SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934.
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a
-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
--------------------------------------------
AMERICAN AADVANTAGE S&P 500 INDEX FUND
AMERICAN AADVANTAGE S&P 500 INDEX MILEAGE FUND
--------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
---------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------
5) Total fee paid:
---------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------
2) Form, Schedule or Registration Statement No.:
-------------------------
3) Filing Party:
-------------------------
4) Date Filed:
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<PAGE>
AMERICAN AADVANTAGE S&P 500 INDEX FUND
AMERICAN AADVANTAGE S&P 500 INDEX MILEAGE FUND
4333 Amon Carter Boulevard, MD 5645
Fort Worth, Texas 76155
September 13, 1999
Dear Shareholder:
On June 4, 1999, Bankers Trust Corporation, the parent of Bankers Trust
Company ("Bankers Trust"), became an indirect wholly-owned subsidiary of
Deutsche Bank, A.G. (the "Merger"). Bankers Trust currently serves as the
investment adviser to the Equity 500 Index Portfolio (the "Equity Portfolio")
under an investment advisory agreement ("Prior Agreement") between the Equity
Portfolio and Bankers Trust. However, as a result of the Merger and relevant
provisions of federal law, the Prior Agreement automatically terminated.
Because the American AAdvantage S&P 500 Index Fund and the American
AAdvantage S&P 500 Index Mileage Fund (collectively, the "Funds") invest their
respective assets in the Equity Portfolio, the Funds may vote their respective
interests in the Equity Portfolio to approve or disapprove a proposal to
re-appoint Bankers Trust as the Equity Portfolio's investment adviser under a
new investment advisory agreement ("New Agreement"). The Funds will vote their
respective interests based on how you and other shareholders of the Funds decide
to vote on the proposals set forth below. The Funds will hold a special combined
meeting of shareholders to be held on October 8, 1999, to consider the following
proposals:
1. A proposal to approve a New Agreement between the Equity Portfolio
and Bankers Trust.
2. A proposal to elect eight Trustees to the Board of Trustees of the
Equity Portfolio.
3. A proposal to ratify the selection of PricewaterhouseCoopers LLP as
the independent accountants of the Equity Portfolio for the current
fiscal year.
VOTING PROCEDURES
The Funds currently operate under a master-feeder structure, pursuant to
which each operating Fund seeks to achieve its investment objective by investing
all of its investable assets in the Equity Portfolio, which has an identical
investment objective to the Funds. Interest holders of the Equity Portfolio,
which includes the Funds, also will hold separate meetings to vote on the same
matters described above. Shareholders of the Funds will be asked to provide
voting instructions relating to the above matters. At the Equity Portfolio
meeting, the Funds will cast their votes in the same proportion as the votes
cast by the Funds' shareholders at the upcoming meeting.
CONCLUSION
We urge you to vote by telephone, Internet, or by completing and
returning the enclosed proxy card(s) promptly, even if you plan to be present at
<PAGE>
the meeting. A postage-paid return envelope is enclosed, if you choose to mail
your card(s). Your prompt response will help eliminate the cost of further proxy
solicitation. Should you have any questions about the proposals, please do not
hesitate to contact us. We look forward to receiving your proxy.
Sincerely yours,
William F. Quinn
President
American AAdvantage Funds
American AAdvantage Mileage Funds
2
<PAGE>
AMERICAN AADVANTAGE S&P 500 INDEX FUND
AMERICAN AADVANTAGE S&P 500 INDEX MILEAGE FUND
4333 AMON CARTER BOULEVARD
FORT WORTH, TEXAS 76155
-----------------------------------
NOTICE OF COMBINED SPECIAL MEETING
OF SHAREHOLDERS
TO BE HELD ON OCTOBER 8, 1999
-----------------------------------
TO THE SHAREHOLDERS:
Notice is hereby given that a combined special meeting of the
shareholders of the American AAdvantage S&P 500 Index Fund and the American
AAdvantage S&P 500 Index Mileage Fund (collectively, the "Funds") will be held
on Friday, October 8, 1999, at 1:00 pm Central Time at the offices of AMR
Investment Services, Inc., 4333 Amon Carter Boulevard, Fort Worth, Texas 76155,
Room 6E1D-36, for the purposes set forth below.
The Funds operate as feeder funds in a master-feeder structure. Under
this master-feeder operating structure, each Fund seeks its investment objective
by investing all of its investable assets in the Equity 500 Index Portfolio (the
"Equity Portfolio"). The Equity Portfolio has the same investment objective and
policies as the Funds. The Funds' voting rights with respect to their Equity
Portfolio shares must be passed through to the Funds' shareholders. Accordingly,
you will be asked to vote on the following proposals:
(1) To authorize the Funds to vote at a meeting of the Equity
Portfolio's interest holders:
(a) To approve a new investment advisory agreement between the
Equity Portfolio and Bankers Trust Company ("Bankers Trust").
