<PAGE>
As filed with the Commission on July 3, 2000
1933 Act File No. 333-37192
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 2
BT INVESTMENT FUNDS
(Exact Name of Registrant as Specified in Charter)
One South Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices)
(410) 895-3433
(Registrant's Telephone Number)
Daniel O. Hirsch, Esq. Copies to: Burton M. Leibert, Esq.
One South Street Willkie Farr & Gallagher
Baltimore, Maryland 21202 787 Seventh Ave
(Name and Address of Agent New York, NY 10019
for Service)
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing pursuant to paragraph (b)
[ ] On September 1, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[X] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
July 3, 2000
BT Pyramid Mutual Funds
Equity Appreciation - Institutional Class
Dear Shareholder,
I am writing to let you know that a meeting will be held July 27, 2000 for
shareholders to vote on an important proposal for Equity Appreciation ("Equity
Fund"). As a shareholder in Equity Fund, you have the opportunity to voice your
opinion on this matter. This package contains information about the proposal,
along with a proxy card for you to vote by mail.
The Proposal
------------
We are asking shareholders of Equity Fund to approve an Agreement and Plan
of Reorganization between Equity Fund and Mid Cap ("Mid Cap Fund") to allow
Equity Fund to transfer all of its assets and liabilities to Mid Cap Fund in
exchange for Institutional Class shares of Mid Cap Fund.
What this means for your investment
. You will receive shares of Mid Cap Fund - Institutional Class in proportion
to the value of your shares in Equity Fund.
. The transaction will be tax-free for shareholders and for both funds.
. Both funds have the same investment objective and investment styles.
. Both funds employ the same portfolio management.
. The annual fees and expenses will remain the same.
. The proposed reorganization would allow Equity Fund to benefit from being
part of a master-feeder structure. As part of a master-feeder structure, the
feeder fund may benefit from economies of scale in portfolio management and
administration and the ability to participate in larger securities
transactions.
How to vote
Cast your vote by completing and signing the enclosed proxy card. Please
mail your completed and signed proxy as quickly as possible, using the postage-
paid envelope provided. You may also vote by calling the toll-free telephone
number 1-800-690-6903 or by logging on to the Internet at www.proxy.com.
Equity Fund's Board of Trustees, whose primary role is to protect your
interests as a shareholder, has reviewed the proposal. In the Trustees' opinion,
the proposal is fair and reasonable. THE TRUSTEES RECOMMEND THAT YOU VOTE FOR
THE PROPOSAL.
PLEASE VOTE! YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW MANY SHARES
YOU OWN.
Any questions?
Please call 1-800-730-1313 if you have any questions about the proposal or
voting procedures.
Sincerely,
/s/ Daniel O. Hirsch
--------------------
Daniel O. Hirsch
Secretary
<PAGE>
Equity Appreciation -- Institutional Class
(a series of BT Pyramid Mutual Funds)
One South Street
Baltimore, MD 21202
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR JULY 27, 2000
This is the formal agenda for a Special Meeting and any adjournments thereof
(the "Meeting") of shareholders of your mutual fund. It tells you what matters
will be voted on and, in case you want to attend this Meeting in person, the
time and place of the Meeting.
To the shareholders of Equity Appreciation -- Institutional Class ("Equity
Fund"):
A Special Meeting of Equity Fund shareholders will be held at One South Street,
Baltimore, MD 21202 on July 27, 2000 at 10:30 a.m., Eastern Time, to consider
the following:
1. A proposal to approve an Agreement and Plan of Reorganization between
Equity Fund and Mid Cap ("Mid Cap Fund"). Under this Agreement, Equity Fund
would transfer all of its assets to Mid Cap Fund in exchange for
Institutional shares of Mid Cap Fund. These shares would be distributed
proportionately to you and the other shareholders of Equity Fund. Mid Cap
Fund would also assume Equity Fund's stated liabilities. Your Board of
Trustees recommends that you vote FOR this proposal.
2. Any other business that may properly come before the meeting.
Shareholders of record as of the close of business on June 2, 2000, are entitled
to vote at the Meeting and any related adjournments thereof.
Whether or not you expect to attend the Meeting, please complete, sign and
return the enclosed proxy card. You may also vote by calling the toll-free
number on your proxy card or by logging on to the Internet at www.proxyvote.com.
If shareholders do not return their proxies in sufficient numbers, Equity Fund
will incur additional costs to solicit proxies.
By Order of the Board of Trustees,
/s/ Daniel O. Hirsch
--------------------
Daniel O. Hirsch
Secretary
July 3, 2000
<PAGE>
PROXY STATEMENT OF
EQUITY APPRECIATION -- INSTITUTIONAL CLASS
(a series of BT Pyramid Mutual Funds)
PROSPECTUS FOR
MID CAP-- INVESTMENT CLASS
(a series of BT Investment Funds)
This proxy statement and prospectus set forth concisely the information you
should know before voting on the proposed reorganization of Equity Appreciation,
One South Street, Baltimore, MD 21202, 1-800-730-1313 ("Equity Fund") into Mid
Cap, One South Street, Baltimore, MD 21202, 1-800-730-1313 ("Mid Cap Fund").
Please read it carefully and retain it for future reference.
Both Mid Cap Fund and Equity Fund (each a "Fund" and together the "Funds") are
open-end mutual funds investing in stocks and other equity fund securities of
medium-sized companies. The investment objective of both Funds is long-term
capital growth.
Mid Cap Fund is a "feeder fund" that invests all of its assets in a "master
fund," the Capital Appreciation Portfolio, with the same investment objective as
Mid Cap Fund. Mid Cap Fund was formerly the Capital Appreciation Fund. The name
change is unrelated to the reorganization and was made to reflect the Fund's
focus on U.S. mid cap equities. References to Mid Cap Fund also apply to the
Capital Appreciation Portfolio where appropriate.
How the Reorganization Will Work
[_] Mid Cap Fund currently has one class of Investment Class shares.
[_] A new class of Institutional shares of Mid Cap Fund will be created at the
time of the reorganization.
[_] Equity Fund will transfer all of its assets to Mid Cap Fund. Mid Cap Fund
will assume Equity Fund's stated liabilities.
[_] Mid Cap Fund will issue the Institutional shares to Equity Fund in an
aggregate amount equal to the value of the assets it receives, less the
stated liabilities it assumes, in the reorganization. These Institutional
shares will be distributed to Equity Fund's shareholders in proportion to
their holdings in Equity Fund on the reorganization date.
[_] Equity Fund will be liquidated and terminated, and you will be a
shareholder of Mid Cap Fund.
[_] The reorganization will be tax-free for federal income tax purposes.
An investment in Mid Cap Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Like shares of all mutual funds, these securities have not been approved or
disapproved by the Securities and Exchange Commission nor has the Securities and
Exchange Commission passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
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Where to Get More Information
====================================================================================================================
<S> <C>
Prospectus of Mid Cap Fund - Investment Class dated In the same envelope as this proxy statement and
January 31, 2000. Equity Fund shareholders will be prospectus. Incorporated by reference into this proxy
offered Mid Cap - Institutional Class. statement and prospectus.
----------------------------------------------------------
Mid Cap Fund's annual report to shareholders dated
September 30, 1999.
====================================================================================================================
Prospectus of Equity Fund dated January 31, 2000. On file with the Securities and Exchange Commission
---------------------------------------------------------- ("SEC") and available at no charge by calling
Equity Fund's annual and semi-annual reports to 1-800-730-1313 or by writing to us at the address
shareholders dated September 30, 1999 and March 31, shown below. Incorporated by reference into this
2000, respectively. proxy statement and prospectus.
----------------------------------------------------------
A statement of additional information dated June 23,
2000 contains additional information about both Mid
Cap Fund and Equity Fund.
----------------------------------------------------------
Mid Cap Fund's semi-annual report to shareholders
dated March 31, 2000.
====================================================================================================================
To ask questions about this proxy statement and Call our toll-free telephone number: 1-800-730-1313 or
prospectus. write to us at Service Center, P.O. Box 219210, Kansas
City, MO 64121-9210.
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</TABLE>
The date of this proxy statement and prospectus is July 3, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION 1
SUMMARY 1
THE REORGANIZATION 5
CAPITALIZATION 9
ADDITIONAL INFORMATION ABOUT THE FUNDS' BUSINESSES 9
BOARDS' EVALUATION AND RECOMMENDATION 10
VOTING RIGHTS AND REQUIRED VOTE 10
INFORMATION CONCERNING THE MEETING 11
OWNERSHIP OF SHARES OF THE FUNDS 12
EXPERTS 13
AVAILABLE INFORMATION 13
</TABLE>
Additional Information
A. Agreement and Plan of Reorganization between Mid Cap Fund and Equity Fund
(attached to this proxy statement and prospectus)
B. Annual report to shareholders dated September 30, 1999 of Mid Cap Fund
C. Prospectus dated January 31, 2000 of Mid Cap Fund
<PAGE>
INTRODUCTION
This proxy statement and prospectus is being used by the Board of Trustees of
Equity Fund to solicit proxies to be voted at a Special Meeting or any
adjournments thereof (the "Meeting") of shareholders of Equity Fund. This
Meeting will be held at One South Street, Baltimore, MD 21202 on July 27, 2000,
at 10:30 a.m., Eastern Time. The purpose of the Meeting is to consider a
proposal to approve an Agreement and Plan of Reorganization (the "Agreement")
providing for the reorganization of Equity Fund into Mid Cap Fund. This proxy
statement and prospectus and a proxy card are being mailed to Equity Fund's
shareholders on or about July 3, 2000.
Who is Eligible to Vote?
Equity Fund shareholders of record on June 2, 2000, are entitled to attend and
vote at the Meeting or any adjournments thereof. Each share of Equity Fund
outstanding on June 2, 2000, is entitled to one vote. Shares represented by
properly executed proxies, or shares voted by telephone or on the Internet,
unless revoked before or at the Meeting, will be voted according to
shareholders' instructions. If you sign a proxy card, but do not fill in a vote,
your shares will be voted to approve the Agreement. If any other business comes
before the Meeting, your shares will be voted at the discretion of the persons
named as proxies.
SUMMARY
The following is a summary. More complete information appears later in this
proxy statement and prospectus. You should read the entire proxy statement and
prospectus and the enclosed exhibits carefully because they contain details that
are not in the summary. The materials in the exhibits and the statements of
additional information dated January 31, 2000 for each of Mid Cap Fund and
Equity Fund are hereby incorporated by reference into this proxy statement and
prospectus.
Comparison of Equity Fund and Mid Cap Fund
<TABLE>
<CAPTION>
==================================================================================================================
Equity Fund Mid Cap Fund
==================================================================================================================
<S> <C> <C>
General A diversified series of BT Pyramid Mutual A diversified series of BT Investment
Funds ("Pyramid Trust"). Pyramid Trust Funds ("Investment Trust"). Investment
is an open-end management investment Trust is an open-end management
company organized as a Massachusetts investment company organized as a
business trust. Massachusetts business trust.
-------------------------------------------------------------------------------------------------------------------
Investment Equity Fund is a stand-alone fund and Mid Cap Fund is a feeder fund in a
Structure invests directly in securities, as master-feeder structure, which means that
described below. it invests all of its assets in a master
portfolio, the Capital Appreciation
Portfolio. Capital Appreciation
Portfolio has the same investment
objective as Mid Cap Fund. References to
Mid Cap Fund in this proxy statement
include Capital Appreciation Portfolio
where appropriate.
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Net assets as of
June 2, 2000 $404,863,017 $40,704,547
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Investment Bankers Trust Company ("BT") is the BT is the investment adviser of Capital
Advisers investment adviser of Equity Fund. Appreciation Portfolio.
-------------------------------------------------------------------------------------------------------------------
Control of investment BT is an indirect wholly owned subsidiary of Deutsche Bank AG, an international
advisers commercial and investment banking group.
-------------------------------------------------------------------------------------------------------------------
Portfolio manager Mary P. Dugan is the portfolio manager for both Funds.
-------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================
Equity Fund Mid Cap Fund
====================================================================================================================
Investment objective and policies
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<S> <C>
Investment Long-term capital growth.
Objective
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Principal Each Fund normally owns stock in approximately 100 medium-sized companies at any one
Investments time. They invest principally in stock and other securities with equity
characteristics. They may also invest in convertible securities when it is more
advantageous than investing in a company's common stock.
Each Fund may also invest up to 25% of its assets in stocks and other securities of
companies based outside the United States. Under normal conditions, this tactic
would not comprise a major element of either Fund's strategy.
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Equity Securities Each Fund may invest in equity and equity-related securities, including common stock,
preferred stock, rights and warrants and convertible securities.
--------------------------------------------------------------------------------------------------------------------
Principal strategies Each Fund pursues a flexible investment program to achieve its objective. Neither
Fund is restricted to investments in specific market sectors. The Funds may invest
in any market sector and in any size company if BT identifies attractive long-term
prospects for capital growth. Nevertheless, both Funds attempt to match the
dollar-weighted average capitalization of the Funds' respective holdings to the
midpoint capitalization of the S&P Mid-Cap 400 Index.
BT considers many broad factors in assessing a potential candidate for investment for
each Fund including:
. competitive position within its industry;
. business prospects;
. management team;
. record of earnings growth;
. underlying asset value relative to industry peers;
. stock price relative to industry peers; and
. existence of reliable and liquid market for shares.
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Other investments
Illiquid securities Each Fund may invest up to 15% of its net assets in illiquid securities.
--------------------------------------------------------------------------------------------------------------------
Investment Each Fund may invest in other investment companies to the extent permitted by the
Companies Investment Company Act of 1940, as amended.
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Derivatives Each Fund may:
. Purchase and sell (write) put and call options on securities, securities indices
and currencies. These options may be traded on exchanges or over-the-counter.
. Enter into futures contracts on securities, securities indices and currencies, and
may purchase and write put and call options on these futures contracts.
. Enter into forward contracts on currencies.
. Purchase and write securities and index options for both hedging purposes and
non-hedging purposes, but may enter into other options, futures and forward contracts
only for hedging purposes.
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Temporary defensive Each Fund may depart from its principal investment strategies in order to take a
positions temporary defensive position by investing up to 100% of its assets in common stocks
of larger companies, fixed income securities or short-term money market securities.
--------------------------------------------------------------------------------------------------------------------
Principal investment risks
--------------------------------------------------------------------------------------------------------------------
General You could lose money on your investment in either Fund. There is no guarantee that
either Fund will achieve its investment objective.
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</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================
Equity Fund Mid Cap Fund
===================================================================================================================
<S> <C>
Management risk The value of each Fund's shares depends in part on the ability of BT to assess
economic conditions and investment opportunities. If BT's judgment about the
attractiveness of various investments proves to be incorrect, each Fund may
underperform its stated benchmark or competing investments.
-------------------------------------------------------------------------------------------------------------------
Stock market risk As with any equity growth fund, the value of your investment in either Fund will
fluctuate in response to stock market movements. An adverse event, such as an
unfavorable earnings report, may depress the value of a particular company's stock.
-------------------------------------------------------------------------------------------------------------------
Medium-sized company risk Both Funds' performance may be more volatile because they invest in medium-sized
company stocks. Industry-wide reversals have a greater impact on medium-sized
companies because they lack a large company's financial resources. In addition, it
may be harder to sell these stocks.
-------------------------------------------------------------------------------------------------------------------
Foreign investment risk To the extent either Fund holds shares of companies based outside the U.S., it faces
the risks inherent in foreign investing. Adverse political, economic or social
developments as well as incomplete information due to different reporting standards
could undermine the value of the Fund's investments or prevent it from realizing its
full value. Also, a decline in foreign currency relative to the value of the U.S.
dollar would depreciate the value of the investment to U.S. investors.
