SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BT INVESTMENT FUNDS
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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:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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BT INVESTMENT FUNDS
Quantitative Equity Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held September 22, 1999
A Special Meeting of shareholders of BT Investment Funds (the "Trust")
will be held at the offices of BT Alex.Brown Incorporated, One South Street,
30th Floor, Baltimore, Maryland 21202 on September 22, 1999 at 11:00 a.m. (the
"Special Meeting"). The Trust is an open-end management investment company,
organized under the laws of the Commonwealth of Massachusetts, that is comprised
of the Quantitative Equity Fund (the "Fund") and fifteen other series, which are
not addressed in the accompanying Proxy Statement ("Proxy Statement").
The Special Meeting is being held to consider and vote on the following
matters for the Fund, as indicated below and more fully described under the
corresponding Proposals in the Proxy Statement, and such other matters as may
properly come before the meeting or any adjournments thereof:
PROPOSAL I: To approve or disapprove new investment advisory
agreements (each a "New Advisory Agreement" and
collectively the "New Advisory Agreements") for
the Trust:
A. To approve or disapprove a New Advisory
Agreement between the Trust and Bankers Trust
Company ("Bankers Trust").
B. To approve or disapprove a New Advisory
Agreement between the Trust and Morgan Grenfell
Inc. ("MGI") to be implemented within two years of
the date of the Special Meeting upon approval of
the members of the Trust's Board of Trustees who
are not "interested persons" ("Independent
Trustees") (as defined in the Investment Company
Act of 1940, as amended).
C. To approve or disapprove a new
sub-investment advisory agreement (the "New
Sub-advisory Agreement," which term, unless
otherwise specified, is included within the
meaning of New Advisory Agreements) between MGI
and Bankers Trust under which Bankers Trust may
perform some of MGI's responsibilities, at MGI's
expense, under the New MGI Advisory Agreement with
the Trust upon approval of the Independent
Trustees.
PROPOSAL II: To elect Trustees of the Trust to hold office
until their respective successors have been duly
elected and qualified or until their earlier
resignation or removal.
PROPOSAL III: To approve conversion of the Fund's structure from
a stand-alone fund structure to a master-feeder
fund structure.
PROPOSAL IV: To ratify or reject the selection of
PricewaterhouseCoopers LLP as the independent
accountants for the Fund's current fiscal year.
The appointed proxies will vote in their discretion on any other business
as may properly come before the Special Meeting or any adjournment thereof.
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THE NEW ADVISORY AGREEMENTS DESCRIBED IN PROPOSALS IA, IB AND IC,
RESPECTIVELY, WILL CONTAIN SUBSTANTIALLY THE SAME TERMS AND CONDITIONS, EXCEPT
FOR THE PARTIES AND THE DATES OF EXECUTION, EFFECTIVENESS AND INITIAL TERM, AS
THE PRIOR INVESTMENT ADVISORY AGREEMENTS PURSUANT TO WHICH SERVICES WERE
PROVIDED TO THE TRUST. IN ADDITION, THE FORM OF NEW SUB-ADVISORY AGREEMENT
AUTHORIZES THE APPLICABLE INVESTMENT ADVISER TO ADJUST THE DUTIES, THE AMOUNT OF
ASSETS TO BE MANAGED AND THE FEES PAID TO THE APPLICABLE INVESTMENT SUBADVISER
WITH AND UPON THE APPROVAL OF THE BOARD AND THE INDEPENDENT TRUSTEES. AS MORE
FULLY DISCUSSED IN THE ACCOMPANYING PROXY STATEMENT, APPROVAL OF THE NEW
ADVISORY AGREEMENTS, WHICH PROVIDE FOR THE SAME SERVICES TO BE PROVIDED AT THE
SAME FEES, IS GENERALLY OCCASIONED BY THE MERGER OF CIRCLE ACQUISITION
CORPORATION, A WHOLLY-OWNED SUBSIDIARY OF DEUTSCHE BANK A.G. ("DEUTSCHE BANK"),
WITH AND INTO BANKERS TRUST CORPORATION, THE PARENT COMPANY OF BANKERS TRUST.
MGI IS, AND AS A RESULT OF THIS TRANSACTION, BANKERS TRUST BECAME, AN INDIRECT
WHOLLY OWNED SUBSIDIARY OF DEUTSCHE BANK. THE NEW ADVISORY AGREEMENTS WITH MGI
DESCRIBED IN PROPOSAL IB AND THE NEW SUB-ADVISORY AGREEMENT WITH BANKERS TRUST
DESCRIBED IN PROPOSAL IC WILL PERMIT DEUTSCHE BANK, UPON THE APPROVAL OF THE
INDEPENDENT TRUSTEES, TO SIMPLIFY THE ORGANIZATIONAL STRUCTURE OF ITS U.S.
MUTUAL FUND OPERATIONS, ENHANCE THE EFFICIENCY OF THEIR ADMINISTRATION AND
PROMOTE CONSISTENCY OF INTERNAL CONTROLS, COMPLIANCE AND REGULATORY OVERSIGHT.
THE DEFERRAL IN IMPLEMENTING THE NEW ADVISORY AGREEMENTS WITH MGI IS NEEDED TO
PERMIT DEUTSCHE BANK A SUFFICIENT AMOUNT OF TIME TO PLAN, PREPARE AND INSTITUTE
THE NECESSARY ARRANGEMENTS FOR MGI TO CONSOLIDATE DEUTSCHE BANK'S U.S. MUTUAL
FUND OPERATIONS.
The close of business on July 22, 1999 has been fixed as the record date
for the determination of the shareholders of each Fund entitled to notice of,
and to vote at, the Special Meeting. You are cordially invited to attend the
Special Meeting.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT SHAREHOLDER
COMMUNICATIONS CORPORATION AT 1-800-732-6168.
This notice and related proxy material are first being mailed to
shareholders on or about August 23, 1999. This proxy is being solicited on
behalf of the Board of Trustees of the Trust.
By Order of the Board of Trustees,
Daniel O. Hirsch, Secretary
New York, New York
August 23, 1999
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WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN
THE ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION
OF YOUR SHARES (UNLESS YOU ARE VOTING BY TELEPHONE
OR THROUGH THE INTERNET). NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED
IN THE UNITED STATES.
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BT INVESTMENT FUNDS
Quantitative Equity Fund
One South Street
Baltimore, Maryland 21202
PROXY STATEMENT FOR THE SPECIAL MEETING OF SHAREHOLDERS
September 22, 1999
This Proxy Statement ("Proxy Statement") is being furnished in connection
with the solicitation of proxies by the Board of Trustees of BT Investment Funds
(the "Trust") with respect to the Quantitative Equity Fund (the "Fund") for use
at the special meeting of the Trust to be held at the offices of BT Alex.Brown
Incorporated, One South Street, 30th Floor, Baltimore, Maryland 21202 on
September 22, 1999 at 11:00 a.m. (the "Special Meeting") and at any adjournments
thereof. This Proxy Statement and accompanying proxy card(s) ("Proxy") are
expected to be mailed to shareholders on or about August 23, 1999.
The Trust is comprised of several series. The Fund is a separate series of
the Trust, along with fifteen other funds which are not addressed in this Proxy
Statement.
For simplicity, actions are described in this Proxy Statement as being
taken by the Fund, although all actions are actually taken by the Trust on
behalf of the Fund.
The Special Meeting is being held to consider and vote on the following
matters for the Fund, as indicated below and described more fully under the
corresponding Proposals discussed herein, and such other matters as may properly
come before the meeting or any adjournments thereof:
PROPOSAL I: To approve or disapprove new investment advisory
agreements (each a "New Advisory Agreement" and
collectively the "New Advisory Agreements") for
the Trust:
A. To approve or disapprove a New Advisory
Agreement between the Trust and Bankers Trust
Company ("Bankers Trust") (the "New BT Advisory
Agreement").
B. To approve or disapprove a New Advisory
Agreement between the Trust and Morgan Grenfell
Inc. ("MGI" and, together with Bankers Trust, the
"Advisers") (the "New MGI Advisory Agreement") to
be implemented within two years of the date of the
Special Meeting upon approval of the members of the
Trust's Board of Trustees who are not "interested
persons" thereof ("Independent Trustees") (as
defined in the Investment Company Act of 1940, as
amended (the "Act")).
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C. To approve or disapprove a new sub-investment
advisory agreement (the "New Sub-advisory
Agreement," which term, unless otherwise specified,
is included within the meaning of New Advisory
Agreements) between MGI and Bankers Trust under
which Bankers Trust may perform certain of MGI's
responsibilities, at MGI's expense, under the New
MGI Advisory Agreement with the Trust upon approval
of the Independent Trustees.
PROPOSAL II: To elect Trustees of the Trust to hold office until
their respective successors have been duly elected
and qualified or until their earlier resignation or
removal.
PROPOSAL III: To approve conversion of the Fund's structure from
a stand-alone fund structure to a master-feeder
fund structure.
PROPOSAL IV: To ratify or reject the selection of
PricewaterhouseCoopers LLP as the independent
accountants for the Fund for the current fiscal
year.
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournment thereof.
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Among other proposals, the shareholders of the Trust are to consider the
election of Charles S. Biggar, S. Leland Dill, Martin J. Gruber, Richard Hale,
Richard J. Herring, Bruce E. Langton, Philip Saunders, Jr. and Harry Van
Benschoten (the "Trustee Nominees") as Trustees of the Trust. Messrs. Dill and
Saunders currently serve on the Board and Drs. Herring and Gruber and Messrs.
Langton and Van Benschoten serve as Trustees of various other investment
companies within the Bankers Trust family of funds. To ensure adherence by the
Trust with Section 15(f) of the Act, only Mr. Hale will be an "interested
person" (within the meaning of Section 2(a)(19) of the Act) of the Fund
following the Merger (as defined herein) and the approval of the New Advisory
Agreement.
Notice of the Special Meeting and a Proxy accompany this Proxy Statement.
Proxy solicitations will be made primarily by mail, but solicitations may also
be made by telephone, telegraph, through the Internet or in person by officers
or agents of the Fund. All costs of solicitation, including (a) printing and
mailing of this Proxy Statement and accompanying material, (b) the reimbursement
of brokerage firms and others for their expenses in forwarding solicitation
material to the beneficial owners of the Fund's shares, (c) payment to
Shareholder Communications Corporation for its services in soliciting proxies
and (d) supplementary solicitations to submit Proxies, will be borne by Bankers
Trust. If the Fund records votes by telephone or through the Internet, it will
use procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been properly
recorded. Proxies voted by telephone or through the Internet may be revoked at
any time before they are voted in the same manner that proxies voted by mail may
be revoked.
