and shall remain the Fund's exclusive property;
(b) to inform its employees, agents or contractors engaged in
handling such information and data of the confidential nature of such
information and data;
(c) to limit access to such information and data to authorized
employees, agents or contractors of the Bank and the Fund who have a need to
know and use such information and data in connection with this Agreement and the
services to be supplied herein;
(d) to keep, and have their employees, agents and contractors
keep , any and all such information and data confidential;
(e) not to copy or publish or disclose such information and
data to others or authorize their employees, agents, contractors or anyone else,
to copy or publish or disclose such information and data to others without the
other party's prior written approval, except if required by a state or federal
court or agency, and in such an event prompt written notice of such disclosure
requirement shall be provided to the other party if permitted by law; and
(f) that upon termination of this Agreement, all records and
other confidential information of the Fund in the possession of the Bank shall
be returned to the Fund or its designated successor custodian, offshore agent,
administrator, subadministrator or fund accountant, as provided herein.
The confidentiality provisions noted above will survive termination of
this Agreement for a period of two years.
The parties further agree that this Agreement will be considered
confidential during the term of its existence, that access to it will be limited
to those employees, agents, contractors or other persons who have a need to know
of or utilize the Agreement (including, without being limited to, the fund's
Board of Directors or Trustees, the auditors and counsel to the Fund, and
Deutsche Fund Management, Inc. or any of its affiliates), and that neither party
will publish or disclose the Agreement to others without the other party's prior
written approval except if required by a state or federal court or agency, and
in such event prompt written notice of such disclosure requirement shall be
provided to the other party if permitted by law.
14.8 RELIEF. The Bank recognizes that the property and proprietary
information of the Fund is unique, and that the Fund cannot be fully compensated
by money damages and would be irreparably harmed by the disclosure of its
confidential information and data in violation of the provisions of Paragraph
14.7. The Bank therefore agrees that the Fund may seek immediate relief at
equity for any failure to comply with Paragraph 14.7 hereof, in addition to any
other remedies the Fund may have in law or in equity.
14.9 REPORTS BY INDEPENDENT PUBLIC ACCOUNTANTS. Upon reasonable
request by the Fund, the Bank shall provide the Fund with copies of any reports
created by independent public accounts relating to the accounting system,
internal accounting control and procedures for safeguarding securities, futures
contracts and options on futures contracts in connection with the services
provided by the Bank to its clients that are the same or similar as the services
provided under this Agreement.
15. LIMITATION OF LIABILITY.
15.1 Notwithstanding anything in this Agreement to the contrary, in
no event shall the Bank or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold the Bank and the Indemnified
Parties harmless from and against any and all loss, damage, liability, actions,
suits, claims, costs and expenses, including legal fees, (a "Claim") arising as
a result of any act or omission of the Bank or any Indemnified Party under this
Agreement, except for any Claim resulting solely from the negligence, willful
misfeasance or bad faith of the Bank or any Indemnified Party. Without limiting
the foregoing, neither the Bank nor the Indemnified Parties shall be liable for,
and the Bank and the Indemnified Parties shall be indemnified against, any Claim
arising as a result of:
(a) Any act or omission by the Bank or any Indemnified Party
in good faith reliance upon the terms of this Agreement, any Officer's
Certificate, Proper Instructions, resolution of the Board, telegram, telecopier,
notice, request, certificate or other instrument reasonably believed by the Bank
to genuine;
(b) Any act or omission of any subcustodian selected by or at
the direction of the Fund;
(c) Any Corporate Action requiring a Response for which the
Bank has not received Proper Instructions or obtained actual possession of all
necessary Securities, consents or other materials by 5:00 p.m. on the date
specified as the Response Deadline;
(d) Any act or omission of any European Branch of a U.S.
banking institution that is the issuer of Eurodollar CDs in connection with any
Eurodollar CDs held by such European Branch;
(e) Information relied on in good faith by the Bank and
supplied by any Authorized Person in connection with the calculation of (i) the
net asset value and public offering price of the shares of capital stock of the
Fund or (ii) the Yield Calculation; or
(f) Any acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation, the unavailability of energy sources
and other similar happenings or events.
15.2 Notwithstanding anything to the contrary in this Agreement, in
no event shall the Bank or the Indemnified Parties be liable to the Fund or any
third party for lost profits or lost revenues or any special, consequential,
punitive or incidental damages of any kind whatsoever in connection with this
Agreement or any activities hereunder.
16. TERMINATION.
16.1 The term of this Agreement shall be three years commencing upon
the effective date of the Fund's registration statement (the "Initial Term"),
unless earlier terminated as provided herein. After the expiration of the
Initial Term, the term of this Agreement shall automatically renew for
successive one-year terms (each a "Renewal Term") unless (i) the Fund delivers a
notice of non-renewal to the Bank no later than six months prior to the
expiration of the Initial Term, or (ii) the Bank delivers a notice of
non-renewal to the Fund no later than one year prior to the expiration of the
Initial Term.
(a) Either party hereto may terminate this Agreement prior to
the expiration of the Initial Term in the event the other party violates any
material provision of this Agreement, provided that the non-violating party
gives written notice of such violation to the violating party and the violating
party does not cure such violation within 90 days of receipt of such notice.
(b) The Fund may terminate this Agreement during any Renewal
Term upon six months written notice to the Bank. The Bank may terminate this
Agreement during any Renewal Term upon one year written notice to the Fund. Any
termination pursuant to this paragraph 16.1(b) shall be effective upon
expiration of such notice period.
16.2 In the event of the termination of this Agreement, the Bank
will immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Fund does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection (16.3), deliver the Portfolio Securities and cash of
the Fund held by the Bank to a bank or trust company of the Bank's own selection
which meets the requirements of Section 17(f)(1) of the 1940 Act and has a
reported capital, surplus and undivided profits aggregating not less than
$10,000,000, to be held as the property of the Fund under terms similar to those
on which they were held by the Bank, whereupon such bank or trust company so
selected by the Bank will become the successor custodian of such assets of the
Fund with the same effect as though selected by the Board. Thereafter, the Bank
shall be released from any and all obligations under this Agreement.
16.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that there has been submitted to the
shareholders of the Fund the question of whether the Fund will be liquidated or
will function without a custodian for the assets of the Fund held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Fund held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Fund's Secretary and an opinion of
counsel to the Fund in form and content satisfactory to the Bank. Thereafter,
the Bank shall be released from any and all obligations under this Agreement,
except for the Bank's obligations under Section 14.7 hereof and any liability to
the Fund already accrued and payable.
16.4 The Fund shall reimburse the Bank for any reasonable expenses
incurred by the Bank in connection with the termination of this Agreement.
16.5 At any time after the termination of this Agreement, the Fund
may, upon written request, have reasonable access to the records of the Bank
relating to its performance of its duties as custodian.
17. CONFIDENTIALITY OF BANK INFORMATION. The Fund agrees than any
non-public information obtained hereunder concerning the Bank is confidential
and may not be disclosed without the consent of the Bank, except as may be
required by applicable law or at the request of a governmental agency. The Fund
further agrees that a breach of this provision would irreparably damage the Bank
and accordingly the Fund agrees that the Bank is entitled, in addition to all
other remedies at law or in equity to an injunction or injunctions without bond
or other security to prevent breaches of this provision.
18. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (I) United
States Postal Service registered mail, (ii) telecopier with written
confirmation, (iii) hand delivery with signature to such party at its office at
the address set forth below, namely:
(a) In the case of notices sent to the Fund to:
Deutsche Portfolios
c/o IBT Trust Company (Cayman) Ltd.
P.O. Box 501
Cardinal Avenue
Georgetown, Grand Cayman
Attention: Carmen Thompson
With a copy to:
Deutsche Fund Management, Inc.
31 W. 52nd Street
New York, NY 10019
Attention: President
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
200 Clarendon Street
P.O. Box 9130
Boston, Massachusetts 02117-9130
Attention: James Keenan, Director, Client Management
With a copy to: John E. Henry, General Counsel
or at such other place as such party may from time to time
designate in writing.
19. AMENDMENTS. This Agreement may not be altered or amended, except by
an instrument in writing, executed by both parties.
20. PARTIES. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns; provided,
however, that this Agreement will not be assignable by the Fund without the
written consent of the Bank or by the Bank without the written consent of the
Fund, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Section 16 hereof will not be deemed to be
an assignment within the meaning of this provision.
21. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
23. ENTIRE AGREEMENT. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.
24. LIMITATION OF LIABILITY. The Bank agrees that the obligations
assumed by the Fund hereunder shall be limited in all cases to the assets of the
Fund and that the Bank shall not seek satisfaction of any such obligation from
the officers, agents, employees, trustees, or shareholders of the Fund.
25. SIGNATURE LICENSE. The Bank shall remain a licensee of Signature Financial
Group, Inc. with respect to the trademarks of Hub(R) and Spoke(R)1 and related
proprietary rights during the term of this Agreement. -------- 1 "Hub" and
"Spoke" and "Hub and Spoke" are registered trademarks of Signature Financial
Group, Inc.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
DEUTSCHE PORTFOLIOS
By:..............................
Name:
Title:
INVESTORS BANK & TRUST COMPANY
By:............................
Name:
Title:
<PAGE>
APPENDIX A
PORTFOLIOS
Provesta Portfolio (US Dollar)
Investa Portfolio (US Dollar)
Japanese Equity Portfolio (US Dollar)
Global Bond Portfolio (US Dollar)
European Bond Portfolio (US Dollar)
Top 50 World Portfolio (US Dollar)
Top 50 Europe Portfolio (US Dollar)
Top 50 Asia Portfolio (US Dollar)
Top 50 US Portfolio (US Dollar)
US Money Market Portfolio (US Dollar)
Exhibit 9(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of this 28th day of September, 1997, between the
Deutsche Portfolios, a New York business trust (the "Fund") and IBT Fund
Services (Canada) Inc. ("IBT").