-------------------------------------------------------------------------------------------------------------------
Buying, exchanging and redeeming shares
-------------------------------------------------------------------------------------------------------------------
Net asset value Each Fund calculates its net asset value per share (NAV) at the close of regular
trading on the New York Stock Exchange ("NYSE") every day the NYSE is open for
business. Each Fund's portfolio securities are valued either based on market
quotations or, if market quotations are unavailable, at fair value, which involves
estimating a security's value based on information other than market quotations.
-------------------------------------------------------------------------------------------------------------------
Classes of shares Currently, each Fund only offers one class of shares, which is offered without a
sales charge. This proposed reorganization would create a new Institutional class of
Mid Cap Fund.
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Rule 12b-1 and service Neither Funds' shares are subject to any Rule 12b-1 or service fee.
fees
-------------------------------------------------------------------------------------------------------------------
Buying and selling shares Investors may purchase or redeem shares either from authorized brokers or directly
from either Fund.
-------------------------------------------------------------------------------------------------------------------
Minimum investment Currently the initial minimum investment If the proposed reorganization is
amounts for the Fund is $250,000 and the minimum approved, the minimum investment for the
subsequent investment is $25,000. newly created Institutional Class of Mid
Cap Fund will be $250,000 and $25,000 to
add to an account.
-------------------------------------------------------------------------------------------------------------------
Exchanging shares Each Fund's shares may be exchanged for shares of another Deutsche Asset Management
mutual fund up to four times a year (from the date of the first exchange).
-------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold
shares of Mid Cap Fund or Equity Fund. The table also shows pro forma expenses
of shares of Mid Cap Fund following the proposed reorganization.
<TABLE>
<CAPTION>
====================================================================================================================
Mid Cap Fund
Annual Fees and Expenses New Institutional Mid Cap Fund/1/ Equity Fund
For the Year Ended September 30, 1999 Class (pro forma) Investment Class Institutional Class
====================================================================================================================
<S> <C> <C> <C>
Management fees 0.65 % 0.65 % 0.65 %
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Distribution (12b-1) and/or service fees None None None
--------------------------------------------------------------------------------------------------------------------
Other expenses 0.55 % 1.23 % 0.55 %
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Total annual fund operating expenses/1/ 1.20 % 1.88 % 1.20 %
--------------------------------------------------------------------------------------------------------------------
Less contractual fee waivers or expense
reimbursements (0.20)% (0.63)% (0.20)%
--------------------------------------------------------------------------------------------------------------------
Net Expenses/2/ 1.00 % 1.25 % 1.00 %
--------------------------------------------------------------------------------------------------------------------
/1/ Information on the annual operating expenses reflects the expenses of both Mid Cap Fund and Capital
Appreciation Portfolio, the master portfolio in which Mid Cap Fund invests its assets. Mid Cap Fund does not
currently have an Institutional Class.
/2/ The investment adviser and administrator have contractually agreed for the 16-month period from the Fund's
fiscal year-end of September 30, 1999, to waive their fees or reimburse expenses so that Equity Fund's total
expenses will not exceed 1.00% and Mid Cap Fund's expenses will not exceed 1.25%. The new Institutional Class
of Mid Cap Fund would be subject to the same contractual obligation. BT has agreed to waive its own fees and
reimburse other fund operating expenses so that the Institutional Class shares' expenses will not exceed 1.00%.
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Expense Example
Hypothetically assume that each Fund's annual return is 5% and that the total
annual Fund operating expenses are exactly as described in the Fees and Expenses
table. For every $10,000 invested, an investor would have paid the following
expenses if an account were closed after the number of years indicated:
<TABLE>
<CAPTION>
===============================================================================================================
Expense 1 Year 3 Years 5 Years 10 Years
Example/3/
===============================================================================================================
<S> <C> <C> <C> <C>
Mid Cap Fund $127 $509 $937 $2,132
---------------------------------------------------------------------------------------------------------------
Equity Fund $102 $354 $634 $1,431
---------------------------------------------------------------------------------------------------------------
Mid Cap Fund $102 $354 $634 $1,431
New Institutional
Class (pro forma)
---------------------------------------------------------------------------------------------------------------
</TABLE>
/3/ For the first 16 months, the expense example takes into account fee waivers
and reimbursements.
The purpose of the table is to assist shareholders in understanding the various
costs and expenses that a shareholder in the Funds will bear directly and
indirectly both for the current Funds and on a pro forma basis if the proposed
reorganization is approved. The example is included solely for illustrative
purposes and should not be considered a
4
<PAGE>
representation of future performance or expenses. Actual expenses may be higher
or lower.
THE REORGANIZATION
Terms of the Reorganization
The Board of Trustees of each Fund has approved the Agreement, a copy of which
is attached as Exhibit A. The Agreement provides for reorganization on the
following terms:
[_] The net asset value of both Funds will be computed as of 4:00 p.m., Eastern
Time, on the reorganization date.
[_] The reorganization is scheduled to occur at 5:00 p.m., Eastern Time, on
August 31, 2000, but may occur on a later date agreed to by the parties.
[_] In the reorganization, Equity Fund will transfer all of its assets to Mid
Cap Fund, and in exchange Mid Cap Fund will assume Equity Fund's stated
liabilities and issue Institutional Class shares as described below. Mid
Cap Fund will then transfer those assets and stated liabilities to Capital
Appreciation Portfolio in exchange for a pro rata interest in Capital
Appreciation Portfolio.
[_] Mid Cap Fund will issue Institutional shares to Equity Fund in an amount
equal to the value of the assets received by Mid Cap Fund, less the stated
liabilities assumed by Mid Cap Fund. These shares will immediately be
distributed by Equity Fund to Equity Fund's shareholders in proportion to
their holdings in Equity Fund on the reorganization date. As a result,
shareholders of Equity Fund will become Institutional shareholders of Mid
Cap Fund.
[_] After the reorganization is complete, Equity Fund will be terminated.
The following diagram shows how the reorganization will be carried out.
<TABLE>
<CAPTION>
<S> <C> <C>
------------------------ ------------------------
Equity Fund transfers Capital
its assets and stated Appreciation
liabilities to Mid Cap Portfolio receives
Fund ----------------------Mid Cap Fund------------------------- assets from and
transfers the Equity Fund assumes stated
assets and stated liabilities to liabilities of Equity
Capital Appreciation Portfolio Fund
------------------------ ------------------------
Equity Fund Mid Cap Fund
shareholders receive Institutional Class
Mid Cap Fund ---------------------- Equity Fund -------------------- shares are issued
Institutional Class receives these
shares shares and
distributes them to
its shareholders
------------------------ ------------------------
</TABLE>
Currently, Mid Cap Fund intends to retain most of the portfolio securities and
other assets acquired from Equity Fund after the reorganization. The portfolio
manager may determine, however, to liquidate individual securities from time to
time.
Tax Status of the Reorganization
The reorganization will be tax-free for federal income tax purposes and will not
take place unless Equity Fund and Mid Cap Fund receive from Willkie Farr &
Gallagher, counsel to both Funds, a satisfactory opinion substantially to the
effect that:
5
<PAGE>
[_] The transfer of Equity Fund's assets to Mid Cap Fund in exchange for
Institutional shares of Mid Cap Fund and the assumption by Mid Cap Fund of
Equity Fund's stated liabilities, followed by the distribution of such
shares to Equity Fund's shareholders and the termination of Equity Fund,
will be a "reorganization" within the meaning of Section 368(a)(1) of the
Internal Revenue Code of 1986 (the "Code"), and each fund will be "a party
to a reorganization" within the meaning of Section 368(b) of the Code;
[_] No gain or loss will be recognized by Equity Fund upon (1) the transfer of
all of its assets and the assumption of its stated liabilities by Mid Cap
Fund as described above or (2) the distribution by Equity Fund of Mid Cap
Fund Institutional shares to Equity Fund's shareholders;
[_] No gain or loss will be recognized by Mid Cap Fund upon the receipt of
Equity Fund's assets solely in exchange for the issuance of Mid Cap Fund
Institutional shares to Equity Fund and the assumption of all of Equity
Fund's stated liabilities by Mid Cap Fund;
[_] The basis of the assets of Equity Fund acquired by Mid Cap Fund will be, in
each instance, the same as the basis of those assets in the hands of Equity
Fund immediately before the transfer;
[_] The tax holding period of the assets of Equity Fund in the hands of Mid Cap
Fund will, in each instance, include Equity Fund's tax holding period for
those assets;
[_] The shareholders of Equity Fund will not recognize gain or loss upon the
exchange of all their shares of Equity Fund solely for Mid Cap Fund
Institutional shares as part of the reorganization;
[_] The basis of Mid Cap Fund Institutional shares received by Equity Fund's
shareholders in the reorganization will be the same as the basis of the
shares of Equity Fund surrendered in exchange;
[_] The tax holding period of Mid Cap Fund Institutional shares received by
Equity Fund's shareholders will include, for each shareholder, the tax
holding period of the shares of Equity Fund surrendered in exchange,
provided that such Equity Fund shares were held as capital assets on the
date of the exchange;
[_] No gain or loss will be recognized by Mid Cap Fund upon its contribution of
the assets of Equity Fund to Capital Appreciation Portfolio solely in
exchange for an interest in Capital Appreciation Portfolio;
[_] No gain or loss will be recognized by Capital Appreciation Portfolio upon
the contribution by Mid Cap Fund of the assets of Equity Fund to Capital
Appreciation Portfolio solely in exchange for an interest in Capital
Appreciation Portfolio;
[_] The basis of Capital Appreciation Portfolio in the assets of Equity Fund
contributed to Capital Appreciation Portfolio by Mid Cap Fund will be, in
each instance, the same as the basis of those assets in the hands of Mid
Cap Fund immediately prior to such contribution;
[_] The tax holding period of Capital Appreciation Portfolio with respect to
the assets of Equity Fund contributed by Mid Cap Fund to Capital
Appreciation Portfolio will, in each instance, include Equity Fund's and
Mid Cap Fund's tax holding periods for such assets;
[_] The basis of the interest in Capital Appreciation Portfolio acquired by Mid
Cap Fund as a result of its contribution to Capital Appreciation Portfolio
of the assets of Equity Fund will be the same as Mid Cap Fund's basis in
such assets; and
[_] The tax holding period of Mid Cap Fund with respect to its interest in
Capital Appreciation Portfolio will include Equity Fund's and Mid Cap
Fund's tax holding periods for the assets of Equity Fund contributed to
Capital Appreciation Portfolio by Mid Cap Fund.
6
<PAGE>
If the reorganization is approved, to qualify as a tax-free reorganization
Equity Fund must distribute to its shareholders Equity Fund's net investment
income and realized capital gains and losses through the date of the merger,
prior to the date of the reorganization. If this distribution were determined as
of May 31, 2000, the distribution would be approximately 6.08% of the current
net asset value. This is equivalent to $1.33 per share, consisting of short-term
gains of $0.62 and long-term gains of $0.71. The amount of the actual
distribution per share may vary significantly from this estimate depending
primarily upon the extent of gains actually realized when Equity Fund portfolio
securities are sold, the extent of losses or credits that offset those gains,
and the number of Equity Fund shares outstanding. Stock markets can be volatile,
and the amount of the actual distribution per share is likely to fluctuate from
the estimated amount as the value of the Equity Fund's holdings change.
As Mid Cap Fund shareholders, former Equity Fund shareholders will become liable
for taxes payable on their proportionate share of any taxable income and capital
gains recognized by Mid Cap Fund. These may include not only taxable income and
gains recognized after the reorganization, but also taxable income and capital
gains recognized but not distributed prior to the reorganization and taxable
income and capital gains attributable to pre-reorganization periods but not
recognized until after the reorganization.
Reasons for the Proposed Reorganization
The Board of Trustees of Equity Fund believes that the proposed reorganization
will be advantageous to the shareholders of Equity Fund for several reasons.
The Board of Trustees considered the following matters, among others, in
approving the reorganization at a meeting held on September 8, 1999.
Overlapping Investment Strategy and Market Niche. Equity Fund and Mid Cap Fund
have identical investment objectives and investment strategies. The same
portfolio management team currently manages both Funds and the same sales force
is now marketing both Funds. Because of the confusion that might be caused by
offering clients competing mid cap funds, it is not advantageous to operate and
market Equity Fund separately from Mid Cap Fund.
Master-Feeder Structure and Greater Diversification. The proposed reorganization
would allow Equity Fund to benefit from being part of a master-feeder structure.
As part of a master-feeder structure, the feeder fund may benefit from economies
of scale in portfolio management and administration and the ability to
participate in larger securities transactions. Shareholders of both Funds may be
better served by a combined fund offering greater diversification at the
portfolio level. To the extent that combining the Funds' assets into a single
fund creates a larger asset base, Mid Cap Fund may achieve greater
diversification after the reorganization than is currently possible for either
Fund. Greater diversification is expected to benefit the shareholders of both
Funds because it may reduce the negative effect that the adverse performance of
any one security may have on the performance of the entire portfolio.
Investment Performance. Mid Cap Fund shares received in the reorganization will
provide Equity Fund's shareholders with substantially the same investment
advantages as they currently have at a comparable level of risk. Equity Fund's
Board of Trustees also considered the performance history of each Fund, which is
shown in the table below. As could be expected, the Funds have performed
similarly for the comparable periods. The Trustees further noted that due to the
overlapping investment strategy, market niche and the similar marketing channels
of these Funds, all shareholders may benefit from the greater diversification
and the possibility of reduced expenses due to the combination of the Funds.
<TABLE>
<CAPTION>
=========================================================================================================
AVERAGE ANNUAL TOTAL RETURNS/1/
For the Period Ending Equity Fund - Institutional Class Mid Cap Fund - Investment Class
March 31, 2000 (Inception 10/12/93) (Inception 03/09/93)
=========================================================================================================
<S> <C> <C>
1 year 70.01% 70.48%
---------------------------------------------------------------------------------------------------------
3 years 40.62% 41.01%
</TABLE>
7
<PAGE>
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------------------------
5 years 28.37% 28.26%
---------------------------------------------------------------------------------------------------
Inception 22.76% 23.61%
---------------------------------------------------------------------------------------------------
</TABLE>
/1/ Past performance offers no indication of how the Fund will perform in the
future.
Possibility of Reduced Expenses. A combined fund offers economies of scale that
may lead to better control over expenses than is currently possible. Both Funds
incur substantial costs for accounting, legal, transfer agency, insurance, and
custodial and administrative services. As shown in the Fees and Expenses table,
the Total Annual Fund Operating Expenses of the new Mid Cap Fund Institutional
Class are expected to be the same as those of Equity Fund.
Benefits to Mid Cap Fund. The Board of Trustees of Mid Cap Fund considered that
the reorganization presents an excellent opportunity for Mid Cap Fund to acquire
investment assets without the obligation to pay commissions or other transaction
costs that are normally associated with the purchase of portfolio securities.
This opportunity provides an economic benefit to Mid Cap Fund and its
shareholders.
Benefits to Advisers and Other Service Providers. The Board of Trustees of each
Fund considered that the Fund's advisers, administrators and distributors would
also benefit from the reorganization. For example, the advisers and
administrators might function more efficiently and therefore realize cost
savings from a consolidated portfolio management effort and from the need to
prepare fewer prospectuses, reports and regulatory filings. The Trustees
believe, however, that these savings will not amount to a significant economic
benefit.
Additional Terms of Agreement
Surrender of Share Certificates. Shareholders of Equity Fund whose shares are
represented by one or more share certificates should, before the reorganization
date, either surrender their certificates to Equity Fund or deliver to Equity
Fund a lost certificate affidavit, in the form and accompanied by any surety
bonds that Equity Fund may require (collectively, an "Affidavit"). On the
reorganization date, all certificates that have not been surrendered to the
transfer agent will be cancelled, will no longer evidence ownership of Equity
Fund's shares and, if not otherwise surrendered, will evidence ownership of Mid
Cap Fund Institutional shares. Shareholders may not redeem or transfer Mid Cap
Fund Institutional shares received in the reorganization until they have
surrendered their Equity Fund share certificates or delivered an Affidavit. Mid
Cap Fund will not issue share certificates in the reorganization.
