<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BT Alex. Brown Cash Reserve Fund, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement., if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
--------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ___________________________________________
2) Form, Schedule or Registration Statement No.: _____________________
3) Filing Party: _____________________________________________________
4) Date Filed: _______________________________________________________
<PAGE>
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.
(Formerly, BT Alex. Brown Cash Reserve Fund, Inc.)
One South Street
Baltimore, Maryland 21202
[August 23], 1999
Dear Shareholder:
On June 4, 1999, Bankers Trust merged with Deutsche Bank AG. Bankers Trust is
the indirect parent of Investment Company Capital Corp., the investment advisor
to each Series of Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (the
"Fund"). As a result of the merger, we are asking shareholders of each Series to
approve new advisory agreements. Enclosed is further information relating to
these changes, including a Questions & Answers section, proxy statement and
proxy card(s).
Important information about the changes:
o The merger has no effect on the number of shares you own or
the value of those shares.
o The advisory fees payable under the new advisory agreements
have not increased.
o The investment objective of each Series has not changed.
In addition to the change in advisory agreements, shareholders are also being
asked to approve other changes outlined in the enclosed Proxy Statement. The
Board of Directors of the Fund believes that the proposals are important and
recommends that you read the enclosed materials carefully and then vote FOR all
proposals.
What you need to do:
o Read all enclosed materials including the Questions & Answers
section.
o Choose one of the following options to vote:
1. By Mail: Complete the enclosed proxy card and return
it in the postage-paid envelope provided by
(dd/mm/yy).
2. By Telephone: Call the Toll-Free # on your proxy
card by (dd/mm/yy).
3. By Internet: Logon to WWW.PROXYVOTE.COM by
(dd/mm/yy).
4. Attend the Shareholder Meeting (details enclosed).
<PAGE>
Please note: If you own shares in more than one Series, you will receive more
than one proxy card. Please sign and return each proxy card you receive.
Sincerely,
[INSERT MR. HALE'S SIGNATURE]
Richard T. Hale
Chairman
Deutsche Banc Alex. Brown
Cash Reserve Fund, Inc.
<PAGE>
[August 23, 1999]
IMPORTANT NEWS
FOR SHAREHOLDERS OF DEUTSCHE BANC ALEX. BROWN
CASH RESERVE FUND, INC.
(Formerly, BT Alex. Brown Cash Reserve Fund, Inc.)
While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of some matters affecting the Prime,
Treasury and Tax-Free Series of the Fund which require a shareholder vote.
Q&A: QUESTIONS AND ANSWERS
Q. What has happened to require a shareholder vote?
A. On June 4, 1999, Bankers Trust became a subsidiary of Deutsche Bank AG.
Bankers Trust is the indirect parent of Investment Company Capital Corp.
("ICC"), investment advisor to each Series of the Fund. Deutsche Bank, a banking
company organized under the laws of the Federal Republic of Germany, provides a
comprehensive range of global banking and financial services.
Deutsche Bank now ranks as the fourth largest investment manager in the
world with $670 billion in assets in a full range of active and index
strategies. Deutsche Asset Management handles the investment management
activities of Deutsche Bank in the Americas, United Kingdom and Asia and will
manage $454 billion in assets globally.
To ensure that ICC may continue to serve as investment advisor to each
Series of the Fund, we are seeking shareholder approval of new advisory
agreements. In addition, you are being asked to elect a Board of Directors of
the Fund and to modify or eliminate certain of the Series' fundamental
investment policies in response to changes in the law.
THE BOARD MEMBERS OF YOUR FUND, INCLUDING THOSE WHO ARE NOT AFFILIATED WITH THE
FUND, RECOMMEND THAT YOU VOTE FOR THESE PROPOSALS.
Q. Why am I being asked to vote on the new advisory agreements?
A. The Investment Company Act of 1940, which regulates investment
companies in the United States such as the Fund, requires a shareholder vote to
approve new investment advisory agreements following certain types of business
combinations. The new advisory agreements became effective immediately upon
consummation of the merger and will continue in effect only upon shareholder
approval.
<PAGE>
Q. How does the merger affect the Fund?
A. Each Series of the Fund and its respective investment objectives have
not changed as a result of the merger. You still own the same shares in the same
Fund as you did prior to the merger. The new advisory agreements contain
substantially the same terms and conditions as the investment advisory
agreements in effect prior to the merger, except for the dates of execution,
effectiveness and initial term. If shareholders do not approve the new advisory
agreements, these agreements will no longer continue and the Board of Directors
will take such action as it deems to be in the best interests of each Series,
and its shareholders.
Q. Have the investment advisory fees remained the same?
A. Yes.
Q. What are the benefits of the merger?
A. There are several potential positive aspects of the merger you may be
interested in. Most notably, the combined institution will be one of the largest
financial institutions in the world, as well as a leader in a number of
important categories, including asset management. The financial strength of the
combined institution coupled with the increased breadth and depth of its
resources and capabilities are advantages the acquisition brings. Further, as a
truly global institution, the combined entity will be in a unique position to
provide coverage, services and products.
Q. How does the Board of Directors of the Fund recommend that I vote?
A. After careful consideration, the Board of Directors of the Fund
recommends that you vote in favor of all the proposals on the enclosed proxy
card(s).
Q. Whom do I call for more information?
A. If you need more information, please call Shareholder Communications
Corporation, the Fund's information agent, at 1-800-732-6168.
Q. How can I vote my shares?
A. You may choose from one of the following options to vote your shares:
o By mail, with the enclosed proxy card(s) and return envelope.
o By telephone, with a toll-free call to the telephone number
that appears on your proxy card.
o Through the Internet, by using the Internet address located
on your proxy card and following the instructions on the site.
<PAGE>
o In person at the shareholder meeting (see details enclosed in
proxy statement).
Q. Will the Fund pay for the proxy solicitation and legal costs associated
with this transaction?
A. No, ICC will bear these costs. However, the Fund will bear the
incremental costs associated with changing the Fund's fundamental policies.
Q. What happens if I own shares in more than one Series?
A. If you have shares of more than one Series in your name at the same
address, you will receive separate proxy cards for each Series but only one
proxy statement for the account.
Please vote all issues on each proxy card that you receive. Thank you for
mailing your proxy card promptly.
[August 23], 1999
<PAGE>
PRELIMINARY COPY
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.
(Formerly, BT Alex. Brown Cash Reserve Fund, Inc.)
One South Street
Baltimore, Maryland 21202
-----------------------------------
Notice of Special Meeting of Shareholders
October 7, 1999
TO THE SHAREHOLDERS OF DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.:
You are cordially invited to a special meeting (the "Special Meeting")
of the shareholders of Deutsche Banc Alex. Brown Cash Reserve Fund, Inc. (the
"Fund"). The Special Meeting will be held on Thursday, October 7, 1999, at 2:45
p.m. Eastern Time at the offices of Investment Company Capital Corp., in the
conference room on the 30th Floor of The Alex. Brown Building, One South Street,
Baltimore, Maryland 21202. The purpose of the Special Meeting is to consider the
proposals set forth below and to transact such other business as may be properly
brought before the Special Meeting:
PROPOSAL 1: To consider and act upon a proposal to elect a Board of
Directors of the Fund (voted on by all shareholders).
PROPOSAL 2: To approve a new Investment Advisory Agreement between the
Fund and Investment Company Capital Corp. with respect to each
Series (voted on by shareholders of each Series separately).
PROPOSAL 3: To eliminate each Series' fundamental investment policy
concerning investments in companies for the purposes of
exercising control or management (voted on by shareholders of
each Series separately).
PROPOSAL 4: To eliminate each Series' fundamental investment policy
concerning pledging, mortgaging or hypothecating assets (voted
on by shareholders of each Series separately).
PROPOSAL 5: To eliminate each Series' fundamental investment policy
concerning investment in securities of other investment
companies (voted on by shareholders of each Series
separately).
<PAGE>
PROPOSAL 6: To eliminate each Series' fundamental investment policy
concerning short sales, purchasing securities on margin, and
investing in puts and calls and modifying each Series' policy
on commodities (voted on by shareholders of each Series
separately).
PROPOSAL 7: To eliminate each Series' fundamental investment policy
concerning purchases of oil, gas, or mineral interests (voted
on by shareholders of each Series separately).
PROPOSAL 8: To modify each Series' fundamental investment policy
concerning borrowing (voted on by shareholders of each Series
separately).
PROPOSAL 9: To modify each Series' fundamental investment policy
concerning loans (voted on by shareholders of each Series
separately).
Only shareholders of the Fund at the close of business on August 6, 1999 are
entitled to notice of, and to vote at, this meeting or any adjournment thereof.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE SPECIAL MEETING, PLEASE
COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD. A POSTAGE PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE SO THAT YOU MAY RETURN YOUR PROXY CARD AS SOON AS
POSSIBLE. YOU MAY ALSO VOTE EASILY AND QUICKLY BY TELEPHONE OR THROUGH THE
INTERNET. TO DO SO[, PLEASE FOLLOW THE INSTRUCTIONS ACCOMPANYING YOUR ENCLOSED
PROXY CARD.] IT IS MOST IMPORTANT AND IN YOUR INTEREST FOR YOU TO VOTE SO THAT A
QUORUM WILL BE PRESENT AND A MAXIMUM NUMBER OF SHARES MAY BE VOTED. THE PROXY IS
REVOCABLE AT ANY TIME PRIOR TO ITS USE.
Amy M. Olmert
Secretary
Dated: [ ], 1999
-2-
<PAGE>
PRELIMINARY COPY
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.
(Formerly, BT Alex. Brown Cash Reserve Fund, Inc.)
One South Street
Baltimore, Maryland 21202
--------------------
PROXY STATEMENT
--------------------
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD
October 7, 1999
This Proxy Statement is furnished by the Board of Directors of Deutsche
Banc Alex. Brown Cash Reserve Fund, Inc. (the "Fund") in connection with the
solicitation of proxies for use at the special meeting of shareholders of the
Fund to be held on Thursday, October 7, 1999, at 2:45 p.m. Eastern Time, or at
any adjournment thereof (the "Special Meeting"), at the offices of Investment
Company Capital Corp., in the conference room on the 30th Floor of The Alex.
Brown Building, One South Street, Baltimore, Maryland 21202. It is expected that
the Notice of Special Meeting, the Proxy Statement and a Proxy Card will be
mailed to shareholders on or about August 23, 1999.
Summary
-------
At the Special Meeting, shareholders will be asked to elect a slate of
Directors, to approve new Investment Advisory Agreements for the Prime, Treasury
and Tax-Free Series of the Fund (each a "Series" and collectively "the Series"),
and to consider a number of issues relating to the fundamental investment
policies of the Series.
Proposal 1 asks shareholders of the Fund to elect a Board of Directors.
Proposal 2 asks shareholders of each of the Prime, Treasury and
Tax-Free Series, respectively, to consider a new Investment Advisory Agreement
between each Series and Investment Company Capital Corp. ("ICC" or the
"Advisor"). This action is necessary because the merger on June 4, 1999 (the
"Merger") between Bankers Trust Corporation ("Bankers Trust"), the indirect
parent of ICC, and a U.S. subsidiary of Deutsche Bank AG ("Deutsche Bank") may
have arguably resulted in an assignment and, therefore, termination of the
Fund's prior Investment Advisory Agreements under the Investment Company Act of
1940, as amended (the "1940 Act"). Each Series' new Investment Advisory
Agreement is identical to its prior Investment Advisory Agreement, except for
the dates of execution, effectiveness and initial term.
-3-
<PAGE>
Proposals 3 through 9 ask shareholders to approve changes in the
fundamental investment policies of each Series. Shareholders are being asked to
modify or eliminate certain of the Series' investment policies in order to
update the policies to reflect changes in the law. The changes to a Series'
fundamental policies would become effective upon shareholder approval or at such
later date as the proper officers of the Fund determine.
All shareholders of the Fund are entitled to vote on Proposal 1.
Proposals 2 through 9 require action by the shareholders of the Prime, Treasury
and Tax-Free Series, voting separately. The summary voting table below sets
forth all of the Proposals to be acted upon and indicates which Series'
shareholders are solicited with respect to each Proposal.
Proposal Number Series
--------------- ------
1 All Series together
2 Prime, Treasury and Tax-Free, separately
3 Prime, Treasury and Tax-Free, separately
4 Prime, Treasury and Tax-Free, separately
5 Prime, Treasury and Tax-Free, separately
6 Prime, Treasury and Tax-Free, separately
7 Prime, Treasury and Tax-Free, separately
8 Prime, Treasury and Tax-Free, separately
9 Prime, Treasury and Tax-Free, separately
If you do not expect to be present at the Special Meeting and wish your
shares to be voted, please vote your proxy (the "Proxy") by mail, telephone or
internet, allowing sufficient time for the Proxy to be received on or before
2:45 p.m. Eastern Time on Thursday, October 7, 1999. If your Proxy is properly
returned, shares represented by it will be voted at the Special Meeting in
accordance with your instructions. However, if no instructions are specified on
the Proxy with respect to a specific Proposal, the Proxy will be voted FOR the
approval of such Proposal and in accordance with the judgment of the persons
appointed as proxies upon any other matter that may properly come before the
Special Meeting. Shareholders may revoke their Proxies at any time prior to the
time they are voted by giving written notice to the Secretary of the Fund, by
delivering a subsequently dated Proxy or by attending and voting at the Special
Meeting.
The close of business on August 6, 1999, has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of, and to vote at, the Special Meeting and at any adjournment thereof.
On that date, the Fund had ________________ shares outstanding, consisting of
_________________ shares of the Prime Series, _______________ shares of the
Treasury Series and ______________ shares of the Tax-Free Series. Each full
share will be entitled to one vote at the Special Meeting and each fraction of a
share will be entitled to the fraction of a vote equal to the proportion of a
full share represented by the fractional share.
-4-
<PAGE>
The expenses of the Special Meeting will be borne by ICC, except that
the incremental costs associated with Proposals 3 through 9 will be borne by the
Fund, and will include reimbursement to brokerage firms and others for expenses
in forwarding Proxy solicitation materials to beneficial owners. The
solicitation of Proxies will be largely by mail, but may include telephonic,
telegraphic, Internet or oral communication by employees and officers of ICC.
Additional solicitation may be made by Shareholder Communications Corporation
("Shareholder Communications"), a solicitation firm located in New York, New
York that has been engaged by the Fund to assist in proxy solicitation.
[Payments by ICC and the Fund to Shareholder Communications for solicitation
services are estimated to be $__________.]
Upon Request, the Fund will furnish to shareholders, without charge, a
copy of the Annual Report for its fiscal year ended March 31, 1999. The Annual
Report of the Fund may be obtained by written request to the Fund, One South
Street, Baltimore, Maryland 21202, or by calling (800) 553-8080.