The Annual Report of the Fund containing audited financial statements for
the fiscal year ended December 31, 1998, as well as the Semi-Annual Report of
the Fund (each a "Report"), have previously been furnished to the Fund's
shareholders. An additional copy of each Report will be furnished without charge
upon request by writing to the Trust at the address set forth on the cover of
this Proxy Statement or by calling 1-800-730-1313.
If the enclosed Proxy is properly executed and returned in time to be
voted at the Special Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. Shares of the Fund are
entitled to one vote each at the Special Meeting and fractional shares are
entitled to proportionate shares of one vote. If no instructions are marked on
the Proxy with respect to a specific Proposal, the Proxy will be voted "FOR" the
approval of such Proposal and in accordance with the judgment of the persons
appointed as proxies upon any other matter that may properly come before the
Special Meeting. Any shareholder giving a Proxy has the right to attend the
Special Meeting to vote his/her shares in person (thereby revoking any prior
Proxy) and also the right to revoke the Proxy at any time by written notice
received by the Fund prior to the time it is voted.
In the event that a quorum is not present at the Special Meeting, or if a
quorum is present but sufficient votes to approve a Proposal are not received,
the persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of Proxies with respect to the Proposal.
In determining whether to adjourn the Special Meeting, the following factors may
be considered: the nature of the proposals that are the subject of the Special
Meeting, the percentage of votes actually cast, the percentage of negative votes
actually cast, the nature of any further solicitation and the information to be
provided to shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the Special Meeting in person or by Proxy. The persons named as
proxies will vote those Proxies that they are entitled to vote "FOR" any
Proposal in favor of an adjournment and will vote those Proxies required to be
voted "AGAINST" any such Proposal against any adjournment. A shareholder vote
may be taken
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on one or more of the Proposals in the Proxy Statement prior to any adjournment
if sufficient votes have been received and it is otherwise appropriate. A quorum
of shareholders is constituted by the presence in person or by proxy of the
holders of a majority of the outstanding shares of the Trust or the Fund (as
applicable) entitled to vote at the Special Meeting. For purposes of determining
the presence of a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that these persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. (See "Vote
Required" for a further discussion of abstentions and broker non-votes.)
Shareholders of record at the close of business on July 22, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Special Meeting.
As of the Record Date, 60,303.471 shares of the Fund were issued and
outstanding.
In order that your shares may be represented, you are requested to (unless
you are voting by telephone or through the Internet):
o indicate your instructions on the Proxy;
o date and sign the Proxy; and
o mail the Proxy promptly in the enclosed envelope.
Beneficial Ownership of Shares of the Funds
Annex I attached hereto sets forth information as of the Record Date
regarding the beneficial ownership of the Fund's shares by (i) the only persons
known by the Fund to beneficially own more than five percent of the outstanding
shares of the Fund, (ii) the Trustees and Trustee Nominees, (iii) the executive
officers of the Fund, and (iv) the Trustees and executive officers of the Fund
as a group. The number of shares beneficially owned by each Trustee, Trustee
Nominee or executive officer is determined under rules of the Securities and
Exchange Commission (the "Commission"), and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under these rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of the Record Date through
the exercise of any stock option or other right. Unless otherwise indicated,
each person has sole investment and voting power (or shares this power with his
or her spouse) with respect to the shares set forth in Annex I. The inclusion
herein of any shares deemed beneficially owned does not constitute an admission
of beneficial ownership of the shares.
Collectively, the Trustees and officers of the Trust own less than 1% of
the Fund's outstanding shares.
Background
The Fund. As indicated earlier, the Fund is a separate series of the
Trust. Bankers Trust, a banking corporation organized under the laws of the
State of New York, located at 130 Liberty Street (One Bankers Trust Plaza), New
York, New York 10006, serves as the investment adviser and custodian of the
Fund. Bankers Trust is a wholly-owned subsidiary of BT Corporation, located at
130 Liberty Street (One Bankers Trust Plaza), New York, New York 10006, a
registered bank holding company organized under the laws of the State of New
York. As discussed later in this Proxy
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Statement, as a result of the Merger (as defined herein), BT Corporation became
a wholly owned subsidiary of Deutsche Bank, A.G. ("Deutsche Bank"), located at
31 West 52nd Street, New York, New York 10019. ICC Distributors, Inc., located
at Two Portland Square, Portland, Maine 04101 serves as the principal
underwriter of the Fund. ICC Distributors, Inc., is not affiliated with Bankers
Trust, Deutsche Bank or any of their affiliates.
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PROPOSAL I
APPROVAL OF NEW ADVISORY AGREEMENTS
THE NEW ADVISORY AGREEMENTS WILL CONTAIN SUBSTANTIALLY THE SAME TERMS AND
CONDITIONS, EXCEPT FOR THE PARTIES AND THE DATES OF EXECUTION, EFFECTIVENESS AND
INITIAL TERM, AS THE PRIOR INVESTMENT ADVISORY AGREEMENT PURSUANT TO WHICH
SERVICES WERE PROVIDED TO THE FUND. IN ADDITION, THE FORM OF NEW SUB-ADVISORY
AGREEMENT AUTHORIZES THE APPLICABLE INVESTMENT ADVISER TO ADJUST THE DUTIES, THE
AMOUNT OF ASSETS TO BE MANAGED AND THE FEES PAID TO THE APPLICABLE INVESTMENT
SUBADVISER WITH AND UPON THE APPROVAL OF THE BOARD AND THE INDEPENDENT TRUSTEES.
AS MORE FULLY DISCUSSED BELOW, APPROVAL OF THE NEW ADVISORY AGREEMENTS, WHICH
PROVIDE FOR THE SAME SERVICES TO BE PROVIDED AT THE SAME FEES, IS GENERALLY
OCCASIONED BY THE MERGER (AS DEFINED HEREIN), PURSUANT TO WHICH BANKERS TRUST
BECAME AN INDIRECT SUBSIDIARY OF DEUTSCHE BANK. THE NEW MGI ADVISORY AGREEMENT
DESCRIBED IN PROPOSAL IB AND THE NEW SUB-ADVISORY AGREEMENT WITH BANKERS TRUST
DESCRIBED IN PROPOSAL IC WILL PERMIT DEUTSCHE BANK, UPON THE APPROVAL OF THE
INDEPENDENT TRUSTEES, TO SIMPLIFY THE ORGANIZATIONAL STRUCTURE OF ITS U.S.
MUTUAL FUND OPERATIONS, ENHANCE THE EFFICIENCY OF THEIR ADMINISTRATION AND
PROMOTE CONSISTENCY OF INTERNAL CONTROLS, COMPLIANCE AND REGULATORY OVERSIGHT.
THE DEFERRAL IN IMPLEMENTING THE NEW MGI ADVISORY AGREEMENTS IS NEEDED TO PERMIT
DEUTSCHE BANK A SUFFICIENT AMOUNT OF TIME TO PLAN, PREPARE AND INSTITUTE THE
NECESSARY ARRANGEMENTS FOR MGI TO CONSOLIDATE DEUTSCHE BANK'S U.S. MUTUAL FUND
OPERATIONS.
The Prior Advisory Agreement.
The Prior Advisory Agreement. Prior to June 4, 1999, Bankers Trust served
as investment adviser to the Fund (as discussed earlier) pursuant to an
investment advisory agreement between Bankers Trust and the Fund (the "Prior
Advisory Agreements"). The Prior Advisory Agreement was initially approved by
the Board, including a majority of the Independent Trustees.
The date of the Prior Advisory Agreement was December 31, 1998. The Prior
Advisory Agreement was most recently approved by the Fund's Trustees on March 8,
1999. The advisory fee rate is 0.50%.(1).
The Merger. On November 30, 1998, BT Corporation, Deutsche Bank and Circle
Acquisition Corporation entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the terms of the Merger Agreement, Circle
Acquisition Corporation, a wholly-owned New York subsidiary of Deutsche Bank,
merged with and into BT Corporation on June 4, 1999, with BT Corporation
continuing as the surviving entity (the "Merger"). Under the terms of the
Merger, each outstanding share of BT Corporation common stock was converted into
the right to receive $93 in cash, without interest. Since the Merger, BT
Corporation, along with its affiliates, has continued to offer the range of
financial products and services, including investment advisory services, that it
offered prior to the Merger.
(1) The Fund first opened to investors on March 29, 1999. Therefore, fees were
not paid by the Fund to Bankers Trust for the prior fiscal year. The
Fund's aggregate fees for the advisory and administrative services
provided by Bankers Trust are capped pursuant to an Expense Limitation
Agreement between Bankers Trust and the Trust whereby Bankers Trust has
contractually waived a portion of the fees payable to it for the current
fiscal year for advisory and administrative services rendered to the Fund.
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As a result of the Merger, BT Corporation became a wholly-owned subsidiary
of Deutsche Bank. Deutsche Bank is a banking company with limited liability
organized under the laws of the Federal Republic of Germany. Deutsche Bank is
the parent company of a group consisting of banks, capital markets companies,
fund management companies, mortgage banks, a property finance company,
installment financing and leasing companies, insurance companies, research and
consultancy companies and other domestic and foreign companies (the "Deutsche
Bank Group"). At March 31, 1999, the Deutsche Bank Group had total assets of US
$727 billion. The Deutsche Bank Group's capital and reserves at March 31, 1999,
were US $19.6 billion.
Impact of the Merger on the Prior Advisory Agreement. Section 15(a) of
the Act provides, in pertinent part, that "[i]t shall be unlawful for any person
to serve or act as investment adviser of a registered investment company, except
pursuant to a written contract, which contract, whether with such registered
company or with an investment adviser of such registered company, has been
approved by the vote of a majority of the outstanding voting securities of such
registered company . . . ." Section 15(a)(4) of the Act further requires that
such written contract provide for automatic termination in the event of its
assignment. Section 2(a)(4) of the Act defines "assignment" to include any
direct or indirect transfer of a contract by the assignor.