Conditions to Closing the Reorganization. The obligation of Equity Fund to
consummate the reorganization is subject to the satisfaction of certain
conditions under the Agreement (see Agreement, paragraphs 6 and 7).
The obligation of Mid Cap Fund to consummate the reorganization is also subject
to the satisfaction of certain conditions under the Agreement, including that
Equity Fund has distributed to its shareholders for its taxable year ending on
the closing date of the Reorganization: (1) all of its investment company
taxable income (prior to reduction by any dividends paid deduction); and (2) all
of its net capital gain, after reduction by any capital loss carry forward.
The obligations of both Funds to consummate the reorganization are subject to,
among other things, the approval of the Agreement by the necessary vote of the
outstanding shares of Equity Fund, in accordance with the provisions of Equity
Fund's declaration of trust and by-laws. The Funds' obligations are also subject
to several other conditions, including the receipt of all consents, orders and
permits necessary to consummate the reorganization and the receipt of a
favorable opinion of counsel as to the federal income tax consequences of the
reorganization.
Termination of Agreement. Equity Fund or Mid Cap Fund may mutually agree to
terminate the Agreement (even if the shareholders of Equity Fund have already
approved it) at any time before the reorganization date. Either Fund may also
terminate the Agreement if the other Fund has materially breached any
representation or warranty agreement contained in the Agreement or if a
precedent condition to the obligation of the Fund terminating cannot or will not
be met.
8
<PAGE>
Expenses of the Reorganization. Equity Fund and Mid Cap Fund will each bear
their own costs of the reorganization. Equity Fund will bear the fees and
expenses incurred in connection with its liquidation and termination. These
liquidation and termination fees are expected to aggregate approximately $5,000.
CAPITALIZATION
The following table sets forth the capitalization of each Fund as of March 31,
2000, and the pro forma combined capitalization of both Funds as if the
reorganization had occurred on that date. The table reflects pro forma exchange
ratios of approximately 1.422 Mid Cap Fund Institutional shares being issued for
each share of Equity Fund shares. If the reorganization is consummated as
proposed, the actual exchange ratios on the reorganization date may vary from
the exchange ratios indicated due to changes in any of a number of factors,
including:
[_] The market value of the portfolio securities of both Mid Cap Fund and
Equity Fund between March 31, 2000, and the reorganization date.
[_] Changes in the amount of undistributed net investment income and net
realized capital gains of Mid Cap Fund and Equity Fund during that period
resulting from income and distributions.
[_] Changes in the accrued liabilities of Mid Cap Fund and Equity Fund during
the same period.
<TABLE>
<CAPTION>
===========================================================================================================
Mid Cap Fund
Capitalization as New Institutional Shares/1/ Mid Cap Fund Equity Fund
of March 31, 2000 Pro Forma
===========================================================================================================
<S> <C> <C> <C>
Net assets $396,439,763 $44,407,694 $352,032,069
-----------------------------------------------------------------------------------------------------------
Net asset value per share $ 18.08 $ 18.08 $ 25.71
-----------------------------------------------------------------------------------------------------------
Shares outstanding 21,928,919 2,456,004 13,694,033
-----------------------------------------------------------------------------------------------------------
</TABLE>
/1/ If the reorganization had taken place on March 31, 2000, Equity Fund would
have received 19,472,915 Institutional shares of Mid Cap Fund, which would have
been available for distribution to the shareholders of Equity Fund.
It is impossible to predict how many Institutional shares of Mid Cap Fund will
actually be received and distributed by Equity Fund on the reorganization date.
The table should not be relied upon to determine the amount of Mid Cap Fund
shares that will actually be received and distributed.
ADDITIONAL INFORMATION ABOUT THE FUNDS' BUSINESSES
Both Funds are organized as Massachusetts business trusts. The following table
shows where in each Fund's prospectus you can find additional information about
the business of that Fund.
<TABLE>
<CAPTION>
==================================================================================================================
Type of Information Headings in Prospectuses
------------------------------------------------------------------------------------------------------------------
Equity Fund Mid Cap Fund
==================================================================================================================
<S> <C> <C>
Risk/return summary Overview of Equity Appreciation -- Overview of Mid Cap --Investment
Institutional Class Class
------------------------------------------------------------------------------------------------------------------
Investment objectives/goals Goal
------------------------------------------------------------------------------------------------------------------
Principal investment strategies Core Strategy, Investment Policies and Strategies
------------------------------------------------------------------------------------------------------------------
Principal risks of investing in Principal Risks of Investing in the Fund, Who Should Consider Investing in
the Funds: narrative disclosure the Fund
------------------------------------------------------------------------------------------------------------------
Principal risks of investing in Total Returns, After Fees and Expenses
the Funds: risk/return bar chart
and table
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================
Type of Information Headings in Prospectuses
------------------------------------------------------------------------------------------------------------------
Equity Fund Mid Cap Fund
==================================================================================================================
Fee table Annual Fund Operating Expenses
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Body of prospectus A Detailed Look at Equity A Detailed Look at Mid Cap
Appreciation -- Institutional Class --Investment Class
------------------------------------------------------------------------------------------------------------------
Investment objectives, principal Objective, Strategy, Principal Investments, Investment Process, Risks
investment strategies and related
risks
------------------------------------------------------------------------------------------------------------------
Management: investment Management of the Fund
adviser and portfolio manager
------------------------------------------------------------------------------------------------------------------
Shareholder information: Calculating the Fund's Share Price
Pricing of fund shares
------------------------------------------------------------------------------------------------------------------
Shareholder information: Buying and Selling Fund Shares
Purchase of fund shares
------------------------------------------------------------------------------------------------------------------
Shareholder information: Dividends and Distributions, Tax Considerations
Dividends and distributions; tax
consequences
------------------------------------------------------------------------------------------------------------------
Financial highlights Financial Highlights
Information
------------------------------------------------------------------------------------------------------------------
</TABLE>
BOARDS' EVALUATION AND RECOMMENDATION
For the reasons described above, the Board of Trustees of Equity Fund, including
the Trustees who are not "interested persons" of either Fund or any of their
advisers ("Independent Trustees"), unanimously approved the reorganization at a
meeting held on September 8, 1999. In particular, the Trustees determined that
the reorganization was in the best interests of Equity Fund and that the
interests of Equity Fund's shareholders would not be diluted as a result of the
reorganization. Similarly, the Board of Trustees of Mid Cap Fund, including the
Independent Trustees, unanimously approved the reorganization at a meeting held
on September 8, 1999. The Board also determined that the reorganization was in
the best interests of Mid Cap Fund and that the interests of Mid Cap Fund's
shareholders would not be diluted as a result of the reorganization.
--------------------------------------------------------------------------------
Therefore, after careful consideration, the Board of Trustees of Equity Fund,
including the Independent Trustees, recommends that the shareholders of Equity
Fund vote "FOR" the proposal to approve the Agreement and Plan of
Reorganization.
--------------------------------------------------------------------------------
VOTING RIGHTS AND REQUIRED VOTE
Each share of Equity Fund outstanding on the Record Date is entitled to one
vote. Approval of the above proposal requires the affirmative vote of a
majority of the shares of Equity Fund outstanding and entitled to vote. For
this purpose, a majority of the outstanding shares of Equity Fund means the vote
of the lesser of:
(1) 67% or more of the shares present at the Meeting, if the holders of more
than 50% of the outstanding shares of the Equity Fund are represented in person
or by proxy, or
(2) more than 50% of the outstanding shares of Equity Fund.
Shares of Equity Fund represented in person or by proxy, including shares that
abstain or do not vote on the proposal, will be counted for purposes of
determining whether there is a quorum at the Meeting or any adjournment thereof.
These include proxies submitted by a broker or a nominee holding shares in
"street name" who indicates on the proxy card that it does not have
discretionary authority to vote on the proposal. Because abstentions and broker
non-votes are treated as shares present but not voting, an abstention from
voting or a "broker non-vote" has the same effect as a vote against the
proposal.
Provided that they are not otherwise represented in person or by proxy, BT will
vote any shares in accounts as to which (i) it has investment authority and
discretionary authority to vote; (ii) it is the owner of record but does not
10
<PAGE>
have investment discretion; and (iii) shares in any other accounts as to which
BT is the agent of record. These shares will be voted by BT for, against, or
abstaining, in the same proportion as the votes cast by holders of all shares in
the Equity Fund otherwise represented at the Meeting. This practice is commonly
referred to as "mirror" or "echo" voting.
If the required approval of shareholders is not obtained, Equity Fund will
continue to engage in business as a separate mutual fund and the Board of
Trustees will consider what further action, if any, may be appropriate.
INFORMATION CONCERNING THE MEETING
Solicitation of Proxies
In addition to the mailing of these proxy materials, proxies may be solicited by
telephone, by fax, through the Internet or in person by the Trustees, officers
and employees of Equity Fund or by personnel of BT or ICC Distributors, Inc.,
the distributor of Equity Fund's shares.
Revoking Proxies
An Equity Fund shareholder signing and returning a proxy has the power to revoke
it at any time before it is exercised:
[_] By filing a written notice of revocation with Equity Fund's transfer agent,
or
[_] By returning before the time of the Meeting a duly executed proxy with a
later date than the proxy being revoked, or
[_] If a shareholder has executed a proxy but is present at the Meeting and
wishes to vote in person, by notifying the secretary of Equity Fund at the
Meeting at any time before the proxy is voted.
Simply attending the Meeting without voting, however, will not revoke a
previously executed and returned proxy.
If you hold your shares in "street name" and have instructed a broker to vote
your shares, you must follow the directions received from your broker on
revoking your proxy.
Outstanding Shares and Quorum
As of June 2, 2000, 17,054,044.538 shares of Equity Fund were outstanding. Only
shareholders of record on June 2, 2000 (the "Record Date") are entitled to
notice of and to vote at the Meeting and any adjournments thereof. A majority of
the outstanding shares of Equity Fund that are entitled to vote will be
considered a quorum for the transaction of business.
Other Business
Equity Fund's Board of Trustees knows of no business to be presented for
consideration at the Meeting other than the proposal. If other business is
properly brought before the Meeting, proxies will be voted according to the best
judgment of the persons named as proxies.
Adjournments
If a quorum is not present in person or by proxy at the time any session of the
Meeting is called to order, the persons named as proxies may vote those proxies
that have been received to adjourn the meeting to a later date. If a quorum is
present but there are not sufficient votes in favor of the proposal, the persons
named as proxies may propose one or more adjournments of the meeting to permit
further solicitation of proxies concerning the proposal. Any adjournment will
require the affirmative vote of a majority of Equity Fund's shares present in
person or by proxy at the session of the Meeting to be adjourned. If an
adjournment of the Meeting is proposed because there are not sufficient votes in
favor of the proposal, the persons named as proxies will vote those proxies
favoring the proposal in favor of adjournment, and will vote those proxies
against the reorganization against adjournment.
11
<PAGE>
Telephone and Internet Voting
Equity Fund may record votes over the telephone or through the Internet. In
doing so, 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 over the 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.
OWNERSHIP OF SHARES OF THE FUNDS
To the knowledge of the Funds, as of June 2, 2000, the following persons owned,
of record or beneficially, 5% or more of the outstanding shares of Mid Cap Fund
and Equity Fund (before the reorganization) and would own (after the
reorganization), 5% or more of the outstanding shares of Mid Cap Fund.
<TABLE>
<CAPTION>
====================================================================================================================
Names and Addresses of Mid Cap Fund Mid Cap Fund
Owners Holding More Equity Fund Investment Shares Institutional Shares
Than 5% of Shares Shares (before reorganization) (after reorganization)
====================================================================================================================
<S> <C> <C> <C>
Northern Telecom Omnibus
Account, C/O Bankers Trust
Co. Attn: John Sawicki, 10,717,125.621 15,389,792.39
MS 3064 62.813% 57.100%
34 Exchange Place 6/th/ Floor
Jersey City, NJ 07302-3985
--------------------------------------------------------------------------------------------------------------------
Bankers Trust Co. as Trustee
for Westinghouse Savannah
River Inc., Savings and 2,806,549.828 4,030,205.553
Investment Plan 16.449% 14.953%
34 Exchange Place MS 3064
Jersey City, NJ 07302-3885
--------------------------------------------------------------------------------------------------------------------
Charles Schwab & Co.
Omnibus Account
Attn: Mutual Fund Acct 1,026,213.289 1,473,642.283
Mgmt Team 6.015% 5.467%
101 Montegomery Street 333-8
San Francisco, CA 94104
--------------------------------------------------------------------------------------------------------------------
Bankers Trust Company
FBO 2245354040
PO Box 9005 126,814.912 126,814.912
Church Street Station 5.15% 0.470%
New York, NY 10008
--------------------------------------------------------------------------------------------------------------------
</TABLE>
As of June 2, 2000, the table reflects pro forma exchange ratios of
approximately 1.436 Mid Cap Fund Institutional Class shares being issued for
each Equity Fund share. If the reorganization is consummated, the actual
exchange ratios on the reorganization date may vary from the exchange ratios as
previously discussed.
As of June 2, 2000, the Trustees and Officers of Equity Fund and Mid Cap Fund,
each as a group, owned in the aggregate less than 1% of the outstanding shares
of their respective Funds.
12
<PAGE>
EXPERTS
The financial statements and the financial highlights of Equity Fund as of
September 30, 1999, and for each of the periods then ended, and of Mid Cap Fund
as of September 30, 1999, and for each of the periods then ended, are
incorporated by reference into this proxy statement and prospectus. These
financial statements and highlights for each of Equity Fund and Mid Cap Fund
have been audited by PricewaterhouseCoopers LLP, independent accountants for
each Fund, as stated in the reports appearing in the respective Annual Report to
shareholders that are incorporated by reference in the related statements of
additional information. These financial statements and highlights are included
in reliance upon the reports given upon the authority of such firm as an expert
in accounting and auditing.
AVAILABLE INFORMATION
Each Fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, as amended, and
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy statements and
other information filed by the Funds can be inspected and copied (at prescribed
rates) at the public reference facilities of the Commission at 450 Fifth Street,
NW, Washington, D.C., and at the following regional offices: Chicago (500 West
Madison Street, Suite 1400, Chicago, Illinois) and New York (7 World Trade
Center, Suite 1300, New York, New York). Copies of such material can also be
obtained by e-mail at [email protected], or by writing the Public Reference
Branch, Office of Consumer Affairs and Information Services of the Commission at
450 Fifth Street, NW, Washington, D.C. 20549-0102, at prescribed rates. For
information on the Public Reference Section, call the Commission at 1-202-942-
8090. In addition, copies of these documents may be viewed on-screen or
downloaded from the EDGAR Database on the Commission's Internet site at
http://www.sec.gov.
13
<PAGE>
Exhibit A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this ____th day of __________, 2000, among (i) BT Investment Funds (the
"Investment Trust"), a business trust organized under the laws of the
Commonwealth of Massachusetts with its principal place of business at One South
Street, Baltimore, Maryland 21202, on behalf of Mid Cap (the "Acquiring Fund"),
a series of the Investment Trust, and (ii) BT Pyramid Mutual Funds (the "Pyramid
Trust"), a business trust organized under the laws of the Commonwealth of
Massachusetts with its principal place of business at One South Street,
Baltimore, Maryland 21202, on behalf of Equity Appreciation (the "Acquired
Fund"), a series of Pyramid Trust.
