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As Filed With the Securities and Exchange Commission on September 29, 2000
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. _ 6_..................X
FLAG INVESTORS PORTFOLIOS TRUST
(formerly, 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)
Edward J. Veilleux Copies to: Richard W. Grant, Esq.
Deutsche Banc Alex. Brown Morgan, Lewis & Bockius LLP
One South Street 1701 Market Street
Baltimore, MD 21202 Philadelphia, PA 19103
(Name and Address of Agent for Service)
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Explanatory Introduction
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.
Flag Investors Portfolios Trust
Top 50 World Portfolio (US Dollar)
Top 50 Europe Portfolio (US Dollar)
Top 50 Asia Portfolio (US Dollar)
Top 50 US Portfolio (US Dollar)
European Mid-Cap Portfolio (formerly, Provesta Portfolio)
(US Dollar)
Japanese Equity Portfolio (US Dollar)
US Money Market Portfolio (US Dollar)
Communications Portfolio (US Dollar)
PART A
Responses to Items 1 through 3, and 5 and 9 have been omitted pursuant to
paragraph 2(b) of Instruction B of the General Instructions to Form N-1A.
Item 4. Investment Objectives, Principal Investment Strategies,
and Related Risks
Beneficial interests in Flag Investors Portfolios Trust (the "Trust")(formerly,
Deutsche Portfolios), an open-end management investment company, are divided
into separate series, each having distinct investment objectives and policies.
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.
There can be no assurance that the investment objective(s) of any of the
Portfolios will be achieved. The Registrant incorporates by reference
information concerning the Portfolios' investment objectives, strategies,
principal investments, and risk factors associated with investments in the
Portfolios from the subsections entitled "Objectives and Strategies" and "Risk
Profile" of the section entitled "Investment Summary"; and from the section
entitled "Investment Program" in the Top 50 World's, Top 50 Europe's, Top 50
Asia's, Top 50 US's, European Mid-Cap Fund's, Japanese Equity Fund's, , and Flag
Investors Communications Fund, Inc.'s (the "Feeder Funds") prospectuses (the
"Feeder Funds' Prospectuses"). The prospectuses, for Top 50 World, Top 50 Asia,
Top 50 Europe, Top 50 US, European Mid-Cap, and Japanese Equity are contained in
the Pose-effective Amendment No. 9 to the registration statement on Form N-1A,
as amended, of Flag Investors Funds, Inc.. The prospectus for the Flag Investors
Communications Fund, Inc. ( the "Communications Feeder Fund") is contained in
the Post-effective Amendment No. 25 to the registration statement on Form N-1A
(File No. 2-87336).
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The investment objective of the US Money Market 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 Portfolio seeks to maintain a stable net asset
value of $1.00 by investing only in short-term, high-quality money market
instruments.
The US Money Market involves investment risks. Therefore, it is possible to lose
money by investing in the Portfolio. The primary factors that may reduce the
Portfolio's returns are listed below. Although the Portfolio seeks to preserve
the value of your investment at $1.00 per share, it is possible to lose money by
investing in the Portfolio.
Credit risks -- the possibility that an issuer will default on a
security by failing to pay interest or principal when due; and,
Interest rate risks -- prices of fixed income securities rise and fall
in response to interest rate changes. The Portfolio cannot guarantee that it
will achieve its investment objective.
The shares of the Portfolio are not deposits or obligations of any bank, are not
endorsed or guaranteed by any bank and are not insured or guaranteed by the U.S.
government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency.
The Portfolio purchases high-quality U.S. dollar denominated money-market
instruments with remaining maturities of no greater than 397 days and maintains
an average weighted maturity of no more than 90 days. These instruments include
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities, and bank obligations (such as certificates of deposit, fixed
time deposits and bankers' acceptances), commercial paper, repurchase
agreements, when-issued and delayed delivery securities, bonds issued by U.S.
corporations and obligations of certain supranational organizations and foreign
governments and their agencies and instrumentalities.
Following are descriptions of the different types of securities that may
comprise the principal securities of the Portfolio. The Portfolio may invest in
each type of security and its related subtypes.
Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.
A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields.
The following describes the types of fixed income securities in which the
Portfolio may invest.
Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. The Portfolio may also purchase interests in bank
loans to companies. The credit risks of corporate debt securities vary widely
among issuers.
In addition, the credit risk of an issuer's debt security may vary based on its
priority for repayment. For example, higher ranking (senior) debt securities
have a higher priority than lower ranking (subordinated) securities. This means
that the issuer might not make payments on subordinated securities while
continuing to make payments on senior securities. In addition, in the event of
bankruptcy, holders of senior securities may receive amounts otherwise payable
to the holders of subordinated securities.
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Commercial paper is an issuer's obligation with a maturity of less than nine
months. The short maturity of commercial paper reduces both the market and
credit risks as compared to other debt securities of the same issuer.
U.S. Treasury securities are direct obligations of the federal government of the
United States. U.S. Treasury securities are generally regarded as having the
lowest credit risks.
Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Agency securities are
generally regarded as having low credit risks, but not as low as treasury
securities.
Bank instruments are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and
banker's acceptances. Yankee instruments are denominated in U.S.dollars and
issued by U.S. branches of foreign banks. Eurodollar instruments are denominated
in U.S. dollars and issued by non-U.S. branches of U.S. or foreign banks.
Repurchase agreements are transactions in which the Portfolio buys a security
from a dealer or bank and agrees to sell the security back at a mutually agreed
upon time and price. The repurchase price exceeds the sale price, reflecting the
Portfolio's return on the transaction. This return is unrelated to the interest
rate on the underlying security. The Portfolio will enter into repurchase
agreements only with banks and other recognized financial institutions, such as
securities dealers, deemed creditworthy by the Advisor.
The Portfolio's custodian will take possession of the securities subject to
repurchase agreements. The Advisor or custodian will monitor the value of the
underlying security each day to ensure that the value of the security always
equals or exceeds the repurchase price.
Repurchase agreements are subject to credit risks.
Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, the
Portfolio will lose money.
Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Service. These services assign ratings to
securities by assessing the likelihood of issuer default. Lower credit ratings
correspond to higher credit risk. If a security has not received a rating, the
Portfolio must rely entirely upon the Advisor's credit assessment.
Fixed income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the
spread)measures the additional interest paid for risk. Spreads may increase
generally in response to adverse economic or market conditions. A security's
spread may also increase if the security's rating is lowered, or the security is
perceived to have an increased credit risk. An increase in the spread will cause
the price of the security to decline.
Credit risk includes the possibility that a party to a transaction involving the
Portfolio will fail to meet its obligations. This could cause the Portfolio to
lose the benefit of the transaction or prevent the Portfolio from selling or
buying other securities to implement their investment strategies
Prices of fixed income securities rise and fall in response to changes in the
interest rate paid by similar securities. Potential or anticipated changes in
interest rates also may affect the value of fixed income securities. Generally,
when interest rates rise, prices of fixed income securities fall. However,
market factors, such as the demand for particular fixed income securities, may
cause the price of certain fixed income securities to fall while the prices of
other securities rise or remain unchanged.
Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of a
fixed income security to changes in interest rates.
Additional information about the investment policies of each Portfolio appears
in Part B.
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Item 6. Management, Organization and Capital Structure
Deutsche Fund Management, Inc. (DFM) is the Advisor of the Top 50 World, Top 50
Europe, Top 50 Asia, Top 50 US, European Mid-Cap (formerly, Provesta), Japanese
Equity, and US Money Market Portfolios. DFM has retained the services of DWS
International Portfolio Management GmbH (DWS) as the Sub-Advisor for each of
these Portfolios, except the US Money Market Portfolio and the Top 50 US
Portfolio. DFM has retained the services of Deutsche Asset Management, Inc.
(DeAM, Inc.)as the Sub-Advisor of the Top 50 US Portfolio and Bankers Trust
Company as the Sub-Advisor of the US Money Market Portfolio.
Investment Company Capital Corp. (ICCC) is the Advisor of the Communications
Portfolio. ICCC has retained the services of Alex. Brown Investment Management
(ABIM) as the Sub-Advisor for this Portfolio.
DFM, DWS, DeAM,Inc., ICCC, and Bankers Trust Company are indirect subsidiaries
of Deutsche Bank AG. ABIM is a limited partnership affiliated with the foregoing
entities. For further information about the Advisors and Sub-Advisors, including
their compensation, see Item 13 in Part B.
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
Advisors or Sub-Advisors. For further information about the Trustees of the
Trust, see Item 13 in Part B.