While it may be argued otherwise, consummation of the Merger may have
resulted in an "assignment" of the Prior Advisory Agreement within the meaning
of the Act, terminating the agreement according to its terms and the Act as of
June 4, 1999. Specifically, as Bankers Trust is a wholly-owned subsidiary of BT
Corporation, the merger of Circle Corporation with and into BT Corporation could
be deemed to have resulted in an "assignment" of the Prior Advisory Agreement
with Bankers Trust.
On May 25, 1999, Bankers Trust was granted an exemptive order (the "Exemptive
Order") by the Commission permitting implementation, without obtaining prior
shareholder approval, of the New BT Advisory Agreement during an interim period
commencing on the date of the closing of the Merger and continuing, for a period
of up to 150 days, through the date on which the New BT Advisory Agreement is
approved or disapproved by the shareholders of the Fund (the "Interim Period").
Under the terms of the Exemptive Order, Bankers Trust was allowed to receive
advisory fees during the Interim Period pursuant to the New BT Advisory
Agreements, provided that these fees would be held in escrow pending shareholder
approval of the New BT Advisory Agreement. In accordance with the Exemptive
Order, the advisory fees charged to the Fund and paid to the Adviser under the
New BT Advisory Agreement have been held in an interest-bearing escrow account
and the Fund expects to continue to deposit these fees in such account until
approval of the New BT Advisory Agreement by the shareholders of the Fund has
been obtained. If the New BT Advisory Agreement is not approved by the
shareholders by the expiration of the Interim Period, the fees held in escrow
will be remitted to the Fund. As of June 30, 1999, the amount in escrow totaled
$0.00. The Fund's advisory fee is currently being waived by Bankers Trust in
order to remain under the limit established by the Expense Limitation Agreement.
The shareholders of the Fund are not being asked to approve or disapprove
the Merger or the Merger Agreement; rather, they are being asked under these
Proposals to approve and continue the New BT Advisory Agreement and to approve
the New Advisory Agreement for the Fund. OTHER THAN THE PARTIES AND THE DATES OF
EXECUTION, EFFECTIVENESS, AND INITIAL TERM OF THE AGREEMENT, THE NEW ADVISORY
AGREEMENTS WILL CONTAIN SUBSTANTIALLY THE SAME TERMS AND CONDITIONS AS THE PRIOR
ADVISORY AGREEMENT. In addition, the form of New Sub-advisory Agreement
authorizes the applicable investment adviser to adjust the duties, the amount of
assets to be managed and the fees paid to the applicable investment subadviser
with and upon the approval of the Board and the Independent Trustees. The
advisory fee rate charged to the Fund under the Prior Advisory Agreement has
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continued to apply under the New BT Advisory Agreement and would continue to
apply under the New MGI Advisory Agreement. MGI, and not the Trust, would be
solely responsible for paying the sub-advisory fees, which may vary from time to
time as approved by the Independent Trustees. In addition, the Advisers have
advised the Fund that it can expect to continue to receive the same level and
quality of services under the New Advisory Agreements as it received under the
Prior Advisory Agreement. The Advisers have represented to the Board that in the
event of any material change in the investment management personnel of the
Advisers responsible for providing services to the Fund, the Advisers will
apprise and consult with the Board to ensure that the Board, including a
majority of the Board's Independent Trustees, is satisfied that the services
provided by the Advisers will not be diminished in scope and quality.
The New Advisory Agreements
The New Advisory Agreements. The form of the New Advisory and Sub-advisory
Agreement is attached to this Proxy Statement as Exhibit A. If shareholders
approve the New Advisory Agreements, each of the agreements will remain in
effect for an initial term of two years from its effective date, and may be
renewed annually thereafter by specific approval of the Board or shareholders of
the Fund, provided that they are also approved by a majority of the Independent
Trustees. The terms and conditions of the New Advisory Agreements, other than
the parties and the dates of execution, effectiveness and initial term, are
substantially the same as those of the Prior Advisory Agreement. In addition,
the form of New Sub-advisory Agreement authorizes the applicable investment
adviser to adjust the duties, the amount of assets to be managed and the fees
paid to the applicable investment subadviser with and upon the approval of the
Board and the Independent Trustees.
Under the terms of the New Advisory Agreements, as under the Prior
Advisory Agreement, each of the Advisers agrees to furnish the Fund with
investment advisory and other services in connection with a continuous
investment program for the Fund, including investment research and management
with respect to all securities, investments, cash and cash equivalents in the
portfolios. Subject to the supervision and control of the Board, each of the
Advisers agrees to (a) conform to all applicable rules and regulations of the
Commission, including all applicable provisions of the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of 1934 (the "Exchange
Act"), the Act and the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and will conduct its activities under the New Advisory
Agreements in accordance with applicable regulations of the Board of Governors
of the Federal Reserve System pertaining to the investment advisory activities
of bank holding companies and their subsidiaries, (b) provide the services
rendered by it in accordance with the Fund's investment objectives and policies
as stated in the Prospectus and Statement of Additional Information of the Fund,
as from time to time in effect, and the Fund's then current registration
statement on Form N-1A as filed with the Commission and the then current
offering Memorandum if the Fund is not registered under the 1933 Act, (c) place
orders pursuant to its investment determinations for the Fund either directly
with the issuer or with any broker or dealer selected by it, (d) determine from
time to time what securities or other investments will be purchased, sold or
retained by the Fund, and (e) maintain books and records with respect to the
securities transactions of the Fund and render to the Board of Trustees of the
Trust such periodic and special reports as they may request.
THE ADVISORY FEE. THE INVESTMENT ADVISORY FEE RATE CHARGED TO THE FUND
UNDER THE NEW BT ADVISORY AGREEMENT AND THE NEW MGI ADVISORY AGREEMENT IS THE
SAME AS THE INVESTMENT ADVISORY FEE RATE CHARGED UNDER THE PRIOR ADVISORY
AGREEMENT. AS NOTED ABOVE, THE INVESTMENT ADVISORY FEE
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PAYABLE UNDER THE NEW SUB-ADVISORY AGREEMENTS WOULD BE PAID BY MGI, NOT THE
TRUST, AND MAY VARY FROM TIME TO TIME, SUBJECT TO THE APPROVAL OF THE TRUST'S
BOARD OF TRUSTEES, INCLUDING A MAJORITY OF ITS INDEPENDENT TRUSTEES.
Bankers Trust is paid a fee under the New BT Advisory Agreement for its
services, calculated daily and paid monthly, equal, on an annual basis, to 0.50%
of the Fund's average daily net assets.
Generally. If approved, the New Advisory Agreements, as applicable, will
remain in effect for an initial term of two years (unless sooner terminated),
and shall remain in effect from year to year thereafter if approved annually (1)
by the Board or by the holders of a majority of the Fund's outstanding voting
securities and (2) by a majority of the Independent Trustees who are not parties
to such contract or agreement. Like the Prior Advisory Agreement, the New
Advisory Agreement will terminate upon assignment by any party and is
terminable, without penalty, on 60 days' written notice by the Board or by a
"majority" vote of the shareholders of the Fund (as defined in the Act) or upon
60 days' written notice by the applicable Adviser.
The services of the Advisers are not deemed to be exclusive and nothing in
the New Advisory Agreement prevents them or their affiliates from providing
similar services to other investment companies and other clients (whether or not
their investment objectives and policies are similar to those of the Fund) or
from engaging in other activities. In addition, the Advisers are obligated to
pay expenses associated with providing the services contemplated by the New
Advisory Agreement. The Trust bears certain other expenses including the fees of
the Board. The Trust also pays any extraordinary expenses incurred.
Under the New Advisory Agreements, each of the Advisers will exercise its
best judgment in rendering its advisory services. The Advisers shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust or the Fund in connection with the matters to which the New Advisory
Agreements relate, provided that nothing therein shall be deemed to protect or
purport to protect the Advisers against any liability to the Trust or the Fund
or to its shareholders to which the Advisers could otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on their part in
the performance of their duties or by reason of the Advisors' reckless disregard
of their obligations and duties under the New Advisory Agreements.
The Advisers
Bankers Trust. Bankers Trust is the principal banking subsidiary of BT
Corporation. Bankers Trust is a bank and, therefore, not required to register as
an investment adviser under the Advisers Act. Bankers Trust provides a broad
range of commercial banking and financial services, including originating loans
and other forms of credit, accepting deposits and arranging financings. Bankers
Trust also engages in trading currencies, securities, derivatives and
commodities. In addition to providing investment advisory services to the Fund,
Bankers Trust serves as investment adviser to 31 other investment companies and
investment subadviser to 34 other investment companies. (See Annex II for a list
of those investment companies that Bankers Trust advises that have investment
objectives similar to those of the Fund, together with information regarding the
fees charged to those companies.) As of March 31, 1999, Bankers Trust had over
$313 billion of assets under management.(2)
(2) The Fund opened to investors on March 29, 1999, and had no assets under
management as of March 31, 1999.
9
<PAGE>
The names, businesses addresses and principal occupations of the current
chief executive officer and directors of Bankers Trust are set forth below.
NAME AND ADDRESS PRINCIPAL OCCUPATION
Josef Ackermann Chairman of the Board, Chief Executive
Deutsche Bank A.G. Officer and President, Bankers Trust
Taunusanlage 12 Company;
D-60262 Frankfurt am Main Member, Board of Managing Directors
Federal Republic of Germany Deutsche Bank A.G.
Hans Angermueller Shearman & Sterling, of counsel
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Mr. George B. Beitzel Director, Computer Task Group, Inc.;
29 King Street Director, Phillips Petroleum Company;
Chappaqua, NY 10514-3432 Director, TIG Holdings Inc.
Mr. William R. Howell Chairman Emeritus, J.C. Penney Company,
J.C. Penney Company, Inc. Inc.;
P.O. Box 10001 Director, Exxon Corporation;
Dallas, TX 75301-1109 Director, Halliburton Company;
Director, National Organization on
Disability;
Director, National Retail Federation;
Director and Chairman, Southern Methodist
University Board of Trustees;
Director, Warner-Lambert Company;
Director, The Williams Companies, Inc.
Hermann-Josef Lamberti Member, Board of Managing Directors
Deutsche Bank A.G. Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
John A. Ross Regional Chief Executive Officer
Deutsche Bank A.G. Deutsche Bank Americas Holding Corp.
31 West 52nd Street
New York, NY 10019
Ronaldo H. Schmitz Member, Board of Managing Directors
Deutsche Bank A.G. Deutsche Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
10
<PAGE>
In addition to serving as investment adviser to the Fund, Bankers Trust
also serves as administrator, transfer agent and custodian of the Fund. These
services will continue to be provided by Bankers Trust after approval of the New
Advisory Agreements(3).