The Fund, an open-end management investment company desires, on behalf
of the portfolios listed on APPENDIX A hereto, to retain IBT to perform certain
fund accounting services for the several portfolios of the Fund currently
existing and hereafter established (the "Portfolios"), and IBT has indicated its
willingness to so act, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS. Whenever used herein, the terms listed below will have
the following meaning:
1.1 AUTHORIZED PERSON. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Fund by appropriate resolution of its Board, and set forth in a
certificate as required by Section 4 hereof.
1.2 BOARD. Board will mean the Board of Trustees of the Fund.
1.3 OFFICERS' CERTIFICATE. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
1.4 PROPER INSTRUCTIONS. Proper Instructions shall mean instructions
(which may be continuing instructions) regarding matters signed or initialed by
an Authorized Person. Oral instructions will be considered Proper Instructions
if IBT reasonably believes them to have been given by an Authorized Person. The
Fund shall cause all oral instructions to be promptly confirmed in writing. IBT
shall act upon and comply with any subsequent Proper Instruction which modifies
a prior instruction and the sole obligation of IBT with respect to any follow-up
or confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires IBT to
act, the Fund shall give IBT specific Proper Instructions as to the action
required. Upon receipt by IBT of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Fund, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and IBT agree in writing that such procedures afford adequate safeguards
for the Fund's assets.
2. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with IBT his or her
certification to IBT, in such form as may be acceptable to IBT, of (i) the names
and signatures of the Authorized Persons and (ii) the names of the members of
the Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund will sign a new or amended certification setting forth the
change and the new, additional or omitted names or signatures. IBT will be
entitled to rely and act upon any Officers' Certificate given to it by the Fund
which has been signed by Authorized Persons named in the most recent
certification received by IBT.
3. MAINTENANCE OF RECORDS AND ACCOUNTING SERVICES. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act. The books and records of
the Bank pertaining to its actions under this Agreement and reports by the Bank
or its independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Fund and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the 1940 Act.
4. FUND EVALUATION AND YIELD CALCULATION
4.1 FUND EVALUATION. IBT shall compute and, unless otherwise
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
Board, the net asset value and the public offering price of a share of capital
stock of each Portfolio, such determination to be made in accordance with the
provisions of the Declaration of Trust and By-laws of the Fund and the
Registration Statement relating to each Portfolio, as they may from time to time
be amended, and any applicable resolutions of the Board at the time in force and
applicable; and promptly to notify the Fund, the proper exchange and the NASD or
such other persons as the Fund may request of the results of such computation
and determination. In computing the net asset value hereunder, IBT may rely in
good faith upon information furnished to it by any Authorized Person in respect
of (i) the manner of accrual of the liabilities of the Fund and in respect of
liabilities of the Fund not appearing on its books of account kept by IBT, (ii)
reserves, if any, authorized by the Board or that no such reserves have been
authorized, (iii) the source of the quotations to be used in computing the net
asset value, (iv) the value to be assigned to any security for which no price
quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and IBT shall
not be responsible for any loss occasioned by such reliance or for any good
faith reliance on any quotations received from a source pursuant to (iii) above.
4.2. YIELD CALCULATION. IBT will compute the performance results of
the Portfolios (the "Yield Calculation") in accordance with the provisions of
Release No. 33-6753 and Release No. IC-16245 (February 2, 1988) (the "Releases")
promulgated by the Securities and Exchange Commission, and any subsequent
amendments to, published interpretations of or general conventions accepted by
the staff of the Securities and Exchange Commission with respect to such
releases or the subject matter thereof ("Subsequent Staff Positions"), subject
to the terms set forth below:
(a) IBT shall compute the Yield Calculation for the Fund for
the stated periods of time as shall be mutually agreed upon, and communicate in
a timely manner the result of such computation to the Fund.
(b) In performing the Yield Calculation, IBT will derive the
items of data necessary for the computation from the records it generates and
maintains for the Fund pursuant Section 3 hereof. IBT shall have no
responsibility to review, confirm, or otherwise assume any duty or liability
with respect to the accuracy or correctness of any such data supplied to it by
the Fund, any of the Fund's designated agents or any of the Fund's designated
third party providers.
(c) At the request of IBT, the Fund shall provide, and IBT
shall be entitled to rely on, written standards and guidelines to be followed by
IBT in interpreting and applying the computation methods set forth in the
Releases or any Subsequent Staff Positions as they specifically apply to the
Fund. In the event that the computation methods in the Releases or the
Subsequent Staff Positions or the application to the Fund of a standard or
guideline is not free from doubt or in the event there is any question of
interpretation as to the characterization of a particular security or any aspect
of a security or a payment with respect thereto (e.g., original issue discount,
participating debt security, income or return of capital, etc.) or otherwise or
as to any other element of the computation which is pertinent to the Fund, the
Fund or its designated agent shall have the full responsibility for making the
determination of how the security or payment is to be treated for purposes of
the computation and how the computation is to be made and shall inform IBT
thereof on a timely basis. IBT shall have no responsibility to make independent
determinations with respect to any item which is covered by this Section, and
shall not be responsible for its computations made in accordance with such
determinations so long as such computations are mathematically correct.
(d) The Fund shall keep IBT informed of all publicly available
information and of any non-public advice, or information obtained by the Fund
from its independent auditors or by its personnel or the personnel of its
investment adviser, or Subsequent Staff Positions related to the computations to
be undertaken by IBT pursuant to this Agreement and IBT shall not be deemed to
have knowledge of such information (except as contained in the Releases) unless
it has been furnished to IBT in writing.
5. FEES. For the services rendered pursuant to this Agreement, the Fund
agrees to pay IBT the fees set forth on APPENDIX B hereto.
6. ADDITIONAL SERVICES. IBT shall perform the additional services for
the Fund as are set forth on APPENDIX C hereto. APPENDIX C may be amended from
time to time upon agreement of the parties to include further additional
services to be provided by IBT to the Fund, at which time the fees set forth in
APPENDIX B shall be appropriately increased.
7. LIMITATION OF LIABILITY.
7.1 Notwithstanding anything in this Agreement to the contrary, in
no event shall IBT or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold IBT and the Indemnified Parties
harmless from and against any and all loss, damage, liability, actions, suits,
claims, costs and expenses, including legal fees, (a "Claim") arising as a
result of any act or omission of IBT or any Indemnified Party under this
Agreement, except for any Claim resulting solely from the negligence, willful
misfeasance or bad faith of IBT or any Indemnified Party. Without limiting the
foregoing, neither IBT nor the Indemnified Parties shall be liable for, and IBT
and the Indemnified Parties shall be indemnified against, any Claim arising as a
result of:
(a) Any act or omission by IBT or any Indemnified Party in
good faith reliance upon the terms of this Agreement, any Officer's Certificate,
Proper Instructions, resolution of the Board, telegram, telecopier, notice,
request, certificate or other instrument reasonably believed by IBT to genuine;
(b) Information relied on in good faith by IBT and supplied by
any Authorized Person in connection with the calculation of (i) the net asset
value and public offering price of the shares of capital stock of the Fund or
(ii) the Yield Calculation; or
(c) Any acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation, the unavailability of energy sources
and other similar happenings or events.
7.2 Notwithstanding anything to the contrary in this Agreement, in
no event shall IBT or the Indemnified Parties be liable to the Fund or any third
party for lost profits or lost revenues or any special, consequential, punitive
or incidental damages of any kind whatsoever in connection with this Agreement
or any activities hereunder.
8. TERMINATION.
8.1 The term of this Agreement shall be three years commencing upon
the effective date of the Fund's registration statement (the "Initial Term"),
unless earlier terminated as provided herein. After the expiration of the
Initial Term, the term of this Agreement shall automatically renew for
successive one-year terms (each a "Renewal Term") unless (i) the Fund delivers a
notice of non-renewal to IBT no later than six months prior to the expiration of
the Initial Term, or (ii) IBT delivers a notice of non-renewal to the Fund no
later than one year prior to the expiration of the Initial Term.
(a) Either party hereto may terminate this Agreement prior to
the expiration of the Initial Term in the event the other party violates any
material provision of this Agreement, provided that the non-violating party
gives written notice of such violation to the violating party and the violating
party does not cure such violation within 90 days of receipt of such notice.
(b) The Fund may terminate this Agreement during any Renewal
Term upon six months written notice to IBT. IBT may terminate this Agreement
during any Renewal term upon one year notice to the Fund. Any termination
pursuant to this paragraph 7.1(b) shall be effective upon expiration of such
notice period.
8.2 The Fund shall reimburse IBT for any reasonable expenses
incurred by IBT in connection with the termination of this Agreement.
8.3 At any time after the termination of this Agreement, the Fund
may, upon written request, have reasonable access to the records of IBT relating
to its performance of its duties as hereunder.