The Fund is registered as an open-end, diversified management
investment company under the 1940 Act and its shares are registered under the
Securities Act of 1933, as amended. The Fund offers three Series of shares:
Prime Series, Treasury Series and Tax-Free Series. The Fund is advised by ICC, a
wholly owned subsidiary of BT Alex. Brown Incorporated ("BT Alex. Brown") and an
indirect subsidiary of Bankers Trust. Prior to June 4, 1999, ICC acted as the
investment advisor to each of the Fund's Series pursuant to three separate
Investment Advisory Agreements dated September 1, 1997 (the "Prior Advisory
Agreements"). The Prior Advisory Agreements were arguably assigned and,
therefore, terminated, by the Merger on June 4, 1999. Under an exemptive order
issued by the Securities and Exchange Commission (the "SEC") on May 25, 1999,
ICC has served as investment advisor since the closing date of the Merger
pursuant to three new Investment Advisory Agreements (the "New Advisory
Agreements") that are substantially identical to the Prior Investment Advisory
Agreements. It is proposed that shareholders approve the New Advisory
Agreements. (See Proposal 2, below.)
PROPOSAL 1: To consider and act upon a proposal to elect a Board of
Directors of the Fund.
At the Special Meeting, it is proposed that eight Directors be elected
to hold office until their successors are duly elected and qualified. The
persons named in the accompanying Proxy intend, in the absence of contrary
instructions, to vote all Proxies on behalf of the shareholders for the election
of Richard R. Burt, Richard T. Hale, Joseph R. Hardiman, Louis E. Levy, Eugene
J. McDonald, Rebecca W. Rimel, Truman T. Semans, and Robert H. Wadsworth (each a
"Nominee" and collectively the "Nominees"). All of the Nominees are currently
members of the Board of Directors except for Messrs. Burt and Wadsworth. Messrs.
Hale, Levy, McDonald and Semans and Ms. Rimel were last elected by a vote of
shareholders on August 14, 1997. Mr. Hardiman was appointed by the Board of
Directors to fill a vacancy on the Board and has not previously been elected by
the shareholders. Messrs. James J. Cunnane and Carl W. Vogt are not seeking
reelection and will resign from the Board effective upon the election of their
successors. It is the intention of the Board that at least 75% of its members
will be disinterested persons within the contemplation of Section 15(f) of the
1940 Act and will remain disinterested persons for at least three years after
the Merger.
-5-
<PAGE>
The proposal to elect the Board of Directors is being presented for
shareholder approval pursuant to requirements under the 1940 Act. Under the 1940
Act, Directors may not fill vacancies unless at least two-thirds of the
Directors holding office after such vacancies are filled have been elected by
the shareholders. The Special Meeting will provide the Board with operating
flexibility by making it possible for the Board of Directors to fill vacancies
that may occur in the future.
Each of the Nominees has consented to being named in this Proxy
Statement and to serving as a Director if elected. The Fund knows of no reason
why any Nominee would be unable or unwilling to serve if elected. Because the
Fund does not hold regular annual shareholder meetings, each Nominee, if
elected, will hold office until his or her successor is elected and qualified.
-6-
<PAGE>
Information Regarding Nominees
The following information is provided for each Nominee. As of May 31,
1999, the Directors and officers of the Fund as a group and the Nominees as a
group beneficially owned an aggregate of less than 1% of any Series of the Fund.
<TABLE>
<CAPTION>
Shares Beneficially
Name and Position Business Experience During the Past Owned as of May
with the Fund Age Five Years (including all directorships) 31, 1999** Percentage
------------- --- ---------------------------------------- ----------
<S> <C> <C> <C>
Richard T. Hale* 54 Managing Director, Deutsche Asset ______ ***
Director since 1989 Management, [_____
-present]; Director and Chairman since 1997
President, Investment Company Capital Corp.
(registered investment advisor); Chartered
Financial Analyst. Formerly, Managing
Director, BT Alex. Brown, [___ - ___].
Director of 10 funds in the Fund Complex.****
Richard R. Burt 52 Chairman, IEP Advisors, Inc.; Chairman of ______ ***
Nominee the Board, Weirton Steel Corporation; Member
of the Board, Archer Daniels Midland Company
(agribusiness operations), Hollinger
International Inc. (publishing) and
Homestake Mining Company (mining and
exploration); Director, Mitchell Hutchins
family of funds (registered investment
companies); Member, Textron Corporation
International Advisory Council; and Partner,
McKinsey & Company (consulting), 1991-1994.
[Formerly, U.S. Chief Negotiator in
Strategic Arms Reduction Talks (START) with
former Soviet Union and U.S. Ambassador to
the Federal Republic of Germany, 1985-1991.]
Nominee for Director of 8 funds in the Fund
Complex.
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially
Name and Position Business Experience During the Past Owned as of May
with the Fund Age Five Years (including all directorships) 31, 1999** Percentage
------------- --- ---------------------------------------- ----------
<S> <C> <C> <C>
Joseph R. Hardiman 62 Private Equity Investor and Capital Markets ______ ***
Director since 1998 Consultant;
Director, Wit Capital Group (registered
broker dealer), The Nevis Fund (registered
investment company) and Circon Corp.
(medical instruments). Formerly, President
and Chief Executive Officer, The National
Association of Securities Dealers, Inc. and
The NASDAQ Stock Market, Inc., 1987-1997;
Chief Operating Officer of Alex. Brown &
Sons Incorporated (now BT Alex. Brown
Incorporated), 1985-1987; and General
Partner, Alex. Brown & Sons Incorporated
(now BT Alex. Brown Incorporated),
1976-1985. Director of each fund in the Fund
Complex.
Louis E. Levy 66 Director, Kimberly-Clark Corporation ______ ***
Director since 1994 (personal consumer products) and
Household International (finance and
banking); and Chairman of the Quality
Control Inquiry Committee and American
Institute of Certified Public Accountants.
[Formerly, Trustee, Merrill Lynch Funds for
Institutions, 1991-1993; Adjunct Professor,
Columbia University-Graduate School of
Business, 1991-1992; and Partner, KPMG Peat
Marwick, retired 1990.] Director of each
fund in the Fund Complex.
Eugene J. McDonald 67 President, Duke Management Company ______ ***
Director since 1995 (investments); Executive Vice President,
Duke University (education, research and
health care); Executive Vice Chairman and
Director, Central Carolina Bank & Trust
(banking); and Director, Victory Funds
(registered investment companies); Formerly,
Director, AMBAC Treasurers Trust (registered
investment company) and DP Mann Holdings
(insurance). Director of each fund in the
Fund Complex.
Rebecca W. Rimel 48 President and Chief Executive Officer, The ______ ***
Director since 1995 Pew Charitable Trusts; Director and
Executive Vice President, The Glenmede
Trust Company. Formerly, Executive
Director, The Pew Charitable Trusts.
Director of 11 funds in the Fund Complex.
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially
Name and Position Business Experience During the Past Owned as of May
with the Fund Age Five Years (including all directorships) 31, 1999** Percentage
------------- --- ---------------------------------------- ----------
<S> <C> <C> <C>
Truman T. Semans* 72 Vice Chairman, Brown Investment Advisory ______ ***
Director since 1995 & Trust Company (formerly, Alex. Brown
Capital Advisory & Trust Company);
Director, Investment Company Capital Corp.
(registered investment advisor); and Virginia
Hot Springs, Inc. (property management).
Formerly, Managing Director, BT Alex.
Brown Incorporated; Vice Chairman,
Alex. Brown & Sons Incorporated (now
BT Alex. Brown Incorporated).
Director of 10 funds in the Fund Complex.
Robert H. Wadsworth 59 President, The Wadsworth Group, First Fund ______ ***
Nominee Distributors, Inc. and Guinness Flight
Investment Funds, Inc.; Director, The
Germany Fund, Inc., The New Germany Fund,
Inc., The Central European Equity Fund,
Inc., and Deutsche Funds, Inc.; Trustee,
Deutsche Portfolios; and Vice President,
Professionally Managed Portfolios and
Advisors Series Trust. Nominee for Director
of 8 funds in the Fund Complex.
</TABLE>
* Denotes an individual who is an "interested person" as defined in the
1940 Act.
** This information has been provided by each Nominee for Director of the
Fund.
*** [As of May 31, 1999, the Nominees of the Fund as a group beneficially
owned an aggregate of less than 1% of any Series of the Fund.]
**** The "Fund Complex" consists of 12 registered investment companies which
hold themselves out to investors as related companies for purposes of
investment and investor services for which ICC provides investment
advisory or administrative services.
Compensation of Directors
Each Director who is not an "interested person" within the meaning of
the 1940 Act, as well as the Fund's President, receives an aggregate annual fee
(plus reimbursement for reasonable out-of-pocket expenses incurred in connection
with his or her attendance at Board and committee meetings) from the Fund and
all of the funds in the Fund Complex for which he or she serves. Payment of such
fees and expenses is allocated among all such funds described above in
proportion to their relative net assets. For the fiscal year ended March 31,
1999, Independent Directors' (defined below) fees attributable to the assets of
the Fund totaled $[137,888]. Officers of the Fund, except the Fund's President,
receive no direct remuneration in such capacity from the Fund. Officers of the
Fund who are employees of BT Alex. Brown or its affiliates may be considered to
have received remuneration indirectly. [Certain of the Fund's Independent
Directors and Nominees [have agreed] [have been appointed] to serve as directors
of other mutual funds managed by Deutsche Bank or its affiliates.]
-9-
<PAGE>
Any Director who receives fees from the Fund is permitted to defer 50%
to 100% of his or her annual compensation pursuant to a Deferred Compensation
Plan. Messrs. Cunnane, Levy, McDonald and Vogt and Ms. Rimel have each executed
a Deferred Compensation Agreement and may defer a portion of their compensation
from the Fund and the Fund Complex. Currently, the deferring Directors may
select from among various funds in the Fund Complex and BT International Equity
Fund in which all or part of their deferral account shall be deemed to be
invested. Distributions from the deferring Directors' deferral accounts will be
paid in cash, in quarterly installments over a period of ten years.
The aggregate compensation payable by the Fund to each of the Fund's
Directors serving during the fiscal year ended March 31, 1999 is set forth in
the compensation table below. The aggregate compensation payable to such
Directors during the fiscal year ended March 31, 1999 by the Fund Complex is
also set forth in the compensation table below.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Total
Pension or Compensation
Aggregate Retirement Benefits From the Fund and Number of Funds in
Compensation Accrued as Part of Fund Complex Fund Complex for Which
Payable Fund Payable to Director
Name and Position from the Fund Expenses Directors Serves
----------------- ------------- ---------- --------- ------
<S> <C> <C> <C> <C>
Richard T. Hale, Chairman(1) $ 0 $ 0 $ 0 10
Truman T. Semans, Director(1) $ 0 $ 0 $ 0 10
James J. Cunnane, Director $25,427(2) (3) $39,000 13(4)
Joseph R. Hardiman, Director(5) $20,384 (3) $29,250 12(6)
John F. Kroeger, Director(7) $24,230(2) (3) $36,750 13(4)
Louis E. Levy, Director $30,300(2) (3) $46,500 13(4)
Eugene J. McDonald, Director $28,656(2) (3) $44,000 13(4)
Rebecca W. Rimel, Director $26,232(2) (3) $39,000 12(4,6)
Carl W. Vogt, Director $25,982(2) (3) $39,000 13(4,6)
- -----------------
</TABLE>
(1) Denotes an individual who is an "interested person" as defined in the
1940 Act.
(2) Of the amounts payable to Messrs. Cunnane, Levy, McDonald and Vogt and
Ms. Rimel, $25,427, $23,250, $28,656, $25,982 and $25,823,
respectively, were deferred pursuant to the Fund Complex's Deferred
Compensation Plan.
(3) The Fund Complex has adopted a retirement plan for eligible Directors
and the Fund's President as described below. The actuarially computed
pension expense for the Fund for the fiscal year ended March 31, 1999
was $287,906.
(4) One of these Funds ceased operations on July 29, 1998.
(5) Appointed to the Board on September 27, 1998.
(6) Ms. Rimel receives and Messrs. Vogt and Hardiman received (prior to
their appointment or election as Director to all of the funds in the
Fund complex) proportionately higher compensation from each fund for
which they serve as a Director.
(7) Retired, effective September 27, 1998; Deceased on November 26, 1998.
-10-
<PAGE>
The Fund Complex has adopted a retirement plan (the "Retirement Plan")
for the Fund's President and Directors who are not employees of the Fund, the
Fund's investment advisor or their respective affiliates (the "Participants").
After completion of six years of service, each Participant will be entitled to
receive an annual retirement benefit equal to a percentage of the fees earned by
such Participant in his or her last year of service. Upon retirement, each
Participant will receive annually 10% of such fee for each year that he or she
served after completion of the first five years, up to a maximum annual benefit
of 50% of the fee earned by the Participant in his or her last year of service.
The fee will be paid quarterly, for life, by each fund for which he or she
serves. The Retirement Plan is unfunded and unvested. The Plan has two
Participants, a Director who retired effective December 31, 1994 and Mr. Woolf,
the Fund's President, who retired as a Director effective December 31, 1996.
These Participants have qualified for the Retirement Plan by serving thirteen
years and fourteen years, respectively, as Directors in the Fund Complex and
each will be paid a quarterly fee of $4,875 by the Fund Complex for the rest of
his life. Such fees are allocated to each fund in the Fund Complex based upon
the relative net assets of such fund to the Fund Complex.
Set forth in the table below are the estimated annual benefits payable
to a Participant upon retirement assuming various years of service and payment
of a percentage of the fee earned in his or her last year of service. The
approximate credited years of service, shown in parentheses, for each
Participant at December 31, 1998, are as follows: Messrs. Cunnane (4), Hardiman
(0), Levy (4), McDonald (6), Vogt (3), and Ms. Rimel (3).
<TABLE>
<CAPTION>
Estimated Annual Benefits Payable By Fund Complex Upon Retirement
Years of Service Chairmen of Audit and Executive Committees Other Participants
---------------- ------------------------------------------ ------------------
<S> <C> <C>
6 years $ 4,900 $ 3,900
7 years $ 9,800 $ 7,800
8 years $14,700 $11,700
9 years $19,600 $15,600
10 years or more $24,500 $19,500
</TABLE>
Meetings and Committees of the Board of Directors
There were four regular meetings of the Board of Directors held during
the fiscal year ended March 31, 1999. In such fiscal year, all incumbent
Directors attended all of the meetings of the Board of Directors held during
their respective terms.
The Board of Directors has an Audit and Compliance Committee. The Audit
and Compliance Committee makes recommendations to the full Board of Directors
with respect to the engagement of independent accountants. The Committee
reviews, with the independent accountants, the results of the audit engagement
and matters having a material effect on the Fund's financial operations. The
members of the Audit and Compliance Committee during the
-11-
<PAGE>
fiscal year ended March 31, 1999, were Messrs. Levy (Chairman), Cunnane,
Hardiman, McDonald and Vogt, and Ms. Rimel each of whom is not an "interested
person" within the meaning of the 1940 Act. Mr. Kroeger was Chairman of the
Audit and Compliance Committee until his retirement. If elected Messrs. Burt and
Wadsworth will become members of the Audit and Compliance Committee. The Audit
and Compliance Committee met four times during the fiscal year ended March 31,
1999. In such fiscal year, all incumbent members attended all of the meetings of
the Audit and Compliance Committee held during their respective terms. The
Chairman of the Audit and Compliance Committee receives an aggregate annual fee
of $10,000 from the Fund Complex. Payment of such fee is allocated among all
funds in the Fund Complex in proportion to their relative net assets.