MGI. MGI is a corporation organized under the laws of the State of
Delaware and is a registered investment adviser under the Advisers Act. It is
located at 885 Third Avenue, 32nd Floor, New York, NY 10022. MGI provides a full
range of investment advisory services to institutional clients. MGI serves as
investment adviser to 10 other investment companies and as subadviser to 5 other
investment companies. MGI is a subsidiary of Morgan Grenfell Asset Management
Ltd. ("MGAM") located at 20 Finsbury Circus, London, England, a wholly owned
subsidiary of Deutsche Morgan Grenfell Group PLC, located at 23 Great Winchester
Street, London, England, an investment holding company which is, in turn, a
wholly owned subsidiary of Deutsche Bank. MGAM currently manages approximately
$16.5 billion for a wide range of pension, corporate, insurance, local
authority, government and private clients worldwide. (See Annex II for a list of
those investment companies that MGI advises that have investment objectives
similar to those of the Fund, together with the information regarding the fees
charged to those companies.)
The names, business addresses and principal occupations of the current
directors and chief executive officer of MGI are set forth below. Except as
otherwise indicated, the business address of the individuals named below is 885
Third Avenue, 32nd Floor, New York, NY 10022 and their positions at MGI
constitute their principal occupation.
NAME AND ADDRESS PRINCIPAL OCCUPATION
Richard Marin President and Director, Morgan
280 Park Avenue Grenfell Inc.; Managing
New York, NY 10017 Director, Deutsche Bank, A.G.
David Westover Baldt Executive Vice President and
Director, Morgan Grenfell Inc.
Joan A. Binstock Chief Operating Officer,
Secretary, Treasurer, and
Director, Morgan Grenfell Inc.
Audrey Mary Theresa Jones Executive Vice President,
Portfolio Manager and
Director, Morgan Grenfell Inc.
Robert H. Smith Chairman and Director, Morgan
Grenfell Inc.; Chief Executive
Officer, Morgan Grenfell Asset
Management; Chairman and Chief
Executive Officer, Morgan
Grenfell Development Capital
(3) Because the Fund opened to investors on March 29, 1999, the Fund has not
had a full fiscal year and the Trust has not yet made payments to Bankers
Trust for these services for the Fund.
11
<PAGE>
NAME AND ADDRESS PRINCIPAL OCCUPATION
Steven Schneider Managing Director, Deutsche
280 Park Avenue Bank A.G.
New York, NY 10017
Section 15(f) of the Act
Section 15(f) of the Act provides that when a change of control of an
investment adviser to an investment company occurs, the investment adviser or
any of its affiliated persons may receive an amount or benefit in connection
therewith as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the change of control, or any express or
implied terms, conditions or understandings applicable thereto. As defined in
the Act, the term "unfair burden" includes any arrangement during the two (2)
year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any "interested person" (as defined in the
Act) of such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its security holders
(other than fees for bona fide investment advisory or other services), or from
any person in connection with the purchase or sale or other property to, or on
behalf of the investment company (other than fees for bona fide brokerage and
principal underwriting services). The Fund's Board has not been advised by the
Advisers of any circumstances arising from the Merger that might result in an
unfair burden being imposed on the Fund.
The second condition is that, during the three (3) year period immediately
following the Merger, at least 75% of the members of the Fund's Board must not
be "interested persons" of the Advisers within the meaning of the Act. All
current members of the Board are not, and have continued not to be since the
Merger, "interested persons" of the Advisers.
Additional Information
On March 11, 1999, Bankers Trust announced that it had reached an
agreement with the United States Attorney's Office in the Southern District of
New York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record-keeping problems that occurred between 1994
and early 1996. 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 or mutual fund management activities of Bankers Trust or its
affiliates.
As a result of the plea, absent an order from the Commission, Bankers
Trust would not be able to continue to provide investment advisory services to
the Fund. The Commission has granted Bankers Trust a temporary order under
Section 9(c) of the Act to permit Bankers Trust and its affiliates to continue
to provide investment advisory services to registered investment companies, and
Bankers Trust, pursuant to Section 9(c) of the Act, has filed an application for
a permanent order. On May 7, 1999, the Commission extended the temporary order
under Section 9(c) of the Act until the Commission takes final action on the
application for a permanent order or, if earlier, November 8, 1999. However,
there is no assurance that the Commission will grant a permanent order. If the
Commission refuses to grant a permanent order, shareholders will receive
supplemental proxy materials
12
<PAGE>
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.
Recommendation of the Board
At a meeting of the Board held on March 8, 1999 called for the purpose of,
among other things, voting on approval of the New BT Advisory Agreement, the
Board, including the Independent Trustees, unanimously approved the New BT
Advisory Agreement. In reaching this conclusion, the Board obtained from BT
Corporation, Deutsche Bank and Bankers Trust such information as they deemed
reasonably necessary to approve Bankers Trust as investment adviser to the
Trust. Additionally, the Board considered a number of factors, including, among
other things, the continuity of the management of the Trust after the Merger;
the nature, scope and quality of services that Bankers Trust would likely
provide to the Fund; the quality of the personnel of Bankers Trust; Bankers
Trusts' commitment to continue to provide these services in the future; the
maintenance of the identical advisory fee rates; and the fact that the New BT
Advisory Agreement contains substantially the same terms and conditions as the
Prior Advisory Agreement. Based on the factors discussed above and others, the
Board determined that the New BT Advisory Agreement is fair and reasonable and
in the best interest of the Fund and its Shareholders.
At meetings of the Board held on July 15 and July 27, 1999 called for the
purpose of, among other things, voting on approval of the New MGI Advisory
Agreement and the New Sub-advisory Agreement, a majority of the Board, including
the Independent Trustees, approved the New MGI Advisory Agreement and the New
Sub-advisory Agreement. In reaching this conclusion, the Board obtained from
Deutsche Bank and MGI such information as they deemed reasonably necessary to
approve MGI as investment advisers to the Fund. Representatives of Deutsche Bank
and MGI made detailed presentations at the July 15th and July 27th meetings with
respect to, among other factors, the organizational structure, assets under
management, asset management service, financial conditions and business plan of
MGI. The Board considered the same factors considered above for the New BT
Advisory Agreement with regard to the New MGI Advisory Agreement and the New
Sub-advisory Agreement. The Board also considered a number of other factors,
including the capacity of MGI to perform its duties under the New Advisory
Agreements; the high degree of continuity of management expected, as a
substantial proportion of management personnel of Bankers Trust who provided
services under the Prior Management Agreement will be employed by MGI; the
financial standing of Deutsche Bank and MGI; the benefit to the Fund and the
Trust from technological advances being instituted by Deutsche Bank on a
world-wide basis; the experience and expertise of MGI as an investment adviser,
as reflected in its amount of assets under management; and the new
organizational structure proposed to be created as a component of the Merger and
the benefits that may accrue to the shareholders as a result thereof. With
respect to the last factor, the Board considered that the proposed
organizational structure may simplify the organizational structure of Deutsche
Bank's U.S. mutual fund operations, enhance the efficiency of their
administration and promote consistency of internal controls, compliance and
regulatory oversight. Additionally, the eventual implementation of the New MGI
Advisory Agreement will provide the Fund and the Trust with an investment
adviser registered under the Advisers Act.
The Board was apprised that the deferral in implementing the New MGI
Advisory Agreement is needed to permit Deutsche Bank a sufficient amount of time
to plan, prepare and institute the necessary arrangements for MGI to consolidate
Deutsche Bank's U.S. mutual fund operations. The Advisers also emphasized to the
Board that the New MGI Advisory Agreement and the New Sub-advisory Agreement
would be implemented only upon the approval of the Trust's Independent Trustees
based on information they then deemed necessary to consider adequately these
arrangements. At the July 27th meeting of the
13
<PAGE>
Board a majority of the Board, including the Independent Trustees, approved the
New MGI Advisory Agreement and the New Sub-advisory Agreement.
Based on the factors discussed above and others, the Board determined that
the New MGI Advisory Agreement and the New Sub-advisory Agreement are fair and
reasonable and in the best interests of the shareholders.
In addition, at meetings held on March 24 and April 21, 1999 the Board,
including the Independent Trustees, also were apprised of the guilty pleas
discussed above and the exemptive relief sought by Bankers Trust.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE "FOR"
THE APPROVAL OF THE NEW ADVISORY AGREEMENT AS SET FORTH IN THESE PROPOSALS.
IF THE NEW BT ADVISORY AGREEMENT IS APPROVED BY THE SHAREHOLDERS, IT WILL
CONTINUE IN EFFECT AS DESCRIBED ABOVE. IF THE NEW BT ADVISORY AGREEMENT IS NOT
APPROVED BY THE SHAREHOLDERS, THE ADVISORY FEES HELD IN ESCROW WITH RESPECT TO
THE NEW BT ADVISORY AGREEMENT WILL BE PAID OVER TO THE TRUST. IN SUCH EVENT, THE
BOARD WILL CONSIDER WHAT OTHER ACTION IS APPROPRIATE BASED UPON THE INTERESTS OF
THE SHAREHOLDERS. IF THE NEW MGI ADVISORY AGREEMENT AND/OR THE NEW SUB-ADVISORY
AGREEMENT ARE NOT APPROVED BY THE SHAREHOLDERS, THE NEW BT ADVISORY AGREEMENT,
IF IT HAS BEEN APPROVED BY THE SHAREHOLDERS, WILL CONTINUE IN EFFECT IN
ACCORDANCE WITH ITS TERMS WHILE THE BOARD CONSIDERS WHETHER AND THE EXTENT TO
WHICH OTHER ACTION IS APPROPRIATE BASED UPON THE INTERESTS OF THE SHAREHOLDERS.
14
<PAGE>
PROPOSAL II
ELECTION OF BOARD OF TRUSTEES OF THE TRUST
Trustees constituting the entire Board of Trustees of the Trust are to be
elected at the Special Meeting to serve until their successors have been duly
elected and qualified or until their earlier resignation or removal. The Trustee
Nominees were recently selected by the Independent Trustees and nominated by the
full Board at a meeting held on July 27, 1999.4 The names and ages of the
Trustee Nominees, their principal occupations during the past five years and
certain of their other affiliations are provided below. Of the Trustee Nominees,
S. Leland Dill and Philip Saunders, Jr. are currently Trustees of the Trust. No
Trustee or Trustee Nominee of the Trust serves or will serve as an officer of
the Trust. Each of the Trustee Nominees has agreed to serve if elected at the
Special Meeting. It is the intention of the persons designated as proxies in the
Proxy, unless otherwise directed therein, to vote at the Special Meeting for the
election of the Trustee Nominees named below as the entire Board of Trustees of
the Trust. If any Trustee Nominee is unable or unavailable to serve, the persons
named in the Proxies will vote the Proxies for such other person as the Board
may recommend.