9. PROPERTY OF THE FUND AND CONFIDENTIALITY.
9.1 The Fund's records, including all those maintained hereunder by
the Bank, whether in magnetic media, hard copy, film form or other format, shall
be the Fund's property for all purposes, and the Bank shall treat confidentially
and as proprietary information of the fund all such records and other
information relative to the Fund which is not independently available to the
Bank or in the public domain, and shall use such records only in connection with
the performance of its duties hereunder and for no other purpose. In particular,
the Bank agrees:
(a) that all information and data so acquired by it or its
employees, agents or contractors under this Agreement, or in contemplation
thereof, shall be and shall remain the Fund's exclusive property;
(b) to inform its employees, agents or contractors engaged in
handling such information and data of the confidential nature of such
information and data;
(c) to limit access to such information and data to authorized
employees, agents or contractors of the Bank and the Fund who have a need to
know and use such information and data in connection with this Agreement and the
services to be supplied herein;
(d) to keep, and have their employees, agents and contractors
keep , any and all such information and data confidential;
(e) not to copy or publish or disclose such information and
data to others or authorize their employees, agents, contractors or anyone else,
to copy or publish or disclose such information and data to others without the
other party's prior written approval, except if required by a state or federal
court or agency, and in such an event prompt written notice of such disclosure
requirement shall be provided to the other party if permitted by law; and
(f) that upon termination of this Agreement, all records and
other confidential information of the Fund in the possession of the Bank shall
be returned to the Fund or its designated successor custodian, offshore agent,
administrator, subadministrator or fund accountant, as provided herein.
The confidentiality provisions noted above will survive termination of
this Agreement for a period of two years.
The parties further agree that this Agreement will be considered
confidential during the term of its existence, that access to it will be limited
to those employees, agents, contractors or other persons who have a need to know
of or utilize the Agreement (including, without being limited to, the fund's
Board of Directors or Trustees, the auditors and counsel to the Fund, and
Deutsche Fund Management, Inc. or any of its affiliates), and that neither party
will publish or disclose the Agreement to others without the other party's prior
written approval except if required by a state or federal court or agency, and
in such event prompt written notice of such disclosure requirement shall be
provided to the other party if permitted by law.
9.2 RELIEF. The Bank recognizes that the property and proprietary
information of the Fund is unique, and that the Fund cannot be fully compensated
by money damages and would be irreparably harmed by the disclosure of its
confidential information and data in violation of the provisions of Paragraph
9.1. The Bank therefore agrees that the Fund may seek immediate relief at equity
for any failure to comply with Paragraph 9.1 hereof, in addition to any other
remedies the Fund may have in law or in equity.
10. CONFIDENTIALITY OF IBT INFORMATION. The Fund agrees that any
non-public information obtained hereunder concerning IBT is confidential and may
not be disclosed without the prior written consent of IBT, except as may be
required by applicable law or at the request of a governmental agency. The Fund
further agrees that a breach of this provision would irreparably damage IBT and
the Fund accordingly agrees that IBT is entitled, in addition to all other
remedies at law or in equity, to an injunction or injunctions without bond or
other security to prevent breaches of this provision.
11. SERVICE LEVEL STANDARDS. Subject to the non-occurrence of an event
of force majeure and the performance of the Fund's obligations described in this
Agreement, the Company agrees that the services will be provided in accordance
with the service level standards specified in APPENDIX D hereto. IBT's fees will
be adjusted based upon performance based reductions as described in APPENDIX D.
12. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (i) United
States Postal Service registered mail, (ii) telecopier with written
confirmation, (iii) had delivery with signature to such party at its office at
the address set forth below, namely:
(a) In the case of notices sent to the Fund to:
Deutsche Portfolios
c/o IBT Trust Company (Cayman) Ltd.
P.O. Box 501
Cardinal Avenue
Georgetown, Grand Cayman
Attention: Carmen Thompson
With a copy to:
Deutsche Fund Management, Inc.
31 W. 52nd Street
New York, NY 10019
Attention: President
<PAGE>
(b) In the case of notices sent to IBT to:
IBT Fund Services (Canada) Inc.
1 First Canadian, King Street West
Suite 2800
PO Box 231
Toronto, Canada M5X1C8
Attention:
With a copy to: John E. Henry, General Counsel
Investors Bank & Trust Company
89 South Street
Boston, MA 02111
or at such other place as such party may from time to time
designate in writing.
13. AMENDMENTS. This Agreement may not be altered or amended, except by
an instrument in writing, executed by both parties.
14. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of IBT or by IBT without the written consent of the
Fund, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Section 8 hereof will not be deemed to be an
assignment within the meaning of this provision.
15. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions.
16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
17. ENTIRE AGREEMENT. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.
18. LIMITATION OF LIABILITY. IBT is hereby expressly put on notice of
the limitation of liability set forth in the Declaration of Trust of the Fund
and agrees that the obligations assumed by the Fund hereunder shall be limited
in all cases to the assets of the Fund and that IBT shall not seek satisfaction
of any such obligation from the officers, agents, employees, trustees, or
shareholders of the Fund.
19. SIGNATURE LICENSE. IBT shall remain a licensee of Signature
Financial Group, Inc. with respect to the trademarks of Hub(R) and Spoke(R)1 and
related proprietary rights during the term of this Agreement.
[Remainder of Page Intentionally Left Blank]
- - --------
1 "Hub" and "Spoke" and "Hub and Spoke" are registered trademarks of Signature
Financial Group, Inc.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
DEUTSCHE PORTFOLIOS
By:.........................................
Name:
Title:
IBT FUND SERVICES (CANADA) INC.
By:...........................................
Name:
Title:
<PAGE>
APPENDIX A
PORTFOLIOS
Provesta Portfolio (US Dollar)
Investa Portfolio (US Dollar)
Japanese Equity Portfolio (US Dollar)
Global Bond Portfolio (US Dollar)
European Bond Portfolio (US Dollar)
Top 50 World Portfolio (US Dollar)
Top 50 Europe Portfolio (US Dollar)
Top 50 Asia Portfolio (US Dollar)
Top 50 US Portfolio (US Dollar)
US Money Market Portfolio (US Dollar)
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
ADMINISTRATION AGREEMENT
BETWEEN
DEUTSCHE PORTFOLIOS
AND
IBT TRUST COMPANY (CAYMAN) LTD.
<PAGE>
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT is made as of September 28, 1997 by and
between the Deutsche Portfolios, a New York business trust (the "Fund"), and IBT
Trust Company (Cayman) Ltd.
("IBT").
WHEREAS, the Fund, on behalf of the portfolios listed on APPENDIX 1
hereto, desires to retain IBT to render certain administrative services to the
Fund, with respect to each of its portfolios (the "Portfolios") and IBT is
willing to render such services.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints IBT to act as Administrator of
the Fund on the terms set forth in this Agreement. IBT accepts such appointment
and agrees to render the services herein set forth for the compensation herein
provided.
2. DELIVERY OF DOCUMENTS. The Fund has furnished IBT with copies
properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Trustees authorizing the
appointment of IBT to provide certain administrative services to the Fund and
approving this Agreement;
(b) The Fund's Declaration of Trust and all amendments thereto
(the "Declaration");
(c) The Fund's by-laws and all amendments thereto (the
"By-Laws");
(d) The Fund's agreements with all service providers which
include any investment advisory agreements, sub-investment advisory agreements,
custody agreements, distribution agreements and transfer agency agreements
(collectively, the "Agreements"); and
(e) Such other certificates, documents or opinions as may
mutually be deemed necessary or appropriate for IBT in the proper performance of
its duties hereunder.
The Fund will immediately furnish IBT with copies of all
amendments of or supplements to the foregoing. Furthermore, the Fund will notify
IBT as soon as possible of any matter which may materially affect the
performance by IBT of its services under this Agreement.
3. DUTIES OF ADMINISTRATOR. Subject to the supervision and direction of
the Trustees of the Fund, IBT, as Administrator, will assist in conducting
various aspects of the Fund's administrative operations and undertakes to
perform the services described in APPENDIX 2 hereto. IBT may, from time to time,
perform additional duties and functions which shall be set forth in an amendment
to such APPENDIX 2executed by both parties. At such time, the fee schedule
included in APPENDIX 3 hereto shall be appropriately amended.
In performing all services under this Agreement, IBT shall act
in conformity with the Fund's Declaration and By-Laws, as the same may be
amended from time to time, and the investment objectives, investment policies
and other practices and policies set forth in the Fund's offering documents, as
the same may be amended from time to time. Notwithstanding any item discussed
herein, IBT has no discretion over the Fund's assets or choice of investments
and cannot be held liable for any problem relating to such investments.
4. DUTIES OF THE FUND. The Fund agrees to make its legal counsel
available to IBT for instruction with respect to any matter of law arising in
connection with IBT's duties hereunder, and the Fund further agrees that IBT
shall be entitled to rely on such instruction without further investigation on
the part of IBT.
5. FEES AND EXPENSES.
(a) For the services to be rendered and the facilities to be
furnished by IBT, as provided for in this Agreement, the Fund will compensate
IBT in accordance with the fee schedule attached as APPENDIX 3 hereto. Such fees
do not include out-of-pocket disbursements (as delineated on the fee schedule or
other expenses with the prior approval of the Fund's management) of IBT for
which IBT shall be entitled to bill the Fund separately and for which the Fund
shall reimburse IBT.
(b) IBT shall not be required to pay any expenses incurred by
the Fund.
6. LIMITATION OF LIABILITY.
(a) IBT, its directors, officers, employees and agents 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 performance of its obligations and
duties under this Agreement, except a loss resulting from willful misfeasance,
bad faith or negligence in the performance of such obligations and duties, or by
reason of its reckless disregard thereof. The Fund will indemnify IBT, its
directors, officers, employees and agents against and hold it and them harmless
from any and all losses, claims, damages, liabilities or expenses (including
legal fees and expenses) resulting from any claim, demand, action or suit (i)
arising out of the actions or omissions of the Fund; (ii) arising out of the
offer or sale of any securities of the Fund in violation of (x) any requirement
under the federal securities laws or regulations, (y) any requirement under the
securities laws or regulations of any state, or (z) any stop order or other
determination or ruling by any federal or state agency with respect to the offer
or sale of such securities; or (iii) not resulting from the willful misfeasance,
bad faith or negligence of IBT in the performance of such obligations and duties
or by reason of its reckless disregard thereof.