The Board of Directors has a Nominating Committee. The Nominating
Committee makes recommendations to the full Board of Directors with respect to
candidates for the Board of Directors. The members of the Nominating Committee
during the fiscal year ended March 31, 1999, were Messrs. McDonald (Chairman),
Cunnane, Hardiman, Levy and Vogt and Ms. Rimel, each of whom is not an
"interested person" within the meaning of the 1940 Act. If elected, Messrs. Burt
and Wadsworth will become members of the Nominating Committee. The Nominating
Committee met once during the fiscal year ended March 31, 1999. All incumbent
members attended the meeting.
The Board of Directors has a Compensation Committee. The Compensation
Committee makes recommendations to the full Board of Directors with respect to
the compensation of Directors. The members of the Compensation Committee during
the fiscal year ended March 31, 1999, were Messrs. Cunnane (Chairman), Hardiman,
Levy, McDonald and Vogt and Ms. Rimel, each of whom is not an "interested
person" within the meaning of the 1940 Act. If elected, Messrs. Burt and
Wadsworth will become members of the Compensation Committee. The Compensation
Committee did not meet during the fiscal year ended March 31, 1999.
The Board of Directors has an Executive Committee. The Executive
Committee makes recommendations to the full Board of Directors with respect to
the renewal of the Fund's agreements with its service providers. The members of
the Executive Committee are Messrs. McDonald (Chairman), Cunnane, Levy, Hardiman
and Vogt and Ms. Rimel, each of whom is not an "interested person" within the
meaning of the 1940 Act. If elected, Messrs. Burt and Wadsworth will become
members of the Executive Committee. The Chairman of the Executive Committee
receives an aggregate annual fee of $10,000 from the Fund Complex. Payment of
such fee is allocated among all funds in the Fund Complex in proportion to their
relative net assets. The Executive Committee was formed on September 28, 1998,
and met twice during the fiscal year ended March 31, 1999. All incumbent members
attended the meetings.
Board Approval of the Election of Directors
At meetings of the Board of Directors held on March 30, 1999 and July
28, 1999, the Board of Directors recommended that shareholders vote FOR each of
the Nominees for Director
-12-
<PAGE>
named herein. In recommending that shareholders elect the Nominees as Directors
of the Fund, the Board considered the Nominees' experience and qualifications.
Shareholder Approval of the Election of Directors
The Election of the Directors requires the affirmative vote of a
plurality of all votes cast at the Special Meeting, provided that a majority of
the shares entitled to vote are present in person or by Proxy at the Special
Meeting. If you give no voting instructions, your shares will be voted FOR all
Nominees named herein. If the Directors are not approved by shareholders of the
Fund, the Board of Directors will consider alternative nominations.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR THE
ELECTION OF THE DIRECTORS. ---
PROPOSAL 2: To approve a new Investment Advisory Agreement between the
Fund and Investment Company Capital Corp. with respect to each
Series
General Information
ICC is the Fund's investment advisor with respect to each Series. ICC
is an indirect, wholly owned subsidiary of Bankers Trust. On November 30, 1998,
Bankers Trust, Deutsche Bank AG and Circle Acquisition Corporation entered into
an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the terms
of the Merger Agreement, Circle Acquisition Corporation, a wholly owned, New
York subsidiary of Deutsche Bank, merged with and into Bankers Trust on June 4,
1999, with Bankers Trust continuing as the surviving entity. Under the terms of
the Merger, each outstanding share of Bankers Trust common stock was converted
into the right to receive $93 in cash, without interest.
As a result of the Merger, Bankers Trust became a wholly owned
subsidiary of Deutsche Bank. Deutsche Bank is a banking company with limited
liability organized under the laws of the Federal Republic of Germany. Deutsche
Bank is the parent company of a group consisting of banks, capital markets
companies, mutual fund management companies, mortgage banks, a property finance
company, installment financing and leasing companies, insurance companies,
research and consultancy companies and other domestic and foreign companies. At
March 31, 1999, the Deutsche Bank Group had total assets of U.S. $727 billion.
The Deutsche Bank Group's capital and reserves at March 31, 1999 were U.S. $19.6
billion. Since the Merger, Bankers Trust, ICC and along with their affiliates,
have continued to offer the same range of financial products and services,
including investment advisory services, that they offered prior to the Merger.
The Merger on June 4, 1999 may have resulted in an assignment, and
therefore a termination, of the Prior Advisory Agreements under the 1940 Act. In
anticipation of the
-13-
<PAGE>
Merger, the Directors of the Fund, including the Directors who are not (i)
parties to the New Advisory Agreement or (ii) interested persons of any such
party (the "Independent Directors"), unanimously approved the New Advisory
Agreements (attached as Exhibit A, B and C) on March 30, 1999. Each New Advisory
Agreement is identical to its corresponding Prior Advisory Agreement, except for
the dates of execution, effectiveness and initial term.
On May 25, 1999, ICC was granted an exemptive order (the "Exemptive
Order") by the SEC permitting implementation, without obtaining prior
shareholder approval, of the New Advisory Agreements during an interim period
commencing on the date of the closing of the Merger and continuing, for a period
of up to 150 days, through the date on which the New Advisory Agreements are
approved by the shareholders of each Series (the "Interim Period"). Under the
terms of the Exemptive Order, ICC is allowed to receive advisory fees during the
Interim Period pursuant to the New Advisory Agreements. In accordance with the
Exemptive Order, the advisory fees charged to the Fund and paid to ICC under the
New Advisory Agreements have been held in an interest-bearing escrow account and
the Fund expects to continue to deposit these fees in such account until
shareholder approval of the New Advisory Agreements has been obtained. If a New
Advisory Agreement is not approved by the shareholders of a Series by the
expiration of the Interim Period, the fees held in escrow with respect to that
Series will be remitted to the Fund. As of [____], 1999, the amount escrowed
totaled $[____].
ICC does not anticipate that the Merger will result in any reduction in
the quality of services now provided to the Series. Nor does ICC anticipate that
the Merger or will have any adverse effect on its ability to fulfill its
obligations under the New Advisory Agreements or to operate its business in a
manner consistent with past business practices.
The Prior Advisory Agreements
Prior to June 4, 1999, ICC served as investment advisor to the Series
pursuant to Prior Advisory Agreements dated September 1, 1997. Each Prior
Advisory Agreement was initially approved by the shareholders on August 14,
1997. The Prior Advisory Agreements were last approved by the Fund's Board of
Directors, including a majority of the Independent Directors, on September 29,
1998.
The New Advisory Agreements
-14-
<PAGE>
Other than the dates of execution, effectiveness and initial term,
each New Advisory Agreement is identical to its corresponding Prior Advisory
Agreement. The terms of the New Advisory Agreements are summarized below and are
qualified by reference to Exhibits A, B and C.
Advisory Fees. The investment advisory fee as a percentage of net
assets payable by the Fund under each New Advisory Agreement will be the same as
it was under the corresponding Prior Advisory Agreement. If the investment
advisory fees under the New Advisory Agreements had been in effect for the
Fund's most recently completed fiscal year, ICC would have received the same
compensation as it received under the Prior Advisory Agreements.
The New Advisory Agreements. The New Advisory Agreements provide that
the Advisor, in return for its fee, will (a) supervise and manage all aspects of
the Series' operations; (b) formulate and implement continuing programs for the
purchase and sale of securities, consistent with the investment objective and
policies of the Series; (c) provide the Series with such executive,
administrative and clerical services as are deemed advisable by the Fund's Board
of Directors; (d) provide the Series with, or obtain for it, adequate office
space and all necessary office equipment and services; (e) obtain and evaluate
pertinent information about significant developments and economic, statistical
and financial data, domestic, foreign or otherwise, whether affecting the
economy generally or the Series, and whether concerning the individual issuers
whose securities are included in the Series or the activities in which they
engage, or with respect to securities which the Advisor considers desirable for
inclusion in the Series; (f) determine which issuers and securities shall be
represented in the Series and regularly report thereon to the Fund's Board of
Directors; (g) take all actions necessary to carry into effect the Fund's
purchase and sale programs with respect to the Series; (h) supervise the
operations of the Series' transfer and dividend disbursing agent; (i) provide
the Series with such administrative and clerical services for the maintenance of
certain shareholder records as are deemed advisable by the Fund's Board of
Directors; and (j) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy materials, tax returns, reports to
the Series' shareholders and reports to and filings with the SEC and state Blue
Sky authorities which may be required of the Series. Subject to the approval of
the Board and the Series' shareholders, the Advisor may delegate certain of its
duties enumerated above to a sub-advisor.
Under the Prime Series' New Advisory Agreement, the Fund pays ICC an
annual fee based on the Fund's average daily net assets. This fee is calculated
daily and paid monthly at the annual rate of 0.30% of the first $500 million,
0.26% of the next $500 million, 0.25% of the next $500 million, 0.24% of the
next $1 billion, 0.23% of the next $1 billion and 0.22% of the amount over $3.5
billion. The Prime Series pays its portion of the foregoing fee based on the
proportion of its net assets relative to the Fund's net assets. In addition, the
Fund pays ICC a fee with respect to the Prime Series, calculated daily and paid
monthly, at the annual rate of 0.02% of the Prime Series' average daily net
assets. The Advisor may, from to time, voluntarily waive a portion of its
advisory fee with respect to the Prime Series to preserve or enhance the
performance of the Prime Series.
-15-
<PAGE>
Under the Treasury Series' New Advisory Agreement, the Fund pays ICC an
annual fee based on the Fund's average daily net assets. This fee is calculated
daily and paid monthly at an annual rate of 0.30% of the first $500 million,
0.26% of the next $500 million, 0.25% of the next $500 million, 0.24% of the
next $1 billion, 0.23% of the next $1 billion and 0.22% of the amount over $3.5
billion. The Treasury Series pays its portion of the foregoing fee based on the
proportion of its net assets relative to the Fund's net assets. The Advisor may,
from time to time, voluntarily waive a portion of its advisory fee with respect
to the Treasury Series to preserve or enhance the performance of the Treasury
Series.
Under the Tax-Free Series' New Advisory Agreement, the Fund pays ICC an
annual fee based on the Fund's average daily net assets. This fee is calculated
daily and paid monthly at an annual rate of 0.30% of the first $500 million,
0.26% of the next $500 million, 0.25% of the next $500 million, 0.24% of the
next $1 billion, 0.23% of the next $1 billion and 0.22% of the amount over $3.5
billion. The Tax-Free Series pays its portion of the foregoing fee based on the
proportion of its net assets relative to the Fund's net assets. In addition, the
Fund pays ICC a fee with respect to the Tax-Free Series, calculated daily and
paid monthly, at the annual rate of 0.03% of the Tax-Free Series' average daily
net assets. The Advisor may, from time to time, voluntarily waive a portion of
its advisory fee with respect to the Tax-Free Series to preserve or enhance the
performance of the Tax-Free Series.
The New Advisory Agreements provide that the Advisor will furnish,
subject to compliance with applicable banking regulations, at its expense and
without cost to the Fund, the services of one or more officers of the Fund to
the extent that such officers may be required by the Fund for the proper conduct
of its affairs. The Fund assumes and pays all other expenses of the Series,
including, without limitation, the Series' allowable portion of the following
expenses: payments to the Fund's distributor under the Series' plans of
distribution; the charges and expenses of any registrar, any custodian or
depository appointed by the Fund for the safekeeping of its cash, portfolio
securities and other property, and any transfer, dividend or accounting agent or
agents appointed by the Fund; brokers' commissions chargeable to the Fund in
connection with portfolio securities transactions to which the Fund is a party;
all taxes, including securities issuance and transfer taxes, and fees payable by
the Fund to federal, state or other governmental agencies; the costs and
expenses of engraving or printing of certificates representing shares of the
Fund; all costs and expenses in connection with the registration and maintenance
of registration of the Fund and its shares with the SEC and various states and
other jurisdictions (including filing fees, legal fees and disbursements of
counsel); the costs and expenses of printing, including typesetting, and
distributing prospectuses and statements of additional information of the Fund
and supplements thereto to the Fund's shareholders; all expenses of
shareholders' and Directors' meetings and of preparing, printing and mailing of
proxy statements and reports to shareholders; fees and travel expenses of
Directors or Director members of any advisory board or committee; all expenses
incident to the payment of any dividend, distribution, withdrawal or redemption,
whether in shares or in cash; charges and expenses of any outside service used
for pricing of the Fund's shares; charges and expenses of legal counsel,
including counsel to the Directors of the Fund who are not interested persons
(as defined in the 1940 Act) of the Fund and of independent
-16-
<PAGE>
accountants, in connection with any matter relating to the Fund; membership dues
of industry associations; interest payable on Fund borrowings; postage;
insurance premiums on property or personnel (including officers and Directors)
of the Fund which inure to its benefit; extraordinary expenses (including but
not limited to, legal claims and liabilities and litigation costs and any
indemnification related thereto); and all other charges and costs of the Fund's
operation unless otherwise explicitly provided herein.
The services of the Advisor are not to be deemed exclusive, and the
Advisor is free to render investment advisory and corporate administrative or
other services to others (including other investment companies), and to engage
in other activities, so long as its services under the agreement are not
impaired thereby. The Advisor's officers or directors may serve as officers or
directors of the Fund, and the Fund's officers or directors may serve as
officers or directors of the Advisor, to the extent permitted by law.
Following the expiration of its initial two-year term, the New Advisory
Agreements will continue in full force and effect from year to year, provided
that such continuance is approved at least annually by the Fund's Board or by
the vote of a majority of the Series' outstanding voting securities, and by the
affirmative vote of a majority of the Directors who are not parties to the
agreement or "interested persons" of a party to the agreement (other than as
Directors of the Fund) by votes cast in person at a meeting specifically called
for such purpose.
The New Advisory Agreements may be terminated at any time, on waivable
written notice within 60 days and without any penalty, by vote of the Fund's
Board of Directors, by vote of a majority of a Series' outstanding voting
securities or by the Advisor. The agreement automatically terminates in the
event of its assignment.
The New Advisory Agreements obligate the Advisor to exercise care and
diligence and to act in good faith and to use its best efforts within reasonable
limits to ensure the accuracy of all services performed under the agreement, but
the Advisor is not liable for any act or omission which does not constitute
willful misfeasance, bad faith or gross negligence on the part of the Advisor or
its officers, directors or employees, or reckless disregard by the Advisor of
its duties under the agreement.