The following table sets forth the names, ages, position with the Trust,
and principal occupation of each Trustee Nominee:
TRUSTEE NOMINEES
<TABLE>
<CAPTION>
Name and Age Position with Trust Principal Occupations During Last Five Years
- ----------------- ------------------- -------------------------------------------------
<S> <C> <C>
Charles P. Biggar(1) Retired; formerly, Vice President of International
Age: 68 Business Machines ("IBM") and President of the
National Services and Field Engineering Divisions
of IBM.
S. Leland Dill+ Trustee of Trust Retired; Director, Coutts (U.S.A.) International;
Age: 69 since 1986 Director, Phoenix-Zweig Trust(4) and Phoenix-Euclid
Market Neutral Fund(4); former Partner of KPMG Peat
Marwick; Director, Vintners International Company
Inc.; Director, Coutts Trust Holdings Ltd.;
Director, Coutts Group; General Partner, Pemco(3)
Martin J. Gruber(2) Nomura Professor of Finance, Leonard N. Stern
Age: 62 School of Business, New York University (since
1964); Trustee, TIAA(4); Trustee, SG Cowen Mutual
Funds(4); Trustee, Japan Equity Fund(4); Trustee,
Taiwan Equity Fund(4).
Richard Hale* Managing Director, Deutsche Asset
Age: 54 Management; Director, Flag Investors Fund(4);
Managing Director, BT Alex. Brown Incorporated;
Director and President, Investment Company
Capital Corp.
Richard J. Herring(2) Jacob Safra Professor of International Banking,
Age: 53 Professor of Finance and Vice Dean, The Wharton
School, University of Pennsylvania (since 1972).
</TABLE>
(4) If the shareholders approve conversion of the Fund to a master-feeder fund
structure, as set forth in Proposal III, the Fund, upon conversion, will
feed into a master fund, whose Board will be identical in composition to
the proposed Board of the Trust.
15
<PAGE>
TRUSTEE NOMINEES
<TABLE>
<CAPTION>
Name and Age Position with Trust Principal Occupations During Last Five Years
- ----------------- ------------------- -------------------------------------------------
<S> <C> <C>
Bruce E. Langton(2) Retired; Trustee, Allmerica Financial Mutual Funds
Age: 68 (1994 to present); Member, Pension & Thrift Plans
and Investment Committee, Unilever U.S. Corporation
(1989 to present)(3); Director, TWA Pilots Directed
Account Plan and 401K Plan (1988 to present)(4).
Philip Saunders, Jr.+ Trustee of Trust Principal, Philip Saunders Associates (Economic and
Age: 63 since 1986 Financial Analysis); Former Director, Financial
Industry Consulting, Wolf and Company; President,
John Hancock Home Mortgage Corporation; Senior Vice
President of Treasury and Financial Services, John
Hancock Mutual Life Insurance Company, Inc.
Harry Van Benschoten(2) Retired; Director, Canada Life Insurance
Age: 71 Corporation of New York.
</TABLE>
- -------------------------
* "Interested Person" within the meaning of Section 2(a)(19) of the Act. Mr.
Hale is a Managing Director of Deutsche Asset Management, the U.S. asset
management unit of Deutsche Bank and its affiliates.
+ Member of the Audit Committee.
(1) Holds one other trusteeship in the Bankers Trust Fund Complex, as defined
herein.
(2) Holds two other trusteeships in the Bankers Trust Fund Complex, as defined
herein.
(3) A publicly held company with securities registered pursuant to Section 12 of
the Exchange Act.
(4) An investment company registered under the Act.
The Board has established an Audit Committee that meets with the Trust's
independent accountants to review the financial statements of the Trust, the
adequacy of internal controls and the accounting procedures and policies of the
Trust, and reports on these matters to the Board. The Independent Trustees, who
constitute 100% of the membership of the current Board, select and nominate the
new trustee nominees who are not "interested persons," as defined under the Act,
of the Trust. The Board does not have compensation committees. During 1998, the
Board held six meetings and the Audit Committee held two meetings. No Trustee
attended less than 75% of the applicable meetings.(5)
If Richard Hale is elected, he will not be a member of the Audit
Committee.
The following table sets forth the compensation received by the Trustee
Nominees for their services to the Trust and Bankers Trust Fund Complex (as
defined below) during the calendar year ended December 31, 1998. In addition to
the fees listed below, the Trustees are also reimbursed for all reasonable
expenses incurred during the execution of their duties for the Trust and Bankers
Trust Fund Complex.(6)
(5) The Fund was organized on December 9, 1998 by the Board. No other
decisions were made by the Board regarding the Fund during 1998.
(6) The compensation paid by the Trust in 1998 to the Trustee Nominees was
not for services rendered to the Fund, as the Fund had no assets in
1998.
16
<PAGE>
- ---------------------------------------------------------------------------
Pension or Estimated
Aggregate Retirement Annual Total
Compensation Benefits Accrued Benefits Compensation
from the as Part of Trust upon From the Complex
Name of Trustee Trust Expenses Retirement Paid to Trustees
- ---------------------------------------------------------------------------
Charles S. Biggar N/A N/A N/A $36,250
- ---------------------------------------------------------------------------
S. Leland Dill $14,485 N/A N/A $36,250
- ---------------------------------------------------------------------------
Martin J. Gruber N/A N/A N/A $36,250
- ---------------------------------------------------------------------------
Richard Hale N/A N/A N/A N/A
- ---------------------------------------------------------------------------
Richard J.Herring N/A N/A N/A $35,000
- ---------------------------------------------------------------------------
Bruce E. Langton N/A N/A N/A $35,000
- ---------------------------------------------------------------------------
Philip Saunders, Jr. $14,582 N/A N/A $36,250
- ---------------------------------------------------------------------------
Harry Van Benschoten N/A N/A N/A $36,250
- ---------------------------------------------------------------------------
- ------------------
* The "Bankers Trust Fund Complex" consists of the Trust and BT Institutional
Funds, BT Pyramid Mutual Funds, BT Advisor Funds and BT Insurance Funds Trust
(collectively, the "BT Funds"), as well as the portfolios into which those
series of the BT Funds which have a master-feeder fund structure invest.
The following table sets forth the names, ages, position with the Trust
and length of service in such position, and principal occupations during the
past five years, of the officers of the Trust.
<TABLE>
<CAPTION>
<S> <C>
Name and Age Position with Trust and Principal Occupations
- --------------- ---------------------------------------------
John A. Keffer President and Chief Executive Officer
Age: 56 since 1998; President, Forum Financial
Group L.L.C. and its affiliates;
President, ICC Distributors, Inc.*
Daniel O. Hirsch Secretary since 1998; Director,
Age: 45 Deutsche Asset Management
since 1999; Director, BT Alex. Brown
Incorporated and Investment Company
Capital Corporation, 1998-99;
Associate General Counsel, Office of
General Counsel, United States
Securities and Exchange Commission,
1993-1998.
Charles Rizzo Treasurer since 1999; [TO COME]
Age: [ ]
</TABLE>
- ------------------
* Underwriter/distributor for the Trust. Mr. Keffer owns 100% of the
shares of ICC Distributors, Inc.
Recommendation of the Board
At a meeting of the Board held on July 27, 1999, a majority of the Board,
based on a recommendation of the incumbent Independent Trustees, unanimously
approved the nomination of the Trustee Nominees. In reaching this conclusion,
the Board obtained from the Trustee Nominees such information as they deemed
reasonably necessary to approve the Trustee Nominees and considered a number of
factors, including, among other things: the nature, scope and quality of
services that the
17
<PAGE>
Trustee Nominees would likely provide to the Trust and the desirability of
maintaining compliance with Section 15(f) of the Act. Based on the factors
discussed above and others, the Board determined that the election of the
Trustee Nominees is in the best interest of the Trust and its shareholders.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMEND THAT THE SHAREHOLDERS OF THE TRUST VOTE "FOR"
THE ELECTION OF THE TRUSTEE NOMINEES AS SET FORTH IN THIS PROPOSAL.
IF THE TRUSTEE NOMINEES ARE ELECTED BY THE APPLICABLE SHAREHOLDERS, EACH
TRUSTEE NOMINEE WILL SERVE UNTIL HIS SUCCESSOR IS DULY ELECTED AND QUALIFIED OR
UNTIL HIS EARLIER RESIGNATION OR REMOVAL. IF THE TRUSTEE NOMINEES ARE NOT
ELECTED, THE BOARD WILL CONSIDER WHAT ACTION IS APPROPRIATE BASED UPON THE
INTERESTS OF THE TRUST'S SHAREHOLDERS.
18
<PAGE>
PROPOSAL III
APPROVAL OF A MASTER-FEEDER FUND STRUCTURE FOR THE FUND
The Board, including the Independent Trustees, has approved, subject to
shareholder approval, the conversion of the structure of the Fund from that of a
stand-alone fund to a master-feeder fund structure. A master-feeder fund
structure is an arrangement whereby funds of several investment companies (the
"Feeder Funds") with different shareholder-related features and distribution
policies, but having substantially the same investment objectives, policies and
restrictions, combine their investments by investing all of their investable
assets in the same master fund (the "Master Fund"), which Master Fund will have
the same investment objectives, policies and restrictions as the Feeder Funds.
Accordingly, by investing in a Master Fund, a Feeder Fund would continue to
pursue its investment objectives and policies in substantially the same manner
as before, except that it would do so through its investment in the Master Fund
rather than directly. The Master Fund, whose shares may be offered to
institutional investors in addition to being offered to Feeder Funds, invests
directly in the same type of investment securities and other investments in
which the Feeder Funds would have invested directly. The expense ratios, yields
and total returns of other investors in the Master Fund may be different from
those of the Fund due to differences in expenses.
A purpose of a master-feeder fund arrangement is to achieve operational
efficiencies through economies of scale, assuming that the assets of the Master
Fund are greater than the assets of any individual Feeder Fund, by achieving a
lower ratio of operating expenses to net assets. There can be no assurance that
such economies of scale will be realized, however.