Registrant incorporates by reference information concerning the management of
the Portfolios' investments (except the US Money Market Portfolio) from the
section entitled "Investment Advisor and Sub-Advisor" in the Feeder Funds'
Prospectuses.
Under the supervision of the Board of Trustees, Bankers Trust Company, with
headquarters at 130 Liberty Street, New York, NY 10006, acts as the investment
advisor to the US Money Market Portfolio. The investment advisor makes the US
Money Market Portfolio's investment decisions and assumes responsibility for the
securities the US Money Market Portfolio owns. It buys and sells securities for
the US Money Market Portfolio and conducts the research that leads to the
purchase and sale decisions.
As of June 30, 2000, Bankers Trust had total assets of approximately $285
billion under management. Bankers Trust is dedicated to servicing the needs of
corporations, governments, financial institutions and private clients and has
invested retirement assets on behalf of the nation's largest corporations and
institutions for more than 50 years. The scope of the firm's capability is broad
- it is a leader in both the active and passive quantitative investment
disciplines and maintains a major presence in stock and bond markets worldwide.
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 Portfolios' assets are generally determined based upon the market value of
the portfolio securities. However, the Board of Trustees of the Trust may
determine in good faith that another method of valuing investments is necessary
to appraise their fair value.
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.
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Item 7. Shareholder Information
The net asset value (NAV) of each Portfolio, except the US Money Market
Portfolio, is determined each day on which the New York Stock Exchange Inc.
(NYSE) is open for trading ("Portfolio Business Day"). The NAV of the Top 50
Europe Portfolio, Top 50 Asia Portfolio, European Mid-Cap (formerly, Provesta)
Portfolio, Japanese Equity Portfolio, Top 50 US, Portfolio and the
Communications Portfolio is determined as of the close of regular trading on the
NYSE (generally 4:00 p.m., U.S. Eastern time)or in the event that the NYSE
closes early, at the time of such early closing (the "Valuation Time. The NAV of
the Top 50 World Portfolio is determined as of the close of regular trading that
day on the NYSE, (generally 4:00 p.m., U.S. Eastern time), but no earlier than
the latest close of regular trading on any European securities exchanges on
which such Portfolio's portfolio securities may trade. Since the Top 50 World
Portfolio, Top 50 Europe Portfolio, Top 50 Asia Portfolio, European Mid-Cap
(formerly, Provesta) Portfolio and Japanese Equity Portfolio own foreign
securities that trade in foreign markets on days the NYSE is closed, the value
of these Portfolios' assets may change on days that beneficial interests cannot
be purchased, redeemed or exchanged.
The NAV of the US Money Market Portfolio is determined at 3:00 p.m. (U.S.
Eastern time) each day the NYSE and the Federal Reserve Bank are open. On days
when U.S. trading markets close early in observance of legal holidays (New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day), the US
Money Market Portfolio would expect to close for purchases and redemptions at
the same time. 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.
Each investor in the Portfolios, except the US Money Market Portfolio, may add
to or reduce its investment in the Portfolio on each day the NYSE is open for
regular trading. Each investor in the US Money Market Portfolio may add to or
reduce its investment in the Portfolio on each day the NYSE is open for regular
trading and the Federal Reserve Bank is open for business. At the close of
regular trading on the NYSE 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 the close of regular trading on the NYSE 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 the
close of regular trading on the NYSE 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 the close of regular trading on the NYSE on the following
business day of the Portfolio.
The end of each Portfolio's (except the Communications Portfolio) fiscal year is
August 31. The end of the Communications Portfolio's fiscal year is December 31.
Each Portfolio is considered a partnership under the Internal Revenue Code.
Therefore, no federal income tax provision is required.
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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 NYSE is closed (other than weekends or holidays) or trading
on the NYSE 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.
There is no minimum initial or subsequent investment in a Portfolio. 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.
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: toll-free 800-767-3524.
Item 8. Distribution Arrangements
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 NAV of each Portfolio is determined
each Portfolio Business Day.
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 eight 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.
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Registrant incorporates by reference information concerning its Master-Feeder
structure from the section entitled "Organizational Structure" in the Feeder
Funds' prospectuses.
Item 9. Financial Highlights
Registrant incorporates by reference information in the most recent Annual
Report (File Nos. 333-7008 and 811-8227) of Flag Investors Funds, Inc. and the
most recent Annual Report (File Nos. 2-87336 and 811-3883) of Flag Investors
Communications Fund, Inc. (the "Feeder Fund's Annual Report").
PART B
Item 10. Cover Page and Table of Contents
This Part B should only be read in conjunction with Part A. Part A contains
additional information about the investment objectives, portfolio strategies,
principal investments, and risk factors associated with investments in the Top
50 World Portfolio, Top 50 Europe Portfolio, Top 50 Asia Portfolio, Top 50 US
Portfolio, European Mid-Cap (formerly, Provesta) Portfolio, Japanese Equity
Portfolio, US Money Market Portfolio and Communications Portfolio.
Registrant incorporates by reference information in the Statement of Additional
Information and Prospectuses for Top 50 World, Top 50 Europe, Top 50 Asia, Top
50 US, European Mid-Cap Fund and Japanese Equity Fund (collectively, the "Feeder
Funds") contained in the Post-effective Amendment No. 9 to the registration
statement on Form N-1A (File No. 333-07008), as amended, of Flag Investors
Funds, Inc. Also, Registrant incorporates by reference information in the
Statement of Additional Information and Prospectus for the Flag Investors
Communications Fund, Inc. (also included in the "Feeder Funds") contained in the
Post-effective Amendment No. 25 to the registration statement on Form N-1A (File
No. 2-87336)(the "Feeder Funds' SAI" and the "Feeder Funds' Prospectuses"). A
copy of the Feeder Funds' registration statements will be provided to anyone
requesting a copy of this Registration Statement. Registrant also incorporates
by reference information in the most recent Annual and Semi-Annual Reports (File
Nos. 333-7008 and 811-8227) of Flag Investors Funds, Inc. and the most recent
Annual and Semi-Annual Reports (File Nos. 2-87336 and 811-3883) of Flag
Investors Communications Fund, Inc. (the "Feeder Funds' Annual Report").
Table of Contents
Trust History.................................................................8
Description of the Trust and its Investments and Risks........................8
Management of the Trust.......................................................14
Control Persons and Principal Holders of Securities...........................14
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Investment Advisory and Other Services........................................15
Brokerage Allocation and Other Practices......................................16
Capital Stock and Other Securities............................................16
Purchase, Redemption and Pricing of Shares....................................17
Taxation of the Trust.........................................................18
Underwriters..................................................................19
Calculation of Performance Data...............................................19
Financial Statements..........................................................19
Item 11. Trust History
Flag Investors Portfolios Trust (the "Trust")(formerly Deutsche Portfolios, the
name of the Trust was changed January 18, 2000) was organized as a trust under
the laws of the State of New York on June 20, 1997. The Trust's Board of
Trustees originally established ten portfolios, of which seven currently remain.
The three Portfolios that liquidated and closed in December 1999 are Investa
Portfolio (US Dollar), Global Bond Portfolio (US Dollar) and European Bond
Portfolio (US Dollar). On September 29, 2000 the Trust's Board of Trustees
established the Communications Portfolio.
Item 12. Description of the Trust and its Investments and Risks
The Trust is a non-diversified, open-end management investment company.
Part A contains additional information about the investment objectives,
portfolio strategies, principal investments, and risk factors associated with
investments in Top 50 World Portfolio, Top 50 Europe Portfolio, Top 50 Asia
Portfolio, Top 50 US Portfolio, European Mid-Cap (formerly, Provesta) Portfolio,
Japanese Equity Portfolio, US Money Market Portfolio, and Communications
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 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 portfolio
strategies, investment policies and limitations, and associated risks of each of
the Portfolios (except the Communications Portfolio and US Money Market
Portfolio) from the sections entitled "Securities in Which the Portfolios
Invest" and "Securities Descriptions, Techniques and Risks" in the Feeder Funds'
SAI. Registrant also incorporates by reference information concerning the
portfolio strategies, investment policies and limitations, and associated risks
of the Communications Portfolio from the section entitled "Investment Objective
and Policies" in the Communications Feeder Fund's SAI.
The following supplements the information concerning the investment objective,
policies and techniques of the US Money Market Portfolio.
Following are descriptions of the short-term securities the US Money Market
Portfolio may purchase. However, other such securities not mentioned below may
be purchased for the Portfolio if they meet the quality and maturity guidelines
set forth in the Portfolio's investment policies.