Board Considerations. The Board held a meeting on March 30, 1999, at
which the Board, including the Independent Directors, unanimously approved the
New Advisory Agreements and recommended the New Advisory Agreements for approval
by shareholders. In evaluating the New Advisory Agreements, the Board based its
determination primarily on its conclusion that there would be a high degree of
continuity of services to the Fund and took into account that each Prior
Advisory Agreement is substantially identical to its corresponding New Advisory
Agreement, including the terms relating to the services to be provided
thereunder by ICC and the fees and expenses payable by the Fund.
-17-
<PAGE>
The Board was assured on behalf of Bankers Trust and Deutsche Bank that
they intend to comply with the requirements of Section 15(f) of the 1940 Act.
Section 15(f) provides a non-exclusive safe harbor for an investment advisor to
an investment company or any of its affiliated persons to receive any amount or
benefit in connection with a change in control of the investment advisor that
results in an assignment so long as two conditions are met:
1. For a period of three years after the change of control, at least
75% of the board members of the investment company must not be interested
persons of the acquired advisor or the acquiror (Bankers Trust and Deutsche
Bank, respectively, in this case). The Fund would be in compliance with this
provision of Section 15(f).
2. An "unfair burden" must not be imposed upon the investment company
as a result of such transaction or any express or implied terms, conditions or
understandings applicable thereto. The term "unfair burden" is defined in
Section 15(f) to include any arrangement during the two-year period after the
Merger whereby the investment advisor, or any interested person of any such
advisor, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its shareholders (other than fees for
bona fide investment advisory or other services) or from any person in
connection with the purchase or sale of securities or other property to, from or
on behalf of the investment company (other than bona fide ordinary compensation
as principal underwriter for such investment company). Bankers Trust and
Deutsche Bank are not aware of any express or implied term, condition,
arrangement or understanding that would impose an "unfair burden" on the Fund as
a result of the Merger. Bankers Trust and Deutsche Bank have agreed that they,
and their affiliates, will take no action that would have the effect of imposing
an "unfair burden" on the Fund as a result of the Merger.
The Board also considered the terms of the Merger and the possible
effects of the Merger upon ICC's organization and upon the ability of ICC to
provide advisory services to the Fund. The Board considered the skills and
capabilities of ICC in this regard and the representations of Bankers Trust and
Deutsche Bank that no material change was planned in the current management or
facilities of ICC.
The Board was also informed of the resources of Deutsche Bank that
could be made available to the Advisor and the Fund. Although the Board focused
primarily on the continuity of services to the Fund, the Directors did consider
Deutsche Bank's experience as advisor and service provider to two families of
U.S. mutual funds as well as numerous non-U.S. mutual funds.
The Board also considered other effects on the Fund of ICC becoming an
affiliated person of Deutsche Bank. Following the Merger, the 1940 Act will
prohibit or impose certain conditions on the ability of the Fund to engage in
certain transactions with Deutsche Bank. For example, absent exemptive relief,
the Fund will be prohibited from entering into securities transactions in which
Deutsche Bank acts as a principal. Currently the Fund is prohibited from
entering into only those transactions in which Bankers Trust acts as principal.
The Fund will
-18-
<PAGE>
also have to satisfy certain conditions in order to engage in securities
transactions in which Deutsche Bank is acting as an underwriter. The Fund is
already required to satisfy such conditions when engaging in transactions in
which Bankers Trust is acting as an underwriter. In this connection, management
of the Advisor represented to the Board that it does not believe these
prohibitions or conditions will have a material effect on the management or
performance of the Fund.
The Board also considered that the costs of the Special Meeting,
insofar as they apply to approval of the New Advisory Agreements, would be borne
by the Advisor.
After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Board, including the Independent
Directors, unanimously approved the New Advisory Agreements and voted to
recommend each for approval by shareholders.
Additional Information. On March 11, 1999, Bankers Trust announced that
it had reached an agreement with the United States Attorney's Office in the
Southern District of New York to resolve an investigation concerning
inappropriate transfers of unclaimed funds and related record-keeping problems
that occurred between 1994 and early 1996. [ICC became a subsidiary of Bankers
Trust after these events took place.] Pursuant to its agreement with the U.S.
Attorney's office, Bankers Trust pleaded guilty to misstating entries in the
bank's books and records and agreed to pay a $60 million fine to federal
authorities. Separately, Bankers Trust agreed to pay a $3.5 million fine to the
State of New York. The events leading up to the guilty pleas did not arise out
of the investment advisory and management activities provided by ICC to the
Series.
As a result of the plea, absent an order from the SEC, ICC would not be
able to continue as Advisor. The SEC has granted Bankers Trust a temporary order
under Section 9(c) of the 1940 Act to permit Bankers Trust and its affiliates to
continue to provide investment advisory services to registered investment
companies, and Bankers Trust, pursuant to Section 9(c) of the 1940 Act, has
filed an application for a permanent order. On May 7, 1999, the SEC extended the
temporary order under Section 9(c) of the Act until the SEC takes final action
on the application for a permanent order or, if earlier, November 8, 1999.
However, there is no assurance that the SEC will grant a permanent order. If the
SEC refuses to grant a permanent order, shareholders will receive supplemental
proxy materials requesting approval to release any amounts held in escrow up to
the time of the refusal and such other action as deemed appropriate by the
Board.
Investment Company Capital Corp.
ICC is a registered investment advisor that had under management as of
June 30, 1999 approximately $10 billion, including assets of the Fund and the
assets of ICC's other clients. ICC is a wholly owned subsidiary of BT Alex.
Brown and an indirect, wholly owned subsidiary of Bankers Trust. The principal
address of ICC and BT Alex. Brown is One South Street, Baltimore, Maryland,
21202 and the principal address of Bankers Trust is 130
-19-
<PAGE>
Liberty Street, New York, New York, 10006. Bankers Trust is a wholly owned
subsidiary of Deutsche Bank. The principal address of Deutsche Bank is Deutsche
Bank Aktiengesellschaft, Taunusalage 12, D-60262 Frankfurt am Main, Federal
Republic of Germany.
The following information is provided for each Director and the
principal executive officer of ICC.
Directors and Principal Executive Officer of ICC
<TABLE>
<CAPTION>
Name and Position
with the Advisor Address Principal Occupation
---------------- ------- --------------------
<S> <C> <C>
Richard T. Hale One South Street Managing Director,
Director and President Baltimore, Maryland 21202 Deutsche Asset Management
Margaret-Mary V. Preston One South Street Managing Director,
Director Baltimore, Maryland 21202 BT Alex. Brown
Incorporated
Mayo A. Shattuck III One South Street President, Chief Operating Officer
Director Baltimore, Maryland 21202 and Director,
BT Alex. Brown
Incorporated
Truman T. Semans Furness House Vice Chairman,
Director 19 South Street Brown Investment Advisory &
Baltimore, Maryland 21202 Trust Company
</TABLE>
For the fiscal year ended March 31, 1999, the Fund paid ICC an
aggregate fee of $14,541,722 for advisory services. For such fiscal year, the
Fund also paid ICC aggregate fees of $2,644,584 for transfer agency services
provided to the Fund and $439,878 for accounting services provided to the Fund.
For the same period, the Fund paid $604,985 to Bankers Trust Company for custody
services provided to the Fund.
ICC does not provide investment advisory services to any other funds
with investment objectives similar to the Fund.
As of June 4, 1999, to the Fund management's knowledge as provided by
the Directors and officers of the Fund, the following Directors and officers of
the Fund beneficially owned shares of Bankers Trust that were converted into the
right to receive $93 per share in cash, without interest, pursuant to the terms
of the Merger. [Mr. Hale, Chairman and a Director of the Fund and President and
a Director of ICC, beneficially owned ______ shares of Bankers Trust. Mr.
Semans, a Director of the Fund and a Director of ICC, beneficially owned ______
shares of Bankers Trust. Charles A. Rizzo, Treasurer of the Fund and a Vice
President of ICC, beneficially owned ___ shares of Bankers Trust.] [Disclose any
substantial interest of officers/Directors/Nominees in Deutsche Bank].
Shareholder Approval of the New Advisory Agreements
-20-
<PAGE>
Approval of each New Advisory Agreement requires the affirmative vote
of a majority of the outstanding voting securities of the corresponding Series.
In the event that shareholders of a Series do not approve that Series' New
Advisory Agreement, the Board will take such action as it deems in the best
interest of the Series and its shareholders, which may include proposing that
shareholders approve an agreement in lieu of the New Advisory Agreement.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH SERIES VOTE FOR
APPROVAL OF ITS NEW ADVISORY AGREEMENT.
PROPOSAL 3. To eliminate each Series' fundamental investment policy
concerning investments in companies for the purposes of
exercising control or management.
At the Special Meeting, the shareholders of each Series will vote
separately regarding the elimination of each Series' fundamental investment
policy with respect to investing in companies for control purposes. Currently,
each Series has a fundamental investment policy stating that:
No Series will buy common stocks or voting securities or invest in
companies for the purpose of exercising control or management.
If shareholders approve, this policy will be eliminated.
The primary purpose of this proposal is to remove each Series'
fundamental investment policy regarding investment for control purposes in light
of current law and regulatory interpretations. This policy was initially adopted
to comply with state regulatory requirements, which have been eliminated as a
result of federal legislation. Because the Fund does not invest in voting
securities of companies, it is unlikely that a Series would invest in a company
for the purposes of exercising control. However, the Directors are requesting
approval of the Proposal in order to eliminate an unnecessary policy and are
doing so at this time in order to take advantage of the fact that the Fund is
holding a shareholder meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH SERIES VOTE FOR
THE ELIMINATION OF EACH SERIES' FUNDAMENTAL INVESTMENT POLICY CONCERNING
INVESTMENTS IN COMPANIES FOR THE PURPOSES OF EXERCISING CONTROL OR MANAGEMENT.
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<PAGE>
PROPOSAL 4. To eliminate each Series' fundamental investment policy
concerning pledging, mortgaging or hypothecating assets.
At the Special Meeting, the shareholders of each Series will vote
separately regarding the elimination of each Series' fundamental investment
policy with respect to pledging, mortgaging, or hypothecating assets. Currently,
each Series has a fundamental investment policy stating that:
No Series will mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings and reverse repurchase agreements and then
only in an amount up to 15% of the value of a Series' total assets at
the time of borrowing or entering into a reverse repurchase agreement.
If shareholders approve, this policy will be eliminated.
The primary purpose of this Proposal is to remove each Series'
fundamental investment policy on pledging, mortgaging or hypothecating assets in
light of current law and regulatory changes. This policy was initially adopted
to comply with state regulatory requirements, which have been eliminated as a
result of federal legislation. The Series will continue to operate under current
legal limitations on borrowing and the elimination of this policy is not
expected to significantly affect the way the Series are managed or the way
securities or instruments are selected for the Series. However, the Directors
are requesting approval of the Proposal to eliminate an unnecessary policy and
are doing so at this time in order to take advantage of the fact that the Fund
is holding a shareholder meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH SERIES VOTE FOR
THE ELIMINATION OF EACH SERIES' FUNDAMENTAL INVESTMENT POLICY CONCERNING
PLEDGING, MORTGAGING OR HYPOTHECATING ASSETS.
PROPOSAL 5. To eliminate each Series' fundamental investment policy
concerning investment in securities of other investment
companies.
At the Special Meeting, the shareholders of each Series will vote
separately regarding the elimination of each Series' fundamental investment
policy concerning investment in the securities of other investment companies.
Currently, each Series has a fundamental investment policy stating that:
No Series will acquire for value the securities of any other investment
company, except in connection with a merger, consolidation,
reorganization or acquisition of assets.
If shareholders approve, this policy will be eliminated.
-22-
<PAGE>
The primary purpose of this Proposal is to remove each Series'
fundamental investment policy on investing in the securities of other investment
companies in light of current law and regulatory changes. This policy was
initially adopted to comply with state regulatory requirements, which have been
eliminated as a result of federal legislation. The Directors believe that
removing this policy will provide the Series with increased flexibility in
making investment decisions.
If the Proposal is approved, each Series may invest in securities of
investment companies, subject to the limitations of the 1940 Act and the Series'
investment objectives and policies. The ability of mutual funds, such as the
Series, to invest in other investment companies is restricted by the 1940 Act,
and the rules and regulations thereunder. Under these rules and regulations, a
Series is prohibited from acquiring the securities of other investment companies
if, as a result of such acquisition, the Series owns more than 3% of the total
voting stock of the other company, securities issued by one investment company
represent more than 5% of a Series' total assets, or securities issued by all
investment companies represent more than 10% of the total assets of a Series. In
addition, money market funds, such as the Series, must comply with the
requirements of Rule 2a-7 under the 1940 Act which also may limit the Series'
ability to invest in securities of investment companies.
The elimination of this policy is not expected to significantly affect
the way the Series are managed or the way securities or instruments are selected
for a Series. However, the Directors are requesting approval of the Proposal in
order to eliminate an unnecessary policy and are doing so at this time in order
to take advantage of the fact that the Fund is holding a shareholder meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH SERIES VOTE FOR
THE ELIMINATION OF EACH SERIES' FUNDAMENTAL INVESTMENT POLICY CONCERNING
INVESTMENT IN SECURITIES OF OTHER INVESTMENT COMPANIES.
PROPOSAL 6: To eliminate each Series' fundamental investment policy
concerning short sales, purchasing securities on margin, and
investing in puts and calls and modifying each Series' policy
on commodities.
At the Special Meeting, the shareholders of each Series will vote
separately regarding the elimination of each Series' fundamental investment
policy with respect to short sales, purchasing securities on margin, and
investing in puts and calls and the modification of each Series' policy on
commodities. Currently, each Series has a fundamental investment policy stating
that:
No Series will purchase or sell commodities or commodity futures
contracts, purchase securities on margin, make short sales or invest in
puts and calls.
-23-
<PAGE>
If shareholders approve, each Series fundamental investment policy
would state that:
No Series will purchase or sell commodities or commodities contracts,
provided that each Series may invest in financial futures and options
on such futures.
The primary purpose of this Proposal is to eliminate each Series'
fundamental investment policies on short sales, purchasing securities on margin,
and investing in puts and calls and to modify each Series' policy on commodities
in light of current law and regulatory changes. These policies were initially
adopted primarily to comply with state regulatory requirements, which have been
eliminated as a result of federal legislation. The 1940 Act requires the Fund to
have a policy with respect to commodities. The modified policy contained in the
Proposal will satisfy the 1940 Act without imposing unnecessary investment
restrictions. Currently, pursuant to the requirements of Rule 2a-7 under the
1940 Act, no Series engages in short sales or margin sales or invests in puts,
calls, futures or options on futures. As a result, the elimination of each
Series' policies on short sales, margin sales, puts and calls, and the
modification of each Series policy on commodities to permit investments in
futures and related options is not expected to significantly affect the way the
Series are managed or the way securities or instruments are selected for the
Series. However, Directors are requesting approval of the Proposal to eliminate
several unnecessary investment policies and is doing so at this time to take
advantage of the fact that the Fund is holding a shareholder meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH SERIES VOTE FOR
THE ELIMINATION OF EACH SERIES' FUNDAMENTAL INVESTMENT POLICY CONCERNING SHORT
SALES, PURCHASING SECURITIES ON MARGIN, AND INVESTING IN PUTS AND CALLS AND
MODIFYING EACH SERIES' POLICY ON COMMODITIES.