The master-feeder fund structure approved by the Board and submitted to
the shareholders for approval would permit the Fund to invest all of its
investable assets in the Quantitative Equity Portfolio (the "Portfolio"). The
Portfolio will be organized as a separate series of BT Investment Portfolios, an
open-end management investment company established as a trust under the laws of
the State of New York. The Portfolio will have substantially the same investment
objectives, policies and restrictions as the Fund.
If Proposal III is approved by the shareholders, the Fund would convert to
the master-feeder fund structure by exchanging all of its investable assets for
an interest in the Portfolio, which Portfolio interest would have the same net
asset value as the value of the assets transferred. The value of a shareholder's
investment in the Fund will be the same immediately after the Fund's investment
in the Portfolio as immediately before that investment. (Of course, the value of
a shareholder's investment in the Fund may fluctuate thereafter.)
If the Fund is converted to a master-feeder structure, the Fund's voting
rights with respect to the Portfolio interest it would hold would be passed
through to the Fund's own shareholders, pursuant to the requirements of the Act
applicable to master-feeder arrangements.
If the shareholders of the Fund approve Proposal III, the Fund would
receive the same administrative and distribution services under the
master-feeder fund structure at the same fees as are currently provided to the
Fund. If in addition the shareholders of the Fund approve Proposals IA, IB and
IC, the Fund would receive the same investment advisory services at the same fee
rates under the New Advisory Agreements as are currently contemplated for the
Fund; the New Advisory Agreements would, however, be between the applicable
Adviser and the Portfolio, rather than the Trust. (If the shareholders of the
Fund approve Proposal III but not Proposals IA, IB or IC, the Board of the Trust
19
<PAGE>
and the Board of the Portfolio will consider what other action is appropriate,
as indicated in the discussion of Proposals IA, IB and IC.) The current
composition of the Board of the Fund and the outcome of Proposal II, concerning
the election of the Trustee Nominees, would not be altered in any way by
conversion to a master-feeder fund structure. The outcome of Proposal IV
concerning ratification of the independent accountants of the Fund would not be
altered in any way by conversion of the Fund to a master-feeder fund structure.
The Fund may withdraw its investment in the Portfolio at any time if the
Board determines that it is in the best interest of the shareholders of the Fund
to do so or if the investment objectives, policies or restrictions of the
Portfolio changed so that they were inconsistent with the investment objectives,
policies or restrictions of the Fund. Upon any such withdrawal, the Board would
consider what other action might be taken, including the investment of the
investable assets of the Fund in another Master Fund or the retaining of an
investment adviser to directly invest the Fund's assets in accordance with the
Fund's investment objectives, policies and restrictions.
Under the Trust's Declaration of Trust, a shareholder vote is required to
sell or transfer substantially all of the assets of the Fund. As conversion to a
master-feeder fund structure contemplates an exchange of the Fund's investable
assets for an interest in the Portfolio, as described above, this conversion
requires, under a conservative interpretation of the Trust's Declaration of
Trust, the affirmative vote of a majority of the votes cast in person or by
proxy at the Special Meeting for the Fund.
At a meeting of the Board held on July 27, 1999 a majority of the Board,
including the Independent Trustees, approved (subject to shareholder approval)
the conversion of the Fund from a stand-alone fund structure to a master-feeder
fund structure. In reaching this conclusion, the Board considered a number of
factors, including the operational efficiencies expected to be obtained by
achieving structural consistency with the other series in the Trust (all of
which presently operate as master-feeder funds); the fees paid by the Trust for
the advisory, administrative and distributive services provided to the Fund
would remain the same; the economies of scale that may be realized through
conversion to a master-feeder fund structure; and the opportunity that the
conversion provides to pursue additional distribution outlets for the Fund.
Based on the factors discussed above and others, the Board determined that the
conversion of the Fund to a master-feeder fund structure is in the best interest
of the Fund and its shareholders.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE TRUST VOTE "FOR"
THE CONVERSION OF THE FUND TO A MASTER-FEEDER FUND STRUCTURE AS SET FORTH IN
THIS PROPOSAL.
IF THE CONVERSION OF THE FUND TO A MASTER-FEEDER FUND STRUCTURE IS
APPROVED, THE BOARD WILL PROCEED TO INVEST ALL OF THE INVESTABLE ASSETS OF THE
FUND IN THE PORTFOLIO, AS DESCRIBED ABOVE. IF THE CONVERSION OF THE FUND TO A
MASTER-FEEDER FUND STRUCTURE IS NOT APPROVED, THE BOARD WILL CONSIDER WHETHER
ANY OTHER ACTION IS APPROPRIATE IN THE INTERESTS OF THE SHAREHOLDERS.
20
<PAGE>
PROPOSAL IV
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS FOR THE FUND
The Board, including a majority of the Independent Trustees, has approved
the selection of PricewaterhouseCoopers LLP to serve as independent accountants
for the Fund for the current fiscal year. PricewaterhouseCoopers LLP has served
as independent accountants of the Fund since the date of the Fund's inception
and has advised the Trust that they have no direct or indirect financial
interest in the Fund. Representatives of PricewaterhouseCoopers LLP are not
expected to be present at the Special Meeting and, thus, are not expected to
make a statement; however, one or more representatives will be available by
telephone to respond to appropriate questions posed by shareholders or
management.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE TRUST VOTE "FOR"
THE RATIFICATION OF THE INDEPENDENT ACCOUNTANTS AS SET FORTH IN THIS PROPOSAL.
21
<PAGE>
VOTE REQUIRED
Approval of Proposals IA, IB and IC with respect to the Fund's New
Advisory Agreements requires the affirmative vote of a "majority" of the
outstanding shares of the Fund. "Majority" (as defined in the Act) means (as of
the Record Date) the lesser of (a) 67% or more of the shares of the Fund present
at the special meeting, if the holders of more than 50% of the outstanding
shares of the Fund are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Fund present and voting at the special meeting.
Because abstentions and broker non-votes are treated as shares present but not
voting, any abstentions and broker non-votes will have the effect of votes
against Proposal IA, IB and IC, which requires the approval of a specified
percentage of the outstanding shares of the Fund.
Approval of Proposal II with respect to the Trustee Nominees requires the
affirmative vote of a plurality of the votes cast in person or by proxy at the
Special Meeting. Because abstentions and broker non-votes are not treated as
shares voted, abstentions and broker non-votes will have no impact on Proposal
II.
Approval of Proposal III with respect to the conversion of the Fund's
structure to a master-feeder structure requires the affirmative vote of a
majority of the votes cast in person or by proxy at the Special Meeting. Because
abstentions and broker non-votes are not treated as shares voted, abstentions
and broker non-votes will have no impact on Proposal III.
Approval of Proposal IV with respect to the selection of the independent
accountants of the Fund requires the affirmative vote of a majority of the votes
cast in person or by proxy at the Special Meeting for the Fund. Because
abstentions and broker non-votes are not treated as shares voted, abstentions
and broker non-votes will have no impact on Proposal IV.
- --------------------------------------------------------------------------------
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE SHAREHOLDERS
VOTE "FOR" APPROVAL OF PROPOSALS IA, IB, IC, II, III AND IV. ANY UNMARKED
PROXIES WILL BE SO VOTED.
- --------------------------------------------------------------------------------
The Board is not aware of any other matters that will come before the
Special Meeting. Should any other matter properly come before the Special
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote the Proxy in accordance with their judgment on such matters.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund does not hold regular shareholders' meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the Trust at the address set forth on the cover of this Proxy Statement.
Proposals must be received at a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the materials for the
Fund's meeting. Timely submission of a proposal does not, however, necessarily
mean that such proposal will be included.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
22
<PAGE>
Shareholders holding at least 10% of the Fund's outstanding voting
securities (as defined in the Act) may require the calling of a meeting of
shareholders for the purpose of voting on the removal of any Trustee of the
Fund. Meetings of shareholders for any other purpose also shall be called by the
Board when requested in writing by shareholders holding at least 10% of the
shares then outstanding.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES
TO BE FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT SHAREHOLDER
COMMUNICATIONS CORPORATION AT 1-800-732-6168.
- --------------------------------------------------------------------------------
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING AND WHO
WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, UNLESS THEY ARE
VOTING BY TELEPHONE OR THROUGH THE INTERNET.
- --------------------------------------------------------------------------------
By Order of the Board of Trustees,
Daniel O. Hirsch, Secretary
August 23, 1999
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES OF THE TRUST HOPES THAT SHAREHOLDERS WILL ATTEND
THE SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE (UNLESS YOU ARE VOTING BY TELEPHONE
OR THROUGH THE INTERNET).
- --------------------------------------------------------------------------------
23
<PAGE>
Annex I
SHARES
BENEFICIALLY PERCENT OWNERSHIP
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF OUTSTANDING SHARES
- ------------------------------------ ------------- ----------------------
(i) 5% Shareholders
BT Alex Brown Inc. 21,910.6050 36.33%
FBO 200-90001-14
PO Box 1346
Baltimore, MD 21203-1346
Jeremiah H. Chafkin 10,915.4250 18.10%
315 Pondfield Rd
Bronxville, NY 10708-49224
Ross C. Youngman 10,171.4650 16.87%
155 W 68th Street Apt 930
New York, NY 10023-5815
Merrilee M. Langton 6,463.5270 10.72%
99 Jordan Ln
Stamford, CT 06903-3915
Sid Hoots 5,000.0000 8.29%
301 E 22nd St. Apt 11F
New York, NY 10010-4822
BT Alex Brown Inc. 5,000.0000 8.29%
FBO 201-93658-12
PO Box 1346
Baltimore, MD 21203-1346
Strafe & Co. 4,633.9200 7.68%
FAO Newman Allen Self Directed
IRA A/C 2610109600
PO Box 160
Westerville, OH 43086-0160
(ii) Trustees and Trustee Nominees *
Charles S. Biggar *
S. Leland Dill *
Martin J. Gruber *
Richard Hale *
Richard J. Herring *
Bruce E. Langton *
Philip Saunders, Jr. *
Harry Van Benschoten *
(iii) Executive Officers *
John A. Keffer *
<PAGE>
Daniel O. Hirsch *
Charles Rizzo *
(iv) Trustees and Executive Officers *
as a Group
* The Trustees, the Trustee Nominees, the executive officers of the Trust and
the Trustees and executive officers as a group own less than 1% of the
Fund's outstanding shares.