Currently, the Portfolio's investment policy is to invest only in money market
instruments, including securities issued or guaranteed by the U.S. government,
its agencies or instrumentalities, and bank obligations (such as certificates of
deposit, fixed time deposits and bankers' acceptances), commercial paper,
repurchase agreements, when-issued and delayed delivery securities, bonds issued
by U.S. corporations and obligations of certain supranational organizations and
foreign governments and their agencies and instrumentalities. The Portfolio may
also enter into reverse repurchase agreements.
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U.S. Government Securities
Assets of the Portfolio may be invested in securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities. These securities,
including those which are guaranteed by federal agencies or instrumentalities,
may or may not be backed by the "full faith and credit" of the United States. In
the case of securities not backed by the full faith and credit of the United
States, it may not be possible to assert a claim against the United States
itself in the event the agency or instrumentality issuing or guaranteeing the
security for ultimate repayment does not meet its commitments. Securities which
are not backed by the full faith and credit of the United States include, but
are not limited to, securities of the Tennessee Valley Authority, the Federal
National Mortgage Association (FNMA), the U.S. Postal Service and the Resolution
Funding Corporation (REFCORP), each of which has a limited right to borrow from
the U.S. Treasury to meet its obligations, and securities of the Federal Farm
Credit System, the Federal Home Loan Banks, the Federal Home Loan Mortgage
Corporation (FHLMC) and the Student Loan Marketing Association, the obligations
of each of which may be satisfied only by the individual credit of the issuing
agency. Securities which are backed by the full faith and credit of the United
States include Treasury bills, Treasury notes, Treasury bonds and pass-through
obligations of the Government National Mortgage Association (GNMA), the Farmers
Home Administration and the Export-Import Bank. There is no percentage
limitation with respect to investments in U.S. government securities.
Bank Obligations
Assets of the Portfolio may be invested in U.S. dollar-denominated negotiable
certificates of deposit, fixed time deposits and bankers' acceptances of banks,
savings associations and savings banks organized under the laws of the United
States or any state thereof, including obligations of non-U.S. branches of such
banks, or of non-U.S. banks or their U.S. or non-U.S. branches, provided that in
each case, such bank has more than $500 million in total assets, and has an
outstanding short-term debt issue rated within the highest rating category for
short-term debt obligations by at least two (unless only rated by one)nationally
recognized statistical rating organizations (e.g., Moody's and S&P)or, if
unrated, are of comparable quality as determined by or under the direction of
the Portfolio's Board of Trustees.
There is no additional percentage limitation with respect to investments in
negotiable certificates of deposit, fixed time deposits and bankers' acceptances
of U.S. branches of U.S. banks and U.S. branches of non-U.S. banks that are
subject to the same regulation as U.S. banks. Since the Portfolio may contain
U.S. dollar-denominated certificates of deposit, fixed time deposits and
bankers' acceptances that are issued by non-U.S. banks and their non-U.S.
branches, the Portfolio may be subject to additional investment risks with
respect to those securities that are different in some respects from obligations
of U.S. issuers, such as currency exchange control regulations, the possibility
of expropriation, seizure or nationalization of non-U.S. deposits, less
liquidity and more volatility in non-U.S. securities markets and the impact of
political, social or diplomatic developments or the adoption of other foreign
government restrictions which might adversely affect the payment of principal
and interest on securities held by the Portfolio. If it should become necessary,
greater difficulties might be encountered in invoking legal processes abroad
than would be the case in the United States. Issuers of non-U.S. bank
obligations may be subject to less stringent or different regulations than are
U.S. bank issuers, there may be less publicly available information about a
non-U.S. issuer, and non-U.S. issuers generally are not subject to uniform
accounting and financial reporting standards, practices and requirements
comparable to those applicable to U.S. issuers. Income earned or received by the
Portfolio from sources within countries other than the United States may be
reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States, however, may reduce
or eliminate such taxes. All such taxes paid by the Portfolio would reduce its
net income available for distribution to investors (i.e., the Fund and other
investors in the Fund); however, the Advisor would consider available yields,
net of any required taxes, in selecting securities of non-U.S. issuers. While
early withdrawals are not contemplated, fixed time deposits are not readily
marketable and may be subject to early withdrawal penalties, which may vary.
Assets of the Portfolio are not invested in obligations of the Manager, or the
Distributor, or in the obligations of the affiliates of any such organization.
Assets of the Portfolio are also not invested in fixed time deposits with a
maturity of over seven calendar days, or in fixed time deposits with a maturity
of from two business days to seven calendar days if more than 10% of the
Portfolio's net assets would be invested in such deposits.
10
<PAGE>
Commercial Paper
Assets of the Portfolio may be invested in commercial paper including variable
rate demand master notes issued by U.S. corporations or by non-U.S. corporations
which are direct parents or subsidiaries of U.S. corporations. Master notes are
demand obligations that permit the investment of fluctuating amounts at varying
market rates of interest pursuant to arrangements between the issuer and a U.S.
commercial bank acting as agent for the payees of such notes. Master notes are
callable on demand, but are not marketable to third parties. Consequently, the
right to redeem such notes depends on the borrower's ability to pay on demand.
At the date of investment, commercial paper must be rated within the highest
rating category for short-term debt obligations by at least two (unless only
rated by one) nationally recognized statistical rating organizations (e.g.,
Moody's and S&P) or, if unrated, are of comparable quality as determined by or
under the direction of the Portfolio's Board of Trustees. Any commercial paper
issued by a non-U.S. corporation must be U.S. dollar-denominated and not subject
to non-U.S. withholding tax at the time of purchase. Aggregate investments in
non-U.S. commercial paper of non-U.S. issuers cannot exceed 10% of the
Portfolio's net assets. Since the Portfolio may contain commercial paper issued
by non-U.S. corporations, it may be subject to additional investment risks with
respect to those securities that are different in some respects from obligations
of U.S. issuers, such as currency exchange control regulations, the possibility
of expropriation, seizure or nationalization of non-U.S. deposits, less
liquidity and more volatility in non-U.S. securities markets and the impact of
political, social or diplomatic developments or the adoption of other foreign
government restrictions which might adversely affect the payment of principal
and interest on securities held by the Portfolio. If it should become necessary,
greater difficulties might be encountered in invoking legal processes abroad
than would be the case in the United States. There may be less publicly
available information about a non-U.S. issuer, and non-U.S. issuers generally
are not subject to uniform accounting and financial reporting standards,
practices and requirements comparable to those applicable to U.S. issuers.
Taxable Municipal Securities
Municipal securities are issued by states, counties, cities and other political
subdivisions and authorities. Although many municipal securities are exempt from
federal income tax, the Portfolio may invest in taxable municipal securities.
When-Issued and Delayed Delivery Securities
Securities may be purchased for the Portfolio on a when-issued or delayed
delivery basis. For example, delivery and payment may take place a month or more
after the date of the transaction. The purchase price and the interest rate
payable on the securities are fixed on the transaction date. The securities so
purchased are subject to market fluctuation and no interest accrues to the
Portfolio until delivery and payment take place. At the time the commitment to
purchase securities for the Portfolio on a when-issued or delayed delivery basis
is made, the transaction is recorded and thereafter the value of such securities
is reflected each day in determining the Portfolio's net asset value. At the
time of its acquisition, a when-issued security may be valued at less than the
purchase price. Commitments for such when-issued securities are made only when
there is an intention of actually acquiring the securities. To facilitate such
acquisitions, a segregated account with the Custodian is maintained for the
Portfolio with liquid assets in an amount at least equal to such commitments.
Such a segregated account consists of liquid, high grade debt securities marked
to the market daily, with additional liquid assets added when necessary to
insure that at all times the value of such account is equal to the commitments.
On delivery dates for such transactions, such obligations are met from
maturities or sales of the securities held in the segregated account and/or from
cash flow. If the right to acquire a when-issued security is disposed of prior
to its acquisition, the Portfolio could, as with the disposition of any other
portfolio obligation, incur a gain or loss due to market fluctuation.
When-issued commitments for the Portfolio may not be entered into if such
commitments exceed in the aggregate 15% of the market value of the Portfolio's
total assets, less liabilities other than the obligations created by when-issued
commitments.
Floating and Variable Rate Instruments
Certain of the obligations that the Portfolio may purchase have a floating or
variable rate of interest. Such obligations bear interest at rates that are not
fixed, but vary with changes in specified market rates or indices, such as the
Prime Rate, and at specified intervals. Certain of such obligations may carry a
11
<PAGE>
demand feature that would permit the holder to tender them back to the issuer at
par value prior to maturity. The Portfolio will limit its purchase of floating
and variable rate obligations to those of the same quality as it otherwise is
allowed to purchase. The Adviser will monitor on an ongoing basis the ability of
an issuer of a demand instrument to pay principal and interest on demand. The
Portfolio's right to obtain payment at par on a demand instrument could be
affected by events occurring between the date the Portfolio elects to demand
payment and the date payment is due that may affect the ability of the issuer of
the instrument to make payment when due, except when such demand instruments
permit same day settlement. To facilitate settlement, these same day demand
instruments may be held in book-entry form at a bank other than the Custodian,
subject to a subcustodian agreement approved by the Portfolio Trust between that
bank and the Custodian.