PROPOSAL 7: To eliminate each Series' fundamental investment policy
concerning purchases of oil, gas, or mineral interests.
At the Special Meeting, the shareholders of each Series will vote
separately regarding the elimination of each Series' fundamental investment
policy with respect to purchasing oil, gas or mineral interests. Currently, each
Series has a fundamental investment policy stating that:
No Series will purchase oil, gas or mineral interests (a Series may,
however, purchase and sell the securities of companies engaged in the
exploration, development, production, refining, transporting, and
marketing of oil, gas or minerals).
If shareholders approve, this policy will be eliminated.
The primary purpose of this Proposal is to remove each Series'
fundamental investment policy regarding purchases of oil, gas or mineral
interests. This policy was initially adopted to comply with state regulatory
requirements, which have been eliminated as a result of federal legislation. The
Series have no present intention to invest directly in oil, gas or mineral
interests. Further, pursuant to the requirements of Rule 2a-7 under the 1940
Act, the Series are not permitted to directly invest in oil, gas or mineral
interests. However, the Directors are requesting approval of the Proposal in
order to eliminate an unnecessary policy and are doing so at this time in order
to take advantage of the fact that the Fund is holding a Shareholder meeting.
-24-
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH SERIES VOTE FOR
THE ELIMINATION OF EACH SERIES' FUNDAMENTAL INVESTMENT POLICY CONCERNING
PURCHASES OF OIL, GAS, OR MINERAL INTERESTS.
PROPOSAL 8. To modify each Series' fundamental investment policy
concerning borrowing.
At the Special Meeting, the shareholders of each Series will vote
regarding the modification of each Series' fundamental investment policy on
borrowing. Currently, each Series has a fundamental investment policy stating
that:
No Series will borrow money or issue senior securities except that (i)
any Series may borrow money from banks for temporary purposes in
amounts up to 10% of the value of such Series' total assets at the time
of borrowing, provided that any such borrowings are repaid prior to the
purchase of additional portfolio securities; (ii) the Prime Series may
enter into reverse repurchase agreements in accordance with its
investment program and (iii) any Series may enter into commitments to
purchase securities in accordance with its investment program.
If shareholders approve the Proposal, each Series' fundamental
investment policy would state that:
No Series will borrow money or issue senior securities except that (i)
any Series may borrow money for temporary purposes in amounts up to 10%
of the value of such Series' total assets at the time of borrowing;
(ii) the Prime Series may enter into reverse repurchase agreements in
accordance with its investment program and (iii) any Series may enter
into commitments to purchase securities in accordance with its
investment program.
The primary purpose of this proposal is to modify the Fund's
fundamental investment policy on borrowing to provide each Series with increased
investment flexibility. The 1940 Act requires all mutual funds to adopt a
fundamental investment policy regarding borrowing. The Proposal will permit each
Series to meet its regulatory requirements under the 1940 Act, while allowing
each Series increased flexibility in making investment decisions. Under its
current
-25-
<PAGE>
policy, each Series may borrow only from banks. If the Proposal is approved,
each Series could borrow from institutions other than banks, to the extent
permitted by law. This modification of the Series' policies on borrowing is not
expected to significantly affect the way the Series are managed or the way
securities or instruments are selected for the Series. However, the Directors
are requesting approval of this policy to provide the Series with increased
investment flexibility and they are doing so at this time to take advantage of
the fact that the Fund is holding a shareholder meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH SERIES VOTE FOR
THE MODIFICATION OF EACH SERIES' FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
BORROWING.
PROPOSAL 9. To modify each Series' fundamental investment policy
concerning loans.
At the Special Meeting, the shareholders of the Series will vote
regarding the modification of the Series' fundamental investment policy on
loans. Currently, each Series has a fundamental investment policy stating that:
No Series will lend money or securities except to the extent that a
Series' investments may be considered loans.
If shareholders approve, each Series' fundamental investment policy
would state that:
No Series will make loans, except that the Series may purchase or hold
debt instruments in accordance with its investment objectives and
policies, and may loan portfolio securities and enter into repurchase
agreements.
The primary purpose of this Proposal is to modify the Series'
fundamental investment policy concerning loans to permit each Series to engage
in securities lending. The 1940 Act requires all funds to adopt a fundamental
investment policy regarding loans. The Proposal will permit each Series to meet
its regulatory requirements under the 1940 Act, while permitting the Series
increased investment flexibility to loan its portfolio securities. If the
proposal is approved, each Series would be able to lend its securities to
brokers, dealers, domestic and foreign banks or other financial institutions for
the purposes of increasing its investment income. Any such loan would be secured
by cash or equivalent collateral, or by a letter of credit at least equal to the
market value of the securities loaned plus accrued interest or income.
Securities lending may subject the Series to the risk of delay in recovering the
loaned securities or a loss of rights in the collateral should the borrower fail
financially.
The Proposal would also make clear that each Series can enter into
repurchase agreements. Repurchase agreements are transactions in which the
Series purchases a security
-26-
<PAGE>
and simultaneously commits to resell the security to the seller (a bank or
broker-dealer) at a mutually agreed upon date and time. Repurchase agreements
may be viewed as a fully collateralized loan of money by the Series to the
seller.
This modification of the Series' policies on loans is not expected to
significantly affect the way the Series are managed or the way securities or
instruments are selected for the Series. However, the Directors are requesting
approval of this policy to provide the Series with increased investment
flexibility and they are doing so at this time to take advantage of the fact
that the Fund is holding a shareholder meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH SERIES VOTE FOR
THE MODIFICATION OF EACH SERIES' FUNDAMENTAL INVESTMENT POLICY CONCERNING LOANS.
ADDITIONAL INFORMATION
Directors and Executive Officers
Information about the Fund's current Directors and principal executive
officers, is set forth below. Each officer of the Fund will hold such office
until a successor has been elected by the Board of Directors. Directors and
officers of the Fund are also directors and officers of some or all of the other
investment companies managed, administered or advised by BT Alex. Brown or its
affiliates.
<TABLE>
<CAPTION>
Shares
Business Experience Beneficially
Name and Position During the Past Five Years, Owned as of
With the Fund Age including all Directorships May 31, 1999 Percentage
------------- --- --------------------------- ------------ ----------
<S> <C> <C> <C>
James J. Cunnane 61 Managing Director, CBC Capital (merchant ______ **
Director since 1994 banking), 1993-Present; Director, Net.World
(telecommunications), 1998-Present.
Director of each fund in the Fund Complex.
Richard T. Hale* 54 See "Information Regarding Nominees." ______ **
Director since 1989
Chairman since 1997
Joseph R. Hardiman 62 See "Information Regarding Nominees." ______ **
Director since 1998
</TABLE>
-27-
<PAGE>
<TABLE>
<CAPTION>
Shares
Business Experience Beneficially
Name and Position During the Past Five Years, Owned as of
With the Fund Age including all Directorships May 31, 1999 Percentage
------------- --- --------------------------- ------------ ----------
<S> <C> <C> <C>
Louis E. Levy 66 See "Information Regarding Nominees." ______ **
Director since 1994
Eugene J. McDonald 67 See "Information Regarding Nominees." ______ **
Director since 1992
Rebecca W. Rimel 48 See "Information Regarding Nominees." ______ **
Director since 1995
Truman T. Semans* 72 See "Information Regarding Nominees." ______ **
Director since 1995
Carl W. Vogt, Esq. 63 Senior Partner, Fulbright & Jaworski L.L.P. ______ **
Director since 1996 (law); Director, Yellow Corporation (trucking)
and American Science & Engineering (x-ray
detection equipment). Formerly, Chairman and
Member, National Transportation Safety Board;
Director, National Railroad Passenger
Corporation (Amtrak); and Member, Aviation
System Capacity Advisory Committee (Federal
Aviation Administration). Director of each
fund in the Fund Complex.
Harry Woolf 76 Professor-at-Large Emeritus, Institute for ______ **
President since 1997 Advanced Study; Director, ATL and Spacelabs
Medical Corp. (medical equipment), Family
Health International (non-profit research and
education) and Research America (non-profit
medical research). Formerly, Trustee, Reed
College (education) and Rockefeller
Foundation; and Director, Merrill Lynch Cluster
C Funds and Flag Investors/ISI and Deutsche
Banc Alex. Brown Cash Reserve Fund, Inc.
Fund Complex (registered investment
companies).
Amy M. Olmert 36 Vice President, BT Alex. Brown ______ **
Secretary since 1997 Incorporated, 1997-Present. Formerly, Senior
Manager, Coopers & Lybrand L.L.P. (now
PricewaterhouseCoopers LLP), 1988-1997.
[Charles Rizzo] [ ] [Insert Bio] ______ **
Treasurer since 1999
Tracie E. Richter 31 Vice President, Morgan Grenfell Inc.; ______ **
Assistant Secretary since Treasurer and Chief Financial
1999 Officer, Morgan Grenfell Investment Trust.
Formerly, Tax Associate, Goldman Sachs Asset
Management, 1993-1996 and Vice President,
Bankers Trust Company, 1996-1998.
</TABLE>
-28-
<PAGE>
<TABLE>
<CAPTION>
Shares
Business Experience Beneficially
Name and Position During the Past Five Years, Owned as of
With the Fund Age including all Directorships May 31, 1999 Percentage
------------- --- --------------------------- ------------ ----------
<S> <C> <C> <C>
Daniel O. Hirsch [ ] [Insert Bio] ______ **
Assistant Secretary since
1999
</TABLE>
- ----------
*Denotes an individual who is an "interested person" as defined in the 1940 Act.
**As of May 31, 1999 the Directors and officers of the Fund as a group (12 or
13 persons) beneficially owned an aggregate of less than 1% the Fund.
Investment Advisor
See "Investment Company Capital Corp." on page ___ for additional
information concerning the Advisor.
Principal Underwriter
ICC Distributors, Inc., located at Two Portland Square, Portland,
Maine, 04104, acts as the Fund's principal underwriter.
Portfolio Transactions
In the fiscal year ended March 31, 1999, the Fund paid no brokerage
commissions to BT Alex. Brown Incorporated or its affiliates.
Independent Accountants
A majority of the Fund's Board of Directors who are not "interested
persons" of the Fund have selected PricewaterhouseCoopers LLP as the independent
accountants of the Fund for the fiscal year ending March 31, 2000. A
representative of PricewaterhouseCoopers LLP will be available by telephone
during the Special Meeting, if needed, to make a statement if desired and to
respond to appropriate questions from shareholders.
Beneficial Owners
To the knowledge of fund management, as of the Record Date, the
following was a beneficial owner of 5% or more of the outstanding shares of a
Series of the Fund.
Amount of Beneficial Percent of Total Shares
Name and Address Ownership Outstanding
- ---------------- --------- -----------
-29-
<PAGE>
[To be provided]
Submission of Shareholder Proposals
The Fund is incorporated under the laws of the State of Maryland. Under
Maryland General Corporation Law, a corporation registered under the 1940 Act,
such as the Fund, is not required to hold an annual meeting in any year in which
the election of Directors is not required to be acted upon under the 1940 Act.
The Fund has availed itself of this provision and achieves cost savings by
eliminating printing costs, mailing charges and other expenses involved in
routine annual meetings.
Even with the elimination of routine annual meetings, the Board of
Directors may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act, or as required or permitted by the
Articles of Incorporation and By-Laws of the Fund. As described above,
shareholder meetings will be held, in compliance with the 1940 Act, to elect
Directors under certain circumstances. Shareholder meetings may also be held by
the Fund for other purposes, including to approve investment policy changes, a
new Investment Advisory Agreement or other matters requiring shareholder action
under the 1940 Act.
A meeting may also be called by shareholders holding at least 10% of
the shares entitled to vote at the meeting for the purpose of voting upon the
removal of Directors. Upon written request by ten or more shareholders, who have
been shareholders for at least six months and who hold shares constituting at
least 1% of the outstanding shares, stating that such shareholders wish to
communicate with the other shareholders for the purpose of obtaining the
signatures necessary to demand a meeting to consider removal of a Director, the
Fund has undertaken to provide a list of shareholders or to disseminate
appropriate materials. In addition, Maryland General Corporation Law provides
for the calling of a special meeting by the written request of shareholders
holding at least 25% of the shares entitled to vote at the meeting.
Shareholders who wish to present a proposal for action at the next
meeting or suggestions as to nominees for the Board of Directors should submit
the proposal or suggestions to be considered to the Fund 60 days in advance of
any such meeting for inclusion in the Fund's proxy statement and form of proxy
for such meeting as is held. The Nominating Committee of the Board of Directors
will give consideration to shareholder suggestions as to nominees for the Board
of Directors. Shareholders retain the right, under limited circumstances, to
request that a meeting of the shareholders be held for the purpose of
considering the removal of a Director from office and, if such a request is
made, the Fund will assist with shareholder communications in connection with
the meeting.
Required Vote
Approval of Proposal 1 requires the affirmative vote of a plurality of
all votes cast at the Special Meeting, provided that a majority of the shares
entitled to vote are present in person or by Proxy at the Special Meeting.
Approval of Proposals 2 through 9 requires the affirmative vote of a majority of
the outstanding voting securities of each Series of the Fund, voting separately.
As defined in the 1940 Act, the vote of a "majority of the outstanding voting
securities" of a Series means the vote of (i) 67% or more of the applicable
Series' outstanding shares present at a meeting, if the holders of more than 50%
of the outstanding shares of that Series are present or represented by proxy, or
(ii) more than 50% of that Series' outstanding shares, whichever is less.
Abstentions and "broker non-votes" will not be counted for or against
the Proposals but will be counted for purposes of determining whether a quorum
is present. Abstentions will be counted as votes present for purposes of
determining a "majority of the outstanding voting securities" present at the
Special Meeting and will therefore have the effect of counting against Proposals
2 through 9. The Fund believes that brokers who hold shares as record owners for
beneficial owners have the authority under the rules of the various stock
exchanges to vote those shares with respect to Proposals 1 and 2 when they have
not received instructions from beneficial owners.
Other Matters
No business other than the matters described above is expected to come
before the Special Meeting, but should any matter incident to the conduct of the
Special Meeting or any
-30-
<PAGE>
question as to an adjournment of the Special Meeting arise, the persons named in
the enclosed Proxy will vote thereon according to their best judgment in the
interest of the Fund.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING AND
WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO VOTE BY MAIL, TELEPHONE OR
INTERNET AS EXPLAINED IN THE INSTRUCTIONS ACCOMPANYING YOUR PROXY CARD.