(b) IBT may apply to the Fund at any time for instructions and
may consult counsel for the Fund, or its own counsel, and with accountants and
other experts with respect to any matter arising in connection with its duties
hereunder, and IBT shall not be liable or accountable for any action taken or
omitted by it in good faith in accordance with such instruction, or with the
opinion of such counsel, accountants, or other experts. IBT shall not be liable
for any act or omission taken or not taken in reliance upon any document,
certificate or instrument which it reasonably believes to be genuine and to be
signed or presented by the proper person or persons. IBT shall not be held to
have notice of any change of authority of any officers, employees, or agents of
the Fund until receipt of written notice thereof has been received by IBT from
the Fund.
(c) In the event IBT is unable to perform, or is delayed in
performing, its obligations under the terms of this Agreement because of acts of
God, strikes, legal constraint, government actions, war, emergency conditions,
interruption of electrical power or other utilities, equipment or transmission
failure or damage reasonably beyond its control or other causes reasonably
beyond its control, IBT shall not be liable to the Fund for any damages
resulting from such failure to perform, delay in performance, or otherwise from
such causes.
(d) In no event shall IBT be liable for special, incidental or
consequential damages, even if advised of the possibility of such damages.
7. TERMINATION OF AGREEMENT.
(a) The term of this Agreement shall be three years commencing
upon the date hereof (the "Initial Term"), unless earlier terminated as provided
herein. After the expiration of the Initial Term, the term of this Agreement
shall automatically renew for successive one-year terms (each a "Renewal Term")
unless (i) the Fund delivers a notice of non-renewal to IBT no later than six
months prior to the expiration of the Initial Term, or (ii) IBT delivers a
notice of non-renewal to the Fund no later than one year prior to the expiration
of the Initial Term.
(i) Either party hereto may terminate this Agreement
prior to the expiration of the Initial Term in the event the other party
violates any material provision of this Agreement, provided that the violating
party does not cure such violation within 90 days of receipt of written notice
from the non- violating party of such violation.
(ii) The Fund may terminate this Agreement during any
Renewal Term upon six months written notice to IBT. IBT may terminate this
Agreement during any Renewal term upon one year notice to the Fund. Any
termination pursuant to this paragraph 7.1(b) shall be effective upon expiration
of such notice period.
(b) At any time after the termination of this Agreement, the
Fund may, upon written request, have reasonable access to the records of IBT
relating to its performance of its duties as Administrator.
<PAGE>
8. MISCELLANEOUS.
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Fund or IBT shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Fund:
Deutsche Portfolios
c/o IBT Trust Company (Cayman) Ltd.
P.O. Box 501
Cardinal Avenue
Georgetown, Grand Cayman
Attention: Carmen Thompson
With a copy to:
Deutsche Fund Management, Inc.
31 W. 52nd Street
New York, NY 10019
Attention: President
To IBT:
IBT Trust Company (Cayman) Ltd.
P.O. Box 501
Cardinal Avenue
Georgetown, Grand Cayman
Attention: Carmen Thompson
With a copy to:
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02117-9130
Attention: John E. Henry, General Counsel
(b) This Agreement shall extend to and shall be binding upon
the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable without the written consent
of the other party.
(c) This Agreement shall be construed in accordance with the
laws of the Commonwealth of Massachusetts, without regard to its conflict of
laws provisions.
(d) This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original and which
collectively shall be deemed to constitute only one instrument.
(e) The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
9. PROPERTY OF THE FUND AND CONFIDENTIALITY.
9.1 The Fund's records, including all those maintained hereunder by
the Bank, whether in magnetic media, hard copy, film form or other format, shall
be the Fund's property for all purposes, and the Bank shall treat confidentially
and as proprietary information of the fund all such records and other
information relative to the Fund which is not independently available to the
Bank or in the public domain, and shall use such records only in connection with
the performance of its duties hereunder and for no other purpose. In particular,
the Bank agrees:
(a) that all information and data so acquired by it or its
employees, agents or contractors under this Agreement, or in contemplation
thereof, shall be and shall remain the Fund's exclusive property;
(b) to inform its employees, agents or contractors engaged in
handling such information and data of the confidential nature of such
information and data;
(c) to limit access to such information and data to authorized
employees, agents or contractors of the Bank and the Fund who have a need to
know and use such information and data in connection with this Agreement and the
services to be supplied herein;
(d) to keep, and have their employees, agents and contractors
keep , any and all such information and data confidential;
(e) not to copy or publish or disclose such information and
data to others or authorize their employees, agents, contractors or anyone else,
to copy or publish or disclose such information and data to others without the
other party's prior written approval, except if required by a state or federal
court or agency, and in such an event prompt written notice of such disclosure
requirement shall be provided to the other party if permitted by law; and
(f) that upon termination of this Agreement, all records and
other confidential information of the Fund in the possession of the Bank shall
be returned to the Fund or its designated successor custodian, offshore agent,
administrator, subadministrator or fund accountant, as provided herein.
The confidentiality provisions noted above will survive termination of
this Agreement for a period of two years.
The parties further agree that this Agreement will be considered
confidential during the term of its existence, that access to it will be limited
to those employees, agents, contractors or other persons who have a need to know
of or utilize the Agreement (including, without being limited to, the fund's
Trustees or Trustees, the auditors and counsel to the Fund, and Deutsche Fund
Management, Inc. or any of its affiliates), and that neither party will publish
or disclose the Agreement to others without the other party's prior written
approval except if required by a state or federal court or agency, and in such
event prompt written notice of such disclosure requirement shall be provided to
the other party if permitted by law.
9.2 RELIEF. The Bank recognizes that the property and proprietary
information of the Fund is unique, and that the Fund cannot be fully compensated
by money damages and would be irreparably harmed by the disclosure of its
confidential information and data in violation of the provisions of Paragraph
9.1. The Bank therefore agrees that the Fund may seek immediate relief at equity
for any failure to comply with Paragraph 9.1 hereof, in addition to any other
remedies the Fund may have in law or in equity.
10. CONFIDENTIALITY OF IBT INFORMATION. The Fund agrees that any
non-public information obtained hereunder concerning IBT is confidential and may
not be disclosed without the prior written consent of IBT, except as may be
required by applicable law or at the request of a governmental agency. The Fund
further agrees that a breach of this provision would irreparably damage IBT and
the Fund accordingly agrees that IBT is entitled, in addition to all other
remedies at law or in equity, to an injunction or injunctions without bond or
other security to prevent breaches of this provision.
11. USE OF NAME. The Fund shall not use the name of IBT or any of its
affiliates in any prospectus, sales literature or other material relating to the
Fund in a manner not approved by IBT prior thereto in writing; provided however,
that the approval of IBT shall not be required for any use of its name which
merely refers in accurate and factual terms to its appointment hereunder or
which is required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental or
judicial authority; PROVIDED FURTHER, that in no event shall such approval be
unreasonably withheld or delayed.
12. SIGNATURE LICENSE. IBT shall remain a licensee of Signature
Financial Group, Inc. with respect to the trademarks of Hub(R) and Spoke(R)1 and
related proprietary rights during the term of this Agreement.
- - --------
1 "Hub" and "Spoke" and "Hub and Spoke" are registered trademarks of Signature
Financial Group, Inc.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the date
first written above.
DEUTSCHE PORTFOLIOS
By:
Name:
Title:
IBT TRUST COMPANY (CAYMAN) LTD.
By:
Name:
Title:
<PAGE>
APPENDIX 1
PORTFOLIOS
Provesta Portfolio (US Dollar)
Investa Portfolio (US Dollar)
Japanese Equity Portfolio (US Dollar)
Global Bond Portfolio (US Dollar)
European Bond Portfolio (US Dollar)
Top 50 World Portfolio (US Dollar)
Top 50 Europe Portfolio (US Dollar)
Top 50 Asia Portfolio (US Dollar)
Top 50 US Portfolio (US Dollar)
US Money Market Portfolio (US Dollar)
<PAGE>
APPENDIX 2
SERVICES
Registration with Cayman Authorities
Filing and maintenance of governing documents, offshore registration documents,
and offshore regulatory reports
Maintenance of telephone line
1 Provision of authorized signatures
1 Authorization and filing of financial statements
1 Filing of tax return and N-SAR
1 Cayman legal compliance
1 Approval of annual expense budget
1 Authorization of expenses (with Treasurer approval)
1 Distribution of Board materials
1 Authorization of fund distributions (omnibus accounts)
1 Distribution of dividends and capital gains (omnibus accounts)
1 Authorization of shareholder trades (omnibus accounts)
1 Distribution of shareholder statements, tax forms, and shareholder
reports (omnibus accounts)
1 Maintenance of shareholder register (omnibus accounts)
1 Maintenance of necessary offshore books and records
1 Maintenance of omnibus accounts
1 Receipt and response to literature requests
Exhibit 9(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
OPERATIONS AGENCY
AGREEMENT
AGREEMENT made as of JULY 28, 1997 by and between DEUTSCHE PORTFOLIOS having
its principal office and place of business at Cardinal Avenue, Cayman Islands ,
BWI (the "Investment Company"), on behalf of the portfolios (individually
referred to herein as a "Fund" and collectively as "Funds") of the Investment
Company, and FEDERATED SERVICES COMPANY, a Pennsylvania Corporation, having its
principal office and place of business at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, on behalf of itself and its subsidiaries (the
"Company").