To the extent that floating and variable rate instruments without demand
features are not readily marketable, they will be subject to the investment
restriction on the Portfolio's investment in securities that are not readily
marketable.
Securities of the World Bank, Other Supranational Organizations and Foreign
Governments
Assets of the Portfolio may also be invested in obligations of the International
Bank of Reconstruction and Development (also known as the World Bank) and
certain other supranational organizations, which are supported by subscribed but
unpaid commitments of member countries. There is no assurance that these
commitments will be undertaken or complied with in the future. The Portfolio
limits its investment in United States dollar-denominated obligations of foreign
governments and their agencies and instrumentalities to the commercial paper and
other short-term notes (or other notes with remaining maturities meeting the
requirements of Rule 2a-7) issued or guaranteed by the governments, or agencies
and instrumentalities thereof, that are members of the OECD and those countries
whose sovereign issuances qualify as Eligible Securities.
Risks
Along with risks as outlined in Part A, The US Money Market Portfolio may also
be subject to call risk. Call risk is the possibility that an issuer may redeem
a fixed income security before maturity (a call) at a price below its current
market price. An increase in the likelihood of a call may reduce the security's
price. If a fixed income security is called, the Portfolio may have to reinvest
the proceeds in other fixed income securities with lower interest rates, higher
credit risks, or other less favorable characteristics.
Fundamental Investment Policies of the US Money Market Portfolio
The Portfolio is classified as "diversified" under the 1940 Act, which means
that at least 75% of its total assets is represented by cash; securities issued
or guaranteed by the U.S. government, its agencies or instrumentalities; and
other securities limited in respect of any one company to an amount no greater
than 5%of the Portfolio's total assets (other than securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities). As a
matter of operating policy, the foregoing fundamental policy would give the
Portfolio the ability to invest, with respect to 25% of its assets, more than 5%
of its assets in any one issuer only in the event that Rule 2a-7 is amended in
the future .Unless Sections 8(b)(1) and 13(a) of the 1940 Act or any Securities
and Exchange Commission (SEC) or SEC staff interpretations thereof are amended
or modified, the Portfolio may not:
(1) enter into repurchase agreements with more than seven days to maturity if,
as a result thereof, more than 10% of the market value its net assets would
be invested in such repurchase agreements together with any other
investment for which market quotations are not readily available;
(2) enter into reverse repurchase agreements which, include any borrowings
under Investment Restriction No. 3, exceed, in the aggregate, one-third of
the market value of its total assets, less liabilities, other than
obligations created by reverse repurchase agreements. In the event that
such agreements exceed, in the aggregate, one-third of such market value,
it will, within three days thereafter (not including Sundays and holidays)
or such longer period as the SEC may prescribe, reduce the amount of the
obligations created by reverse repurchase agreements to an extent that such
obligations will not exceed, in the aggregate, one-third of the market
value of its assets;
12
<PAGE>
(3) borrow money, except from banks for extraordinary or emergency purposes and
then only in amounts not to exceed 10% of the value of its total assets,
taken at cost, at the time of such borrowing; mortgage, pledge, or
hypothecate any assets except in connection with any such borrowing and in
amounts not to exceed 10% of the of the value of its net assets at the time
of such borrowing. Neither the Portfolio nor the Corporation on behalf of
the Funds, as the case may be, will purchase securities while borrowings
exceed 5% of its total assets. This borrowing provision is included to
facilitate the orderly sale of portfolio securities, for example, in the
event of abnormally heavy redemption requests, and is not for investment
purposes and does not apply to reverse repurchase agreements;
(4) enter into when-issued commitments exceeding in the aggregate 15% of the
market value of its total assets, less liabilities other than obligations
created by when-issued commitments;
(5) purchase the securities or other obligations of issuers conducting their
principal business activity in the same industry, if, immediately after
such purchase, the value of such investments in such industry would equal
or exceed 25% of the value of its total assets. For purposes of industry
concentration, there is no percentage limitation with respect to
investments in U.S. government securities and negotiable certificates of
deposit, fixed time deposits and bankers' acceptances of U.S. branches of
U.S. banks and U.S. branches of non-U.S. banks that are subject to the same
regulation as U.S. banks;
(6) purchase the securities or other obligations of any one issuer if,
immediately after such purchase, more than 5% of the value of its total
assets would be invested in securities or other obligations or any one such
issuer. This limitation does not apply to issues of the U.S. government,
its agencies or instrumentalities;
(7) make loans, except through the purchase or holding of debt obligations,
repurchase agreements or loans of portfolio securities in accordance with
its investment objective and policies;
(8) purchase or sell puts, calls, straddles, spreads, or any combinations
thereof; real estate; commodities; commodity contracts or interests in oil,
gas or mineral exploration or development programs. However, bonds and
commercial paper issued by companies which invest in real estate or
interests therein including real estate investment trusts may be purchased;
(9) purchase securities on margin, make short sales of securities or maintain a
short position, provided that this restriction is not deemed to be
applicable to the purchase or sale of when-issued securities or of
securities for delivery at a future date;
(10) invest in fixed time deposits with a duration of over seven calendar days,
or in fixed time deposits with a duration of from two business days to
seven calendar days if more than 10% of its total assets would be invested
in such deposits;
(11) acquire securities of other investment companies;
(12) act as an underwriter of securities; or
(13) issue any senior security (as that term is defined in the 1940 Act) if such
issuance is specifically prohibited by the 1940 Act or rules and
regulations promulgated thereunder.
Non-Fundamental Investment Restrictions
In order to comply with certain federal statutes and policies the US Money
Market Portfolio may not as a matter of operating policy: (i) borrow money at
any time at which the amount of its borrowings exceed 5% of its total assets
(taken at market value), (ii) purchase securities issued by an investment
company if such purchase at the time thereof would cause more than 5% of its
total assets (taken at the greater of cost or market value) to be invested in
the securities of the issuer, would cause more than 10% of its total assets
(taken at the greater of cost or market value) to be invested in the securities
of such issuer and all other investment companies or would cause more than 3% of
the outstanding voting securities of any issuer to be held for it, or (iii)
invest more than 10% of its net assets in securities (valued at the greater of
cost or market value) that are subject to legal or contractual restrictions on
resale or in securities which are not readily marketable, including repurchase
agreements and fixed time deposits having maturities of more than 7 days,
13
<PAGE>
provided that there is no limitation with respect to or arising out of
investment in (a) securities that have legal or contractual restrictions on
resale but have a readily available market or (b) securities that are not
registered under the 1933 Act but which can be sold to qualified institutional
buyers in accordance with Rule 144A under the 1933 Act. These policies are not
fundamental and may be changed without shareholder or investor approval in
response to changes in the various federal requirements.
Except with respect to Fundamental Investment Restriction No. 2 and
Non-Fundamental Investment Restriction (iii) above and the limitation on the US
Money Market Portfolio's obligations created by reverse repurchase agreements, a
percentage or rating restriction on investment or utilization of assets set
forth above is adhered to at the time an investment is made or assets are so
utilized, a later change in percentage resulting from changes in the value of
the portfolio securities or a later change in the rating of a portfolio security
is not considered a violation of policy. If the Portfolio's investment
restrictions relating to any particular investment practice or policy are not
consistent, the Portfolio has agreed that it will adhere to the more restrictive
limitation.
The US Money Market Portfolio will comply with Rule 2a-7 under the 1940 Act,
including eligibility, diversification, quality and maturity limitations imposed
by the Rule.
Currently, pursuant to Rule 2a-7, the US Money Market Portfolio may invest only
in U.S. dollar-denominated "eligible securities" (as that term is defined in the
Rule) that have been determined by the Advisor to present minimal credit risks
pursuant to procedures approved by the Trustees. Generally, an eligible security
is a security that (i) has, or is deemed to have, a remaining maturity of 397
days or less and (ii) is rated, or is issued by an issuer with short-term debt
outstanding that is rated in one of the two highest rating categories by two
nationally recognized statistical rating organizations ("NRSROs") or, if only
one NRSRO has issued a rating, by that NSRSO. A security that originally had a
maturity of greater than 397 days is an eligible security if its remaining
maturity, or remaining deemed maturity, at the time of purchase is 397 calendar
days or less and the issuer has outstanding short-term debt that would be an
eligible security. Unrated securities may also be eligible securities if the
Advisor determines that they are of comparable quality to a rated eligible
security pursuant to guidelines approved by the Trustees.