By Order of the Directors,
Amy M. Olmert
Dated: [ ], 1999
-31-
<PAGE>
EXHIBIT A
FORM OF INVESTMENT ADVISORY AGREEMENT
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. - PRIME SERIES
THIS AGREEMENT is made as of the ____________________ day of
______________________________, 1999 by and between DEUTSCHE BANC ALEX. BROWN
CASH RESERVE FUND, INC., a Maryland corporation (the "Fund"), and INVESTMENT
COMPANY CAPITAL CORP., a Maryland corporation (the "Advisor"), with respect to
the following recital of fact:
WHEREAS, the Fund is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Advisor is registered as an investment advisor under
the Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment advisor; and
WHEREAS, the Fund's Articles of Incorporation authorize the Board
of Directors of the Fund to classify or reclassify authorized but unissued
shares of the Fund; and
WHEREAS, the Fund's Board of Directors has authorized the issuance
of three series of shares with a par value of $.001 representing interests in
three portfolios: the Prime Series, the Treasury Series and the Tax-Free Series
(each of the existing portfolios and any portfolios hereafter added shall be
referred to collectively as the "Series"); and
WHEREAS, the Fund and the Advisor desire to enter into an agreement
to provide investment advisory and administrative services for the Fund's Prime
Series (the "Prime Series") on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Investment Advisor. The Fund hereby appoints the
Advisor to act as the investment advisor to the Prime Series. The Advisor shall
manage the Prime Series' affairs and shall supervise all aspects of the Prime
Series' operations (except as otherwise set forth herein), including the
investment and reinvestment of the cash, securities or other properties
comprising the Prime Series' assets, subject at all times to the policies and
control of the Fund's Board of Directors. The Advisor shall give the Prime
Series the benefit of its best judgment, efforts and facilities in rendering its
services as Advisor.
2. Duties of Investment Advisor. In carrying out its obligations
under section 1 hereof, the Advisor shall:
(a) supervise and manage all aspects of the Prime Series'
operations;
(b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the investment objective and
policies of the Prime Series;
(c) provide the Prime Series with such executive, administrative
and clerical services as are deemed advisable by the Fund's Board of Directors;
A-1
<PAGE>
(d) provide the Prime Series with, or obtain for it, adequate
office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items for
the Fund's principal office;
(e) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Prime Series, and
whether concerning the individual issuers whose securities are included in the
Prime Series or the activities in which they engage, or with respect to
securities which the Advisor considers desirable for inclusion in the Prime
Series;
(f) determine which issuers and securities shall be represented
in the Prime Series and regularly report thereon to the Fund's Board of
Directors;
(g) take all actions necessary to carry into effect the Fund's
purchase and sale programs with respect to its Prime Series;
(h) supervise the operations of the Prime Series' transfer and
dividend disbursing agent;
(i) provide the Prime Series with such administrative and
clerical services for the maintenance of certain shareholder records, as are
deemed advisable by the Fund's Board of Directors; and,
(j) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax returns, reports to
the shareholders of the Prime Series and reports to and filings with the
Securities and Exchange Commission (the "SEC") and state Blue Sky authorities,
which may be required for the Prime Series.
3. Broker-Dealer Relationship. In the event that the Advisor is
responsible for decisions to buy and sell securities for the Prime Series,
broker-dealer selection, and negotiation of its brokerage commission rates, the
Advisor's primary consideration in effecting a security transaction will be
execution at the most favorable price. The Fund understands that a substantial
majority of the Prime Series' transactions will be transacted with primary
market makers acting as principal on a net basis, with no brokerage commissions
being paid by the Fund. Such principal transactions may, however, result in a
profit to the market makers. In certain instances the Advisor may make purchases
of underwritten issues at prices which include underwriting fees. In selecting a
broker-dealer to execute each particular transaction, the Advisor will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Prime Series on a
continuing basis. Accordingly, the price to the Fund in any transaction may be
less favorable than that available from another broker-dealer if the difference
is reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies as the Board of Directors may determine, the
Advisor shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides brokerage and research
services to the Advisor an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Advisor
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to the Prime Series. The Advisor
is further authorized to allocate the orders placed by it on behalf of the Prime
Series to such brokers and dealers who also provide research or statistical
material or other services to the Fund or the Advisor. Such allocation shall be
in such amounts and proportions as the Advisor shall determine and the Advisor
will report on said allocation regularly to the Board of Directors of the Fund,
indicating the brokers to whom such allocations have been made and the basis
therefor.
A-2
<PAGE>
4. Control by Board of Directors. Any management or supervisory
activities undertaken by the Advisor pursuant to this Agreement, as well as any
other activities undertaken by the Advisor on behalf of the Prime Series
pursuant thereto, shall at all times be subject to any applicable directives of
the Board of Directors of the Fund.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statement of the Fund
under the Securities Act of 1933 and 1940 Act;
(c) the provisions of the Articles of Incorporation, as amended;
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Prime Series shall be
allocable between the Fund and the Advisor as follows:
(a) The Advisor shall, subject to compliance with applicable
banking regulations, furnish, at its expense and without cost to the Fund, the
services of one or more officers of the Fund, to the extent that such officers
may be required by the Fund for the proper conduct of its affairs.
(b) The Fund assumes and shall pay or cause to be paid all other
expenses of the Prime Series, including, without limitation, the Prime Series'
allocable portion of the following expenses: payments to the Fund's distributor
under the Prime Series' plans of distribution; the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the safekeeping
of its cash, portfolio securities and other property, and any transfer, dividend
or accounting agent or agents appointed by the Fund; brokers' commissions
chargeable to the Fund in connection with portfolio securities transactions to
which the Fund is a party; all taxes, including securities issuance and transfer
taxes, and fees payable by the Fund to Federal, State or other governmental
agencies; the costs and expenses of engraving or printing of certificates
representing shares of the Fund; all costs and expenses in connection with the
registration and maintenance of registration of the Fund and its shares with the
SEC and various states and other jurisdictions (including filing fees, legal
fees and disbursements of counsel); the costs and expenses of printing,
including typesetting, and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and directors' meetings and of
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of directors or director members of any advisory board
or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash; charges
and expenses of any outside service used for pricing of the Fund's shares;
charges and expenses of legal counsel, including counsel to the directors of the
Fund who are not interested persons (as defined in the 1940 Act) of the Fund and
of independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
directors) of the Fund which inure to its benefit; extraordinary expenses
(including but not limited to, legal claims and liabilities and litigation costs
and any indemnification related thereto); and all other charges and costs of the
Fund's operation unless otherwise explicitly provided herein.
A-3
<PAGE>
7. Delegation of Responsibilities.
(a) Subject to the approval of the Board of Directors and
shareholders of the Prime Series, the Advisor may delegate to a sub-advisor
certain of its duties enumerated in section 2 hereof provided that the Advisor
shall continue to supervise the performance of any such sub-advisor. The Advisor
shall not be responsible for any such sub-advisor's performance under a
sub-advisory agreement.
(b) Subject to the approval of the Board of Directors and, to
the extent required by the 1940 Act, shareholders of the Prime Series, the
Advisor may delegate to any company that it controls, is controlled by, or is
under common control with (or to more than one such company), or to specified
employees of any such companies, certain of its duties enumerated in Section 2
hereof provided that the Advisor shall continue to supervise the performance of
any such company and shall regularly report thereon to the Fund's Board of
Directors.
(c) The Advisor may, but shall not be under any duty to, perform
services on behalf of the Prime Series which are not required by this Agreement
upon the request of the Fund's Board of Directors. Such services will be
performed on behalf of the Prime Series and the Advisor's charge in rendering
such services may be billed monthly to the Fund, subject to examination by the
Fund's independent accountants. Payment or assumption by the Advisor of any Fund
expense that the Advisor is not required to pay or assume under this Agreement
shall not relieve the Advisor of any of its obligations to the Prime Series nor
obligate the Advisor to pay or assume any similar Prime Series' expenses on any
subsequent occasions.
8. Compensation. For the services to be rendered and the expenses
assumed by the Advisor, the Prime Series shall pay to the Advisor monthly
compensation at an annual rate derived by: (1) calculating an amount equal to
.30% of the first $500 million of the Fund's aggregate average daily net assets,
.26% of the next $500 million of the Fund's aggregate average daily net assets,
.25% of the next $500 million of the Fund's aggregate average daily net assets,
.24% of the next $1 billion of the Fund's aggregate average daily net assets,
.23% of the next $1 billion of the Fund's aggregate average daily net assets and
.22% of that portion of the Fund's aggregate average daily net assets in excess
of $3.5 billion; (2) applying to this amount a fraction equal to the net assets
of the Prime Series divided by the net assets of the Fund; and (3) adding an
amount calculated daily and paid monthly, at the annual rate of .02% of the
Prime Series' average daily net assets.
Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily and the amounts of the daily accruals
shall be paid monthly. If this Agreement becomes effective subsequent to the
first day of a month or terminates before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees as set forth above. Payment
of the Advisor's compensation for the preceding month shall be made as promptly
as possible.
9. Non-Exclusivity. The services of the Advisor to the Fund are not
to be deemed to be exclusive, and the Advisor shall be free to render investment
advisory and corporate administrative or other services to others (including
other investment companies) and to engage in other activities, so long as its
services under this Agreement are not impaired thereby. It is understood and
agreed that officers or directors of the Advisor may serve as officers or
directors of the Fund, and that officers or directors of the Fund may serve as
officers or directors of the Advisor to the extent permitted by law; and that
the officers and directors of the Advisor are not prohibited from engaging in
any other business activity or from rendering services to any other person, or
from serving as partners, officers, trustees or directors of any other firm,
trust or corporation, including other investment companies.
10. Term. This Agreement shall become effective at the close of
business on the date hereof and shall continue in force and effect, subject to
section 12 hereof, for two years from the date hereof.
11. Renewal. Following the expiration of its initial two-year term,
this Agreement shall continue in force and effect from year to year, provided
that such continuance is specifically approved at least annually:
A-4
<PAGE>
(a) (i) by the Fund's Board of Directors or (ii) by the vote of
a majority of the outstanding voting securities of the Prime Series (as defined
in Section 2(a) (42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the directors who
are not parties to this Agreement or "interested persons" of a party to this
Agreement (other than as directors of the Fund) by votes cast in person at a
meeting specifically called for such purpose.
12. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by vote of the Fund's Board of Directors or
by vote of a majority of the Prime Series' outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), or by the Advisor, on sixty (60)
days' written notice to the other party. The notice provided for herein may be
waived by either party. This Agreement shall automatically terminate in the
event of its assignment, the term "assignment" having the meaning defined in
Section 2(a)(4) of the 1940 Act.
13. Liability of Advisor. In the performance of its duties
hereunder, the Advisor shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to ensure
the accuracy of all services performed under this Agreement, but the Advisor
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of the Advisor or its
officers, directors or employees, or reckless disregard by the Advisor of its
duties under this Agreement.
14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Fund and
the Advisor for this purpose shall be One South Street, Baltimore, Maryland
21202.
15. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or, in the absence of any controlling decision
of any such court, by rules, regulations or orders of the SEC issued pursuant to
said Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
A-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate by their respective officers on the day and year
first above written.
DEUTSCHE BANC ALEX. BROWN CASH RESERVE
FUND, INC.
Attest: By __________________________________
Name:
_____________________ Title:
INVESTMENT COMPANY CAPITAL CORP.
Attest: By __________________________________
Name:
_____________________ Title:
A-6
<PAGE>
EXHIBIT B
FORM OF INVESTMENT ADVISORY AGREEMENT
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. - TREASURY SERIES
THIS AGREEMENT is made as of the ____________________ day of
___________________________________, 1999 by and between DEUTSCHE BANC ALEX.
BROWN CASH RESERVE FUND, INC., a Maryland corporation (the "Fund"), and
INVESTMENT COMPANY CAPITAL CORP., a Maryland corporation (the "Advisor"), with
respect to the following recital of fact:
WHEREAS, the Fund is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Advisor is registered as an investment advisor under
the Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment advisor; and
WHEREAS, the Fund's Articles of Incorporation authorize the Board
of Directors of the Fund to classify or reclassify authorized but unissued
shares of the Fund; and
WHEREAS, the Fund's Board of Directors has authorized the issuance
of three series of shares with a par value of $.001 representing interests in
three portfolios: the Prime Series, the Treasury Series and the Tax-Free Series
(each of the existing portfolios and any portfolios hereafter added shall be
referred to collectively as the "Series"); and
WHEREAS, the Fund and the Advisor desire to enter into an agreement
to provide investment advisory and administrative services for the Fund's
Treasury Series (the "Treasury Series") on the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Investment Advisor. The Fund hereby appoints the
Advisor to act as the investment advisor to the Treasury Series. The Advisor
shall manage the Treasury Series' affairs and shall supervise all aspects of the
Treasury Series' operations (except as otherwise set forth herein), including
the investment and reinvestment of the cash, securities or other properties
comprising the Treasury Series' assets, subject at all times to the policies and
control of the Fund's Board of Directors. The Advisor shall give the Treasury
Series the benefit of its best judgment, efforts and facilities in rendering its
services as Advisor.
2. Duties of Investment Advisor. In carrying out its obligations
under section 1 hereof, the Advisor shall:
(a) supervise and manage all aspects of the Treasury Series'
operations;
(b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the investment objective and
policies of the Treasury Series;
(c) provide the Treasury Series with such executive,
administrative and clerical services as are deemed advisable by the Fund's Board
of Directors;
B-1
<PAGE>
(d) provide the Treasury Series with, or obtain for it, adequate
office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items for
the Fund's principal office;
(e) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Treasury Series, and
whether concerning the individual issuers whose securities are included in the
Treasury Series or the activities in which they engage, or with respect to
securities which the Advisor considers desirable for inclusion in the Treasury
Series;
(f) determine which issuers and securities shall be represented
in the Treasury Series and regularly report thereon to the Fund's Board of
Directors;
(g) take all actions necessary to carry into effect the Fund's
purchase and sale programs with respect to its Treasury Series;
(h) supervise the operations of the Treasury Series' transfer
and dividend disbursing agent;
(i) provide the Treasury Series with such administrative and
clerical services for the maintenance of certain shareholder records, as are
deemed advisable by the Fund's Board of Directors; and,
(j) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax returns, reports to
the shareholders of the Treasury Series and reports to and filings with the
Securities and Exchange Commission (the "SEC") and state Blue Sky authorities,
which may be required for the Treasury Series.
3. Broker-Dealer Relationship. In the event that the Advisor is
responsible for decisions to buy and sell securities for the Treasury Series,
broker-dealer selection, and negotiation of its brokerage commission rates, the
Advisor's primary consideration in effecting a security transaction will be
execution at the most favorable price. The Fund understands that a substantial
majority of the Treasury Series' transactions will be transacted with primary
market makers acting as principal on a net basis, with no brokerage commissions
being paid by the Fund. Such principal transactions may, however, result in a
profit to the market makers. In certain instances the Advisor may make purchases
of underwritten issues at prices which include underwriting fees. In selecting a
broker-dealer to execute each particular transaction, the Advisor will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Treasury Series on a
continuing basis. Accordingly, the price to the Fund in any transaction may be
less favorable than that available from another broker-dealer if the difference
is reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies as the Board of Directors may determine, the
Advisor shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides brokerage and research
services to the Advisor an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Advisor
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to the Treasury Series. The
Advisor is further authorized to allocate the orders placed by it on behalf of
the Treasury Series to such brokers and dealers who also provide research or
statistical material or other services to the Fund or the Advisor. Such
allocation shall be in such amounts and proportions as the Advisor shall
determine and the Advisor will report on said allocation regularly to the Board
of Directors of the Fund, indicating the brokers to whom such allocations have
been made and the basis therefor.