This Agreement is intended to be and is adopted as a plan of reorganization
within the meaning of Section 368(a)(1) of the United States Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization (the "Reorganization")
will consist of (i) the transfer of all of the assets of the Acquired Fund to
the Acquiring Fund in exchange for (a) the issuance of Institutional shares of
beneficial interest of the Acquiring Fund (collectively, the "Acquiring Fund
Shares" and each, an "Acquiring Fund Share") to the Acquired Fund, and (b) the
assumption by the Acquiring Fund of certain scheduled liabilities of the
Acquired Fund, and (ii) the distribution by the Acquired Fund, on the Closing
Date herein referred to or as soon thereafter as conveniently practicable, of
the Acquiring Fund Shares to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund and the termination of the Acquired Fund, all
upon the terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Reorganization is intended to qualify as a reorganization
within the meaning of Section 368(a) of the Code;
WHEREAS, the Investment Trust and the Pyramid Trust are each registered
open-end management investment companies, and the Acquired Fund owns securities
that generally are assets of the character in which the Acquiring Fund is
permitted to invest;
WHEREAS, the Acquiring Fund is authorized to issue shares of beneficial
interest;
WHEREAS, the Board of Trustees of Pyramid Trust has determined that the
exchange of all of the assets and certain liabilities of the Acquired Fund for
shares of the Acquiring Fund is in the best interests of the Acquired Fund
shareholders and that the interests of the existing shareholders of the Acquired
Fund would not be diluted as a result of this transaction;
WHEREAS, the Board of Trustees of Investment Trust has determined that the
exchange of all of the assets of the Acquired Fund for shares of the Acquiring
Fund and the assumption by the Acquiring Fund of certain of the liabilities of
the Acquired Fund is in the best interests of the Acquiring Fund shareholders
and that the interests of the existing shareholders of the Acquiring Fund would
not be diluted as a result of this transaction.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR INSTITUTIONAL CLASS
SHARES OF THE ACQUIRING FUND AND ASSUMPTION OF THE ACQUIRED FUND'S
SCHEDULED LIABILITIES AND LIQUIDATION AND TERMINATION OF THE ACQUIRED FUND.
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund agrees
to transfer its assets to the Acquiring Fund as set forth in paragraph 1.2 free
and clear of all liens and encumbrances, and the Acquiring Fund agrees in
exchange therefor: (i) to issue and deliver to the Acquired Fund the number of
Acquiring Fund Shares, including fractional Acquiring Fund Shares, determined by
dividing the value of the net assets of the Acquired Fund transferred to the
Acquiring Fund, computed in the manner and as of the time and date set forth in
paragraph 2.1, by the net asset value of one Acquiring Fund Share, computed in
the manner as of the time and date set forth in paragraph 2.2; and (ii) to
assume certain scheduled liabilities of the Acquired Fund, as set forth in
paragraph 1.3. Such transactions shall take place at the closing provided for
A-1
<PAGE>
in paragraph 3.1 (the "Closing").
1.2. (a) The assets of the Acquired Fund to be acquired by the Acquiring
Fund shall consist of all of the property of the Acquired Fund, including,
without limitation, all good will, all interests in the name of the Acquired
Fund, all other intangible property and all books and records of the Acquired
Fund.
(b) The Acquired Fund has provided the Acquiring Fund with a list of
all of the Acquired Fund's assets as of the date of execution of this Agreement.
The Acquired Fund reserves the right to sell any of these securities (in the
ordinary course of its business, except to the extent sales may be limited by
representations made in connection with the issuance of the tax opinion
described in paragraph 7.6 hereof ) but will not, without the prior approval of
the Acquiring Fund, acquire any additional securities other than securities of
the type in which the Acquiring Fund is permitted to invest.
1.3. The Acquired Fund will endeavor to discharge all the Acquired Fund's
known liabilities and obligations prior to the Closing Date. The Acquiring Fund
shall assume all liabilities, expenses, costs, charges and reserves reflected on
an unaudited Statement of Assets and Liabilities of the Acquired Fund prepared
by Bankers Trust Company, as administrator of the Acquired Fund, as of the
Valuation Date, in accordance with generally accepted accounting principles
consistently applied from the prior audited period. The Acquiring Fund shall
assume only those liabilities of the Acquired Fund reflected in that unaudited
Statement of Assets and Liabilities and shall not assume any other liabilities,
whether absolute or contingent, not reflected thereon.
1.4. On the Closing Date or as soon thereafter as is conveniently
practicable (the "Liquidation Date"), the Acquired Fund will liquidate and
distribute pro rata to the Acquired Fund's shareholders of record determined as
of the close of business on the Closing Date (the "Acquired Fund Shareholders"),
the Acquiring Fund Shares it receives pursuant to paragraph 1.1. Such
liquidation and distribution will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the Acquired Fund on the
books of the Acquiring Fund to names of the shareholders of the Acquired Fund
and representing the respective pro rata number of the Acquiring Fund Shares due
such shareholders. All issued and outstanding shares of the Acquired Fund will
simultaneously be cancelled on the books of the Acquired Fund, although share
certificates, if any, representing interests in the shares of the Acquired Fund
will represent a number of Acquiring Fund Shares after the Closing Date as
determined in accordance with paragraph 1.1. The Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares in connection with such
exchange.
1.5. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund's transfer agent. The Acquiring Fund Shares will be issued in the
manner described in the Acquiring Fund's current prospectus and statement of
additional information.
1.6. Any transfer taxes payable upon issuance of the Acquiring Fund Shares
in a name other than the registered holder of the Acquired Fund shares on the
books of the Acquired Fund as of that time shall, as a condition of such
issuance and transfer, be paid by the person to whom such Acquiring Fund Shares
are to be issued and transferred.
1.7. Any reporting responsibility of the Acquired Fund is and shall remain
the responsibility of the Acquired Fund up to and including the Closing Date and
such later date on which the Acquired Fund is terminated.
1.8. The Acquired Fund shall, following the Closing Date and the making of
all distributions pursuant to paragraph 1.4, be terminated under the laws of the
Commonwealth of Massachusetts and in accordance with its governing documents.
2. VALUATION
2.1. The value of the assets of the Acquired Fund to be transferred, and
liabilities of the Acquired Fund to be assumed, hereunder shall be the value of
such assets computed as of the close of regular trading on The New York Stock
Exchange, Inc. (the "NYSE") on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the then current prospectus or statement of additional information of
the Acquiring Fund.
2.2. The net asset value of the Acquiring Fund Shares shall be the value
computed as of the
A-2
<PAGE>
close of regular trading on the NYSE on the Valuation Date, using the valuation
procedures set forth in the then current prospectus or statement of additional
information of the Acquiring Fund.
2.3. All computations of value shall be made by Bankers Trust Company
("Bankers Trust") in accordance with its regular practice as pricing agent for
the Acquiring Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing Date shall be ____________ 2000, or such later date as
the parties may agree to in writing. All acts taking place at the Closing shall
be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 5:00
p.m. at the offices of Deutsche Asset Management, One South Street, Baltimore,
Maryland 21202, or at such other time and/or place as the parties may agree.
3.2. The custodian for the Acquired Fund (the "Custodian") shall deliver
at the Closing a certificate of an authorized officer stating that: (a) the
Acquired Fund's assets have been delivered in proper form to the Acquiring Fund
on the Closing Date and (b) all necessary transfer taxes including all
applicable federal and state stock transfer stamps, if any, shall have been
paid, or provision for payment shall have been made, in conjunction with the
delivery of portfolio securities.
3.3. In the event that on the Valuation Date (a) the NYSE or another
primary trading market for portfolio securities of the Investment Trust or the
Pyramid Trust shall be closed to trading or trading thereon shall be restricted
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of the
parties hereto is impracticable, the Closing Date shall be postponed until the
first business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
3.4. The Acquired Fund shall deliver to the Acquiring Fund at the Closing
a list of the names, addresses, taxpayer identification numbers and backup
withholding and nonresident alien withholding status of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding full and
fractional shares owned by each such shareholder immediately prior to the
Closing, certified on behalf of the Acquired Fund by the President or a Vice
President of the Pyramid Trust. The Acquiring Fund shall issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited to the Acquired
Fund's account on the Closing Date to the Secretary of the Pyramid Trust on
behalf of the Acquired Fund, or provide evidence satisfactory to the Acquired
Fund that such Acquiring Fund Shares have been credited to the Acquired Fund's
account on the books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts or other documents as such other party or its
counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Pyramid Trust and the Acquired Fund represent and warrant to the
Investment Trust and the Acquiring Fund as follows:
(a) The Acquired Fund is a series of the Pyramid Trust, which is a
business trust, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has the power to own all of its properties and
assets and, subject to approval by the shareholders of the Acquired Fund, to
perform its obligations under this Agreement. The Acquired Fund is not required
to qualify to do business in any jurisdiction in which it is not so qualified or
where failure to qualify would subject it to any material liability or
disability. The Acquired Fund has all necessary federal, state and local
authorizations to own all of its properties and assets and to carry on its
business as now being conducted;
(b) The Pyramid Trust is a registered open-end investment management
company, and its registration with the Securities and Exchange Commission (the
"Commission") as an investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), is in full force and effect;
(c) The Pyramid Trust is not, and the execution, delivery and performance
of this Agreement with respect to the Acquired Fund will not result, in a
material violation of its Declaration of Trust or By-laws or of any agreement,
indenture, instrument, contract, lease or other undertaking with respect to the
Acquired Fund to which the Pyramid Trust is a party or by which it is bound;
A-3
<PAGE>
(d) The Pyramid Trust has no material contracts or other commitments
(other than this Agreement) with respect to the Acquired Fund which will be
terminated with liability to the Pyramid Trust or to the Acquired Fund prior to
the Closing Date;
(e) No material litigation or administrative proceeding or investigation
of the same, before any court or governmental body, is presently pending or, to
the best of its knowledge, threatened against the Pyramid Trust with respect to
the Acquired Fund or any of the Acquired Fund's properties or assets, except as
previously disclosed in writing to, and acknowledged in writing by, the
Acquiring Fund. The Pyramid Trust and the Acquired Fund know of no facts which
might form the basis for the institution of such proceedings and neither the
Pyramid Trust nor the Acquired Fund is a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects the Acquired Fund's business or the Pyramid
Trust's ability to consummate the transactions herein contemplated;
(f) The Statement of Assets and Liabilities of the Acquired Fund as of
September 30, 1999, has been audited by PricewaterhouseCoopers LLP, independent
accountants, and is in accordance with generally accepted accounting principles
consistently applied, and such statement (copies of which have been furnished to
each of the other parties hereto) fairly reflects the financial condition of the
Acquired Fund as of such date, and there are no known contingent liabilities of
the Acquired Fund as of such date not disclosed therein;
(g) Since September 30, 1999, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date that such indebtedness was incurred, except as otherwise disclosed to
and accepted by each of the other parties hereto. For the purposes of this
subparagraph (g), a decline in net asset value per share of the Acquired Fund
shall not constitute a material adverse change;
(h) At the Closing Date, all federal and other tax returns and reports of
the Acquired Fund required by law then to have been filed by such dates shall
ave been filed, and all federal and other taxes shown as due on such returns and
reports shall have been paid so far as due, or provision shall have been made
for the payment thereof and, to the best of the Acquired Fund's knowledge, no
such return is currently under audit and no assessment has been asserted with
respect to such returns;
(i) For each taxable year of its operation, the Acquired Fund has met the
requirements of Subchapter M of the Code for qualification and treatment as a
regulated investment company and has elected to be treated as such and will
qualify as such for its final taxable year ending on the Closing Date;
(j) For each taxable year of its operation, the Acquired Fund has met the
requirements of Section 851(g) of the Code for qualification and treatment as a
separate corporation and will qualify and be treated as such for its final
taxable year ending on the Closing Date;
(k) All issued and outstanding shares of the Acquired Fund are, and at
the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. All of the issued and outstanding shares of the Acquired
Fund will, at the time of Closing, be held by the persons and in the amounts set
forth in the records of the transfer agent as provided in paragraph 3.4. The
Acquired Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any shares of the Acquired Fund, nor is there
outstanding any security convertible into any shares of the Acquired Fund;
(l) At the Closing Date, the Pyramid Trust with respect to the Acquired
Fund, will have good and marketable title to the assets to be transferred to the
Acquiring Fund pursuant to paragraph 1.1 and full right, power and authority to
sell, assign, transfer and deliver such assets hereunder and, upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the Securities Act of 1933, as
amended (the "1933 Act"), other than as disclosed in writing to, and
acknowledged in writing by, the Acquiring Fund;
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action on the part of the Pyramid Trust's Board
of Trustees on behalf of the Acquired Fund, and, subject to the approval of the
Acquired Fund shareholders, assuming due authorization, execution
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and delivery by the Investment Trust on behalf of the Acquiring Fund, this
Agreement will constitute a valid and binding obligation of the Pyramid Trust
with respect to the Acquired Fund, enforceable in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency, reorganization, moratorium
and other laws relating to or affecting creditors' rights and to general equity
principles;
(n) The information to be furnished by the Pyramid Trust on behalf of the
Acquired Fund for use in no-action letters, applications for exemptive orders,
registration statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations thereunder
applicable thereto;
(o) The proxy statement of the Acquired Fund (the "Proxy Statement") to
be included in the registration statement on Form N-14 of the Acquiring Fund
(the "Registration Statement") (other than information therein that relates to
the Acquiring Fund and supplied in writing by the Acquiring Fund for inclusion
therein) will, on the effective date of the Registration Statement and on the
Closing Date, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading;
(p) No consent, approval, authorization or order of any court or
governmental authority is required for the consummation by the Pyramid Trust on
behalf of the Acquired Fund of the transactions contemplated by this Agreement;
(q) All of the issued and outstanding shares of beneficial interest of
the Acquired Fund have been offered for sale and sold in conformity with all
applicable federal and state securities laws, except as may have been previously
disclosed in writing to the Acquiring Fund; and
(r) The prospectus of the Acquired Fund dated January 31, 2000, and any
amendments or supplements thereto, previously furnished to the Acquiring Fund,
does not contain any untrue statements of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which such statements were made,
not materially misleading.