WHEREAS, the Investment Company is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), with authorized and issued beneficial interests ("Interest(s)");
WHEREAS, the Fund is a Hub(R) in a Hub(R) and Spoke(R) investment
structure; and
WHEREAS the Investment Company may desire to appoint the Company as its
operations agent to provide it with operations agency services (as herein
defined) and the Company desires to accept such appointment; and
WHEREAS, from time to time the Investment Company may desire and may instruct
the Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to another agent (the "Agent").
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:
SECTION ONE: OPERATIONS AGENCY SERVICES.
ARTICLE 1. APPOINTMENT
The Investment Company hereby appoints the Company as Operations Agent for the
period and on the terms and conditions set forth in this Agreement. The Company
accepts such appointment and agrees to furnish the services set forth in Article
2 of this Agreement in return for the compensation set forth in Article 6 of
this Agreement.
ARTICLE 2. THE COMPANY'S DUTIES.
As Operations Agent, and subject to the supervision and control of the Board,
and in accordance with Proper Instructions (as defined hereafter) from the
Investment Company the Company will provide facilities, equipment, and personnel
to carry out the following operations agency services for operation of the
business and affairs of the Investment Company and each of its portfolios:
(1) following the organization of the Investment Company,
prepare the Investment Company's governing documents and any
amendments thereto, including the Charter (which has already
been prepared and filed), the By-laws and minutes of
meetings of the Board and Investors;
(2) following the Investment Company's effectiveness with the
Securities and Exchange Commission, prepare the registration
statements for the Fund and all amendments thereto, reports
to regulatory authorities and Investors, offering documents,
proxy and/or information statements, and such other
documents all as may be necessary to enable the Investment
Company to make a private offering of its shares;
(3) conduct compliance training sessions for the benefit of the
investment advisers of the Funds;
(4) maintain the Investment Company's calendar of reporting and
filing obligations
(5) perform internal audit examinations;
(6) monitor and supervise the collection of tax reclaims;
(7) plan and prepare for meetings of the Investment Company's
Board, including maintaining the Board's agenda and
preparing materials for the Board's review and
consideration;
(8) attend in person, and record the minutes of meetings of, the
Investment Company's Board;
(9) consult with the Investment Company and its Board on matters
concerning the Investment Company and its affairs;
(10) prepare materials necessary for shareholder meetings and
record the minutes of shareholder meetings;
(11) prepare expense projections for the Funds;
(12) coordinate the activities of all service providers to the
Investment Company. By way of example, the Company will, in
conjunction with item (4) above, communicate to the other
service providers to the Investment Company lists of
information and materials needed for filing obligations, as
well as deadlines for the receipt of such materials. The
Company does not take responsibility for the failure of
other service providers to provide such materials to the
Investment Company in a timely fashion or for the
performance of functions for which other service providers
are responsible.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Fund under this Section One, shall hereafter
be referred to as "Operations Agency Services."
ARTICLE 3. RECORDS.
The Company shall maintain a set of all necessary books and records in
accordance with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the Investment Company act of
1940 and the rules thereunder, as the same may be amended from time to time,
pertaining to the Operations Agency Services performed by it and not otherwise
created and maintained by another party pursuant to contract with the Investment
Company. Where applicable, such records shall be maintained by the Company for
the periods and in the places required by Rule 31a-2 under the 1940 Act. The
books and records pertaining to the Investment Company which are in the
possession of the Company shall be the property of the Fund. The Investment
Company, or the Investment Company's authorized representatives, shall have
access to such books and records at all times during the Company `s normal
business hours. Upon the reasonable request of the Investment Company, copies of
any such books and records shall be provided promptly by the Company to the
Investment Company or the Investment Company's authorized representatives.
ARTICLE 4. DUTIES OF THE FUND.
the Fund assumes full responsibility for the preparation, contents and
distribution of its own offering document and for complying with all applicable
requirements the 1940 Act, the Internal Revenue Code, and any other laws, rules
and regulations of government authorities having jurisdiction.
ARTICLE 5. EXPENSES.
The Company shall be responsible for expenses incurred in providing office
space, equipment, and personnel as may be necessary or convenient to provide the
Operations Agency Services to the Funds. The Fund shall be responsible for all
other reasonable and documented expenses incurred by the Company on behalf of
the Investment Company, including without limitation postage and courier
expenses, printing expenses, travel expenses, registration fees, filing fees,
fees of outside counsel and independent auditors or other professional services,
organizational expenses, insurance premiums, fees payable to Error! Reference
source not found.= business trust "Trustees" "Directors" persons who are not the
Company employees, trade association dues, and other expenses properly payable
by the Funds and/or Classes.
ARTICLE 6. COMPENSATION.
For the Operations Agency Services provided, the Investment Company hereby
agrees to pay and the Company hereby agrees to accept as full compensation for
its services rendered hereunder an operations agency fee at an annual rate per
portfolio of the Investment Company's shares as specified on Exhibit A.
The compensation and out-of-pocket expenses attributable to the Fund shall
be accrued by the Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket expenses
by the Fund.
ARTICLE 7. RESPONSIBILITY OF OPERATIONS AGENT.
A. The Company shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Investment Company in connection with the
matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. The Company shall be entitled
to rely on and may act upon advice of counsel (who may be counsel for the
Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. Any person, even
though also an officer, director, trustee, partner, employee or agent of
the Company, who may be or become an officer,Error! Reference source not
found.= business trust "Trustee" "Director" director, trustee, partner,
employee or agent of the Investment Company, shall be deemed, when
rendering services to the Investment Company or acting on any business of
the Investment Company (other than services or business in connection with
the duties of the Company hereunder) to be rendering such services to or
acting solely for the Investment Company and not as an officer, director,
trustee, partner, employee or agent or one under the control or direction
of the Company even though paid by the Company.
B. The Company shall be kept indemnified by the Investment Company and be
without liability for any action taken or thing done by it in performing
the Operations Agency Services in accordance with the above standards. In
order that the indemnification provisions contained in this Article 7 shall
apply, however, it is understood that if in any case the Investment Company
may be asked to indemnify or save the Company harmless, the Investment
Company shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further understood that the
Company will use all reasonable care to identify and notify the Investment
Company promptly concerning any situation which presents or appears likely
to present the probability of such a claim for indemnification against the
Investment Company. The Investment Company shall have the right to defend
the Company against any claim which may be the subject of this
indemnification. In the event that the Investment Company so elects, it
will so notify the Company and thereupon the Investment Company shall take
over complete defense of the claim, and the Company shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this Article. The Company shall in no case confess
any claim or make any compromise in any case in which the Investment
Company will be asked to indemnify the Company except with the Investment
Company's written consent.
SECTION TWO: GENERAL PROVISIONS.
ARTICLE 8. PROPER INSTRUCTIONS.
As used throughout this Agreement, a "Proper Instruction" means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral instructions will be deemed to
be Proper Instructions if (a) the Company reasonably believes them to have been
given by a person previously authorized in Proper Instructions to give such
instructions with respect to the transaction involved, and (b) the Investment
Company, or the Fund, and the Company promptly cause such oral instructions to
be confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Investment Company, or the Fund, and the Company are satisfied that such
procedures afford adequate safeguards for the Fund's assets. Proper Instructions
may only be amended in writing.
ARTICLE 9. ASSIGNMENT.
Except as provided below, neither this Agreement nor any of the rights or
obligations under this Agreement may be assigned by either party without the
written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. With regard to Operations Agency Services, the Company may without
further consent on the part of the Investment Company subcontract for
the performance of such services with Federated Administrative Services,
a wholly-owned subsidiary of the Company.
C. The Company shall upon instruction from the Investment Company subcontract
for the performance of services under this Agreement with an Agent selected by
the Investment Company, other than as described in B. above; provided, however,
that the Company shall in no way be responsible to the Investment Company for
the acts and omissions of the Agent.
ARTICLE 10. DOCUMENTS.
A. In connection with the appointment of the Company under this Agreement,
the Investment Company shall file with the Company the following
documents relating to it:
(1) a copy of its Charter and By-Laws and all amendments thereto;
(2) a copy of the resolution of its Board authorizing this Agreement;
(3) all documents relating to the Fund or Investor accounts; and
(4) a copy of its current offering document.
B. The Investment Company will also furnish from time to time the following
documents relating to it:
(1) a resolution of its Board authorizing the original offering of its
Interests;
(2) a Registration Statement filed with the SEC and amendments thereof and
orders relating thereto in effect with respect to the sale of its
Interests;
(3) a certified copy of each amendment to the governing document and the
By-Laws of the Investment Company;
(4) certified copies of each vote of the Board authorizing persons to
give Proper Instructions;
(5) such other documents or opinions which the Company may, in its
discretion, deem necessary or appropriate in the proper
performance of its duties; and
(6) revisions to the offering document for each Fund.
ARTICLE 11. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties of the Company
The Company represents and warrants to the Fund that:
(1) it is a corporation duly organized and existing and in good standing
under the laws of the Commonwealth of Pennsylvania;
(2) it is duly qualified to carry on its business in the Commonwealth of
Pennsylvania;
(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement;
(4) all requisite corporate proceedings have been taken to authorize it to
enter into and perform its obligations under this Agreement;
(5) it has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement;
(6) it is in compliance with federal securities law requirements and in
good standing as an administrator and fund accountant; and
(7) it has obtained all required approvals from all government or
regulatory authorities necessary to enter into this arrangement and to
provide the services contemplated herein.