(b) To elect eight Trustees to the Board of Trustees of the Equity
Portfolio.
(c) To ratify the selection of PricewaterhouseCoopers LLP as the
independent accountants of the Equity Portfolio for the
current fiscal year.
(2) To transact such other business as may properly come before the
meeting or any adjournments thereof.
You will be entitled to vote at the meeting and any adjournments thereof
if you owned shares of the Funds at the close of business on September 8, 1999.
<PAGE>
If you owned shares in both Funds, you may receive more than one proxy card.
Please be certain to vote each proxy card you receive. If you attend the
meeting, you may vote your shares in person.
By order of the Board of Trustees,
Robert J. Zutz
SECRETARY
September 13, 1999
YOUR VOTE IS IMPORTANT
REGARDLESS OF HOW MANY SHARES YOU OWN
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE ASK THAT YOU PLEASE
PROMPTLY VOTE BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD(S). IF
YOU SIGN, DATE AND RETURN THE PROXY CARD(S) BUT GIVE NO VOTING INSTRUCTIONS,
YOUR SHARES WILL BE VOTED "FOR" ALL PROPOSALS NOTICED ABOVE. IN ORDER TO AVOID
ADDITIONAL EXPENSE TO THE FUNDS AND/OR BANKERS TRUST OF FURTHER SOLICITATION,
MANAGEMENT REQUESTS YOUR COOPERATION IN VOTING PROMPTLY. UNLESS PROXIES ARE
SIGNED BY THE APPROPRIATE PERSONS, THEY WILL NOT BE VOTED.
ii
<PAGE>
AMERICAN AADVANTAGE S&P 500 INDEX FUND
AMERICAN AADVANTAGE S&P 500 INDEX MILEAGE FUND
4333 Amon Carter Boulevard
Fort Worth, Texas 76155
-----------------------------------
PROXY STATEMENT
Combined Special Meeting of Shareholders
To Be Held on October 8, 1999
-----------------------------------
This document is a Proxy Statement for the American AAdvantage S&P 500
Index Fund and the American AAdvantage S&P 500 Index Mileage Fund (each, a
"Fund" and collectively, the "Funds"). This Proxy Statement and the accompanying
proxy card(s) will be mailed to shareholders on or about September 13, 1999.
This Proxy Statement is furnished in connection with the solicitation of
proxies, made by, and on behalf of, the Boards of Trustees of the American
AAdvantage Funds (the "AAdvantage Trust") and the American AAdvantage Mileage
Funds (the "Mileage Trust") (collectively, the "Trusts") at the Combined Special
Meeting of Shareholders of the Funds and at any adjournments thereof
("Meeting"), to be held at 1:00 pm Central Time on Friday, October 8, 1999, at
the offices of AMR Investment Services, Inc. (the "Manager"). The Manager serves
as the manager and administrator of the Funds. SWS Financial Services, located
at 7001 Preston Road, Dallas, Texas 75205, serves as underwriter to the Funds.
The purpose of the meeting is set forth in the accompanying Notice.
The Funds operate as feeder funds in a master-feeder structure. The
Funds pursue their investment objectives by investing all of their respective
investable assets in the Equity 500 Index Portfolio (the "Equity Portfolio"),
which has an investment objective identical to the Funds. At a meeting of
interest holders of the Equity Portfolio, the Funds will vote their respective
interests in the Equity Portfolio in proportion to the votes cast by that Fund's
shareholders when a meeting of interest holders of the Equity Portfolio is
called. Each Fund will vote shares for which it receives no voting instructions
in the same proportion as the shares for which it does receive voting
instructions. Because a Fund's votes are proportionate to its percentage
interest in the Equity Portfolio, the majority of the Equity Portfolio's
interest holders could approve an action against which a majority of the voting
securities of each Fund had voted.
The solicitation of proxies will be made by mail, but also may include
telephone or oral communications by employees of the Manager, who will not
receive any compensation from the Trusts or the Funds for such solicitation. All
costs of solicitation, including (a) printing and mailing of this Proxy
Statement and accompanying material, (b) the reimbursement of brokerage firms
<PAGE>
and others for their expenses in forwarding solicitation material to the
beneficial owners of the Funds' shares, (c) payment to _______ for its services
in soliciting proxies (estimated to be approximately $______) and (d)
supplementary solicitations to submit proxy cards, will be borne by Bankers
Trust Company ("Bankers Trust"), 130 Liberty Street, One Bankers Trust Plaza,
New York, New York 10006, the investment adviser to the Equity Portfolio.