4.2. The Investment Trust and the Acquiring Fund represent and warrant to
Pyramid Trust and the Acquired Fund as follows:
(a) The Acquiring Fund is a series of the Investment Trust, which is a
business trust, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts and has the power to own all of its properties and
assets and to perform its obligations under this Agreement. The Acquiring Fund
is not required to qualify to do business in any jurisdiction in which it is not
so qualified or where failure to qualify would subject it to any material
liability or disability. The Acquiring Fund has all necessary federal, state and
local authorizations to own all of its properties and assets and to carry on its
business as now being conducted;
(b) The Investment Trust is a registered open-end investment management
company, and its registration with the Commission as an investment company under
the 1940 Act is in full force and effect;
(c) The current prospectus of and statement of additional information of
the Investment Trust on behalf of the Acquiring Fund conform in all material
respects to the applicable requirements of the 1933 Act and the 1940 Act and the
rules and regulations of the Commission thereunder and do not include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not materially misleading;
(d) The Investment Trust has, and at the Closing Date will have, good and
marketable title to the Acquiring Fund's assets;
(e) The Investment Trust is not, and the execution, delivery and
performance of this Agreement on behalf of the Acquiring Fund will not result,
in a material violation of its Declaration of Trust or By-laws or of any
agreement, indenture, instrument, contract, lease, or other undertaking with
respect to the Acquiring Fund to which the Investment Trust is a party or by
which it is bound;
(f) No material litigation or administrative proceeding or investigation
of the same, before
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any court or governmental body, is presently pending or, to the best of its
knowledge, threatened against the Investment Trust with respect to the Acquiring
Fund or any of the Acquiring Fund's properties or assets, except as previously
disclosed in writing to, and acknowledged in writing by, the Acquired Fund. The
Investment Trust and the Acquiring Fund know of no facts which might form the
basis for the institution of such proceedings and neither the Investment Trust
nor the Acquiring Fund is a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which materially and
adversely affects the Acquiring Fund's business or the Investment Trust's
ability on behalf of the Acquiring Fund to consummate the transactions
contemplated herein;
(g) The Statement of Assets and Liabilities of the Acquiring Fund as of
September 30, 1999 has been audited by PricewaterhouseCoopers LLP, independent
accountants, and is in accordance with generally accepted accounting principles
consistently applied, and such statement (copies of which have been furnished to
each of the other parties hereto) fairly reflects the financial condition of the
Acquiring Fund as of such date, and there are no known contingent liabilities of
the Acquiring Fund as of such date not disclosed therein;
(h) Since September 30, 1999, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date that such indebtedness was incurred, except as otherwise disclosed
to and accepted by the Acquired Fund. For the purposes of this subparagraph (h),
a decline in net asset value per share of the Acquiring Fund shall not
constitute a material adverse change;
(i) At the Closing Date, all federal and other tax returns and reports of
the Acquiring Fund required by law then to have been filed by such dates shall
have been filed, and all federal and other taxes shown as due on said returns
and reports shall have been paid so far as due, or provision shall have been
made for the payment thereof and, to the best of the Acquiring Fund's knowledge,
no such return is currently under audit and no assessment has been asserted with
respect to such returns;
(j) For each taxable year of its operations, the Acquiring Fund has met
the requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company and has elected to be treated as such and will
qualify as such on the Closing Date;
(k) For each taxable year of its operation, the Acquiring Fund has met
the requirements of Section 851(g) of the Code for qualification and treatment
as a separate corporation and will qualify and be treated as such on the Closing
Date;
(l) At the date hereof, all issued and outstanding shares of the
Acquiring Fund are, and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable. The Acquiring Fund does not have
outstanding any options, warrants or other rights to subscribe for or purchase
any shares of the Acquiring Fund, nor is there outstanding any security
convertible into shares of the Acquiring Fund;
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary action, if any, on the part of the Investment
Trust's Board of Trustees on behalf of the Acquiring Fund, and, assuming due
authorization, execution and delivery by the Pyramid Trust on behalf of the
Acquired Fund, this Agreement will constitute a valid and binding obligation of
the Investment Trust on behalf of the Acquiring Fund, enforceable in accordance
with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles;
(n) The Acquiring Fund Shares to be issued and delivered to the Acquired
Fund, for the account of the Acquired Fund shareholders, pursuant to the terms
of this Agreement, will at the Closing Date have been duly authorized and, when
so issued and delivered, will be duly and validly issued Acquiring Fund Shares
and will be fully paid and non-assessable;
(o) The information to be furnished by the Acquiring Fund for use in no-
action letters, applications for exemptive orders, registration statements,
proxy materials and other documents which may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
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(p) The information contained in the Proxy Statement and in the
Registration Statement (other than information therein that relates to the
Acquired Fund and supplied in writing by the Acquired Fund for inclusion
therein) will, on the effective date of the Registration Statement and on the
Closing Date, not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading; and
(q) The Investment Trust, on behalf of the Acquiring Fund, agrees to use
all reasonable efforts to obtain the approvals and authorizations required by
the 1933 Act, the 1940 Act and such of the state Blue Sky or securities laws as
it may deem appropriate in order to continue the Acquiring Fund's operations
after the Closing Date.
5. COVENANTS OF EACH OF THE PARTIES
5.1. The Pyramid Trust, on behalf of the Acquired Fund, will operate its
business in the ordinary course between the date hereof and the Closing Date. It
is understood that such ordinary course of business will include the declaration
and payment of customary dividends and distributions and any other dividends and
distributions necessary or advisable (except to the extent distributions that
are not customary may be limited by representations made in connection with the
issuance of the tax opinion described in paragraph 7.6 hereof), in each case
payable either in cash or in additional shares.
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5.2. The Investment Trust, on behalf of the Acquiring Fund, will operate
its business in the ordinary course between the date hereof and the Closing
Date. It is understood that such ordinary course of business will include the
declaration and payment of customary dividends and distributions and any other
dividends and distributions necessary or advisable, in each case payable either
in cash or in additional shares.
5.3. The Pyramid Trust will call a meeting of the Acquired Fund's
shareholders to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated herein.
5.4. The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
5.5. The Acquired Fund will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning the beneficial
ownership of the Acquired Fund's shares.
5.6. Subject to the provisions of this Agreement, the Pyramid Trust, on
behalf of the Acquired Fund, and the Investment Trust, on behalf of the
Acquiring Fund, each will take, or cause to be taken, all action, and do or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.7. The Acquired Fund shall furnish to the Acquiring Fund on the Closing
Date the Statement of Assets and Liabilities of the Acquired Fund as of the
Closing Date, which statement shall be prepared in accordance with generally
accepted accounting principles consistently applied and shall be certified by
the Pyramid Trust's Treasurer or Assistant Treasurer. As promptly as
practicable, but in any case within 60 days after the Closing Date, the Acquired
Fund shall furnish to the Acquiring Fund, in such form as is reasonably
satisfactory to the Acquiring Fund, a statement of the earnings and profits of
the Acquired Fund for federal income tax purposes, and of any capital loss
carryovers and other items that will be carried over to the Acquiring Fund as a
result of Section 381 of the Code, and which statement will be certified by the
Treasurer of the Pyramid Trust.
5.8. The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the "Prospectus"),
which will include the Proxy Statement referred to in paragraph 4.1(n), all to
be included in the Registration Statement, in compliance with the 1933 Act, the
Securities Exchange Act of 1934 (the "1934 Act"), and the 1940 Act in connection
with the meeting of the Acquired Fund's shareholders to consider approval of
this Agreement and the transactions contemplated herein.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND AND THE ACQUIRING
FUND
The obligations of the Funds to consummate the transactions provided for herein
shall be subject, at their election, to the performance by each Fund of all of
the obligations to be performed by them hereunder on or before the Closing Date
and, in addition thereto, the following further conditions:
6.1. All representations and warranties made in this Agreement by or on
behalf of the Funds shall be true and correct in all material respects as of the
date hereof and, except as they may be affected by the transactions contemplated
by this Agreement, as of the Closing Date with the same force and effect as if
made on and as of the Closing Date;
6.2. The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities showing the federal tax
basis and holding periods as of the Closing Date, certified by Pyramid Trust's
Treasurer or Assistant Treasurer on behalf of the Acquired Fund; and
6.3. Pyramid Trust on behalf of the Acquired Fund and Investment Trust on
behalf of the Acquiring Fund shall have delivered to the Acquiring Fund and the
Acquired Fund, respectively, on the Closing Date a certificate executed in its
name by its President or Vice President and Treasurer or Assistant Treasurer, in
form and substance satisfactory to the respective Funds and dated as of the
Closing Date, to the effect that the representations and warranties made in this
Agreement by or on behalf of each Fund are true and correct at and as of the
Closing Date, except as they may be affected by the
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transactions contemplated by this Agreement.
7. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH OF THE PARTIES
If any of the conditions set forth below do not exist on or before the Closing
Date with respect to either party hereto, the other party to this Agreement
shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
7.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Pyramid Trust's
Declaration of Trust and By-laws and certified copies of the votes evidencing
such approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, no party hereto may waive the conditions set
forth in this paragraph 7.1;
7.2. On the Closing Date, no action, suit or other proceeding shall be
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated herein;
7.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities, including "no-
action" positions of and exemptive orders from such federal and state
authorities) deemed necessary by either party hereto to permit consummation, in
all material respects, of the transactions contemplated hereby shall have been
obtained, except where failure to obtain any such consent, order or permit would
not involve a risk of a material adverse effect on the assets or properties of
any party hereto, provided that any party may for itself waive any of such
conditions;
7.4. The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act;
7.5. The Acquired Fund shall have distributed to its shareholders all of
its investment company taxable income, as defined in Section 852(b)(2) of the
Code (prior to reduction by any dividends paid deduction), and all of its net
capital gain, as such term is used in Section 852(b)(3)(C) of the Code, after
reduction by any capital loss carryforward, and all of the excess of (1) its
interest income excludable from gross income under Section 103(a) of the Code
over (2) the deductions disallowed under Sections 265 and 171(a)(2) of the Code,
in each case for its taxable year ending on the Closing Date.
7.6. The parties shall have received a favorable opinion of Willkie Farr &
Gallagher, addressed to the Investment Trust and the Pyramid Trust with respect
to the relevant Merging Fund and satisfactory to Daniel O. Hirsch, as Secretary
of the Merging Funds, substantially to the effect that for federal income tax
purposes:
(a) The acquisition by the Acquiring Fund of all of the assets of
the Acquired Fund solely in exchange for the issuance of Acquiring Fund
Shares to the Acquired Fund and the assumption of certain scheduled
Acquired Fund liabilities by the Acquiring Fund, followed by the
distribution by the Acquired Fund, in liquidation of the Acquired Fund, of
Acquiring Fund Shares to the shareholders of the Acquired Fund in exchange
for their Acquired Fund shares of beneficial interest and the termination
of the Acquired Fund, will constitute a reorganization within the meaning
of Section 368(a)(1) of the Code, and the Acquired Fund and the Acquiring
Fund will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code;
(b) No gain or loss will be recognized by the Acquired Fund upon (i)
the transfer of all of its assets to the Acquiring Fund solely in exchange
for the issuance of Acquiring Fund Shares to the Acquired Fund and the
assumption of certain scheduled Acquired Fund liabilities by the Acquiring
Fund and (ii) the distribution by the Acquired Fund of such Acquiring Fund
Shares to the shareholders of the Acquired Fund;
(c) No gain or loss will be recognized by the Acquiring Fund upon
the receipt of the assets of the Acquired Fund solely in exchange for the
issuance of Acquiring Fund
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Shares to the Acquired Fund and the assumption of certain scheduled
Acquired Fund liabilities by the Acquiring Fund;
(d) The basis of the assets of the Acquired Fund acquired by the
Acquiring Fund will be, in each instance, the same as the basis of those
assets in the hands of the Acquired Fund immediately prior to the transfer;
(e) The tax holding period of the assets of the Acquired Fund in the
hands of the Acquiring Fund will, in each instance, include Acquired Fund's
tax holding period for those assets;
(f) The shareholders of the Acquired Fund will not recognize gain or
loss upon the exchange of all of their shares of beneficial interest of the
Acquired Fund solely for Acquiring Fund Shares as part of the transaction;
(g) The basis of the Acquiring Fund Shares received by the Acquired
Fund shareholders in the transaction will be the same as the basis of the
shares of beneficial interest of the Acquired Fund surrendered in exchange
therefor;
(h) The tax holding period of Acquiring Fund Shares received by the
Acquired Fund shareholders will include, for each shareholder, the tax
holding period for the shares of beneficial interest of the Acquired Fund
surrendered in exchange therefor, provided that such Acquired Fund shares
were held as capital assets on the date of the exchange;
(i) No gain or loss will be recognized by the Acquiring Fund upon its
contribution of the assets of the Acquired Fund to the Capital Appreciation
Portfolio solely in exchange for an interest in the Capital Appreciation
Portfolio;
(j) No gain or loss will be recognized by the Capital Appreciation
Portfolio upon the contribution by the Acquiring Fund of the assets of the
Acquired Fund to the Capital Appreciation Portfolio solely in exchange for
an interest in the Capital Appreciation Portfolio;
(k) The basis of the Capital Appreciation Portfolio in the assets of
the Acquired Fund contributed to the Capital Appreciation Portfolio by the
Acquiring Fund will be, in each instance, the same as the basis of those
assets in the hands of the Acquiring Fund immediately prior to such
contribution;
(l) The tax holding period of the Capital Appreciation Portfolio with
respect to the assets of the Acquired Fund contributed by the Acquiring
Fund to the Capital Appreciation Portfolio will, in each instance, include
the Acquired Fund's and the Acquiring Fund's tax holding periods for such
assets;
(m) The basis of the interest in the Capital Appreciation Portfolio
acquired by the Acquiring Fund as a result of its contribution to the
Capital Appreciation Portfolio of the assets of the Acquired Fund will be
the same as the Acquiring Fund's basis in such assets; and
(n) The tax holding period of the Acquiring Fund with respect to its
interest in the Capital Appreciation Portfolio will include the Acquired
Fund's and the Acquiring Fund's tax holding periods for the assets of the
Acquired Fund contributed to the Capital Appreciation Portfolio by the
Acquiring Fund.
Notwithstanding anything herein to the contrary, no party hereto may waive in
any material respect the conditions set forth in this paragraph 7.6.
7.7 Each of the Acquiring Fund and the Acquired Fund agrees to make and
provide representations with respect to itself that are reasonably necessary to
enable Willkie Farr & Gallagher to deliver an opinion substantially as set forth
in paragraph 7.6.
8. BROKERAGE FEES AND EXPENSES
8.1. Each party hereto represents and warrants to each other party hereto,
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
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8.2. Shareholders of each of Acquired Fund and Acquiring Fund will bear
their respective expenses, if any, incurred in connection with the transactions.
9. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
9.1. The parties hereto agree that no party has made any representation,
warranty or covenant not set forth herein or referred to in paragraphs 4.1 and
4.2 and 5.1 through 5.8 hereof and that this Agreement constitutes the entire
agreement between the parties.
9.2. The representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall survive the consummation of the transactions contemplated hereunder.
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10. TERMINATION
10.1. This Agreement may be terminated at any time prior to the Closing
Date by: (i) the mutual agreement of the Pyramid Trust on behalf of the
Acquired Fund and the Investment Trust on behalf of the Acquiring Fund; (ii) any
party hereto in the event that the other party hereto shall materially breach
any representation, warranty or agreement contained herein to be performed at or
prior to the Closing Date; or (iii) a condition herein expressed to be precedent
to the obligations of the terminating party has not been met and it reasonably
appears that it will not or cannot be met.
10.2. In the event of any such termination, there shall be no liability
for damages on the part of any party hereto or their respective Trustees or
officers to any other party, but each shall bear the expenses incurred by it
incidental to the preparation and carrying out of this Agreement.
11. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as may be
mutually agreed upon in writing by the authorized officers of the Pyramid Trust
on behalf of the Acquired Fund and the Investment Trust on behalf of the
Acquiring Fund; provided, however, that following the meeting of the Acquired
Fund shareholders called by the Pyramid Trust pursuant to paragraph 5.3 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of the Acquiring Fund Shares to be issued to the Acquired
Fund shareholders under this Agreement to the detriment of such shareholders
without their further approval.
12. NOTICES
Any notice, report, statement or demand required or permitted by any provisions
of this Agreement shall be in writing and shall be given by prepaid telegraph,
telecopy or certified mail addressed to the Pyramid Trust on behalf of the
Acquired Fund and the Investment Trust on behalf of the Acquiring Fund at One
South Street, Baltimore, MD 21202.
13. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
13.1. The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
13.4. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other parties hereto. Nothing herein
expressed or implied is intended or shall be construed to confer upon or give
any person, firm, corporation or other entity, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
13.5. It is expressly agreed that the obligations of the Investment Trust
and the Pyramid Trust shall not be binding upon any of their respective
Trustees, shareholders, nominees, officers, agents or employees personally, but
shall bind only the trust property of the Investment Trust or the Pyramid Trust,
as the case may be, as provided in the trust instruments of the Investment Trust
and the Pyramid Trust, respectively. The execution and delivery of this
Agreement has been authorized by the Trustees of each of the Investment Trust
and the Pyramid Trust, and this Agreement has been executed by authorized
officers of the Investment Trust and the Pyramid Trust on behalf of the Acquired
Fund and the Acquiring Fund, respectively, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officers
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Investment Trust and the Pyramid Trust, as the case may be, as provided in
the Declaration of Trust of the Investment Trust and the Pyramid Trust,
respectively.
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WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by its President or Vice President and attested by its Secretary or
Assistant Secretary.
Attest: BT INVESTMENT FUNDS on behalf of
MID CAP
By: __________________________ By: __________________________
Name: Name:
Title: Title:
Attest: BT PYRAMID FUNDS on behalf of
EQUITY APPRECIATION
By: __________________________ By: __________________________
Name: Name:
Title: Title:
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MID CAP
STATEMENT OF ADDITIONAL INFORMATION
June 23, 2000
This statement of additional information is not a prospectus, but expands upon
and supplements the information contained in the prospectus of Mid Cap, dated
January 31, 2000. This statement of additional information should be read in
conjunction with the prospectus.