B. Representations and Warranties of the Investment Company
The Investment Company represents and warrants to the Company that:
(1) it is an investment company duly organized and existing and in good
standing under the laws of its state of organization;
(2) it is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform its obligations under this Agreement;
(3) all corporate proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform its
obligations under this Agreement; and
(4) it is an open-end investment company registered under the 1940 Act.
ARTICLE 12. TERM AND TERMINATION OF AGREEMENT.
The initial term of this Agreement shall commence on the date hereof, and
extend for a period of three years following the date of the commencement of the
public offering of the Fund's shares. After the initial term of this Agreement,
the Agreement will be terminable on not less than 90 days' notice by either the
Company or the Investment Company subject to the payment of all deferred
expenses and unamortized expenses. In the event, however, of willful
misfeasance, bad faith, negligence or reckless disregard of its duties by the
Company, the Investment Company has the right to terminate the Agreement upon 30
days written notice, if Company has not cured such willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties within that same 30
days. The termination date for all original or after-added Investment companies
which are, or become, a party to this Agreement shall be coterminous. Investment
Companies that merge or dissolve during the Term shall cease to be a party on
the effective date of such merger or dissolution.
Should the Investment Company exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and materials
will be borne by the Investment Company or the appropriate Fund. Additionally,
the Company reserves the right to charge for any other reasonable expenses
associated with such termination. The provisions of Article 7 shall survive the
termination of this Agreement.
ARTICLE 13. AMENDMENT.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by a written agreement executed by both parties.
ARTICLE 14. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Agreement, the Company and the
Investment Company may from time to time agree on such provisions interpretive
of or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing signed by all
parties and shall be annexed hereto, PROVIDED that no such interpretive or
additional provisions shall contravene any applicable federal regulations or any
provision of the organizational documents. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
ARTICLE 15. GOVERNING LAW.
This Agreement shall be construed and the provisions hereof interpreted under
and in accordance with the laws of the State of New York.
ARTICLE 16. NOTICES.
Except as otherwise specifically provided herein, notices and other writings
delivered or mailed postage prepaid to the Investment Company at Cardinal
Avenue, Grand Cayman, Cayman Islands, BWI with a copy to Deutsche Fund
Management, Inc. at 31 West 52nd Street, new York, New York 10019, Attn:
President or to the Company at Federated Investors Tower, Pittsburgh,
Pennsylvania, 15222-3779, or to such other address as the Investment Company or
the Company may hereafter specify, shall be deemed to have been properly
delivered or given hereunder to the respective address.
ARTICLE 17. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
ARTICLE 18. SUCCESSOR AGENT.
If a successor agent shall be appointed by the Investment Company, the
Company shall upon termination of this Agreement deliver to such successor agent
at the office of the Company all properties of the Fund held by it hereunder. If
no such successor agent shall be appointed, the Company shall at its office upon
receipt of Proper Instructions deliver such properties in accordance with such
instructions.
With regard to Section One, in the event that no written order designating a
successor agent or Proper Instructions shall have been delivered to the Company
on or before the date when such termination shall become effective, then the
Company shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $2,000,000, all properties held by the Company under this
Agreement. Thereafter, such bank or trust company shall be the successor of the
Company under this Agreement.
ARTICLE 19. FORCE MAJEURE.
The Company shall have no liability for cessation of services hereunder or
any damages resulting therefrom to the Investment Company or the Fund as a
result of work stoppage, natural disaster, governmental action, loss or
malfunction of utilities or other impossibility of performance.
ARTICLE 20. ASSIGNMENT; SUCCESSORS.
Either party may assign all of or a substantial portion of its business to a
party controlling, controlled by, or under common control with such party.
Nothing in this Article 21 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.
ARTICLE 21. SEVERABILITY.
In the event any provision of this Agreement or any interpretive or
additional provision described in Article 15 are held illegal, void or
unenforceable, the balance shall remain in effect.
ARTICLE 22. LIMITATIONS OF LIABILITY OF TRUSTEES AND INVESTORS OF THE INVESTMENT
COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of Investment Company and signed by an authorized officer of the
Investment Company, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon the
Trustees, the Fund or Investors, but bind only the appropriate property of the
Investment Company, as provided in the Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
DEUTSCHE PORTFOLIOS
By: /S/ RAYMOND O'NEILL
Attorney-In-Fact
FEDERATED SERVICES COMPANY
By: /S/ THOMAS J. WARD
Name: Thomas J. Ward
Title: Senior Vice President
<PAGE>
ADMINISTRATIVE OR OPERATIONAL AGENCY SERVICES
OUT-OF-POCKET EXPENSES SCHEDULE
Cost of preparing, printing and mailing stock certificates, prospectuses,
sales literature, proxies, reports and notices.
Interest on borrowed money
Taxes and fees payable to Federal, state and other governmental agencies
Fees of Trustees of the Funds
Outside auditing and legal expenses
Travel expenses incurred by employees of Federated Services Company and its
affiliates in connection with such employees' attendance at Fund Board
meetings or in performance of Internal Audit Department functions
Insurance premiums
Trade association dues
Other expenses which may be properly payable by a Fund, as applicable
<PAGE>
ADMINISTRATIVE SERVICES
FEE SCHEDULE
HUB PORTFOLIOS 3.5 basis points
(minimum fee of $60,000 per Hub)
DOMESTIC SPOKES
First $500 million 6.5 basis points
(minimum fee of $75,000 per Spoke)
Assets over $500 million 5.0 basis points
(minimum fee of $75,000 per Spoke)
OFFSHORE SPOKES 2.5 basis points
(minimum fee of $35,000 per Spoke)
Fees will be capped at $75,000 per Hub and Spoke cluster (Hub with two Spokes,
two classes of shares on each domestic Spoke) for the first year of the contract
and $125,000 per Hub and Spoke cluster in the second contract.
Exhibit 9(iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
DEUTSCHE PORTFOLIOS
Cardinal Avenue
Grand Cayman, Cayman Islands, BWI
JULY 28, 1997
Edgewood Services, Inc.
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ladies and Gentlemen:
Re: EXCLUSIVE PLACEMENT AGENT AGREEMENT
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, DEUTSCHE PORTFOLIOS (the "Trust"), an open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), organized as a trust under the laws of the
State of New York, has agreed that Edgewood Services, Inc., a New York
corporation ("Edgewood"), shall be the exclusive placement agent (the "Exclusive
Placement Agent") of beneficial interests ("Trust Interests") of each series of
the Trust.
1. SERVICES AS EXCLUSIVE PLACEMENT AGENT.
1.1 Edgewood will act as Exclusive Placement Agent of the Trust Interests.
In acting as Exclusive Placement Agent under this Exclusive Placement Agent
Agreement, neither EDGEWOOD nor its employees or any agents thereof shall make
any offer or sale of Trust Interests in a manner which would require the Trust
Interests to be registered under the Securities Act of 1933, as amended (the
"1933 Act").
1.2 All activities by Edgewood and its agents and employees as Exclusive
Placement Agent of Trust Interests shall comply with all applicable laws, rules
and regulations, including, without limitation, all rules and regulations
adopted pursuant to the 1940 Act by the Securities and Exchange Commission (the
"Commission").
1.3 Nothing herein shall be construed to require the Trust to accept any
offer to purchase any Trust Interests, all of which shall be subject to approval
by the Trust's Board of Trustees.
1.4 The Trust shall furnish from time to time for use in connection with
the sale of Trust Interests such information with respect to the Trust and Trust
Interests as Edgewood may reasonably request. The Trust shall also furnish
Edgewood upon request with: (a) unaudited semiannual statements of the Trust's
books and accounts prepared by the Trust, and (b) from time to time such
additional information regarding the Trust's financial or regulatory condition
as Edgewood may reasonably request.
1.5 The Trust represents to Edgewood that all registration statements
filed by the Trust with the Commission under the 1940 Act with respect to Trust
Interests have been prepared in conformity with the requirements of such statute
and the rules and regulations of the Commission thereunder. As used in this
Agreement the term "registration statement" shall mean any registration
statement filed with the Commission, as modified by any amendments thereto that
at any time shall have been filed with the Commission by or on behalf of the
Trust. The Trust represents and warrants to Edgewood that any registration
statement will contain all statements required to be stated therein in
conformity with both such statute and the rules and regulations of the
Commission; that all statements of fact contained in any registration statement
will be true and correct in all material respects at the time of filing of such
registration statement or amendment thereto; and that no registration statement
will include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of Trust Interests. The Trust may but shall not be
obligated to propose from time to time such amendment to any registration
statement as in the light of future developments may, in the opinion of the
Trust's counsel, be necessary or advisable. If the Trust shall not propose such
amendment and/or supplement within fifteen days after receipt by the Trust of a
written request from Edgewood to do so, Edgewood may, at its option, terminate
this Agreement. The Trust shall not file any amendment to any registration
statement without giving Edgewood reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement shall in any way
limit the Trust's right to file at any time such amendment to any registration
statement as the Trust may deem advisable, such right being in all respects
absolute and unconditional.