2
<PAGE>
Annex II
I. BANKERS TRUST
[TO COME]
<PAGE>
II. MORGAN GRENFELL, INC.
[TO COME]
<PAGE>
EXHIBIT A
[FORM OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENT]
AGREEMENT made as of [_________________] by and between [Trust Name], a
(state of organization) (herein called the "Trust") and [________________]
(herein called the "Investment Adviser") [and [______________] (herein called
the "Investment Subadviser")].
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940;
WHEREAS, the Trust desires to retain the Investment Adviser to render
investment advisory and other services to the Trust with respect to certain of
its series of shares of beneficial interests as may currently exist or be
created in the future (each, a "Fund") as listed on Exhibit A hereto, and the
Investment Adviser is willing to so render such services on the terms
hereinafter set forth;
[WHEREAS, the Investment Adviser desires to retain the Investment
Subadviser to perform certain of the Investment Adviser's duties under this
Agreement, and the Investment Subadviser is willing to so render such services
on the terms hereinafter set forth;]
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the promises and mutual covenants herein contained, it
is agreed between the parties hereto as follows:
1. Appointment. The [Trust] [Investment Adviser] hereby appoints the
[Investment Adviser] [Investment Subadviser] to act as [investment adviser]
[investment subadviser] to each Fund for the period and on the terms set forth
in this Agreement. The [Investment Adviser] [Investment Subadviser] accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Management. Subject to the supervision of the [Board of Trustees of the
Trust] [Investment Adviser], the [Investment Adviser] [Investment Subadviser]
will provide a continuous investment program for the Fund, including investment
research and management with respect to all securities, investments, cash and
cash equivalents in the Fund. The [Investment Adviser] [Investment Subadviser]
will determine from time to time what securities and other investments will be
purchased, retained or sold by each Fund. The [Investment Adviser] [Investment
Subadviser] will provide the services rendered by it hereunder in accordance
with the investment objective(s) and policies of each Fund as stated in the
Fund's then-current prospectus and statement of additional information (or the
Fund's then current registration statement on Form N-1A as filed with the
Securities and Exchange Commission (the "SEC") and the then-current offering
memorandum if the Fund is not registered under the Securities Act of 1933, as
amended ("1933 Act"). The [Investment Adviser] [Investment Subadviser] further
agrees that:
(a) it will conform with all applicable rules and regulations of the SEC (herein
called the "Rules") and with all applicable provisions of the 1933 Act; as
amended, the Securities Exchange Act of 1934, as amended (the "1934 Act"), the
Investment Company Act of 1940, as amended (the "1940 Act"); and the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), and will, in addition,
conduct its activities under this Agreement in accordance with applicable
regulations of the Board of Governors of the Federal Reserve System pertaining
to the investment advisory activities of bank holding companies and their
subsidiaries;
<PAGE>
(b) it will place orders pursuant to its investment determinations for each Fund
either directly with the issuer or with any broker or dealer selected by it. In
placing orders with brokers and dealers, the [Investment Adviser] [Investment
Subadviser] will use its reasonable best efforts to obtain the best net price
and the most favorable execution of its orders, after taking into account all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. Consistent with this
obligation, the [Investment Adviser] [Investment Subadviser] may, to the extent
permitted by law, purchase and sell portfolio securities to and from brokers and
dealers who provide brokerage and research services (within the meaning of
Section 28(e) of the 1934 Act) to or for the benefit of any fund and/or other
accounts over which the [Investment Adviser] [Investment Subadviser] or any of
its affiliates exercises investment discretion. Subject to the review of the
[Trust's Board of Trustees] [Investment Adviser] from time to time with respect
to the extent and continuation of the policy, the [Investment Adviser]
[Investment Subadviser] is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for effecting a securities
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the [Investment
Adviser] [Investment Subadviser] determines in good faith that such 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 overall responsibilities of the [Investment Adviser]
[Investment Subadviser] with respect to the accounts as to which it exercises
investment discretion; and
(c) it will maintain books and records with respect to the securities
transactions of each Fund and will render to the [Trust's Board of Trustees]
[Investment Adviser] such periodic and special reports as the Board may request.
3. [Subject to the provisions of this Agreement, the duties of the
Investment Subadviser, the portion of portfolio assets that the Subadviser shall
manage, and the fees to be paid the Investment Subadviser by the Investment
Adviser under and pursuant to this Agreement may be adjusted from time to time
by the Investment Adviser with and upon the approval of the Board and the
members of the Trust's Board of Trustees who are not "interested persons," as
defined in the Act ](1).
4. Services Not Exclusive. The investment advisory services rendered by
the [Investment Adviser] [Investment Subadviser] hereunder are not to be deemed
exclusive, and the [Investment Adviser] [Investment Subadviser] shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3 of
the Rules under the 1940 Act, the [Investment Adviser] [Investment Subadviser]
hereby agrees that all records which it maintains for the Trust are the property
of the Trust and further agrees to surrender promptly to the [Trust] [Investment
Adviser] any of such records upon request of the [Trust] [Investment Adviser].
The [Investment Adviser] [Investment Subadviser] further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records required to
be maintained by Rule 31a-1 under the 1940 Act and to comply in full with the
requirements of Rule 204-2 under the Advisers Act pertaining to the maintenance
of books and records.
6. Expenses. During the term of this Agreement, the [Investment Adviser]
[Investment Subadviser] will pay all expenses incurred by it in connection with
its activities under this Agreement other than the cost of purchasing securities
(including brokerage commissions, if any) for the Fund.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, [_________] will pay the [Investment Adviser]
(1) Provision contained in the form of Investment Subadvisory Agreement only.
2
<PAGE>
[Investment Subadviser], and the [Investment Adviser] [Investment Subadviser]
will accept as full compensation therefor, fees, computed daily and payable
monthly, on an annual basis equal to the percentage set forth on Exhibit A
hereto of that Fund's average daily net assets.
8. Limitation of Liability of the [Investment Adviser] [Investment
Subadviser]: Indemnification.
(a) The [Investment Adviser] [Investment Subadviser] shall not be liable for any
error of judgment or mistake of law or for any loss suffered by a Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the [Investment Adviser] [Investment
Subadviser] in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement;
(b) Subject to the exceptions and limitations contained in Section 7(c) below:
(i) the [Investment Adviser] [Investment Subadviser]
(hereinafter referred to as a "Covered Person") shall be indemnified by the
respective Fund to the fullest extent permitted by law, against liability and
against all expenses reasonably incurred or paid by him in connection with any
claim, action, suit or proceeding in which he becomes involved, as a party or
otherwise, by virtue of his being or having been the [Investment Adviser]
[Investment Subadviser] of the Fund, and against amounts paid or incurred by him
in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or thereafter,
and the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties
and other liabilities.
(c) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the [Trust] [Investment
Adviser] or to one or more Funds' investors by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office, or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of a Fund; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office;
(A) by the court or other body approving the settlement; or
(B) by at least a majority of those Trustees who are neither Interested Persons
of the Trust nor are parties to the matter based upon a review of readily
available facts (as opposed to a full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry); provided,
however, that any investor in a Fund may, by appropriate legal proceedings,
challenge any such determination by the Trustees or by independent counsel.
(d) The rights of indemnification herein provided may be insured against by
policies maintained by the [Trust] [Investment Adviser], shall be severable,
shall not be exclusive of or affect any other rights to which any Covered Person
may now or hereafter be entitled, shall continue as to a person who has ceased
to be a Covered Person and shall inure to the benefit of the successors and
assigns of such person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel and any other persons, other than a
3
<PAGE>
Covered Person, may be entitled by contract or otherwise under law.
(e) Expenses in connection with the preparation and presentation of
a defense to any claim, suit or proceeding of the character described in
subsection (b) of this Section 7 may be paid by the [Trust] [Investment Adviser]
on behalf of the respective Fund from time to time prior to final disposition
thereto upon receipt of an undertaking by or on behalf of such Covered Person
that such amount will be paid over by him to the [Trust] [Investment Adviser] on
behalf of the respective Fund if it is ultimately determined that he is not
entitled to indemnification under this Section 7; provided, however, that either
(i) such Covered Person shall have provided appropriate security for such
undertaking or (ii) the [Trust] [Investment Adviser] shall be insured against
losses arising out of any such advance payments, or (iii) either a majority of
the Trustees who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts as opposed to a
trial-type inquiry or full investigation, that there is reason to believe that
such Covered Person will be entitled to indemnification under this Section 7.
9. Duration and Termination. This Agreement shall be effective as to a
Fund as of the date the Fund commences investment operations after this
Agreement shall have been approved by the Board of Trustees of the Trust with
respect to that Fund and the Investor(s) in the Fund in the manner contemplated
by Section 15 of the 1940 Act and, unless sooner terminated as provided herein,
shall continue until the second anniversary of such date. Thereafter, if not
terminated, this Agreement shall continue in effect as to such Fund for
successive periods of 12 months each, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board of Trustees of the Trust who are not parties to this Agreement or
Interested Persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or (b) by Vote of a Majority of the
Outstanding Voting Securities of the Trust; provided, however, that this
Agreement may be terminated by the Trust at any time, without the payment of any
penalty, by the Board of Trustees of the Trust, by Vote of a Majority of the
Outstanding Voting Securities of the Trust on 60 days' written notice to the
[Investment Adviser] [Investment Subadviser], or by the [Investment Adviser]
[Investment Subadviser] as to the [Trust] [Investment Adviser] at any time,
without payment of any penalty, on 90 days' written notice to the [Trust]
[Investment Adviser]. This Agreement will immediately terminate in the event of
its assignment (as used in this Agreement, the terms "Vote of a Majority of the
Outstanding Voting Securities," "Interested Person" and "Assignment" shall have
the same meanings as such terms have in the 1940 Act and the rules and
regulatory constructions thereunder.)
10. Amendment of this Agreement. No material term of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of a material term of this
Agreement shall be effective with respect to a Fund, until approved by Vote of a
Majority of the Outstanding Voting Securities of that Fund.
11. Representations and Warranties. The [Investment Adviser]
[Investment Subadviser] hereby represents and warrants as follows:
(a) [The [Investment Adviser] [Investment Subadviser] is exempt from
registration under the 1940 Act:]
(b) The [Investment Adviser] [Investment Subadviser] has all requisite authority
to enter into, execute, deliver and perform its obligations under this
Agreement;
(c) This Agreement is legal, valid and binding, and enforceable in
accordance with its terms; and
(d) The performance by the [Investment Adviser] [Investment Subadviser] of its
obligations under this Agreement does not conflict with any law to which it is
subject.