Under Rule 2a-7, the US Money Market Portfolio may not invest more than five
percent of its assets in the securities of any one issuer other that the United
States government, its agencies and instrumentalities. In addition, the
Portfolio may not invest in a security that has received, or is deemed
comparable in quality to a security that has received, the second highest rating
by the requisite number of NRSROs (a "second tier security") if immediately
after the acquisition thereof the Portfolio would have invested more than (a)
the greater of one percent of its total assets or one million dollars in
securities issued by that issuer which are second tier securities, or (b) five
percent of its total assets in second tier securities.
Item 13. Management of the Trust
Registrant incorporates by reference information concerning the management of
the Trust from the subsection entitled "Officers and Board of Directors of the
Corporation and Trustees of the Portfolio Trust" of the section entitled "Who
Manages and Provides Services to the Funds?" in the Feeder Funds' SAI.
Item 14. Control Persons and Principal Holders of Securities
As of September 13, 2000, the Trust's Board and Officers as a group owned less
than 1% of the Portfolios' outstanding beneficial interests.
As of September 13, 2000, the following funds owned more than 5% of the
outstanding beneficial interests in each of the Portfolios:
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<PAGE>
<TABLE>
<CAPTION>
Percentage
Ownership Owner of Beneficial Interest Portfolio
<S> <C> <C>
20.9% Top 50 World Fund and Top 50 World Portfolio
79.1% Deutsche Top 50 World
34.3% Top 50 Europe Fund and Top 50 Europe Portfolio
65.7% Deutsche Top 50 Europe
45.1% Top 50 Asia Fund and Top 50 Asia Portfolio
54.9% Deutsche Top 50 Asia
43.8% Top 50 US Fund and Top 50 US Portfolio
56.2% Deutsche Top 50 US
58.5% European Mid-Cap Fund and European Mid-Cap Portfolio
41.5% Deutsche European Mid-Cap Fund (formerly, Provesta)
51.6% Japanese Equity Fund and Japanese Equity Portfolio
43.4% Deutsche Japanese Equity Fund
100% Deutsche US Money Market Fund US Money Market Portfolio
N/A Communications Portfolio(1)
</TABLE>
---------------------------
(1) The Communications Portfolio did not commence operations until September 29,
2000.
So long as each majority owner controls its corresponding Portfolio, the
majority owner may take actions without the approval of any other holder of
beneficial interest in the Portfolio.
Each investor has informed its corresponding 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 15. Investment Advisory and Other Services
Registrant incorporates by reference information concerning the investment
advisory and other services provided for or on behalf of each of the Portfolios
(except Communications Portfolio and US Money Market Portfolio) from the
subsections entitled "Manager," "Investment Advisor," "Operations Agent,"
"Administrative Agent," "Fund Accountant," "Custodian," "Independent
Accountants" and "Fees Paid by the Portfolio Trust for Services for the Fiscal
Year/Periods ended August 31" of the section entitled "Who Manages and Provides
Services to the Funds?" in the Feeder Funds' SAI, and the sections entitled
"Fees and Expenses" and "Fund Management -- Management and Advisory Fees" in the
Feeder Funds' Prospectuses. Registrant also incorporates by reference
information concerning the investment advisory and other services provided for
or on behalf of the Communications Portfolio from the sections entitled
"Management of the Fund", "Investment Advisory and Other Services", "Custodian,
Transfer Agent and Accounting Services", "Independent Accountants", and "Legal
Matters" in the Feeder Fund's SAI and from the section entitled "Investment
Advisor or Sub-Advisor" in the Feeder Fund's Prospectus.
The following supplements the information concerning the Investment Advisory and
Other Services for the US Money Market Portfolio.
CODE OF ETHICS
The Board of Trustees of the Trust has adopted a Code of Ethics pursuant to Rule
17j-1 under the Investment Company Act. The Trust's Cods permits access persons
to engage in personal trading provided that the access persons comply with the
provisions of the advisor's and sub-advisor's Codes of Ethics, as applicable,
and requires that each of these codes be approved by the Board of Trustees. In
addition, the Trust's Code contains reporting requirements applicable to
disinterested Directors of the Trust. The Portfolios' advisor, Deutsche Fund
15
<PAGE>
Management, Inc. has adopted a Code of Ethics pursuant to Rule 17j-1. The
advisor's Code permits access persons to trade securities that may be purchased
or held by the Portfolios for their own accounts, subject to compliance with
preclearance procedures. In addition, the advisor's Code provides for trading
"blackout periods" that prohibit trading by access persons within periods of
trading by the Portfolios in the same security, subject to certain exceptions.
The advisor's Code also prohibits short term trading profits and personal
investment in initial public offerings, and requires prior approval with respect
to purchases of securities in private placements.
Bankers Trust Company, the sub-advisor of the US Money Market Portfolio, has
also adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act. The
Bankers Trust Code of Ethics allows personnel to invest in securities for their
own accounts, but requires compliance with that Code's preclearance requirements
and other restrictions including "blackout periods" and minimum holding periods,
subject to certain exceptions. The Bankers Trust Code prohibits purchases of
securities in initial public offerings and requires prior approval for purchases
of securities in private placements.
The Portfolios' principal underwriter, ICC Distributors, Inc. is not required to
adopt a Code of Ethics as it meets the exception provided by Rule 17j-1(c)(3)
under the 1940 Act.
FEES PAID BY THE PORTFOLIO TRUST FOR SERVICES FOR FISCAL YEAR/PERIODS ENDED
AUGUST 31
<TABLE>
<CAPTION>
----------------- ---------------------------- -------------------------- ------------------------ -------------------------
Portfolio Name Manager Fee Paid Advisory Fee Operations Agent Administrative Agent
Paid** Fee Paid Fee Paid
---------------------------- -------------------------- ------------------------ -------------------------
1999 1998* 1999 1998* 1999 1998* 1999 1998*
----------------- ------------- -------------- ------------ ------------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
US Money Market $374,550 $215,792 $280,913 $161,844 $62,622 $28,933 $27,855 $56,920
Portfolio
----------------- ------------- -------------- ------------- ------------ ------------ ----------- ------------ ------------
</TABLE>
* The commencement of operations for the Portfolio was:
March 25, 1998
**The Advisory fee was paid by DFM out of the manager fee it received from the
Portfolio.
Item 16. Brokerage Allocation and Other Practices
Registrant incorporates by reference information concerning the brokerage
allocation and other practices of each of the Portfolios (except Communications
Portfolio) from the subsections entitled "Brokerage Transactions" and "Fees Paid
by the Funds for Services for the Fiscal Year/Periods Ended August 31" of the
section entitled "Who Manages and Provides Services to the Funds?" in the Feeder
Funds' SAI. Registrant also incorporates by reference information concerning the
brokerage allocation and other practices of the Communications Portfolio from
the section entitled "Brokerage" in the Feeder Fund's SAI.
The following supplements the information concerning the Brokerage Allocation
and Other Practices for the US Money Market Portfolio.
For the fiscal year ended, August 31, 1999, Deutsche Bank Investment Management
Inc. (DBIM), the former Advisor to Top 50 US Portfolio and US Money Market
Portfolio, directed brokerage transactions to certain brokers due to research
services they provided. The total amount of these transactions directed by DBIM
was $168,093,236 for which the Portfolios paid $89,992 in brokerage commissions.
Item 17. 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 Portfolios. Investors in each series would be entitled to vote
separately to approve advisory agreements or changes in investment policy of the
16
<PAGE>
particular series. 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.
The Feeder Funds do not issue certificates representing an investor's beneficial
interest in the Portfolio.
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.
In addition to selling beneficial interests to its corresponding Feeder Fund, a
Portfolio may sell beneficial interests to other mutual funds or institutional
investors (e.g., other investment companies, insurance company separate accounts
and common and commingled trust funds). Such investors will invest in a
Portfolio on the same terms and conditions and will pay a proportionate share of
the Portfolio's expenses. However, the other investors investing in the
Portfolio may sell shares of their own fund using a different pricing structure
than the corresponding Feeder Fund. Such different pricing structures may result
in differences in returns experienced by investors in other funds that invest in
the Portfolio. Such differences in returns are not uncommon and are present in
other mutual fund structures.
The Trust is organized as a trust under the laws of the State of New York. The
Declaration of Trust of the Portfolios provides that 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.