Additional copies of the prospectus may be obtained by writing to the Fund at
the Service Center, P.O. Box 219210, Kansas City, MO, 64121-9210 or by
telephoning the Fund toll free at 800-730-1313.
This statement of additional information is accompanied by and incorporates by
reference the statement of additional information dated January 31, 2000 of BT
Investment Funds on behalf of Mid Cap, and the statement of additional
information dated January 31, 2000 of BT Pyramid Mutual Funds on behalf of
Equity Appreciation. Mid Cap and Equity Appreciation are referred to
collectively as the "Funds".
Mid Cap Fund's semi-annual report to shareholders dated March 31, 2000, is
incorporated by reference herein. Equity Appreciation Fund's semi-annual report
to shareholders dated March 31, 2000, is incorporated by reference herein.
<PAGE>
ADDITIONAL INFORMATION ABOUT
MID CAP AND
EQUITY APPRECIATION
The following table shows where in each Fund's statement of additional
information (SAI) you can find additional information about each Fund.
<TABLE>
<CAPTION>
TYPE OF INFORMATION HEADINGS IN SAI
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BT INVESTMENT FUNDS, MID CAP BT PYRAMID MUTUAL FUNDS,
Formerly Capital Appreciation Fund EQUITY APPRECIATION
SAI dated January 31, 2000 Formerly BT Investment Equity
Appreciation Fund
SAI dated January 31, 2000
-----------------------------------------------------------------------------------------------------------------
Fund history ORGANIZATION OF THE TRUST
-----------------------------------------------------------------------------------------------------------------
Description of each Fund and INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS:
investments, strategies, policies Investment Objectives
and risks Investment Policies
Futures Contracts and Options on Futures Contracts
Additional Risk Factors
Investment Restrictions
-----------------------------------------------------------------------------------------------------------------
Management of the Funds, MANAGEMENT OF THE TRUST MANAGEMENT OF THE TRUST:
including the Board of Trustees, AND THE PORTFOLIOS: Trustees of the Trust
Officers and Trustee compensation Trustees of the Trust Officers of the Trust
Trustees of the Portfolio Trustee Compensation Table
Officers of the Trust and Portfolio
Trustee Compensation Table
-----------------------------------------------------------------------------------------------------------------
Control persons, principal MANAGEMENT OF THE TRUST MANAGEMENT OF THE TRUST:
holders of securities and AND THE PORTFOLIOS: Trustee Compensation Table
management ownership Trustee Compensation Table
-----------------------------------------------------------------------------------------------------------------
Investment advisory and other MANAGEMENT OF THE TRUST MANAGEMENT OF THE TRUST:
services: investment adviser, AND THE PORTFOLIOS: Investment Adviser
distributor and other service Investment Adviser Administrator
providers Administrator Distributor
Distributor Service Agent
Service Agent Custodian and Transfer Agent
Custodian and Transfer Agent Use of Name
Banking Regulatory Matters Banking Regulatory Matters
Counsel and Independent Counsel and Independent
Auditors Auditors
-----------------------------------------------------------------------------------------------------------------
Brokerage allocation and other INVESTMENT OBJECTIVE, INVESTMENT OBJECTIVE,
Practices POLICIES AND RESTRICTIONS: POLICIES AND RESTRICTIONS:
Portfolio Transactions and Brokerage Commissions
Brokerage Commissions
-----------------------------------------------------------------------------------------------------------------
Shares of beneficial interest ORGANIZATION OF THE TRUST
-----------------------------------------------------------------------------------------------------------------
Purchase, redemption and pricing VALUATION OF SECURITIES; VALUATION OF SECURITIES;
of shares REDEMPTIONS AND REDEMPTIONS AND PURCHASES
PURCHASES IN-KIND: IN-KIND:
Purchase of Shares Purchase of Shares
Redemption of Shares Redemption of Shares
Redemptions and Purchases In-
Kind
Trading in Foreign Securities
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TYPE OF INFORMATION HEADINGS IN SAI
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BT INVESTMENT FUNDS, MID CAP BT PYRAMID MUTUAL FUNDS,
SAI dated January 31, 2000 EQUITY APPRECIATION
SAI dated January 31, 2000
----------------------------------------------------------------------------------------------------------------
Taxation of the Funds TAXATION: TAXATION:
Dividends and Distributions Dividends and Distributions
Taxation of the Fund Taxation of the Fund
Taxation of the Portfolios Foreign Securities
Foreign Securities Other Taxation
Other Taxation
----------------------------------------------------------------------------------------------------------------
Calculation of performance data PERFORMANCE INFORMATION:
Standard Performance Information
Comparison of Fund Performance
Economic and Market Information
----------------------------------------------------------------------------------------------------------------
Financial statements FINANCIAL STATEMENTS:
This section incorporates by reference Investment Equity Appreciation's and
Mid Cap's annual report each dated September 30, 1999.
----------------------------------------------------------------------------------------------------------------
</TABLE>
FINANCIAL HIGHLIGHTS
The financial highlights table for Mid Cap, which is intended to help you
understand Mid Cap's financial performance for the past five years, is included
in Mid Cap's prospectus dated January 31, 2000, which is included herewith and
incorporated herein by reference.
Pro Forma Financial Statements
<TABLE>
<CAPTION>
Pro Forma Combined Statement of Net Assets
For the Year Ended September 30, 1999 Mid Cap
(Unaudited) Pro Forma Pro Forma
Mid Cap Equity Fund Adjustments Combined
<S> <C> <C> <C> <C> <C>
Assets & Liabilities
Investments at Value 28,740,545 180,427,459 -- 209,168,004
Cash -- -- -- --
Other assets less liabilities (8,542) (8,718,909) (46,500) [3] (8,773,951)
--------------- --------------- --------------- ---------------
Total Net Assets 28,732,003 171,708,550 (46,500) 200,394,053
Shares Outstanding 1,945,242 8,536,924 3,090,366 [4] 13,572,532
NAV 14.77 20.11 -- 14.77
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Statement of Operations
Net Investment Income
Allocated from Mid Cap Portfolio 17,564 -- (981,463) [1] (963,899)
Dividends -- 1,060,541 -- 1,060,541
------------ ------------ ------------ ------------
Total Investment Income 17,564 1,060,541 (981,463) [1] 96,642
------------ ------------ ------------ ------------
Expenses:
Advisory -- (981,463) 981,463 [1] --
Administration and Service (162,423) (768,495) -- (930,918)
Professional Fees (32,602) (37,928) 20,000 [2] (50,530)
Printing and Shareholder Rpts (28,672) (29,051) -- (57,723)
Registration Fees (5,466) (5,044) -- (10,510)
Trustees Fees (5,271) (13,081) 2,150 [2] (16,202)
Miscellaneous (7,561) (9,144) -- (16,705)
------------ ------------ ------------ ------------
Total Expenses (241,995) (1,844,206) 1,003,613 (1,082,588)
Less Fees waived/reimbursed 79,572 302,505 (22,150) [5] 359,927
------------ ------------ ------------ ------------
Net Expenses (162,423) (1,541,701) 981,463 (722,661)
------------ ------------ ------------ ------------
Expenses in Excess of Income (144,859) (481,160) -- (626,019)
------------ ------------ ------------ ------------
Realized & Unrealized Gains
On Investments
Net Realized Gain from Investment
Transactions 8,027,605 36,268,372 -- 44,295,977
Net Change in Unrealized Apprec/Deprec 1,426,125 16,844,927 -- 18,271,052
------------ ------------ ------------ ------------
Net Realized & Unrealized Gain On
Investment 9,453,730 53,113,299 -- 62,567,029
------------ ------------ ------------ ------------
Net Increase in Net Assets from
Operations 9,308,871 52,632,139 -- 61,941,010
============ ============ ============ ============
</TABLE>
[1]Reclassification of Advisory fees which are recorded at the Master level on
Mid Cap and netted in the Income allocation to the feeder.
[2]Adjustment to eliminate duplication of expenses
[3]Estimated fees for legal, audit, and shareholder reporting associated with
the Fund reorganization.
[4]Conversion ratio of 1.362
[5]Pro Forma adjustments will not impact results of operations, as adjustments
will reduce the waivers/reimbursements.
<PAGE>
<TABLE>
<CAPTION>
Pro Forma Combined Statement of Net Assets
For the 6 months ended March 31, 2000 Mid Cap
(Unaudited) Pro Forma Pro Forma
Mid Cap Equity Fund Adjustments Combined
<S> <C> <C> <C> <C>
Assets & Liabilities
Investments at Value 44,413,470 352,616,707 -- 397,030,177
Cash -- -- -- --
Other assets less liabilities (5,776) (584,638) (46,500) [3] (636,914)
----------- ------------- -------------- ------------
Total Net Assets 44,407,694 352,032,069 (46,500) 396,439,763
Shares outstanding 2,456,004 13,694,033 5,778,881.93 [4] 21,928,919
NAV 18.08 25.71 -- 18.08
Statement of Operations
Net Investment Income
Allocated from Mid Cap
Portfolio 30,258 -- (793,091) [1] (762,833)
Dividends -- 1,047,214 -- 1,047,214
Total Investment Income 30,258 1,047,214 (793,091) [1] 284,381
----------- ------------- -------------- ------------
Expenses:
Advisory -- (793,091) 793,091 [1] --
Administration and Service (116,061) (617,071) -- (733,132)
Professional Fees (6,881) (13,337) 10,000 [2] (10,218)
Printing and Shareholder Rpts (8,835) (3,009) -- (11,844)
Registration Fees (1,382) (7,126) -- (8,508)
Trustees Fees (1,995) (2,150) 1,075 [2] (3,070)
Miscellaneous (1,772) (1,768) -- (3,540)
----------- ------------- -------------- ------------
Total Expenses (136,926) (1,437,552) 804,166 (770,312)
Less Fees waived/reimbursed 20,865 208,122 (11,075) [5] 217,912
----------- ------------- -------------- ------------
Net Expenses (116,061) (1,229,430) 793,091 (552,400)
----------- ------------- -------------- ------------
Expenses in Excess of Income (85,803) (182,216) -- (268,019)
----------- ------------- -------------- ------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Realized & Unrealized Gains
On Investments
Net realized gain from
invest Transactions 5,319,828 24,721,772 -- 30,041,600
----------- ------------- ------------ -------------
Net change in unrealized
Apprec/Deprec 10,271,756 78,186,926 -- 88,458,682
----------- ------------- ------------ -------------
Net realized & unrealized
gain on invest. 15,591,584 102,908,698 -- 118,500,282
----------- ------------- ------------ -------------
Net increase in Net Assets from
Operations 15,505,781 102,726,482 -- 118,232,263
============ ============= ============ =============
</TABLE>
1 Reclassification of Advisory fees which are recorded at the Master level on
Mid Cap and netted in the Income allocation to the feeder.
2 Adjustment to eliminate duplication of expenses
3 Estimated fees for legal, audit, and shareholder reporting associated with
the Fund reorganization.
4 Conversion ratio of 1.422
5 Pro Forma adjustments will not impact results of operations, as adjustments
will reduce the waivers/reimbursements.
Notes to Pro Forma Financial Statement of
Mid Cap Fund and Equity Appreciation Fund
Unaudited
1. Basis of Combination
The pro forma combined schedule of assets and liabilities, including pro forma
combined schedule of investments, and the related pro forma combined statement
of operations reflect the accounts of Mid Cap Fund and Capital Appreciation
Portfolio, into which Mid Cap Fund invests all of its investable assets, and
Equity Appreciation Fund (collectively the "Funds") for the 12 months ended
September 30, 1999 and for the six months ended March 31, 2000.
The pro forma combined financial statements give effect to the proposed transfer
of assets and liabilities of the Equity Appreciation Fund in exchange for shares
of the Mid Cap Fund. The historical cost of investment securities will be
carried forward to the surviving portfolio and the results of operations of the
surviving portfolio for pre-combining periods will not be restated. The pro-
forma statements reflect expenses of the Funds in carrying out the
reorganization under the Plan of Reorganization, and are reflected as an
adjustment to accrued liabilities.
<PAGE>
The accompanying pro forma financial statements should be read in conjunction
with the historical financial statements of the Funds.
2. Pro Forma Operations
The pro forma combined statement of operations assumes historical rates of gross
investment income for the investments of the Funds. Accordingly, the combined
gross investment income is equal to the sum of each fund's gross investment
income. Certain expenses have been adjusted to reflect the expected expenses of
the combined net assets. Pro forma operating expenses include actual expenses of
the funds as if the funds had been combined for the entire 12 month period ended
September 30, 1999 and the 6 month period ended March 31, 2000.
3. Surviving Entity
The Mid Cap Fund will be the surviving entity for accounting purposes.
<PAGE>
Pro Forma Combined Schedule of Portfolio Investments
As of September 30, 1999
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Equity Appreciation Fund Pro Forma Combined
Description of Securities Portfolio
-------------------------------------------------------------------------------------
Shares Value Shares Value Shares Value
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - 89.4%
America's Changing Leisure Time - 10.6%
Clear Channel Communications, Inc./1/ 6,200 $ 495,225 42,600 $ 3,402,675 48,800 $ 3,897,900
Harley-Davidson, Inc. 9,200 460,575 55,000 2,753,437 64,200 3,214,012
Hispanic Broadcasting Corp./1/ 6,700 510,037 45,100 3,433,237 51,800 3,943,274
Mandalay Resort Group, Inc./1/ 16,700 329,825 107,900 2,131,025 124,600 2,460,850
Royal Caribbean Cruises Ltd. 10,100 454,500 60,200 2,709,000 70,300 3,163,500
Univision Communications, Inc./1/ 9,700 789,337 68,600 5,582,325 78,300 6,371,662
---------- ----------- -----------
3,039,499 20,011,699 23,051,198
---------- ----------- -----------
America's Industrial Renaissance - America's Industrial
2.2% Renaissance - 2.4%
Black & Decker Corp. 4,900 223,869 30,600 1,398,037 35,500 1,621,906
SPX Corp./1/ 4,400 399,300 29,100 2,640,825 33,500 3,040,125
---------- ----------- -----------
623,169 4,038,862 4,662,031
---------- ----------- -----------
Client Server Computing - 6.6% Client Server Computing - 7.5%
BMC Software, Inc./1/ 1,700 121,656 11,700 837,281 13,400 958,937
Citrix Systems, Inc./1/ 8,700 538,856 61,200 3,790,575 69,900 4,329,431
Lexmark Int'l Group, Inc.-Class A/1/ 8,000 644,000 54,500 4,387,250 62,500 5,031,250
Network Appliance, Inc./1/ 8,200 587,325 54,000 3,867,750 62,200 4,455,075
---------- ----------- -----------
1,891,837 12,882,856 14,774,693
---------- ----------- -----------
Energizing the Globe - 8.2% Energizing the Globe - 8.7%
Apache Corp. 10,600 457,788 63,400 2,738,088 74,000 3,195,876
BJ Services Co./1/ 17,100 543,994 102,500 3,260,781 119,600 3,804,775
Cooper Cameron Corp. 4,900 184,975 34,200 1,291,050 39,100 1,476,025
Devon Energy Copr. 7,200 298,350 42,900 1,777,669 50,100 2,076,019
Noble Drilling Corp./1/ 15,400 336,875 100,900 2,207,187 116,300 2,544,062
Sante Fe International Corp. 13,000 280,312 88,400 1,906,125 101,400 2,186,437
Smith International, Inc./1/ 6,300 255,150 42,700 1,729,350 49,000 1,984,500
---------- ----------- -----------
2,357,444 14,910,250 17,267,694
---------- ----------- -----------
Flourishing In The Managed Care Flourishing In The Managed
Environment -0.9% Care Environment -1.0%
Trigon Healthcare, Inc./1/ 9,000 259,875 62,000 1,790,250 71,000 2,050,125
---------- ----------- -----------
Interactive Media - 4.9% Interactive Media - 5.3%
General Instrument Corp./1/ 7,800 375,375 54,900 2,642,063 62,700 3,017,438
Scientific-Atlanta, Inc. 13,900 688,919 82,600 4,093,862 96,500 4,782,781
USA Networks, Inc./1/ 9,100 352,625 60,900 2,359,875 70,000 2,712,500
---------- ----------- -----------
1,416,919 9,095,800 10,512,719
---------- ----------- -----------
Life On The Net - 2.1% Life On The Net - 2.5%
Etoys, Inc. 1 3,600 239,625 25,500 1,697,344 29,100 1,936,969
Infospace.com, Inc. 1 4,100 $ 168,612 27,200 $ 1,118,600 31,300 $ 1,287,212
PSINet, Inc. 1 5,700 205,022 39,600 1,424,363 45,300 1,629,385
---------- ----------- -----------
613,259 4,240,307 4,853,566
---------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital Appreciation Equity Appreciation Fund Pro Forma Combined
Description of Portfolio
Securities
-----------------------------------------------------------------------------------------------------------------
Shares Value Shares Value Shares Value
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Life Sciences Life Sciences Revolution - 6.2%
Revolution - 5.9%
Allergan, Inc. 6,800 748,000 40,700 4,477,000 47,500 5,225,000
Genzyme Corp./1/ 6,800 306,425 44,500 2,005,281 51,300 2,311,706
Immunex Corp./1/ 3,200 138,800 23,600 1,023,650 26,800 1,162,450
Pe Corp.-Pe
Biosystems Group 7,100 512,975 42,500 3,070,625 49,600 3,583,600
--------- ---------- ----------
1,706,200 10,576,556 12,282,756
--------- ---------- ----------
Managing The Managing The Information Age - 7.2%
Information Age - 6.4%
Flextronics
International/1/ 6,400 372,400 43,100 2,507,881 49,500 2,880,281
Maxim Integrated
Products, Inc./1/ 12,100 763,434 79,100 4,990,716 91,200 5,754,150
Portal Software,
Inc./1/ 2,800 108,500 19,300 747,875 22,100 856,375
Redback Networks 2,800 302,400 19,600 2,116,800 22,400 2,419,200
Sanmina Corp./1/ 3,900 301,762 26,200 2,027,225 30,100 2,328,987
--------- ---------- ----------
1,848,496 12,390,497 14,238,993
--------- ---------- ----------
New Consumer - 7.7% New Consumer - 8.1%
Abercrombie & Fitch
Co.-Class A/1/ 10,500 357,656 62,700 2,135,719 73,200 2,493,375
Circuit City Stores,
Inc. 7,200 303,750 46,800 1,974,375 54,000 2,278,125
Gucci Group NV 1,665 139,027 11,765 982,378 13,430 1,121,405
Jones Apparel Group,
Inc./1/ 13,800 396,750 82,300 2,366,125 96,100 2,762,875
Tommy Hilfiger Corp.