A majority of each applicable Fund's shares of beneficial interest
outstanding on September 8, 1999 ("Record Date"), represented in person or by
proxy, constitutes a quorum, and a quorum must be present for the transaction of
business with respect to each proposal. If a quorum is present at the Meeting
but sufficient votes to approve any of the proposals are not received, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. If a quorum is present, the persons named as proxies will
vote those proxies that they are entitled to vote FOR any such proposal in favor
of such an adjournment, and will vote those proxies required to be voted AGAINST
any such proposal against such adjournment. A shareholder vote may be taken on
one or more of the proposals in this Proxy Statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
Abstentions and broker non-votes will be counted as shares present for
purposes of determining whether a quorum is present but will not be voted FOR or
AGAINST any adjournment. Abstentions and broker non-votes will not be counted,
however, as votes cast for purposes of determining whether sufficient votes have
been received to approve a proposal. Accordingly, abstentions and broker
non-votes effectively will be a vote AGAINST adjournment or AGAINST proposal
(1)(a), for which the required vote is a majority of the outstanding voting
securities, as defined below. With respect to proposals (1)(b) and (1)(c),
abstentions and broker non-votes are not treated as shares voted and, thus, will
have no impact on either proposal.
The individuals named as proxies on the enclosed proxy card(s) will vote
in accordance with your directions as indicated thereon if your proxy vote is
received and has been properly executed. If your proxy vote is properly executed
and you give no voting instructions, your shares will be voted in favor of the
proposals described in this Proxy Statement. You may revoke your proxy card by
giving another proxy, by letter or telegram revoking your initial proxy if
received by that applicable Fund prior to the Meeting, or by appearing and
voting at the Meeting.
The American AAdvantage S&P 500 Index Fund offers two classes of shares,
including the Institutional Class and the PlanAhead Class. Each share of each
Fund class is entitled to one vote. As of the Record Date, there were issued and
outstanding __________ shares of American AAdvantage S&P 500 Index Fund and
___________ shares of American AAdvantage S&P 500 Index Mileage Fund. For a list
of shareholders who owned of record five percent or more of the shares of each
Fund as of the Record Date, see Appendix A. To the knowledge of the Manager, the
executive officers and Trustees, as a group, owned less than one percent of the
outstanding shares of each Fund as of September 8, 1999.
Shareholders of record at the close of business on the Record Date will
be entitled to vote at the Meeting. Each full share of each Fund is entitled to
2
<PAGE>
one vote and each fractional share is entitled to a proportionate share of one
vote. YOU MAY OBTAIN A COPY OF THE AADVANTAGE TRUST'S OR MILEAGE TRUST'S ANNUAL
AND SEMI-ANNUAL REPORTS TO SHAREHOLDERS, FREE OF CHARGE, BY WRITING TO THE
MANAGER AT 4333 AMON CARTER BOULEVARD, MD 5645, FORT WORTH, TEXAS 76155, OR BY
CALLING 1-800-388-3344.
PROPOSAL (1)(A): APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE
EQUITY 500 INDEX PORTFOLIO AND BANKERS TRUST COMPANY
INTRODUCTION
Bankers Trust has served as investment adviser to the Equity Portfolio
in accordance with an investment advisory agreement ("Prior Agreement") between
Bankers Trust and the Equity Portfolio. On June 4, 1999, Bankers Trust
Corporation, the parent company of Bankers Trust, merged with a wholly-owned
subsidiary of Deutsche Bank, A.G. ("Deutsche Bank") (the "Merger"). As a result,
Bankers Trust became an indirect wholly-owned subsidiary of Deutsche Bank, a
banking company with limited liability organized under the laws of the Federal
Republic of Germany. Deutsche Bank is the parent company of a group consisting
of banks, capital market companies, fund management companies, mortgage banks, a
property finance company, installment financing and leasing companies, insurance
companies, research and consultancy companies and other domestic and foreign
companies. As of March 31, 1999, Deutsche Bank had total assets of U.S. $727
billion. Deutsche Bank's capital and reserves as of March 31, 1999, were U.S.
$19.6 billion.