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. 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. Accordingly, the Trustees of
the Trust believe that neither the Portfolios nor their investors will be
adversely affected by reason of the investment of all of the assets of a Feeder
Fund in its corresponding Portfolio.
Item 18. Purchase, Redemption and Pricing of Shares.
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<PAGE>
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 "Shareholder Information" in Part A. Registrant
incorporates by reference information concerning the method followed by each
Portfolio (except the Communications Portfolio and US Money Market Portfolio) in
determining its net asset value, the timing of such determinations and the
purchase of shares from the section entitled "What Do Shares Cost?" in the
Feeder Funds' SAI. Registrant also incorporates by reference information
concerning the method followed by the Communications Portfolio in determining
its net asset value, the timing of such determinations and the purchase of
shares from the section entitled "Valuation of Shares and Redemption" in the
Communications Feeder Fund's SAI.
The net asset value of the US Money Market Portfolio's shares is determined each
day the NYSE is open for regular trading and the Federal Reserve Bank is open
for business. This determination of the net asset value of each share is made
once during each such day as of 3:00p.m. (U.S. Eastern time). The securities
held by the Portfolio are valued at their amortized cost. Pursuant to a rule of
the SEC, an investment company may use the amortized cost method of valuation
subject to certain conditions and the determination that such method is in the
best interest of the Portfolio's investors. The use of amortized cost valuations
is subject to the following conditions: (i) as a particular responsibility
within the overall duty of care owed to the Portfolio's investors, the Trustees
of the Trust have established procedures reasonably designed, taking into
account current market conditions and the investment objective of its investors,
to stabilize the net asset value as computed; (ii) the procedures include
periodic review by the Trustees of the Trust, as they deem appropriate and at
such intervals as are reasonable in light of current market conditions, of the
relationship between the value of the Portfolio's net assets using amortized
cost and the value of the Portfolio's net assets based upon available
indications of market value with respect to such portfolio securities; (iii) the
Trustees of the Trust will consider what steps, if any, should be taken if a
difference of more than 1/2 of 1% occurs between the two methods of valuation;
and (iv) the Trustees of the Trust will take such steps as they consider
appropriate, such as shortening the average portfolio maturity, realizing gains
or losses, establishing the value of the Portfolio's net assets by using
available market quotations, or reducing the value of interests in the
Portfolio, to minimize any material dilution or other unfair results which might
arise from such differences between the two methods of valuation.
Such conditions also generally require that: (i) investments for the Portfolio
be limited to instruments which the Trustees of the Trust determine present
minimal credit risks and which are of high quality as determined by any
nationally recognized statistical rating organization that is not an affiliated
person of the issuer of, or any issuer, guarantor or provider of credit support
for, the instrument, or in the case of any instrument that is not so rated, is
of comparable quality as determined by the Investment Advisor under the general
supervision of the Trustees of the Trust; (ii) a dollar-weighted average
portfolio maturity of not more than 397 days within the meaning stated in the
1940 Act; (iii) the Portfolio's available cash will be invested in such a manner
as to reduce such maturity to 90 days or less as soon as is reasonably
practicable, if the disposition of a portfolio security results in a
dollar-weighted average portfolio maturity of more than 90 days; and (iv) no
more than 5% of the Portfolio's total assets may be invested in the securities
of any one issuer (other than U.S. government securities).
An investor's right to receive payment with respect to any redemption may be
suspended or the payment of the redemption proceeds postponed: (i) during
periods when the New York Stock Exchange or foreign stock exchange is closed for
other than weekends and holidays or when regular trading on such exchange is
restricted as determined by the SEC by rule or regulation, (ii) during periods
in which an emergency exists which causes disposal of, or evaluation of the net
asset value of, portfolio securities to be unreasonable or impracticable, or
(iii) for such other periods as the SEC may permit.
18
<PAGE>
Item 19. Taxation of the Trust
The Trust is organized as a New York business trust. Each of the Portfolios is
treated for federal income tax purposes as a separate partnership that is not a
"publicly traded partnership." As a result, each Portfolio is not subject to
federal income tax; instead, each investor in a Portfolio is required to take
into account in determining federal income tax liability its share of the
Portfolio's income, gains, losses, deductions and credits, without regard to
whether it has received any cash distributions from the Portfolio.
For certain purposes, a holder of beneficial interests in a Portfolio is deemed
to own a proportionate share of a Portfolio's assets and to earn a proportionate
share of such Portfolio's income including for purposes of determining whether
an investor satisfies the requirements to qualify as a regulated investment
company ("RIC"). Accordingly, each Portfolio intends to conduct its operations
so that investors that invest substantially all of their assets in such
Portfolio and intend to qualify as RICs should be able to satisfy all those
requirements.
Distributions to an investor from a Portfolio ( whether pursuant to a partial or
complete withdrawal or otherwise) will not result in the investor's recognition
of any gain or loss for federal income tax purposes, except that: (1) gain will
be recognized to the extent any cash that is distributed exceeds the investor's
basis for its interest in such Portfolio before the distribution; (2) income or
gain will be recognized if the distribution is in liquidation of the investor's
entire interest in a Portfolio and includes a disproportionate share of any
unrealized receivables held by such Portfolio; (3) loss will be recognized to
the extent that a liquidation distribution consisting solely of cash and/or
unrealized receivables is less than the investor's basis for its interest in a
Portfolio prior to distribution; and (4) gain or loss may be recognized on a
distribution to an investor that contributed property to a Portfolio (other than
the property to be distributed to such investor). An investor's basis for its
interest in a Portfolio generally will equal the amount of cash and the basis of
any property it invests in such Portfolio, increased by the investor's share of
the Portfolio's net income and gains and decreased by (a) the amount of cash and
the basis or any property such Portfolio distributed to the investor and (b) the
investor's share of a Portfolio's losses.
If a Portfolio engages in transactions in options, futures, contracts, forward
contracts and certain other transactions involving foreign exchange gain or
loss, such transactions may be subject to special tax rules, the effect or which
may be to accelerate income to such Portfolio, defer Portfolio losses, cause
adjustments in the holding periods of the Portfolio securities, convert capital
gain into ordinary income and convert short-term capital losses into long-term
capital losses.
Foreign Investments. If the Portfolios purchase foreign securities, the
investment income of their corresponding Feeder Fund may be subject to foreign
withholding or other taxes that could reduce the return on these securities. Tax
treaties between the United States and foreign countries, however, may reduce or
eliminate the amount of foreign taxes to which the Feeder Funds would be
subject. The effective rate of foreign tax cannot be predicted since the amount
of a Portfolio's assets to be invested within various countries is uncertain.
However, each Portfolio intends to operate so as to qualify for treaty-reduced
tax rates when applicable.
19
<PAGE>
Distributions from a Feeder Fund may be based on estimates of book income for
the year. Book income generally consists solely of the coupon income generated
by the portfolio, whereas tax basis income includes gains or losses attributable
to currency fluctuation. Due to differences in the book and tax treatment of
fixed income securities denominated in foreign currencies, it is difficult to
project currency effects on an interim basis. Therefore, to the extent that
currency fluctuations cannot be anticipated, a portion of distributions to
shareholders could later be designated as a return of capital, rather than
income, for income tax purposes, which may be of particular concern to simple
trusts.
Foreign Taxes. 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 relates only to federal income tax law. Income from a
Portfolio also may be subject to foreign, state, and local taxes, and their
treatment under foreign, state, and local tax laws may differ from the federal
income tax treatment. Investors should consult their tax advisors with respect
to particular questions of federal, state, and local taxation.
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 20. Underwriters
The Exclusive Placement Agent for the Trust is ICC Distributors, Inc., who
replaced Edgewood Services, Inc. on December 20, 1999. The Executive Placement
Agent 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 21. Calculation of Performance Data
Not applicable
Item 22. Financial Statements
Registrant incorporates by reference the financial statements of the Portfolios
from the sections entitled "Statement of Assets and Liabilities", "Statement of
Operations", "Statements of Changes in Net Assets", "Financial Highlights" and
"Notes to Financial Statements" in each of the Feeder Funds' (except
Communications Fund Inc.) most recent Semi-Annual Report and the Flag Investors
Communications Fund, Inc.'s (Feeder Fund) most recent Annual Report.
20
<PAGE>
Registrant incorporates by reference the financial statements of the US Money
Market Portfolio from the sections entitled "Statement of Assets and
Liabilities", "Statement of Operations", "Statements of Changes in Net Assets",
"Financial Highlights" and "Notes to Financial Statements" in the US Money
Market Feeder Fund's 1999 Annual Report.