B-2
<PAGE>
4. Control by Board of Directors. Any management or supervisory
activities undertaken by the Advisor pursuant to this Agreement, as well as any
other activities undertaken by the Advisor on behalf of the Treasury Series
pursuant thereto, shall at all times be subject to any applicable directives of
the Board of Directors of the Fund.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statement of the Fund
under the Securities Act of 1933 and 1940 Act;
(c) the provisions of the Articles of Incorporation, as amended;
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Treasury Series shall
be allocable between the Fund and the Advisor as follows:
(a) The Advisor shall, subject to compliance with applicable
banking regulations, furnish, at its expense and without cost to the Fund, the
services of one or more officers of the Fund, to the extent that such officers
may be required by the Fund for the proper conduct of its affairs.
(b) The Fund assumes and shall pay or cause to be paid all other
expenses of the Treasury Series, including, without limitation, the Treasury
Series' allocable portion of the following expenses: payments to the Fund's
distributor under the Treasury Series' plans of distribution; the charges and
expenses of any registrar, any custodian or depository appointed by the Fund for
the safekeeping of its cash, portfolio securities and other property, and any
transfer, dividend or accounting agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio securities
transactions to which the Fund is a party; all taxes, including securities
issuance and transfer taxes, and fees payable by the Fund to Federal, State or
other governmental agencies; the costs and expenses of engraving or printing of
certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund and
its shares with the SEC and various states and other jurisdictions (including
filing fees, legal fees and disbursements of counsel); the costs and expenses of
printing, including typesetting, and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and directors' meetings and of
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of directors or director members of any advisory board
or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash; charges
and expenses of any outside service used for pricing of the Fund's shares;
charges and expenses of legal counsel, including counsel to the directors of the
Fund who are not interested persons (as defined in the 1940 Act) of the Fund and
of independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
directors) of the Fund which inure to its benefit; extraordinary expenses
(including but not limited to, legal claims and liabilities and litigation costs
and any indemnification related thereto); and all other charges and costs of the
Fund's operation unless otherwise explicitly provided herein.
B-3
<PAGE>
7. Delegation of Responsibilities.
(a) Subject to the approval of the Board of Directors and
shareholders of the Treasury Series, the Advisor may delegate to a sub-advisor
certain of its duties enumerated in section 2 hereof provided that the Advisor
shall continue to supervise the performance of any such sub-advisor. The Advisor
shall not be responsible for any such sub-advisor's performance under a
sub-advisory agreement.
(b) Subject to the approval of the Board of Directors and, to
the extent required by the 1940 Act, shareholders of the Treasury Series, the
Advisor may delegate to any company that it controls, is controlled by, or is
under common control with (or to more than one such company), or to specified
employees of any such companies, certain of its duties enumerated in Section 2
hereof provided that the Advisor shall continue to supervise the performance of
any such company and shall regularly report thereon to the Fund's Board of
Directors.
(c) The Advisor may, but shall not be under any duty to, perform
services on behalf of the Treasury Series which are not required by this
Agreement upon the request of the Fund's Board of Directors. Such services will
be performed on behalf of the Treasury Series and the Advisor's charge in
rendering such services may be billed monthly to the Fund, subject to
examination by the Fund's independent accountants. Payment or assumption by the
Advisor of any Fund expense that the Advisor is not required to pay or assume
under this Agreement shall not relieve the Advisor of any of its obligations to
the Treasury Series nor obligate the Advisor to pay or assume any similar
Treasury Series' expenses on any subsequent occasions.
8. Compensation. For the services to be rendered and the expenses
assumed by the Advisor, the Fund shall pay to the Advisor monthly compensation
at an annual rate derived by: (1) calculating an amount equal to .30% of the
first $500 million of the Fund's aggregate average daily net assets, .26% of the
next $500 million of the Fund's aggregate average daily net assets, .25% of the
next $500 million of the Fund's aggregate average daily net assets, .24% of the
next $1 billion of the Fund's aggregate average daily net assets, .23% of the
next $1 billion of the Fund's aggregate average daily net assets and .22% of
that portion of the Fund's aggregate average daily net assets in excess of $3.5
billion; and (2) applying to this amount a fraction equal to the net assets of
the Treasury Series divided by the net assets of the Fund.
Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily and the amounts of the daily accruals
shall be paid monthly. If this Agreement becomes effective subsequent to the
first day of a month or terminates before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees as set forth above. Payment
of the Advisor's compensation for the preceding month shall be made as promptly
as possible.
9. Non-Exclusivity. The services of the Advisor to the Fund are not
to be deemed to be exclusive, and the Advisor shall be free to render investment
advisory and corporate administrative or other services to others (including
other investment companies) and to engage in other activities, so long as its
services under this Agreement are not impaired thereby. It is understood and
agreed that officers or directors of the Advisor may serve as officers or
directors of the Fund, and that officers or directors of the Fund may serve as
officers or directors of the Advisor to the extent permitted by law; and that
the officers and directors of the Advisor are not prohibited from engaging in
any other business activity or from rendering services to any other person, or
from serving as partners, officers, trustees or directors of any other firm,
trust or corporation, including other investment companies.
10. Term. This Agreement shall become effective at the close of
business on the date hereof and shall continue in force and effect, subject to
section 12 hereof, for two years from the date hereof.
11. Renewal. Following the expiration of its initial two-year term,
this Agreement shall continue in force and effect from year to year, provided
that such continuance is specifically approved at least annually:
B-4
<PAGE>
(a) (i) by the Fund's Board of Directors or (ii) by the vote of
a majority of the outstanding voting securities of the Treasury Series (as
defined in Section 2(a) (42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the directors who
are not parties to this Agreement or "interested persons" of a party to this
Agreement (other than as directors of the Fund) by votes cast in person at a
meeting specifically called for such purpose.
12. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by vote of the Fund's Board of Directors or
by vote of a majority of the Treasury Series' outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), or by the Advisor, on sixty (60)
days' written notice to the other party. The notice provided for herein may be
waived by either party. This Agreement shall automatically terminate in the
event of its assignment, the term "assignment" having the meaning defined in
Section 2(a)(4) of the 1940 Act.
13. Liability of Advisor. In the performance of its duties
hereunder, the Advisor shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to ensure
the accuracy of all services performed under this Agreement, but the Advisor
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of the Advisor or its
officers, directors or employees, or reckless disregard by the Advisor of its
duties under this Agreement.
14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Fund and
the Advisor for this purpose shall be One South Street, Baltimore, Maryland
21202.
15. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or, in the absence of any controlling decision
of any such court, by rules, regulations or orders of the SEC issued pursuant to
said Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
B-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate by their respective officers on the day and year
first above written.
DEUTSCHE BANC ALEX. BROWN CASH RESERVE
FUND, INC.
Attest: By ___________________________________
Name:
___________________ Title:
INVESTMENT COMPANY CAPITAL CORP.
Attest: By ___________________________________
Name:
___________________ Title:
B-6
<PAGE>
EXHIBIT C
FORM OF INVESTMENT ADVISORY AGREEMENT
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. - TAX-FREE SERIES
THIS AGREEMENT is made as of the ___________________ day of
___________________________________ , 1999 by and between DEUTSCHE BANC ALEX.
BROWN CASH RESERVE FUND, INC., a Maryland corporation (the "Fund"), and
INVESTMENT COMPANY CAPITAL CORP., a Maryland corporation (the "Advisor"), with
respect to the following recital of fact:
WHEREAS, the Fund is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Advisor is registered as an investment advisor under
the Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment advisor; and
WHEREAS, the Fund's Articles of Incorporation authorize the Board
of Directors of the Fund to classify or reclassify authorized but unissued
shares of the Fund; and
WHEREAS, the Fund's Board of Directors has authorized the issuance
of three series of shares with a par value of $.001 representing interests in
three portfolios: the Prime Series, the Treasury Series and the Tax-Free Series
(each of the existing portfolios and any portfolio hereafter added shall be
referred to collectively as the "Series"); and
WHEREAS, the Fund and the Advisor desire to enter into an agreement
to provide investment advisory and administrative services for the Fund's
Tax-Free Series (the "Tax-Free Series") on the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Investment Advisor. The Fund hereby appoints the
Advisor to act as the investment advisor to the Tax-Free Series. The Advisor
shall manage the affairs of the Tax-Free Series and shall supervise all aspects
of the Tax-Free Series' operations (except as otherwise set forth herein),
including the investment and reinvestment of the cash, securities or other
properties comprising the Tax-Free Series' assets, subject at all times to the
policies and control of the Fund's Board of Directors. The Advisor shall give
the Tax-Free Series the benefit of its best judgment, efforts and facilities in
rendering its services as Advisor.
2. Duties of Investment Advisor. In carrying out its obligations
under section 1 hereof, the Advisor shall:
(a) supervise and manage all aspects of the Tax-Free Series'
operations;
(b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the investment objective and
policies of the Tax-Free Series;
(c) provide the Tax-Free Series with such executive,
administrative and clerical services as are deemed advisable by the Fund's Board
of Directors;
C-1
<PAGE>
(d) provide the Tax-Free Series with, or obtain for it, adequate
office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items for
the Fund's principal office;
(e) obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or the Tax-Free Series, and
whether concerning the individual issuers whose securities are included in the
Tax-Free Series or the activities in which they engage, or with respect to
securities which the Advisor considers desirable for inclusion in the Tax-Free
Series;
(f) determine which issuers and securities shall be represented
in the Tax-Free Series and regularly report thereon to the Fund's Board of
Directors;
(g) take all actions necessary to carry into effect the Fund's
purchase and sale programs, with respect to its Tax-Free Series;
(h) supervise the operations of the Tax-Free Series' transfer
and dividend disbursing agent;
(i) provide the Tax-Free Series with such administrative and
clerical services for the maintenance of certain shareholder records, as are
deemed advisable by the Fund's Board of Directors; and,
(j) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto, proxy material, tax returns, reports to
the shareholders of the Tax-Free Series and reports to and filings with the
Securities and Exchange Commission (the "SEC") and state Blue Sky authorities,
which may be required for the Tax-Free Series.
3. Broker-Dealer Relationship. In the event that the Advisor is
responsible for decisions to buy and sell securities for the Tax-Free Series,
broker-dealer selection, and negotiation of its brokerage commission rates, the
Advisor's primary consideration in effecting a security transaction will be
execution at the most favorable price. The Fund understands that a substantial
majority of the Tax-Free Series' transactions will be transacted with primary
market makers acting as principal on a net basis, with no brokerage commissions
being paid by the Fund. Such principal transactions may, however, result in a
profit to the market makers. In certain instances the Advisor may make purchases
of underwritten issues at prices which include underwriting fees. In selecting a
broker-dealer to execute each particular transaction, the Advisor will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Tax-Free Series on a
continuing basis. Accordingly, the price to the Fund in any transaction may be
less favorable than that available from another broker-dealer if the difference
is reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies as the Board of Directors may determine, the
Advisor shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker or dealer that provides brokerage and research
services to the Advisor an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction, if the Advisor
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
Advisor's overall responsibilities with respect to the Tax-Free Series. The
Advisor is further authorized to allocate the orders placed by it on behalf of
the Tax-Free Series to such brokers and dealers who also provide research or
statistical material or other services to the Fund or the Advisor. Such
allocation shall be in such amounts and proportions as the Advisor shall
determine and the Advisor will report on said allocation regularly to the Board
of Directors of the Fund, indicating the brokers to whom such allocations have
been made and the basis therefor.
C-2
<PAGE>
4. Control by Board of Directors. Any management or supervisory
activities undertaken by the Advisor pursuant to this Agreement, as well as any
other activities undertaken by the Advisor on behalf of the Tax-Free Series
pursuant thereto, shall at all times be subject to any applicable directives of
the Board of Directors of the Fund.
5. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
(b) the provisions of the Registration Statement of the Fund
under the Securities Act of 1933 and 1940 Act;
(c) the provisions of the Articles of Incorporation, as amended;
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and federal law.
6. Expenses. The expenses connected with the Tax-Free Series shall
be allocable between the Fund and the Advisor as follows:
(a) The Advisor shall, subject to compliance with applicable
banking regulations, furnish, at its expense and without cost to the Fund, the
services of one or more of its officers to the extent that such officers may be
required by the Fund for the proper conduct of its affairs.
(b) The Fund assumes and shall pay or cause to be paid all other
expenses of the Tax- Free Series, including, without limitation, the Tax-Free
Series' allocable portion of the following expenses: payments to the Fund's
distributor under the Fund's plan of distribution; the charges and expenses of
any registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities and other property, and any
transfer, dividend or accounting agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio securities
transactions to which the Fund is a party; all taxes, including securities
issuance and transfer taxes, and fees payable by the Fund to Federal, State or
other governmental agencies; the costs and expenses of engraving or printing of
certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund and
its shares with the SEC and various states and other jurisdictions (including
filing fees, legal fees and disbursements of counsel); the costs and expenses of
printing, including typesetting, and distributing prospectuses and statements of
additional information of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and directors' meetings and of
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of directors or director members of any advisory board
or committee; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash; charges
and expenses of any outside service used for pricing of the Fund's shares;
charges and expenses of legal counsel, including counsel to the directors of the
Fund who are not interested persons (as defined in the 1940 Act) of the Fund and
of independent accountants, in connection with any matter relating to the Fund;
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
directors) of the Fund which inure to its benefit; extraordinary expenses
(including but not limited to, legal claims and liabilities and litigation costs
and any indemnification related thereto); and all other charges and costs of the
Fund's operation unless otherwise explicitly provided herein.
C-3
<PAGE>
7. Delegation of Responsibilities.
(a) Subject to the approval of the Board of Directors and
shareholders of the Tax-Free Series, the Advisor may delegate to a sub-advisor
certain of its duties enumerated in section 2 hereof provided that the Advisor
shall continue to supervise the performance of any such sub-advisor and shall
report regularly thereon to the Fund's Board of Directors. The Advisor shall not
be responsible for any such sub-advisor's performance under a sub-advisory
agreement.
(b) Subject to the approval of the Board of Directors and, to
the extent required by the 1940 Act, shareholders of the Tax-Free Series, the
Advisor may delegate to any company that it controls, is controlled by, or is
under common control with (or to more than one such company), or to specified
employees of any such companies, certain of its duties enumerated in Section 2
hereof provided that the Advisor shall continue to supervise the performance of
any such company and shall regularly report thereon to the Fund's Board of
Directors.