1.6 The Trust agrees to indemnify, defend and hold Edgewood, its several
officers and directors, and any person who controls Edgewood within the meaning
of Section 15 of the 1933 Act or Section 20 of the Securities and Exchange Act
of 1934 (the "1934 Act") (for purposes of this paragraph 1.6, collectively, the
"Covered Persons") free and harmless from and against any and all claims,
demand, liabilities and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which any Covered Person may incur under the 1933 Act, the
1934 Act, or otherwise, arising out of or based on any untrue statement of a
material fact contained in any registration statement, private placement
memorandum or other offering material ("Offering Material") or arising out of or
based on any omission to state a material fact required to be stated in any
Offering Material or necessary to make the statements in any Offering Material
not misleading; provided, however, that the Trust's agreement to indemnify
Covered Persons shall not be deemed to cover any claims, demands, liabilities or
expenses arising out of any financial and other statements as are furnished in
writing to the Trust by Edgewood in its capacity as Exclusive Placement Agent
for use in the answers to any items of any registration statement or in any
statements made in any Offering Material, or arising out of or based on any
omission or alleged omission to state a material fact in connection with the
giving of such information required to be stated in such answers or necessary to
make the answers not misleading; and further provided that the Trust's agreement
to indemnify Edgewood and the Trust's representation and warranties hereinbefore
set forth in paragraph 1.5 shall not be deemed to cover any liability to the
Trust or its investors to which a Covered Person would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of a Covered Person's reckless disregard of its
obligations and duties under this Agreement. The Trust should be notified of any
action brought against a Covered Person, such notification to be given by letter
or by telegram addressed to the Trust, Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, PA 15222-3779, Attention: Secretary, with a copy to John
Bostelman, Esq., Sullivan and Cromwell, 125 Broad Street, New York, New York,
10004, promptly after the summons or other first legal process shall have been
duly and completely served upon such Covered Person. The failure to so notify
the Trust of any such action shall not relieve the Trust from any liability
except to the extent the Trust shall have been prejudiced by such failure, or
from any liability that the Trust may have to the Covered Person against whom
such action is brought by reason of any such untrue statement or omission,
otherwise than on account of the Trust's indemnity agreement contained in this
paragraph. The Trust will be entitled to assume the defense of any suit brought
to enforce any such claim, demand or liability, but in such case such defense
shall be conducted by counsel of good standing chosen by the Trust and approved
by Edgewood, which approval shall not be unreasonably withheld. In the event the
Trust elects to assume the defense in any such suit and retain counsel of good
standing approved by Edgewood, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of them;
but in case the Trust does not elect to assume the defense of any such suit, or
in case Edgewood reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse the Covered Person named as defendant in such suit, for the
fees and expenses of any counsel retained by Edgewood or the Covered Persons.
The Trust's indemnification agreement contained in this paragraph and the
Trust's representations and warranties in this Agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of Covered Persons, and shall survive the delivery of any Trust
Interests. This agreement of indemnity will inure exclusively to Covered Persons
and their successors. The Trust agrees to notify Edgewood promptly of the
commencement of any litigation or proceedings against the Trust or any of its
officers or Trustees in connection with the issue and sale of any Trust
Interests.
1.7 Edgewood agrees to indemnify, defend and hold the Trust, its several
officers and trustees, and any person who controls the Trust within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act (for purposes of
this paragraph 1.7, collectively, the "Covered Persons") free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
costs of investigating or defending such claims, demands, liabilities and any
counsel fees incurred in connection therewith) that Covered Persons may incur
under the 1933 Act, the 1934 Act, common law, or otherwise, but only to the
extent that such liability or expense incurred by a Covered Person resulting
from such claims or demands shall arise out of or be based on (i) any untrue
statement of a material fact contained in information furnished in writing by
Edgewood in its capacity as Exclusive Placement Agent to the Trust for use in
the answers to any of the items of any registration statement or in any
statements in any other Offering Material, or (ii) any omission to state a
material fact in connection with such information furnished in writing by
Edgewood to the Trust required to be stated in such answers or necessary to make
such information not misleading. Edgewood shall be notified of any action
brought against a Covered Person, such notification to be given by letter or
telegram addressed to Edgewood at Federated Investors Tower, 1001 Liberty
Avenue, Pittsburgh, PA 15222-3779, Attention: Secretary, promptly after the
summons or other first legal process shall have been duly and completely served
upon such Covered Person. Edgewood shall have the right of first control of the
defense of the action with counsel of its own choosing satisfactory to the Trust
if such action is based solely on such alleged misstatement or omission on
Edgewood's part, and in any other event each Covered Person shall have the right
to participate in the defense or preparation of the defense of any such action.
The failure to so notify Edgewood of any such action shall not relieve Edgewood
(i) from any liability except to the extent the Trust shall have been prejudiced
by such failure, or (ii) from any liability that Edgewood may have to Covered
Persons by reason of any such untrue or alleged untrue statement, or omission or
alleged omission, otherwise than on account of Edgewood's indemnity agreement
contained in this paragraph.
1.8 No Trust Interests shall be offered by either Edgewood or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Trust Interests hereunder shall be accepted by the Trust if and so long
as the effectiveness of the registration statement or any necessary amendments
thereto shall be suspended under any of the provisions of the 1940 Act;
provided, however, that nothing contained in this paragraph shall in any way
restrict or have an application to or bearing on the Trust's obligation to
redeem Trust Interests from any investor in accordance with the provisions of
the Trust's registration statement or Declaration of Trust, as amended from time
to time. The Trust shall notify Edgewood promptly of the suspension of the
registration statement or any necessary amendments thereto, such notification to
be given by letter or telegram addressed to Edgewood at Federated Investors
Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779, Attention: Secretary.
1.9 The Trust agrees to advise Edgewood as soon as reasonably practical by
a notice in writing delivered to Edgewood or its counsel:
(a) of any request by the Commission for amendments to the
registration statement then in effect or for additional
information;
(b) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement then in effect or the
initiation by service of process on the Trust of any proceeding for that
purpose;
(c) of the happening of any event that makes untrue any statements
of a material fact made in the registration statement then in effect or that
requires the making of a change in such registration statement in order to make
the statements therein not misleading; and
(d) of all action of the Commission with respect to any amendment to
any registration statement that may from time to time be filed with the
Commission.
For purposes of this paragraph 1.9, informal requests by or acts of the
Staff of the Commission shall not be deemed actions of or requests by the
Commission.
1.10 Edgewood agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records and other
information not otherwise publicly available relative to the Trust and its
prior, present or potential investors and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where Edgewood may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
1.11 In addition to Edgewood's duties as Exclusive Placement Agent, the
Trust understands that Edgewood may, in its discretion, perform additional
functions in connection with transactions in Trust Interests.
The processing of Trust Interest transactions may include, but is not
limited to, compilation of all transactions from Edgewood's various offices;
creation of a transaction tape and timely delivery of it to the Trust's transfer
agent for processing; reconciliation of all transactions delivered to the
Trust's transfer agent; and the recording and reporting of these transactions
executed by the Trust's transfer agent in customer statements; rendering of
periodic customer statements; and the reporting of IRS Form 1099 information at
year end if required.
Edgewood may also provide other investor services, such as communicating
with Trust investors and other functions in administering customer accounts for
Trust investors.
Edgewood understands that these services may result in cost savings to the
Trust or to the Trust's investment manager and neither the Trust nor the Trust's
investment manager will compensate Edgewood for all or a portion of the costs
incurred in performing functions in connection with transactions in Trust
Interests. Nothing herein is intended, nor shall be construed, as requiring
Edgewood to perform any of the foregoing functions.
1.12 Except as set forth in paragraph 1.6 of this Agreement, the Trust
shall not be liable to Edgewood or any Covered Persons as defined in paragraph
1.6 for any error of judgment or mistake of law or for any loss suffered by
Edgewood in connection with the matters to which this Agreement relates, except
a loss resulting from the willful misfeasance, bad faith or gross negligence on
the part of the Trust in the performance of its duties or from reckless
disregard by the Trust of its obligations and duties under this Agreement.
1.13 Except as set forth in paragraph 1.7 of this Agreement, Edgewood
shall not be liable to the Trust or any Covered Persons as defined in paragraph
1.7 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, except a
loss resulting from the willful misfeasance, bad faith or gross negligence on
the part of Edgewood in the performance of its duties or from reckless disregard
by Edgewood of its obligations and duties under this Agreement.
2. TERM.
This Agreement shall become effective on the date first above written and,
unless sooner terminated as provided herein, shall continue until December 1,
1997 and thereafter shall continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by (i) the
Trust's Board of Trustees or (ii) by a vote of a majority (as defined in the
1940 Act) of the Trust's outstanding voting securities, provided that in either
event the continuance is also approved by the majority of the Trust's Trustees
who are not interested persons (as defined in the 1940 Act) of the Trust and who
have no direct or indirect financial interest in this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable without penalty, on not less than 60 days' notice, by
the Board, by a vote of a majority (as defined in the 1940 Act) of the Trust's
outstanding voting securities, or by Edgewood. This Agreement will also
terminate automatically in the event of its assignment (as defined in the 1940
Act and the rules thereunder).
3. REPRESENTATIONS AND WARRANTIES.
Edgewood and the Trust each hereby represents and warrants to the other
that it has all requisite authority to enter into, execute, deliver and perform
its obligations under this Agreement and that, with respect to it, this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
4. CONCERNING APPLICABLE PROVISIONS OF LAW, ETC.
This Agreement shall be subject to all applicable provisions of law,
including the applicable provisions of the 1940 Act and to the extent that any
provisions herein contained conflict with any such applicable provisions of law,
the latter shall control.
The laws of the Commonwealth of Pennsylvania shall, except to the extent
that any applicable provisions of Federal law shall be controlling, govern the
construction, validity and effect of this Agreement, without reference to
principles of conflicts of law.
The undersigned officer of the Trust has executed this Agreement not
individually, but as President under the Trust's Declaration of Trust, dated as
of __________, 1997. Pursuant to the Declaration of Trust the obligations of
this Agreement are not binding upon any of the Trustees or investors of the
Trust individually, but bind only the trust estate.