/1/ 10,400 293,150 61,900 1,744,806 72,300 2,037,956
Williams-Sonoma,
Inc./1/ 7,000 339,938 45,200 2,195,025 52,200 2,534,963
Zale Corp./1/ 10,300 394,619 67,300 2,578,431 77,600 2,973,050
--------- ---------- ----------
2,224,890 13,976,859 16,201,749
--------- ---------- -----------
New Health Paradigm New Health Paradigm - 4.5%
- 4.3%
IVAX Corp. 28,900 474,850 176,200 2,907,300 205,100 3,382,150
MiniMed, Inc./1/ 3,400 334,050 22,400 2,200,800 25,800 2,534,850
Stryker Corp. 8,600 439,675 50,000 2,556,250 58,600 2,995,925
--------- --------- ----------
1,248,575 7,664,350 8,912,925
--------- --------- ----------
Our Strengthening Financial Our Strengthening Financial
Structure - 4.1% Structure - 4.5%
AMBAC Financial Group 2,200 104,225 13,100 620,613 15,300 724,838
Charter One
Financial, Inc. 9,975 230,672 66,990 1,549,144 76,965 1,779,816
Concord EFS, Inc./1/ 14,700 303,188 98,100 2,023,313 112,800 2,326,501
Dime Bancorp, Inc. 12,200 213,500 83,500 1,461,250 95,700 1,674,750
North Fork Bancorp 16,300 317,850 105,300 2,053,350 121,600 2,371,200
--------- --------- ----------
1,169,435 7,707,670 8,877,105
--------- --------- ----------
Return To Home Ownership - Return To Home Ownership - 0.4%
0.4%
Linens `N Things,
Inc./1/ 3,300 111,375 21,300 718,875 24,600 830,250
--------- --------- ----------
Special Situations - 9.4% Special Situations - 9.9%
Allegheny Energy,
Inc. 9,100 289,494 54,600 1,736,962 63,700 2,026,456
American Water Works
Co., Inc. 11,400 $ 329,887 67,900 $ 1,964,856 79,300 $ 2,294,743
Bowater, Inc. 5,000 262,500 34,700 1,821,750 39,700 2,084,250
Energy East Corp. 12,400 294,500 74,000 1,757,500 86,400 2,052,000
Intuit, Inc./1/ 3,800 333,094 25,100 2,200,172 28,900 2,533,266
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Equity Appreciation Fund Pro Forma Combined
Description of Securities Portfolio
----------------------------------------------------------------------------------------------
Shares Value Shares Value Shares Value
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Northeast Utilities Corp./1/ 39,200 720,301 235,300 4,323,637 274,500 5,043,938
Outdoor Systems, Inc./1/ 13,384 478,478 90,062 3,219,716 103,446 3,698,194
------------ ------------- -------------
2,708,254 17,024,593 19,732,847
------------ ------------- -------------
Stores Of Value - 3.8% Stores Of Value - 4.2%
BJ's Wholesale Club/1/ 12,700 375,444 88,800 2,625,150 101,500 3,000,594
Family Dollar Stores, Inc. 17,100 361,238 113,200 2,391,350 130,300 2,752,588
TJX Companies, Inc. 12,200 342,362 80,100 2,247,806 92,300 2,590,168
------------ ------------- -------------
1,079,044 7,264,306 8,343,350
------------ ------------- -------------
Telecommunications - 5.8% Telecommunications - 6.5%
American Tower Corp. -Class A 11,600 226,925 76,200 1,490,662 87,800 1,717,587
E-Tek Dynamics, Inc./1/ 2,400 130,200 16,700 905,975 19,100 1,036,175
Global Crossing Ltd./1/ 5,076 134,514 34,304 909,056 39,380 1,043,570
Newbridge Networks Corp./1/ 4,500 117,281 30,500 794,906 35,000 912,187
Qwest Communications Int'l, Inc./1/ 7,000 206,938 46,400 1,371,700 53,400 1,578,638
Voicestream Wireless Corp. /1/ 5,200 320,938 34,300 2,116,953 39,500 2,437,891
Western Wireless Corp. - Class A/1/ 5,200 233,188 34,300 1,538,141 39,500 1,771,329
WinStar Communications, Inc./1/ 7,600 296,875 52,900 2,066,406 60,500 2,363,281
------------ ------------- -------------
1,666,859 11,193,799 12,860,658
------------ ------------- -------------
The Ubiquitous Semiconductor - 6.1% The Ubiquitous Semiconductor - 6.9%
Broadcom Corp. - Class A/1/ 1,500 163,500 9,500 1,035,500 11,000 1,199,000
Linear Technology Corp. 8,400 493,763 55,000 3,232,969 63,400 3,726,732
National Semiconductor Corp./1/ 4,800 146,400 34,700 1,058,350 39,500 1,204,750
Novellus Systems, Inc./1/ 4,600 310,212 30,500 2,056,844 35,100 2,367,056
Teradyne, Inc./1/ 11,200 394,800 77,600 2,735,400 88,800 3,130,200
Vitesse Semiconductor Corp./1/ 2,900 247,587 20,200 1,724,575 23,100 1,972,162
------------ ------------- -------------
1,756,262 11,843,638 13,599,900
------------ ------------- -------------
Total Common Stocks
(cost $20,408,257) 25,721,392 167,331,167 193,052,559
------------ ------------- -------------
Short Term Instrument - 16.6% Short Term Instrument - 7.6%
Mutual Fund Mutual Fund
Institutional Cash Management Fund 4,748,393 $ 4,748,393 13,096,292 13,096,292 17,844,685
Total Investments 30,469,785 180,427,459 210,897,244
Total Cost 25,156,650 147,410,277 172,566,927
Net Assets - 100% 28,740,572 171,708,550 200,449,122
============ ============= ============
</TABLE>
/1/ Non-Income Producing Security.
<PAGE>
Pro Forma Combined Schedule of Portfolio Investments
As of March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Equity Appreciation Fund Pro Forma Combined
Description of Securities Portfolio
----------------------------------------------------------------------------------------------------------------------------------
Shares Value Shares Value Shares Value
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCKS - 92.0%
America's Changing Leisure Time - 4.9%
Harley-Davidson, Inc. 9,600 $ 762,000 77,000 $ 6,111,875 86,600 $ 6,873,875
Hispanic Broadcasting Corp./1/ 4,600 520,950 36,500 4,133,625 41,100 4,654,575
Univision Communications, Inc./1/ 8,100 915,300 62,200 7,028,600 70,300 7,943,900
------------- -------------- -------------
2,198,250 17,274,100 19,472,350
------------- -------------- -------------
America's Industrial Renaissance - America's Industrial
1.2% Renaissance - 1.2%
SPX Corp./1/ 4,500 512,719 36,000 4,101,750 40,500 4,614,469
------------- -------------- -------------
Client Server Computing - 12.5% Client Server Computing -
12.3%
BEA Systems, Inc./1/ 11,400 836,475 86,000 6,310,250 97,400 7,146,725
Citrix Systems, Inc./1/ 16,200 1,073,250 122,400 8,109,000 138,600 9,182,250
Flextronics International Ltd./1/ 15,800 1,112,912 126,400 8,903,300 142,200 10,016,212
Mercery Interactive Corp./1/ 8,200 649,850 62,800 4,976,900 71,000 5,626,750
Network Appliance, Inc./1/ 14,800 1,224,700 117,600 9,731,400 132,400 10,956,100
Rational Software./1/ 8,600 657,900 69,100 5,286,150 77,700 5,944,050
------------- -------------- -------------
5,555,087 43,317,000 48,872,087
------------- -------------- -------------
Energizing the Globe - 13.7% Energizing the Globe -13.8%
Apache Corp. 11,070 550,732 88,720 4,413,820 99,790 4,964,552
BJ Services Co./1/ 14,600 1,078,575 116,700 8,621,212 131,300 9,699,787
Cooper Cameron Corp. 8,900 595,187 71,100 4,754,812 80,000 5,349,999
Devon Energy Copr. 7,200 349,650 53,300 2,588,381 60,500 2,938,031
Dynery, Inc./1/ 16,204 1,016,801 130,179 8,168,732 146,383 9,185,533
Montana Power Co./1/ 11,400 729,600 91,700 5,868,800 103,100 6,598,400
Noble Drilling Corp./1/ 16,490 683,304 132,140 5,475,551 148,630 6,158,855
Santa Fe International Corp. 13,600 503,200 108,900 4,029,300 122,500 4,532,500
Smith International, Inc./1/ 7,400 573,500 59,400 4,603,500 66,800 5,177,000
------------- -------------- -------------
6,080,549 48,524,108 54,604,657
------------- -------------- -------------
Interactive Media - 3.6% Interactive Media - 3.6%
Charter Communications/1/ 8,000 114,625 60,200 862,553 68,200 977,178
Scientific-Atlanta, Inc. 16,400 1,040,375 131,800 8,361,062 148,200 9,401,437
USA Networks, Inc./1/ 19,300 435,456 155,000 3,497,187 174,300 3,932,643
------------- -------------- -------------
1,590,456 12,720,802 14,311,258
------------- -------------- -------------
Life On The Net - 3.4% Life On The Net - 3.4%
Art Technology Group /1/ 3,200 210,200 25,000 1,642,187 28,200 1,852,387
Broadvision, Inc./1/ 5,300 237,837 42,400 1,902,700 47,700 2,140,537
Infospace.com, Inc./1/ 6,500 945,344 50,700 7,373,681 57,200 8,319,025
Vignette Corp./1/ 800 128,200 6,700 1,073,675 7,500 1,201,875
------------- -------------- -------------
$ 1,521,581 $ 11,992,243 13,513,824
------------- -------------- -------------
Life Sciences Revolution - 9.6% Life Sciences Revolution - 9.6%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Equity Appreciation Fund Pro Forma Combined
Description of Securities Portfolio
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares Value Shares Value Shares Value
-----------------------------------------------------------------------------------------------------------------------------------
Abgenix, Inc./1/ 600 $ 82,875 4,500 $ 621,563 5,100 $ 704,438
Alkermes, Inc./1/ 1,900 175,750 14,900 1,378,250 16,800 1,554,000
Immunex Corp./1/ 18,300 1,160,906 147,000 9,325,312 165,300 10,486,218
Invitrogen, Corp./1/ 5,000 290,312 40,300 2,339,919 45,300 2,630,231
Medimmune, Inc./1/ 4,000 696,500 31,900 5,554,587 35,900 6,251,087
Nanogen, Inc./1/ 2,500 85,000 19,700 669,800 22,200 754,800
Pe Corp.-Pe Biosystems Group 14,400 1,389,600 110,400 10,653,600 124,800 12,043,200
Qiagen NV/1/ 1,500 204,000 12,300 1,672,800 13,800 1,876,800
Techne Corp./1/ 2,900 200,100 23,300 1,607,700 26,200 1,807,800
----------- ------------ -------------
4,285,043 33,823,531 38,108,574
----------- ------------ -------------
Managing The Information Age- Managing The Information Age-
8.0% 8.1%
Aether Systems, Inc./1/ 700 127,050 5,800 1,052,700 6,500 1,179,750
Alteon Websystems, Inc./1/ 5,500 451,000 44,100 3,616,200 49,600 4,067,200
Brocade Communications, Inc./1/ 4,900 878,631 38,900 6,975,256 43,800 7,853,887
Cobalt Networks, Inc./1/ 2,100 98,700 16,700 784,900 18,800 883,600
OTG Software, Inc./1/ 3,300 133,031 26,300 1,060,219 29,600 1,193,250
Portal Software, Inc./1/ 13,000 740,187 104,400 5,944,275 117,400 6,684,462
Redback Networks/1/ 3,200 959,800 25,900 7,768,381 29,100 8,728,181
Verisign, Inc./1/ 1,000 149,500 8,300 1,240,850 9,300 1,390,350
----------- ------------ -------------
3,537,899 28,442,781 31,980,680
----------- ------------ -------------
New Consumer- 2.5% New Consumer- 2.6%
Circuit City Stores, Inc. 7,200 438,300 58,000 3,530,750 65,200 3,969,050
Gucci Group NV 1,765 156,975 14,165 1,259,800 15,930 1,416,775
Zale Corp./1/ 11,300 533,219 89,600 4,228,001 100,900 4,761,220
----------- ------------ -------------
1,128,494 9,018,551 10,147,045
----------- ------------ -------------
New Health Paradigm - 2.4% New Health Paradigm - 2.4%
IVAX Corp. 39,000 1,062,750 312,500 8,515,625 351,500 9,578,375
Our Strengthening Financial Our Strengthening Financial
Structure - 1.6% Structure - 1.6%
AMBAC Financial Group 4,200 211,575 33,500 1,687,563 37,700 1,899,138
Charter One Financial, Inc. 10,175 213,675 81,190 1,704,990 91,365 1,918,665
North Fork Bancorp 16,400 293,150 131,000 2,341,625 147,400 2,634,775
----------- ------------ -------------
718,400 5,734,178 6,452,578
----------- ------------ -------------
Productivity Enhancements-0.8% Productivity Enhancements-
0.8%
Caliper Technolgies 3,300 266,888 27,000 2,183,625 30,300 2,450,513
Palm, Inc./1/ 1,800 80,775 14,300 641,713 16,100 722,488
----------- ------------ -------------
347,663 2,825,338 3,173,001
----------- ------------ -------------
Special Situations - 3.0% Special Situations - 3.0%
Bowater, Inc. 5,200 277,500 41,700 1,821,750 46,900 2,503,288
Energy East Corp. 11,500 227,844 91,300 1,808,881 102,800 2,036,725
Northeast Utilities Corp./1/ 37,600 808,400 297,300 6,391,950 334,900 7,200,350
----------- ------------ -------------
1,313,794 10,426,569 11,740,363
----------- ------------ -------------
Stores Of Value - 3.8% Stores Of Value - 4.2%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Equity Appreciation Fund Pro Forma Combined
Description of Securities Portfolio
Shares Value Shares Value Shares Value
<S> <C> <C> <C> <C> <C> <C>
BJ's Wholesale Club /1/ 14,700 $ 567,788 117,500 $ 4,538,438 132,200 $ 5,106,226
Family Dollar Stores, Inc. 22,900 476,607 182,200 3,792,038 205,100 4,268,645
$ 1,044,395 $ 8,330,476 $ 9,374,871
----------- ------------ ------------
Telecommunications - 5.8% Telecommunications - 6.5%
Allegiance Telecom, Inc. /1/ 7,600 612,750 61,050 4,922,156 68,650 5,534,906
American Tower Corp.-Class A 12,500 617,188 100,400 4,957,250 112,900 5,574,438
Avanex Corp. /1/ 2,300 349,025 18,600 2,822,550 20,900 3,171,575
Clarent Corp. /1/ 7,700 694,444 61,500 5,546,531 69,200 6,240,975
Micromuse, Inc. /1/ 2,800 388,675 22,400 3,109,400 25,200 3,498,075
Netro Corp. /1/ 3,200 208,050 25,400 1,651,397 28,600 1,859,447
Nextlink Communications, Inc. /1/ 5,600 692,650 45,200 5,590,675 50,800 6,283,325
SDL, Inc. /1/ 2,800 596,050 22,200 4,725,825 25,000 5,321,875
Voicestream Wireless Corp. /1/ 4,000 515,250 31,400 4,044,713 35,400 4,559,963
----------- ------------ ------------
4,674,082 37,370,497 42,044,579
----------- ------------ ------------
The Ubiquitous Semiconductor - 6.1 The Ubiquitous Semiconductor -
6.9
Altera Corp. /1/ 5,700 508,725 45,800 4,087,650 51,500 4,596,375
EMCORE Corp. 3,300 379,706 26,500 3,049,156 29,800 3,428,862
LSI Logic Corp. 9,840 714,630 78,830 5,725,029 88,670 6,439,659
Maxim Integrated Products, Inc. /1/ 19,700 1,399,931 138,000 9,806,625 157,700 11,206,556
Microchip Technology, Inc. /1/ 11,750 772,563 94,050 6,183,788 105,800 6,956,351
National Semiconductor Corp. /1/ 8,700 527,438 69,700 4,225,563 78,400 4,753,001
Teradyne, Inc. /1/ 11,800 970,550 94,400 7,764,400 106,200 8,734,950
----------- ------------ ------------
5,273,543 40,842,211 46,115,754
----------- ------------ ------------
Total Common Stocks (cost)
(cost $25,259,804) 40,844,705 212,055,652 323,259,760 364,104,465
----------- ------------ ------------
Short Term Instrument - 8.5% Short Term Instrument -
Mutual Fund 11.6% Mutual Fund
Institutional Cash Management Fund 3,770,096 3,770,096 29,356,947 29,356,947 33,127,043
----------- ------------ ------------
Total Investments 44,614,801 352,616,707 397,231,508
Total Cost 29,029,900 241,412,599 270,442,499
Net Assets - 100% $44,413,513 $352,032,069 $396,445,582
=========== ============ ============
</TABLE>
/1/ Non-Income Producing Security.