PART C. OTHER INFORMATION
Responses to Items 23(e) and 23(i) through (k) have been omitted pursuant to
paragraph 2(b) of Instruction B of the General Instructions to Form N-1A.
Item 23. Exhibits:
(a) (i) Amended and Restated Declaration of Trust, incorporated by
reference to Registrant's Registration Statement as filed
with the Commission on September 23, 1997 ;
(ii) Trustees' Resolution to Amend Declaration of Trust, filed
herewith;
(b) By-Laws of the Registrant, incorporated by reference to
Registrant's Registration Statement as filed with the Commission on
September 23, 1997;
(c) Not applicable;
(d) (i) Conformed copy of Investment Advisory Agreement between
Registrant and Deutsche Fund Management, Inc. ("DFM"), filed
herewith;
(ii) Conformed copy of Investment Sub-Advisory Agreement between
DFM, DWS International Portfolio Management GmbH and Deutsche
Asset Management, Inc., and Bankers Trust Company, filed
herewith;
(iii) Form of Investment Advisory Agreement between Registrant, on
behalf of the Communications Portfolio, and Investment
Company Capital Corp., filed herewith;
(iv) Form of Investment Sub-Advisory Agreement among Registrant,
on behalf of the Communications Portfolio, Investment Company
Capital Corp., and Alex. Brown Investment Management, filed
herewith;
(e) Not applicable;
(f) Not applicable;
(g) (i) Conformed copy of Custodian Agreement between the Registrant
and Investors Bank & Trust Company, incorporated by reference
to Amendment No. 2 to Registrant's Registration Statement as
filed with the Commission on September 1, 1998;
(ii) Form of Custodian Agreement between Registrant, on behalf of
the the Communications Portfolio and Bankers Trust, filed
herewith;
(iii) Conformed copy of Delegation Agreement between Deutsche
Portfolios and Investors Bank and Trust Company including
Appendix A-D, incorporated by reference to Amendment No. 3 to
Registrant's Registration Statement as filed with the
Commission on November 3,1998;
21
<PAGE>
(h)(i) Conformed copy of Fund Accounting Agreement between the
Registrant and IBT Fund Services (Canada) Inc., incorporated
by reference to Amendment No. 2 to Registrant's Registration
Statement as filed with the Commission on September 1, 1998;
(ii) Form of Master Services Agreement between the Registrant and
ICCC, filed herewith;
(iii) Conformed copy of Operations Agency Agreement between the
Registrant and and ICCC dated April 7, 2000, filed herewith;
(iv) Conformed copy of Amendment to Operations Agency Agreement,
incorporated by reference to Amendment No. 4 to Registrant's
Registration Statement as filed with the the Commission on
January 6, 2000;
(v) Conformed copy of Exclusive Placement Agency Agreement
between the Registrant and ICC Distributors, Inc., filed
herewith;
(vi) Form of Master License Agreement between the Registrant and
Deutsche Banc Alex. Brown, LLC, filed herewith;
(vii) Form of Fee Waiver Agreement between Registrant, on behalf of
Communications Portfolio, and Investment Company Capital
Corp.
(viii) Conformed copy of Letter Agreement between Flag Investors
Funds, Inc. and Deutsche Fund Management, Inc., incorporated
by reference to Amendment No. 9 to Flag Investors Funds,
Inc.'s Registration Statement as filed with the Commission
on June 1, 2000;
(i) Not applicable;
(j) Not applicable;
(k) Not applicable;
(l) Investment representation letters of initial investors,
incorporated by reference to Registrant's Registration Statement as filed with
the Commission on September 23, 1997;
(m) Not applicable;
(n) Not applicable;
(o) Conformed copies of Powers of Attorney, filed herewith;
(p) (i) Flag Funds Complex Code of Ethics, filed herewith;
(ii) Investment Company Capital Corp. and Alex. Brown Investment
Management Code of Ethics, filed herewith;
(iii) Deutsche Fund Management, Inc. Code of Ethics, filed
herewith;
(iv) DWS International Portfolio Management GmbH Code of Ethics,
filed herewith;
(v) Deutsche Asset Management, Inc. and Bankers Trust Company
Code of Ethics, filed herewith.
Item 24. Persons Controlled By or Under Common Control with the Trust:
None
Item 25. Indemnification:
Incorporated by reference to Registrant's Registration Statement as filed with
the Commission on September 23, 1997.
22
<PAGE>
Item 26. Business and Other Connections of Investment Adviser:
During the past two fiscal years, no director or officer of ICCC (investment
advisor of the Communications Portfolio), DFM (investment advisor for each
Portfolio, except the Communications Portfolio), DWS (investment sub-advisor for
each Portfolio, except Communications Portfolio, Top 50 US Portfolio, and US
Money Market Portfolio), DeAM, Inc. (investment sub-advisor for Top 50 US
Portfolio), and no partner of ABIM (investment sub-advisor for Communications
Portfolio), has engaged in any other business, profession, vocation, or
employment of a substantial nature other than that of the business of investment
management and through affiliates, investment banking.
BTCo. serves as investment sub-advisor to the US Money Market Portfolio. Bankers
Trust, a New York banking corporation, is a wholly owned subsidiary of Deutsche
Bank AG. Bankers Trust conducts a variety of commercial banking and trust
activities and is a major wholesale supplier of financial services to the
international institutional market.
To the knowledge of the Trust, none of the directors or officers of Bankers
Trust, except those set forth below, is engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and officers also hold various positions with and engage in business
for Deutsche Bank AG and its affiliates or subsidiaries. Set forth below are the
names and principal businesses of the directors and officers of Bankers Trust
who, to our knowledge as of June 20, 2000, are engaged in any other business,
profession, vocation or employment of a substantial nature.
Josef Ackermann
Member, Board of Managing Directors, Deutsche Bank AG; Chairman of the Board and
Chief Executive Officer, Bankers Trust Corporation; Chairman of the Board and
Chief Executive Officer, Bankers Trust Company; Chairman of the Supervisory
Board, Deutsche Bank Luxembourg, S.A.; Supervisory Board Memberships in: EUREX
Frankfurt AG; EUREX Zurich AG; Linde AG, Stora Enso Oyj and Mannesmann AG;
Director, Deutsche Bank Americas Holding Corp. Address: Deutsche Bank AG,
Taunusanlage 12, 60325 Frankfurt am Main, Germany.
Hans Angermueller
"Of Counsel", Shearman & Sterling; Director, Bankers Trust Corporation;
Director, Bankers Trust Company. Address: Shearman & Sterling, 599 Lexington
Avenue, Suite 1414, New York, New York 10022-6069.
George B. Beitzel
Private Investor; Director, Bankers Trust Corporation; Director, Bankers Trust
Company; Directorships in: Bitstream, Inc.; Computer Task Group, Inc.; and Staff
Leasing Inc. Address: 29 King Street, Chappaqua, New York 10514-3432.
Yves de Balman
Co-Chairman and Co-Chief Executive Officer, DB Alex. Brown LLC; Vice Chairman,
Bankers Trust Corporation; Director, Bankers Trust International, plc; Director,
Aerospatiale Matra; Co-Chairman and Co-Chief Executive Officer, Deutsche Bank
Securities Inc. Address: 130 Liberty Street, New York, New York 10006.
William R. Howell
Chairman Emeritus, J.C. Penney Company, Inc.; Director, Bankers Trust
Corporation; Director, Bankers Trust Company; Director, Exxon Mobil Corporation;
Warner-Lambert Company; Halliburton Company; Williams, Inc.; Central and South
West Corporation. Adddress: 6501 Legacy Drive, Plano, Texas 75054-3698.
Hermann-Josef Lamberti
Executive Vice President, Deutsche Bank AG; Director and Vice Chairman, Bankers
Trust Corporation; Director, Bankers Trust Company; Board memberships: Euroclear
plc (London); Euroclear sc. (Brussels); and The Clearinghouse Interbank Payments
Co. L.L.C. Supervisory Board Memberships in: GZS (Frankfurt) and the European
Transaction Bank (e.t.b.). Director, Deutsche Bank Americas Holding Corp.
Address: Deutsche Bank AG, Taunusanlage 12, 60325 Frankfurt am Main, Germany.
23
<PAGE>
Troland S. Link
General Counsel of Deutsche Bank North America; General Counsel, Bankers Trust
Corporation; Managing Director and General Counsel, Bankers Trust Company.
Address: 1301 Sixth Avenue - Fl.8, New York, NY 10019.
Rodney A. McLauchlan
Executive Vice President, Bankers Trust Company; Executive Vice President,
Bankers Trust Corporation. Address: 31 West 52nd Street, Fl.28, New York, NY
10019.