12. Covenants. The [Investment Adviser] [Investment Subadviser] hereby
covenants and agrees that, so
4
<PAGE>
long as this Agreement shall remain in effect:
(a) The [Investment Adviser] [Investment Subadviser] shall remain
either exempt from, or registered under, the registration provisions of the
Advisers Act; and
(b) The performance by the [Investment Adviser] [Investment
Subadviser] of its obligations under this Agreement shall not conflict with any
law to which it is then subject.
13. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, (a) to the Investment Adviser, Mutual Funds Services, 130 Liberty
Street (One Bankers Trust Plaza), New York, New York 10006 , [(b) to the
Subadviser, [Address] or ](c) to the Trust, c/o BT Alex. Brown, Incorporated,
One South Street, Baltimore, Maryland 21202.
14. Waiver. With full knowledge of the circumstances and the effect of its
action, the [Investment Adviser] [Investment Subadviser] hereby waives any and
all rights which it may acquire in the future against the property of any
investor in a Fund, other than shares in that Fund, which arise out of any
action or inaction of the [Trust] [Investment Adviser] under this Agreement.
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and shall be governed by the laws
of the ______________________________, without reference to principles of
conflicts of law. The Trust is organized under the laws of
_________________________________ pursuant to a ______________ dated
______________. No Trustee, officer or employee of the Trust shall be personally
bound by or liable hereunder, nor shall resort be had to their private property
for the satisfaction of any obligation or claim hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
[SIGNATORIES]
5
<PAGE>
EXHIBIT A
TO
INVESTMENT ADVISORY AGREEMENT
MADE AS OF ____________________
BETWEEN
[Trust Name] AND [______________]
Fund Investment Advisory Fee
6
<PAGE>
FORM OF PROXY CARD
<PAGE>
FORM OF PROXY CARD
<TABLE>
<CAPTION>
<S> <C>
[BANKERS TRUST LOGO] BT Investment Funds
[BT Alex.Brown] Quantitative Equity Fund
MUTUAL FUND SERVICES -- LEGAL DEPARTMENT
MS 1-18-8 One South Street
Baltimore, Maryland 21202
One South Street PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
Baltimore, Maryland 21202-3220 11:00 a.m., Eastern time, on September 22, 1999
The undersigned hereby
appoints Daniel O. Hirsch and Amy
M. Olmert and each of them, with
full power of substitution, as
proxies of the undersigned to vote
all shares of stock that the
undersigned is entitled in any
capacity to vote at the
above-stated special meeting, and
at any and all adjournments or
postponements thereof (the
"Special Meeting"), on the matters
set forth on this Proxy Card, and,
in their discretion, upon all matters
incident to the conduct of the Special
Meeting and upon such other matters as
may properly be brought before the
Special Meeting. This proxy revokes all
prior proxies given by the undersigned.
ALL PROPERLY EXECUTED
PROXIES WILL BE VOTED AS DIRECTED.
IF NO INSTRUCTIONS ARE INDICATED
ON A PROPERLY EXECUTED PROXY, THE
PROXY WILL BE VOTED FOR APPROVAL
OF PROPOSALS IA, IB, IC, II, III
AND IV. ALL ABSTAIN VOTES WILL BE
COUNTED IN DETERMINING THE
EXISTENCE OF A QUORUM AT THE
SPECIAL MEETING AND, FOR PROPOSALS
IA, IB AND IC, AS VOTES AGAINST
THE APPLICABLE PROPOSAL.
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF TRUSTEES WITH RESPECT TO YOUR
FUND. THE BOARD OF TRUSTEES RECOMMENDS A
VOTE FOR PROPOSALS IA, IB, IC, II, III
AND IV.
UNLESS VOTING BY TELEPHONE OR INTERNET,
PLEASE SIGN AND DATE BELOW AND MAIL THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
DO NOT RETURN YOUR PROXY CARD IF YOU VOTE BY
PHONE OR INTERNET.
TO VOTE, MARK BLOCKS IN BLUE OR BLACK INK AS
FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS.
</TABLE>
<PAGE>
DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
QUANTITATIVE EQUITY FUND
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND MAIL THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Joint owners should EACH sign. Please sign EXACTLY as your name(s) appears on
this card. When signing as attorney, trustee, executor, administrator, guardian
or corporate officer, please give your FULL title below.)
Vote on Trustees
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
II. Election of Messrs. (01) Biggar, []For All [] Withhold All [] For All Except To withhold
(02) Dill, (03) Hale, (04) Langton, authority
(05) Saunders, and (06) Van Benschoten to vote, mark
and Drs. (07) Gruber and (08) Herring "For All
as Trustees of the Board. Except" and
write the
nominee's
number on the
line below.
__________________
Vote on Proposals
IA. Approval of New III. Conversion of the [] FOR [] AGAINST [] ABSTAIN
Investment Advisory Fund's structure
Agreement with from a stand-alone
Bankers Trust Company fund structure to a
master-feeder fund
[] FOR [] AGAINST [] ABSTAIN structure. [] FOR [] AGAINST [] ABSTAIN
IB. Approval of New IV. Ratification of
Investment Advisory the selection of
Agreement with PricewaterhouseCoopers
Morgan Grenfell Inc. LLP as the independent
[] FOR [] AGAINST [] ABSTAIN accountants of the Fund. [] FOR [] AGAINST [] ABSTAIN
IC. Approval of
New Investment
Sub-advisory
Agreement with The appointed proxies will vote on any
Bankers Trust other business as may properly come before
Company [] FOR [] AGAINST [] ABSTAIN the Special Meeting
Receipt of the Notice and the Proxy
Statement, dated August 23, 1999
(the "Proxy Statement"), is hereby acknowledged.
- ------------------------------------------------- --------------------------------------
- ------------------------------------------------- --------------------------------------
Signature (Please sign within box) Date Signature (Joint Owners) Date
</TABLE>
2
<PAGE>
[August 23], 1999
IMPORTANT NEWS
FOR SHAREHOLDERS OF BT INVESTMENT FUNDS
Here is a brief overview of some matters affecting your Fund which
require a shareholder vote. We encourage you to read the full text of the
enclosed Proxy Statement, and to vote your shares.
Q. What has happened to require a shareholder vote?
A. On June 4, 1999, Bankers Trust became a subsidiary of Deutsche Bank AG.
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 $256 billion in assets globally.
To ensure that Bankers Trust may continue to serve as investment adviser
of the BT Mutual Funds, we are seeking shareholder approval of new
advisory agreements.
THE BOARD MEMBERS OF YOUR FUND RECOMMEND THAT YOU VOTE FOR THESE
PROPOSALS.
Q. Why am I being asked to vote on the new advisory agreements?
A. The Investment Company Act, which regulates investment companies in the
United States such as your BT Mutual Fund, requires a shareholder vote to
approve a new advisory agreement following certain types of business
combinations. Each of the new advisory agreements became effective
immediately upon consummation of the merger and will continue in effect
only upon shareholder approval.
Q. How does the merger affect my BT Mutual Fund?
A. Your BT Mutual Fund and its respective investment objectives have not
changed as a result of the merger. You still own the same shares in
the same Fund as you did prior to the merger. Each of the new advisory
agreements contains substantially the same terms and conditions as the
agreement in effect prior to the merger, except for the dates of
execution and termination. If shareholders do not approve the new
advisory agreements, the agreements will no longer continue and the
governing Boards of your Fund will take such action as they deem to be
in the best interests of the Fund, and their respective shareholders.
<PAGE>
Q. Have the investment advisory fees remained the same?
A. Yes.
Q. What are the benefits of the merger?
A. There are several potential positive aspects of the merger you may be
interested in. Most notably, the combined institution will be one of
the largest financial institutions in the world, as well as a leader in
a number of important categories, including asset management. The
financial strength of the combined institution coupled with the
increased breadth and depth of its resources and capabilities are
advantages the acquisition brings. Further, as a truly global
institution, the combined entity will be in a unique position to
provide coverage, services and products.
Q. How do the Board of Trustees of my BT Mutual Fund recommend that I vote?
A. After careful consideration, the Boards of Trustees of your BT Mutual Fund
recommend that you vote in favor of all the proposals on the enclosed
proxy card(s).
Q. Whom do I call for more information?
A. If you need more information, please call Shareholder Communications
Corporation, your Fund's information agent, at 1-800-732-6168.
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.
o In person at the shareholder meeting (see details enclosed in proxy
statement).
Q. Will my BT Mutual Fund pay for the proxy solicitation and legal costs
associated with this transaction?
A. No, Bankers Trust will bear these costs.
Q. What happens if I own shares in more than one BT Mutual Fund?
A. If you have more than one BT Mutual Fund in your name at the same address,
you will receive separate proxy cards for each Fund but only one proxy
statement for the account.
Please vote all issues on each proxy card that you receive. Thank you for
mailing your proxy card(s) promptly.
-2-
<PAGE>
[August 23], 1999
Dear Shareholder:
On June 4, 1999, Bankers Trust merged with Deutsche Bank AG. As a result of the
merger, we are asking shareholders of BT Mutual Funds to approve new advisory
agreements. Enclosed is further information relating to these changes, including
a Questions & Answers section and proxy card(s).
Important information about the changes:
o The merger has no effect on the number of shares you own or
the value of those shares.
o The advisory fees payable under the new advisory agreements
have not increased.
o The investment objective and policies of your mutual fund
investment have not changed.
In addition to the change in advisory agreements, shareholders are also being
asked to approve other changes outlined in the enclosed Proxy Statement. The
Board of Trustees of your BT Mutual Fund believes that the proposals are
important and recommends that you read the enclosed materials carefully and then
vote for all proposals.
What you need to do:
o Read all enclosed materials including the Questions & Answers
section.
o Choose one of the following options to vote:
1. By Mail: Complete the enclosed proxy card and return
in postage-paid envelope provided.
2. 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 Shareholder Meeting (details enclosed)
Please note: if you own shares of more than one Fund, you will receive more than
one proxy card. Please sign and return each proxy card you receive.
Sincerely,
[INSERT MR. HIRSCH'S SIGNATURE]
Daniel O. Hirsch
Secretary
BT Mutual Funds