<PAGE>
PART C - OTHER INFORMATION
Item 15. Indemnification
The response to this Item 15 is incorporated by reference to Item 25 of Post-
Effective Amendment No. 38 to the Registrant's Registration Statement on Form
N-1A (Registration Statement") as filed with the Securities and Exchange
Commission ("SEC") on April 29, 1996.
Item 16. Exhibits:
(1) Declaration of Trust dated July 21, 1986; (1)
(i) Supplement to Declaration of Trust dated October 20, 1986; (1)
(ii) Second Supplement to Declaration of Trust dated May 16, 1988; (1)
(2) By-Laws; (1)
(3) Not applicable
(4) Form of Agreement and Plan of Reorganization filed herewith.
(5) Not Applicable
(6) Investment Advisory Agreement dated December 31, 1998; (9)
(i) Investment Advisory Agreement dated June 4, 1999 between Capital
Appreciation Portfolio and Bankers Trust Company; (14)
(7) Distribution Agreement dated August 11, 1998; (5)
(ii) Appendix A dated December 9, 1998 to Distribution Agreement;
(7)
(iii) Appendix A dated December 23, 1999 to Distribution Agreement;
(12)
(8) Bonus or Profit Sharing Contracts - Not applicable;
(9) Custodian Agreement dated July 1, 1996; (2)
(i) Amendment No. 2 to Exhibit A of the Custodian Agreement dated
October 8, 1997;(3)
(ii) Amendment No. 3 to Exhibit A of the Custodian Agreement dated
June 10, 1998; (7)
(iii) Amendment No. 4 to Exhibit A of the Custodian Agreement dated
December 9, 1998; (7)
(iv) Cash Services Addendum to Custodian Agreement dated December
18, 1997; (4)
(v) Amendment No. 5 to Exhibit A of the Custodian Agreement dated
December 23, 1999 ;(12)
(10) Not Applicable;
(11) Not Applicable;
(12) Final Opinion of Willkie Farr & Gallagher concerning the tax matters and
consequences to shareholders discussed in the prospectus is filed
herewith;
(13) Administration and Services Agreement dated October 28, 1992; (8)
(i) Exhibit D to the Administration and Services Agreement as of
October 28, 1992; (7)
(ii) Agreement to Provide Shareholder Services for BT
PreservationPlus Income Fund as of June 10, 1998; (5)
(iii) Shareholder Services Plan for BT PreservationPlus Income Fund
as of June 10, 1998; (5)
(iv) Expense Limitation Agreement dated September 30, 1998 on
behalf of Intermediate Tax Free Fund, International Equity
Fund, Capital Appreciation Fund, Pacific Basin Equity Fund,
Latin American Equity Fund, Small Cap Fund, International
Small Company Equity Fund and Global Emerging Markets Equity
Fund; (6)
(v) Expense Limitation Agreement dated December 31, 1998 on behalf
of Cash Management Fund, Tax Free Money Fund, NY Tax Free
Money Fund, Treasury Money Fund and Quantitative Equity Fund;
(9)
(vi) Expense Limitation Agreement dated March 31, 1999, on behalf
of BT Investment Lifecycle Long Range Fund, BT Investment
Lifecycle Mid Range Fund, and BT Investment Lifecycle Short
Range Fund; (10)
(vii) Expense Limitation Agreement dated August 31, 2000 on behalf
of Mid Cap and Small Cap; (15)
(viii) Amended Expense Limitation Agreement dated December 31, 1998
on behalf of Cash Management Fund, Tax Free Money Fund, NY Tax
Free Money Fund, Treasury Money Fund and Quantitative Equity
Fund; (12)
(ix) Exhibit D to the Administration and Services Agreement as of
October 28, 1992, as revised December 23, 1999 Fund; (12)
(14) Consent of Independent Accountants is filed herewith:
<PAGE>
(15) Not Applicable;
(16) Power of attorney is filed herewith.
___________________________________
1. Incorporated by reference to Post-Effective Amendment No. 34 to Registrant's
Registration Statement on Form N-1A ("Registration Statement") as filed with
the Securities and Exchange Commission ("Commission") on July 31, 1995.
2. Incorporated by reference to Post-Effective Amendment No. 44 to Registrant's
Registration Statement as filed with the Commission on July 1, 1997.
3. Incorporated by reference to Post-Effective Amendment No. 46 to Registrant's
Registration Statement as filed with the Commission on January 28, 1998.
4. Incorporated by reference to Post-Effective Amendment No. 50 to Registrant's
Registration Statement as filed with the Commission on June 30, 1998.
5. Incorporated by reference to Post-Effective Amendment No. 55 to Registrant's
Registration Statement as filed with the Commission on November 25, 1998.
6. Incorporated by reference to Post-Effective Amendment No. 56 to Registrant's
Registration Statement as filed with the Commission on January 28, 1999.
7. Incorporated by reference to Post-Effective Amendment No. 57 to Registrant's
Registration Statement as filed with the Commission on February 8, 1999.
8. Incorporated by reference to Post-Effective Amendment No. 29 to Registrant's
Registration Statement as filed with the Commission on November 8, 1993.
9. Incorporated by reference to Post-Effective Amendment No. 60 to Registrant's
Registration Statement as filed with the Commission on March 15, 1999.
10. Incorporated by reference to Post-Effective Amendment No. 63 to Registrant's
Registration Statement as filed with the Commission on July 29, 1999.
11. Incorporated by reference to Post-Effective Amendment No. 64 to Registrant's
Registration Statement as filed with the Commission on October 22, 1999.
12. Incorporated by reference to Post-Effective Amendment No. 66 to Registrant's
Registration Statement as filed with the Commission on December 23, 1999.
13. Incorporated by reference to Post-Effective Amendment No. 67 to Registrant's
Registration Statement as filed with the Commission on January 28, 2000.
14. Incorporated by reference to Post-Effective Amendment No. 9 to Registrant's
Registration Statement as filed with the Commission on January 31, 2000.
15. Incorporated by reference to Post-Effective Amendment No. 73 to Registrant's
Registration Statement as filed with the Commission on August 31, 2000.
Item 17. Undertakings.
The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of this
registration statement by any person or party which is deemed to be an
underwriter within the meaning of Rule 145(c) under the Securities Act of 1933,
the reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form. The undersigned Registrant agrees that every prospectus
that is filed under paragraph (1) above will be filed as part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the Securities Act of
1933, each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering of them.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant, BT Investment Funds, on behalf of its series Mid Cap, certifies that
it meets all of the requirements for effectiveness of this Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933,
as amended, and has duly caused this Post-Effective Amendment on Form N-14 to be
signed on its behalf by the undersigned, duly authorized, in the City of
Baltimore and the State of Maryland on this 31st day of August 31, 2000.
BT INVESTMENT FUNDS
By: /s/ Daniel O. Hirsch
-----------------------
Daniel O. Hirsch, Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
By: /s/ DANIEL O. HIRSCH Secretary August 31, 2000
------------------------------ Attorney in Fact
Daniel O. Hirsch For the Persons Listed Below)
/s/ JOHN Y. KEFFER* President and
---------------------------------- Chief Executive Officer
John Y. Keffer
/s/ CHARLES A. RIZZO* Treasurer (Principal
---------------------------------- Financial and Accounting Officer)
Charles A. Rizzo
/s/ CHARLES P. BIGGAR* Trustee
----------------------------------
Charles P. Biggar
/s/ S. LELAND DILL* Trustee
----------------------------------
S. Leland Dill
/s/ MARTIN J. GRUBER* Trustee
----------------------------------
Martin J. Gruber
/s/ RICHARD T. HALE* Trustee
----------------------------------
Richard T. Hale
/s/ RICHARD J. HERRING* Trustee
----------------------------------
Richard J. Herring
/s/ BRUCE T. LANGTON* Trustee
----------------------------------
Bruce T. Langton
/s/ PHILIP SAUNDERS, JR.* Trustee
----------------------------------
Philip Saunders, Jr.
/s/ HARRY VAN BENSCHOTEN* Trustee
----------------------------------
Harry Van Benschoten
</TABLE>
* By Power of Attorney. Incorporated by reference to Post-Effective Amendment
No. 66 of BT Investment Funds as filed with the SEC on December 23, 1999.
<PAGE>
SIGNATURES
BT INVESTMENT PORTFOLIOS certifies that it meets all of the requirements for
effectiveness of this Amendment to its Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933, as amended, has duly caused this Post-
Effective Amendment on Form N-14 to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of Baltimore and the State of Maryland on
the 31st day of August, 2000.
BT INVESTMENT PORTFOLIOS
By: /s/ Daniel O. Hirsch
------------------------
Daniel O. Hirsch, Secretary
This Pre-Effective Amendment on Form N-14AE/A of BT Investment Funds has been
signed below by the following persons in the capacities indicated with respect
to BT INVESTMENT PORTFOLIOS.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
By: /s/ DANIEL O. HIRSCH Secretary August 31, 2000
------------------------------ Attorney in Fact
Daniel O. Hirsch For the Persons Listed Below)
/s/ JOHN Y. KEFFER* President and
---------------------------------- Chief Executive Officer
John Y. Keffer
/s/ CHARLES A. RIZZO* Treasurer (Principal
---------------------------------- Financial and Accounting Officer)
Charles A. Rizzo
/s/ CHARLES P. BIGGAR* Trustee
----------------------------------
Charles P. Biggar
/s/ S. LELAND DILL* Trustee
----------------------------------
S. Leland Dill
/s/ MARTIN J. GRUBER* Trustee
----------------------------------
Martin J. Gruber
/s/ RICHARD T. HALE* Trustee
----------------------------------
Richard T. Hale
/s/ RICHARD J. HERRING* Trustee
----------------------------------
Richard J. Herring
/s/ BRUCE T. LANGTON* Trustee
----------------------------------
Bruce T. Langton
/s/ PHILIP SAUNDERS, JR.* Trustee
----------------------------------
Philip Saunders, Jr.
/s/ HARRY VAN BENSCHOTEN* Trustee
----------------------------------
Harry Van Benschoten
</TABLE>
* By Power of Attorney. Incorporated by reference to Post-Effective Amendment
No. 66 of BT Investment Funds as filed with the SEC on December 23, 1999.
<PAGE>
-------------
The Registrant incorporates by reference Mid Cap's prospectus dated January 31,
2000, and Mid Cap's annual report dated September 30, 1999 filed as exhibits
with Form N-14 on May 16, 2000 (accession number 0000950169-00-00519).
<PAGE>
FORM OF PROXY CARD
BT Pyramid Mutual Funds
Equity Appreciation
One South Street, Baltimore, Maryland
PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
10:30 A.M., Eastern time, on July 27, 2000
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 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
Proposal I. All ABSTAIN votes will be counted only in determining the existence
of a quorum at the Special Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO
EQUITY APPRECIATION. THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" PROPOSAL I.
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournment thereof.
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
instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to the Website www.proxyvote.com
-----------------
3) Enter the 12-digit control number set forth on the Proxy card and follow the
instructions.
<PAGE>
Please mark boxes in blue or black ink.
I. Approval of Agreement and Plan of Reorganization between Equity
Appreciation and Mid Cap, pursuant to which Equity Appreciation
would transfer all of its assets to Mid Cap in exchange for Mid Cap's
assumption of Equity Appreciation's stated liabilities and the issuance
of Institutional Class shares of Mid Cap to be distributed pro rata to
Equity Appreciation shareholders.
FOR [_] AGAINST [_] ABSTAIN [_]
II. To consider and vote upon such other business as may properly come before
the Special Meeting and any adjournment or adjournments thererof.
FOR [_] AGAINST [_] ABSTAIN [_]
-------------------------------------------------------------------------------
PLEASE SIGN AND DATE BELOW AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
--------------------------------------------
(Title or Authority)
--------------------------------------------
(Signature)
--------------------------------------------
(Signature)
Dated: [____________________________], 2000
(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.)
------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT, PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Receipt of the notice and the Proxy Statement, dated July 3, 2000 (the "Proxy
Statement"), is hereby acknowledged.