If the contract set forth herein is acceptable to you, please so indicate
by executing the enclosed copy of this Agreement and returning the same to the
undersigned, whereupon this Agreement shall constitute a binding contract
between the parties hereto effective at the closing of business on the date
hereof.
Yours very truly,
DEUTSCHE PORTFOLIOS
By: /S/ RAYMOND O'NEILL
Attorney-In-Fact
Accepted:
EDGEWOOD SERVICES, INC.
By: /S/ LAWRENCE CARACCIOLO
POWER OF ATTORNEY
Each person whose signature appears below
hereby constitutes and appoints the Deputy General Counsel of
Federated Investors, his true and lawful attorney-in-fact and agents, with full
power of substitution and resubstitution for them and their names, place and
stead, in any and all capacities, to sign any and all documents to be filed with
the Securities and Exchange Commission on behalf of DEUTSCHE PORTFOLIOS.
Pursuant to the Securities Act of 1933, the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, by means of the Securities and Exchange
Commission's electronic disclosure system known as EDGAR; and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to sign and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as each of them might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/s/ Brian A. Lee President April 29,1998
Brian A. Lee
/s/ Holger Naumann Treasurer April 29,1998
Holger Naumann (Principal Financial and
Accounting Officer)
/s/ Edward C. Schmults April 29,1998
Edward C. Schmults
/s/ Robert H. Wadsworth April 29,1998
Robert H. Wadsworth
/s/ Werner Walbroel April 29,1998
Werner Walbroel
/s/ G. Richard Stamberger April 29,1998
G. Richard Stamberger
/s/ Christian Strenger April 29,1998
Christian Strenger
/s/ Robert R. Gambee Secretary April 29,1998
Robert R. Gambee
Sworn to and subscribed before me this __th day of ____, 199
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> Top 50 World Portfolio (US Dollar)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 7,908,397
<INVESTMENTS-AT-VALUE> 8,528,670
<RECEIVABLES> 1,082,028
<ASSETS-OTHER> 60,494
<OTHER-ITEMS-ASSETS> 226,812
<TOTAL-ASSETS> 9,898,004
<PAYABLE-FOR-SECURITIES> 756,276
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 168,512
<TOTAL-LIABILITIES> 924,788
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,973,216
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,973,216
<DIVIDEND-INCOME> 47,562
<INTEREST-INCOME> 11,916
<OTHER-INCOME> 0
<EXPENSES-NET> 120,032
<NET-INVESTMENT-INCOME> (60,554)
<REALIZED-GAINS-CURRENT> 22,451
<APPREC-INCREASE-CURRENT> 620,375
<NET-CHANGE-FROM-OPS> 582,272
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 24,276
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 120,032
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> Top 50 Europe Portfolio (US Dollar)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 6,652,912
<INVESTMENTS-AT-VALUE> 7,183,054
<RECEIVABLES> 1,108,390
<ASSETS-OTHER> 60,494
<OTHER-ITEMS-ASSETS> 399,719
<TOTAL-ASSETS> 8,751,657
<PAYABLE-FOR-SECURITIES> 927,610
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 164,047
<TOTAL-LIABILITIES> 1,091,657
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,660,000
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,660,000
<DIVIDEND-INCOME> 11,153
<INTEREST-INCOME> 14,823
<OTHER-INCOME> 0
<EXPENSES-NET> 115,793
<NET-INVESTMENT-INCOME> (89,817)
<REALIZED-GAINS-CURRENT> 34,629
<APPREC-INCREASE-CURRENT> 528,374
<NET-CHANGE-FROM-OPS> 473,186
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19,927
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 115,793
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> Top 50 Asia Portfolio (US Dollar)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 26,883,646
<INVESTMENTS-AT-VALUE> 29,393,309
<RECEIVABLES> 1,119,550
<ASSETS-OTHER> 60,927
<OTHER-ITEMS-ASSETS> 837,653
<TOTAL-ASSETS> 31,411,439
<PAYABLE-FOR-SECURITIES> 1,496,641
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 261,698
<TOTAL-LIABILITIES> 1,758,339
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,653,100
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 29,653,100
<DIVIDEND-INCOME> 34,894
<INTEREST-INCOME> 50,934
<OTHER-INCOME> 0
<EXPENSES-NET> 145,682
<NET-INVESTMENT-INCOME> (59,854)
<REALIZED-GAINS-CURRENT> (734,288)
<APPREC-INCREASE-CURRENT> 2,509,575
<NET-CHANGE-FROM-OPS> 1,715,433
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 58,531
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 145,682
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> Top 50 US Portfolio (US Dollar)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 4,886,143
<INVESTMENTS-AT-VALUE> 5,443,009
<RECEIVABLES> 1,075,364
<ASSETS-OTHER> 60,494
<OTHER-ITEMS-ASSETS> 615,628
<TOTAL-ASSETS> 7,194,495
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 153,677
<TOTAL-LIABILITIES> 153,677
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,040,818
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,040,818
<DIVIDEND-INCOME> 12,083
<INTEREST-INCOME> 8,612
<OTHER-INCOME> 0
<EXPENSES-NET> 105,257
<NET-INVESTMENT-INCOME> (84,562)
<REALIZED-GAINS-CURRENT> 3,925
<APPREC-INCREASE-CURRENT> 556,866
<NET-CHANGE-FROM-OPS> 476,229
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 13,124
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 105,257
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 5
<NAME> Provesta Portfolio (US Dollar)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 2,301,580
<INVESTMENTS-AT-VALUE> 2,410,439
<RECEIVABLES> 19,603
<ASSETS-OTHER> 61,036
<OTHER-ITEMS-ASSETS> 8,225
<TOTAL-ASSETS> 2,499,303
<PAYABLE-FOR-SECURITIES> 29,789
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 144,833
<TOTAL-LIABILITIES> 174,622
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,324,681
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,324,681
<DIVIDEND-INCOME> 1,032
<INTEREST-INCOME> 603
<OTHER-INCOME> 0
<EXPENSES-NET> 92,982
<NET-INVESTMENT-INCOME> (91,347)
<REALIZED-GAINS-CURRENT> 36,948
<APPREC-INCREASE-CURRENT> 108,848
<NET-CHANGE-FROM-OPS> 54,449
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,485
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 92,982
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> Investa Portfolio (US Dollar)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 2,285,502
<INVESTMENTS-AT-VALUE> 2,467,622
<RECEIVABLES> 31,275
<ASSETS-OTHER> 61,036
<OTHER-ITEMS-ASSETS> 3,197
<TOTAL-ASSETS> 2,563,130
<PAYABLE-FOR-SECURITIES> 535
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 144,950
<TOTAL-LIABILITIES> 145,485
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,417,645
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,417,645
<DIVIDEND-INCOME> 4,265
<INTEREST-INCOME> 736
<OTHER-INCOME> 0
<EXPENSES-NET> 93,087
<NET-INVESTMENT-INCOME> (88,086)
<REALIZED-GAINS-CURRENT> 59,798
<APPREC-INCREASE-CURRENT> 182,076
<NET-CHANGE-FROM-OPS> 153,788
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,593
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93,087
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> Japanese Equity Portfolio
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 1,827,720
<INVESTMENTS-AT-VALUE> 1,653,140
<RECEIVABLES> 915
<ASSETS-OTHER> 61,072
<OTHER-ITEMS-ASSETS> 92,617
<TOTAL-ASSETS> 1,807,744
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 143,373
<TOTAL-LIABILITIES> 143,373
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,664,371
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,664,371
<DIVIDEND-INCOME> 711
<INTEREST-INCOME> 4,456
<OTHER-INCOME> 0
<EXPENSES-NET> 91,287
<NET-INVESTMENT-INCOME> (86,120)
<REALIZED-GAINS-CURRENT> (86,271)
<APPREC-INCREASE-CURRENT> (174,571)
<NET-CHANGE-FROM-OPS> (346,962)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5,400
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 91,287
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 8
<NAME> Global Bond Portfolio
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 2,675,740
<INVESTMENTS-AT-VALUE> 2,683,988
<RECEIVABLES> 57,185
<ASSETS-OTHER> 60,964
<OTHER-ITEMS-ASSETS> 344,078
<TOTAL-ASSETS> 3,146,215
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 146,804
<TOTAL-LIABILITIES> 146,804
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,999,411
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,999,411
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 54,786
<OTHER-INCOME> 0
<EXPENSES-NET> 95,419
<NET-INVESTMENT-INCOME> (40,633)
<REALIZED-GAINS-CURRENT> (1,786)
<APPREC-INCREASE-CURRENT> 7,323
<NET-CHANGE-FROM-OPS> (35,096)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,704
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 95,419
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 9
<NAME> European Bond Portfolio
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 2,250,203
<INVESTMENTS-AT-VALUE> 2,250,510
<RECEIVABLES> 49,924
<ASSETS-OTHER> 61,036
<OTHER-ITEMS-ASSETS> 125,545
<TOTAL-ASSETS> 2,487,015
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 144,592
<TOTAL-LIABILITIES> 144,592
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,342,423
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,342,423
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 44,574
<OTHER-INCOME> 0
<EXPENSES-NET> 92,735
<NET-INVESTMENT-INCOME> (48,161)
<REALIZED-GAINS-CURRENT> 6,735
<APPREC-INCREASE-CURRENT> (1,048)
<NET-CHANGE-FROM-OPS> (42,474)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,256
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 92,735
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information
extracted from Deutsche Funds, Inc.
form N-SAR for the period ended February 28, 1998
and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 10
<NAME> Deutsche U.S. Money Market
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 210
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 210
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