John A. Ross
Chief Executive Officer of the Americas, Deutsche Bank AG; President and
Director, Bankers Trust Corporation; President and Director, Bankers Trust
Company; President, Director and Chief Executive Officer, Taunus Corporation and
DB U.S. Financial Markets Holding Corporation; President and Chief Executive
Officer, Deutsche Bank Americas Holding Corp.; Director, Deutsche Bank
Securities Inc.and DB Alex. Brown LLC. Address: Deutsche Bank, 31 West 52nd
Street, FL. 28, New York, New York 10019.
Ronaldo H. Schmitz
Member of the Group Board, Deutsche Bank AG, Director, Bankers Trust
Corporation; Director, Bankers Trust Company; Non-executive Director,
Bertelsmann AG, Glaxo Wellcome plc, Rohm & Haas Co. and INSEAD - Paris, France;
Director, Deutsche Bank Americas Holding Corp. Address: Deutsche Bank AG,
Taunusanlage 12, 60325 Frankfurt am Main, Germany.
Mayo A. Shattuck III
Co-Chairman and Co-Chief Executive Officer, DB Alex. Brown LLC; Vice Chairman,
Bankers Trust Corporation; Director, Bankers Trust International, plc, Alex.
Brown & Sons Holdings Limited, Alex. Brown & Sons Limited, Alex. Brown Asset
Management, Inc., Alex. Brown Capital Advisory, Incorporated and Investment
Company Capital Corporation; Co-Chairman and Co-Chief Executive Officer,
Deutsche Bank Securities Inc.; Director and President - AB Administrative
Partner, Inc., ABFS I Incorporated, ABS Leasing Services Company, ABS MB Ltd.,
Alex. Brown Financial Corporation, Alex. Brown Financial Services Incorporated,
Alex. Brown Investments Incorporated, Alex. Brown Management Services Inc. and
Alex. Brown Mortgage Capital Corporation; and Director and Vice President, Alex.
Brown & Sons Holdings Limited; Director, Constellation Holdings; President,
South Street Aviation; Co-Chairman and Co-Chief Executive Officer, Deutsche Bank
Securities Inc. Address: One South Street, Fl.30 Baltimore, MD 21202.
24
<PAGE>
Item 27. Principal Underwriters:
(a) ICC Distributors, Inc. the Exclusive Placement Agent for shares of the
Registrant, acts as principal underwriter for Flag Investors Communications
Fund, Inc. (formerly known as Flag Investors Telephone Income Fund, Inc.), Flag
Investors Series Funds, Inc. - Flag Investors International Equity Fund
(formerly known as Flag Investors International Fund, Inc.), Flag Investors
Emerging Growth Fund, Inc., Flag Investors Shares Class of Total Return U.S.
Treasury Fund, Inc., Flag Investors Shares Class of Managed Municipal Fund,
Inc., Flag Investors Short-Intermediate Income Fund, Inc. (formerly known as
Flag Investors Intermediate-Term Income Fund, Inc.), Flag Investors Value
Builder Fund, Inc., Flag Investors Real Estate Securities Fund, Inc., Flag
Investors Equity Partners Fund, Inc., BT Investment Funds, BT Advisor Funds, BT
Pyramid Mutual Funds, BT Institutional Funds, BT Investment Portfolios, Cash
Management Portfolio, Intermediate Tax Free Portfolio, Tax Free Money Portfolio,
NY Tax Free Money Portfolio, Treasury Money Portfolio, International Equity
Portfolio, Equity 500 Index Portfolio, Capital Appreciation Portfolio, Asset
Management Portfolio, Morgan Grenfell Investment Trust, The Glenmede Funds, Inc.
and The Glenmede Portfolios, all registered open-end management investment
companies.
<TABLE>
<CAPTION>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
<S> <C> <C>
John Y. Keffer President, -------
Two Portland Square ICC Distributors, Inc.
Portland, ME 14101
David I. Goldstein Secretary, -------
Two Portland Square ICC Distributors, Inc.
Portland, ME 14101
Benjamin L. Niles Vice President, -------
Two Portland Square ICC Distributors, Inc.
Portland, ME 14101
Nanette K. Chern Chief Compliance Officer, --------
Two Portland Square ICC Distributors, Inc.
Portland, ME 14101
Ronald H. Hirsh Treasurer, --------
Two Portland Square ICC Distributors, Inc.
Portland, ME 14101
Marc D. Keffer Assistant Secretary, --------
Two Portland Square ICC Distributors, Inc.
Portland, ME 14101
Frederick Skillin Assistant Treasurer, -------
Two Portland Square ICC Distributors, Inc.
Portland, ME 14101
</TABLE>
25
<PAGE>
(c) Not applicable
Item 28. 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:
Flag Investors Portfolios Trust
P.O. Box 501
Cardinal Avenue Grand Cayman, Cayman Islands, BWI
Deutsche Fund Management, Inc.
280 Park Avenue
New York, NY 10017
(Investment Advisor for each Portfolio except the Communications Portfolio)
Investment Company Capital Corp.
One South Street
Baltimore, MD 21202
(Investment Advisor and Accounting Agent for the Communications Portfolio,
Operations Agent and Administrative Agent for each Portfolio)
DWS International Portfolio Management GmbH
Gruenburgweg 113-115, 60323
Frankfurt am Main, Germany
(Investment Sub-Advisor for each Portfolio, except US Money Market Portfolio
(US Dollar), Top 50 US Portfolio (US Dollar), and Communications Portfolio
(US Dollar))
Deutsche Asset Management, Inc.
855 Third Avenue 32nd Floor
New York, NY 10022
(Investment Sub-Advisor for Top 50 US Portfolio (US Dollar))
Bankers Trust Company
130 Liberty Street
New York, NY 10006
(Investment Sub-Advisor for US Money Market Portfolio (US Dollar) and Custodian
for Communications Portfolio)
Alex. Brown Investment Management
One South Street
Baltimore, MD 21202
(Investment Sub-Advisor for Communications Portfolio (US Dollar))
IBT Fund Services (Canada) Inc.
One First Place
King Street West, Suite 2800
P.O. Box 231
Toronto, Ontario M5X1C8
(Fund Accounting Agent for each Portfolio except the Communications Portfolio)
Item 29. Management Services:
Not applicable.
Item 30. Undertakings:
Not applicable
26
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, FLAG
INVESTORS PORTFOLIOS TRUST has duly caused this registration statement on Form
N-1A to be signed on its behalf by the undersigned, thereto duly authorized, in
the City of Baltimore and the State of Maryland, on the 29th day of September
2000.
FLAG INVESTORS PORTFOLIOS TRUST
By: /s/ Carl W. Vogt, Esq.*
-----------------------
Carl W. Vogt, Esq.
President
NAME TITLE
---- -----
By: /s/ Truman T. Semans* Trustee
--------------------------------
Truman T. Semans
/s/ Richard R. Burt* Trustee
--------------------------------
Richard R. Burt
/s/ Richard T. Hale* Trustee
--------------------------------
Richard T. Hale
/s/ Joseph R. Hardiman* Trustee
--------------------------------
Joseph R. Hardiman
/s/ Louis E. Levy* Trustee
--------------------------------
Louis E. Levy
/s/ Eugene J. McDonald* Trustee
--------------------------------
Eugene J. McDonald
/s/ Rebecca W. Rimel* Trustee
--------------------------------
Rebecca W. Rimel
/s/ Robert H. Wadsworth* Trustee
--------------------------------
Robert H. Wadsworth
/s/ Carl W. Vogt, Esq.* President
--------------------------------
Carl W. Vogt, Esq.
/s/ Charles A. Rizzo* Chief Financial and
-------------------------------- Accounting Officer
Charles A. Rizzo
By: /s/ Daniel O. Hirsch Attorney -In-Fact
--------------------------------
Daniel O. Hirsch
*By Power of Attorney - filed herewith.
27
<PAGE>
RESOLVED, that Edward J. Veilleux, Amy M. Olmert and Daniel O. Hirsch are
authorized to sign the Registration Statements on Form N-1A, and any
Post-Effective Amendments thereto, of each Fund in the Flag Funds
Complex on behalf of each Fund's President pursuant to a properly
executed power of attorney.
RESOLVED, that Edward J. Veilleux, Amy M. Olmert and Daniel O. Hirsch are
authorized to sign the Registration Statements on Form N-1A, and any
Post-Effective Amendments thereto, of each Fund in the Flag Funds
Complex on behalf of each Fund's Chief Financial Officer pursuant to a
properly executed power of attorney.
28