(c) The Advisor may, but shall not be under any duty to, perform
services on behalf of the Tax-Free Series which are not required by this
Agreement upon the request of the Fund's Board of Directors. Such services will
be performed on behalf of the Tax-Free Series and the Advisor's charge in
rendering such services may be billed monthly to the Fund, subject to
examination by the Fund's independent accountants. Payment or assumption by the
Advisor of any Fund expense that the Advisor is not required to pay or assume
under this Agreement shall not relieve the Advisor of any of its obligations to
the Tax-Free Series nor obligate the Advisor to pay or assume any similar
expenses on any subsequent occasions.
8. Compensation. For the services to be rendered and the expenses
assumed by the Advisor, the Tax-Free Series shall pay to the Advisor monthly
compensation at an annual rate derived by: (1) calculating an amount equal to
.30% of the first $500 million of the Fund's aggregate average daily net assets,
.26% of the next $500 million of the Fund's aggregate average daily net assets,
.25% of the next $500 million of the Fund's aggregate average daily net assets,
.24% of the next $1 billion of the Fund's aggregate average daily net assets,
.23% of the next $1 billion of the Fund's aggregate average daily net assets and
.22% of that portion of the Fund's aggregate average daily net assets in excess
of $3.5 billion; (2) applying to this amount a fraction equal to the net assets
of the Tax-Free Series divided by the net assets of the Fund; and (3) adding an
amount calculated daily and paid monthly, at the annual rate of .03% of the
Tax-Free Series' average daily net assets.
Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily and the amounts of the daily accruals
shall be paid monthly. If this Agreement becomes effective subsequent to the
first day of a month or terminates before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees as set forth above. Payment
of the Advisor's compensation for the preceding month shall be made as promptly
as possible.
9. Non-Exclusivity. The services of the Advisor to the Fund are not
to be deemed to be exclusive, and the Advisor shall be free to render investment
advisory and corporate administrative or other services to others (including
other investment companies) and to engage in other activities, so long as its
services under this Agreement are not impaired thereby. It is understood and
agreed that officers or directors of the Advisor may serve as officers or
directors of the Fund, and that officers or directors of the Fund may serve as
officers or directors of the Advisor to the extent permitted by law; and that
the officers and directors of the Advisor are not prohibited from engaging in
any other business activity or from rendering services to any other person, or
from serving as partners, officers, trustees or directors of any other firm,
trust or corporation, including other investment companies.
10. Term. This Agreement shall become effective at the close of
business on the date hereof and shall continue in force and effect, subject to
section 12 hereof, for two years from the date hereof.
C-4
<PAGE>
11. Renewal. Following the expiration of its initial two-year term,
this Agreement shall continue in force and effect from year to year, provided
that such continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote of
a majority of the outstanding voting securities of the Tax-Free Series (as
defined in Section 2(a) (42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the directors who
are not parties to this Agreement or "interested persons" of a party to this
Agreement (other than as directors of the Fund) by votes cast in person at a
meeting specifically called for such purpose.
12. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by vote of the Fund's Board of Directors or
by vote of a majority of the Tax-Free Series' outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), or by the Advisor, on sixty (60)
days' written notice to the other party. The notice provided for herein may be
waived by either party. This Agreement shall automatically terminate in the
event of its assignment, the term "assignment" having the meaning defined in
Section 2(a)(4) of the 1940 Act.
13. Liability of Advisor. In the performance of its duties
hereunder, the Advisor shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to ensure
the accuracy of all services performed under this Agreement, but the Advisor
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of the Advisor or its
officers, directors or employees, or reckless disregard by the Advisor of its
duties under this Agreement.
14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Fund and
the Advisor for this purpose shall be One South Street, Baltimore, Maryland
21202.
15. Questions of Interpretation. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or, in the absence of any controlling decision
of any such court, by rules, regulations or orders of the SEC issued pursuant to
said Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the effect of
such rule, regulation or order.
C-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate by their respective officers on the day and year
first above written.
DEUTSCHE BANC ALEX. BROWN CASH RESERVE
FUND, INC.
Attest: By ___________________________________
Name:
___________________ Title:
INVESTMENT COMPANY CAPITAL CORP.
Attest: By ___________________________________
Name:
___________________ Title:
C-6
<PAGE>
[FLAG INVESTORS PROXY SERVICES]
[P.O. BOX 9148]
[FARMINGDALE, NY 11735]
FORM OF
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. - TREASURY SERIES
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
October 7, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.
This proxy is for your use in voting on various matters relating to Deutsche
Banc Alex. Brown Cash Reserve Fund, Inc. (the "Fund"). The undersigned
shareholder(s) of the Fund, revoking previous proxies, hereby appoint(s) Edward
J. Veilleux, Amy M. Olmert and Kathy L. Churko and each of them (with full power
of substitution) the proxies of the undersigned to attend the Special Meeting of
Shareholders of the Fund to be held on October 7, 1999 (the "Special Meeting")
and any adjournments thereof, to vote all of the shares of the Fund that the
signer would be entitled to vote if personally present at the Special Meeting
and on any matter incident to the conduct of the Special Meeting, all as set
forth in the notice of Special Meeting of Shareholders and Proxy Statement of
the Board of Directors. Said proxies are directed to vote or refrain from voting
pursuant to the Proxy Statement as indicated upon the matters set forth below.
This proxy will be voted as indicated below. If no indication is made, this
proxy will be voted FOR the proposals set forth below. The undersigned
acknowledges receipt with this proxy of a copy of the Notice of Special Meeting
of Shareholders and the Proxy Statement of the Board of Directors.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. - TREASURY SERIES
Vote on Directors
1. To consider and act upon a proposal to elect a Board of
Directors.
Richard T. Hale Richard R. Burt
Joseph R. Hardiman Louis E. Levy
Eugene J. McDonald Rebecca W. Rimel
Truman T. Semans Robert H. Wadsworth
|_| FOR ALL.
|_| WITHHOLD ALL.
|_| FOR ALL EXCEPT:
<PAGE>
To withhold authority to vote, mark "FOR ALL EXCEPT" and write the
nominee's name on the line below _____________________________.
Vote on Proposals
2. To approve a new Investment Advisory Agreement between the
Fund and Investment Company Capital Corp. with respect to the
Treasury Series.
|_| For |_| Against |_| Abstain
3. To eliminate the Treasury Series' fundamental investment
policy concerning investments in companies for the purposes of
exercising control or management.
|_| For |_| Against |_| Abstain
4. To eliminate the Treasury Series' fundamental investment
policy concerning pledging, mortgaging or hypothecating
assets.
|_| For |_| Against |_| Abstain
5. To eliminate the Treasury Series' fundamental investment
policy concerning investment in securities of other investment
companies.
|_| For |_| Against |_| Abstain
6. To eliminate the Treasury Series' fundamental investment
policy concerning short sales, purchasing securities on
margin, and investing in puts and calls and modifying the
Treasury Series' policy on commodities.
|_| For |_| Against |_| Abstain
7. To eliminate the Treasury Series' fundamental investment
policy concerning purchases of oil, gas, or mineral interests.
|_| For |_| Against |_| Abstain
8. To modify the Treasury Series' fundamental investment policy
concerning borrowing.
|_| For |_| Against |_| Abstain
9. To modify the Treasury Series' fundamental investment policy
concerning loans.
|_| For |_| Against |_| Abstain
<TABLE>
<CAPTION>
<S> <C> <C>
Please print and sign your name
in the space provided to authorize the
voting of your shares as indicated and
return promptly. When signing on behalf --------------------------------------- --------------
of a corporation, partnership, estate, Signature [PLEASE SIGN WITHIN BOX] Date
trust or in any other representative
capacity, please sign your name and title. --------------------------------------- --------------
For joint accounts, each joint owner must sign. Signature (Joint Owners) Date
</TABLE>
PLEASE COMPLETE, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY
<PAGE>
USING THE ENCLOSED ENVELOPE.
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
<PAGE>
[FLAG INVESTORS PROXY SERVICES]
[P.O. BOX 9148]
[FARMINGDALE, NY 11735]
FORM OF
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. - TAX-FREE SERIES
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
October 7, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.
This proxy is for your use in voting on various matters relating to Deutsche
Banc Alex. Brown Cash Reserve Fund, Inc. (the "Fund"). The undersigned
shareholder(s) of the Fund, revoking previous proxies, hereby appoint(s) Edward
J. Veilleux, Amy M. Olmert and Kathy L. Churko and each of them (with full power
of substitution) the proxies of the undersigned to attend the Special Meeting of
Shareholders of the Fund to be held on October 7, 1999 (the "Special Meeting")
and any adjournments thereof, to vote all of the shares of the Fund that the
signer would be entitled to vote if personally present at the Special Meeting
and on any matter incident to the conduct of the Special Meeting, all as set
forth in the notice of Special Meeting of Shareholders and Proxy Statement of
the Board of Directors. Said proxies are directed to vote or refrain from voting
pursuant to the Proxy Statement as indicated upon the matters set forth below.
This proxy will be voted as indicated below. If no indication is made, this
proxy will be voted FOR the proposals set forth below. The undersigned
acknowledges receipt with this proxy of a copy of the Notice of Special Meeting
of Shareholders and the Proxy Statement of the Board of Directors.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. - TAX-FREE SERIES
Vote on Directors
1. To consider and act upon a proposal to elect a Board of
Directors.
Richard T. Hale Richard R. Burt
Joseph R. Hardiman Louis E. Levy
Eugene J. McDonald Rebecca W. Rimel
Truman T. Semans Robert H. Wadsworth
|_| FOR ALL.
|_| WITHHOLD ALL.
|_| FOR ALL EXCEPT:
1-PH:1056072.1
<PAGE>
To withhold authority to vote, mark "FOR ALL EXCEPT" and write the
nominee's name on the line below _____________________________.
Vote on Proposals
2. To approve a new Investment Advisory Agreement between the
Fund and Investment Company Capital Corp. with respect to the
Tax-Free Series.
|_| For |_| Against |_| Abstain
3. To eliminate the Tax-Free Series' fundamental investment
policy concerning investments in companies for the purposes of
exercising control or management.
|_| For |_| Against |_| Abstain
4. To eliminate the Tax-Free Series' fundamental investment
policy concerning pledging, mortgaging or hypothecating
assets.
|_| For |_| Against |_| Abstain
5. To eliminate the Tax-Free Series' fundamental investment
policy concerning investment in securities of other investment
companies.
|_| For |_| Against |_| Abstain
6. To eliminate the Tax-Free Series' fundamental investment
policy concerning short sales, purchasing securities on
margin, and investing in puts and calls and modifying the
Tax-Free Series' policy on commodities.
|_| For |_| Against |_| Abstain
7. To eliminate the Tax-Free Series' fundamental investment
policy concerning purchases of oil, gas, or mineral interests.
|_| For |_| Against |_| Abstain
8. To modify the Tax-Free Series' fundamental investment policy
concerning borrowing.
|_| For |_| Against |_| Abstain
9. To modify the Tax-Free Series' fundamental investment policy
concerning loans.
|_| For |_| Against |_| Abstain
<TABLE>
<CAPTION>
<S> <C> <C>
Please print and sign your name in the
space provided to authorize the voting of
your shares as indicated and return
promptly. When signing on behalf of a --------------------------------------- --------------
corporation, partnership, estate, trust Signature [PLEASE SIGN WITHIN BOX] Date
or in any other representative capacity,
please sign your name and title. For joint --------------------------------------- --------------
accounts, each joint owner must sign. Signature (Joint Owners) Date
</TABLE>
PLEASE COMPLETE, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
<PAGE>
[FLAG INVESTORS PROXY SERVICES]
[P.O. BOX 9148]
[FARMINGDALE, NY 11735]
FORM OF
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. - PRIME SERIES
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
October 7, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC.
This proxy is for your use in voting on various matters relating to Deutsche
Banc Alex. Brown Cash Reserve Fund, Inc. (the "Fund"). The undersigned
shareholder(s) of the Fund, revoking previous proxies, hereby appoint(s) Edward
J. Veilleux, Amy M. Olmert and Kathy L. Churko and each of them (with full power
of substitution) the proxies of the undersigned to attend the Special Meeting of
Shareholders of the Fund to be held on October 7, 1999 (the "Special Meeting")
and any adjournments thereof, to vote all of the shares of the Fund that the
signer would be entitled to vote if personally present at the Special Meeting
and on any matter incident to the conduct of the Special Meeting, all as set
forth in the notice of Special Meeting of Shareholders and Proxy Statement of
the Board of Directors. Said proxies are directed to vote or refrain from voting
pursuant to the Proxy Statement as indicated upon the matters set forth below.
This proxy will be voted as indicated below. If no indication is made, this
proxy will be voted FOR the proposals set forth below. The undersigned
acknowledges receipt with this proxy of a copy of the Notice of Special Meeting
of Shareholders and the Proxy Statement of the Board of Directors.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DEUTSCHE BANC ALEX. BROWN CASH RESERVE FUND, INC. - PRIME SERIES
Vote on Directors
1. To consider and act upon a proposal to elect a Board of
Directors.
Richard T. Hale Richard R. Burt
Joseph R. Hardiman Louis E. Levy
Eugene J. McDonald Rebecca W. Rimel
Truman T. Semans Robert H. Wadsworth
|_| FOR ALL.
|_| WITHHOLD ALL.
|_| FOR ALL EXCEPT:
<PAGE>
To withhold authority to vote, mark "FOR ALL EXCEPT" and write the
nominee's name on the line below _____________________________.
Vote on Proposals
2. To approve a new Investment Advisory Agreement between the
Fund and Investment Company Capital Corp. with respect to the
Prime Series.
|_| For |_| Against |_| Abstain
3. To eliminate the Prime Series' fundamental investment policy
concerning investments in companies for the purposes of
exercising control or management.
|_| For |_| Against |_| Abstain
4. To eliminate the Prime Series' fundamental investment policy
concerning pledging, mortgaging or hypothecating assets.
|_| For |_| Against |_| Abstain
5. To eliminate the Prime Series' fundamental investment policy
concerning investment in securities of other investment
companies.
|_| For |_| Against |_| Abstain
6. To eliminate the Prime Series' fundamental investment policy
concerning short sales, purchasing securities on margin, and
investing in puts and calls and modifying the Prime Series'
policy on commodities.
|_| For |_| Against |_| Abstain
7. To eliminate the Prime Series' fundamental investment policy
concerning purchases of oil, gas, or mineral interests.
|_| For |_| Against |_| Abstain
8. To modify the Prime Series' fundamental investment policy
concerning borrowing.
|_| For |_| Against |_| Abstain
9. To modify the Prime Series' fundamental investment policy
concerning loans.
|_| For |_| Against |_| Abstain
<TABLE>
<CAPTION>
<S> <C> <C>
Please print and sign your name in the
space provided to authorize the voting of
your shares as indicated and return
promptly. When signing on behalf of a --------------------------------------- --------------
corporation, partnership, estate, trust or Signature [PLEASE SIGN WITHIN BOX] Date
in any other representative capacity, please
sign your name and title. For joint accounts, --------------------------------------- --------------
each joint owner must sign. Signature (Joint Owners) Date
</TABLE>
PLEASE COMPLETE, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY
<PAGE>
USING THE ENCLOSED ENVELOPE.
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