Under federal law, the Merger could be deemed to cause the automatic
termination of the Prior Agreement. However, on May 25, 1999, Bankers Trust
received an exemptive order from the Securities and Exchange Commission ("SEC")
permitting implementation of an investment advisory agreement without obtaining
prior shareholder approval ("New Agreement") between Bankers Trust and the
Equity Portfolio for a period of up to 150 days from the closing date of the
Merger through the date on which the New Agreement is approved or disapproved by
the Equity Portfolio's interest holders. The exemptive order permits Bankers
Trust to collect fees during this period for its advisory services to the Equity
Portfolio provided the fees are held in a separate interest-bearing escrow
account pending interest holder approval of the New Agreement. If interest
holders do not approve the New Agreement, then the fees held in escrow will be
remitted to the Equity Portfolio. As of June 30, 1999, the amount in escrow
totaled $477,425.44. If interest holders approve the New Agreement, Bankers
Trust will continue to operate as the Equity Portfolio's investment adviser
under the New Agreement for an initial term of 2 years.
The Funds, as interest holders of the Equity Portfolio, are being asked
to approve the New Agreement. The New Agreement is substantially similar to the
Prior Agreement (collectively, the "Agreements") other than the date of
execution, effectiveness and initial term of the agreement.
DESCRIPTION OF THE PRIOR AND NEW AGREEMENTS
The Prior Agreement, dated April 8, 1992, was last approved by the
Equity Portfolio's Board of Trustees (the "Equity Portfolio Board"), including a
majority of the Trustees who are not "interested persons" as defined under the
3
<PAGE>
Investment Company Act of 1940 (the "1940 Act") ("Independent Trustees"), at its
meeting on March 8, 1999. The Equity Portfolio's shareholders also approved the
Prior Agreement on April 8, 1992 for the purpose of its renewal. The proposed
New Agreement was approved, subject to interest holder approval, by the Equity
Portfolio Board at its meeting on March 8, 1999. A copy of the New Agreement is
included with this Proxy Statement as Exhibit A. The proposed New Agreement
contains substantially the same terms and conditions as the Prior Agreement
other than the dates of execution, effectiveness and initial term. The advisory
fee rates charged to the Equity Portfolio under both Agreements are the same.
Additionally, Bankers Trust has informed the Equity Portfolio that it can expect
to continue to receive the same level and quality of services under the proposed
New Agreement as it received under the Prior Agreement. Bankers Trust has
represented to the Equity Portfolio Board that in the event of any material
change in Bankers Trust's investment management personnel responsible for
providing services to the Equity Portfolio, Bankers Trust will apprise and
consult with the Equity Portfolio Board to ensure that the Equity Portfolio
Board, including a majority of its Independent Trustees, is satisfied that the
services provided by Bankers Trust will not be diminished in scope and quality.
Under the terms of both Agreements, Bankers Trust provides investment
advisory and other services for the Equity Portfolio, including investment
research and management with respect to all securities, investments, cash and
cash equivalents. Subject to the supervision and control of the Equity Portfolio
Board, Bankers Trust agrees to conform to all applicable federal securities
laws, rules and regulations of the SEC and applicable regulations of the Board
of Governors of the Federal Reserve System with respect to investment advisory
activities of bank holding companies and their subsidiaries. For its services
under the proposed New Agreement, Bankers Trust receives an annual fee of 0.075%
of the Equity Portfolio's daily net assets, which is the same fee it received
under the Prior Agreement. Prior to May 6, 1998, the advisory fee under the
Prior Agreement was payable at an annual rate of 0.10% of the Equity Portfolio's
daily net assets. For the fiscal year ended December 31, 1998, Bankers Trust
received advisory fees in the amount of $3,186,503.
Under the New Agreement, Bankers Trust will exercise its best judgment
in rendering advisory services. Bankers Trust shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Equity Portfolio
in connection with the matters relating to the New Agreement, provided that
nothing therein shall be deemed to protect or purport to protect Bankers Trust
against any liability to the Equity Portfolio or its interest holders to which
Bankers Trust otherwise could be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of Bankers Trust's reckless disregard of its obligations and duties under
the New Agreement.
If approved, the New Agreement will remain in effect for an initial two
year term from its effective date (unless sooner terminated). It would continue
automatically for successive annual periods, if the New Agreement is approved
annually (1) by the Equity Portfolio Board or by holders of a majority of the
Equity Portfolio's outstanding voting securities and (2) by a majority of the
Independent Trustees. Similar to the Prior Agreement, the New Agreement will
terminate upon assignment by any party, upon 60 days' written notice by the
4
<PAGE>
Equity Portfolio Board (without penalty), by a majority vote of the Equity
Portfolio's interest holders or upon 60 days' written notice by Bankers Trust.
ABOUT BANKERS TRUST
Bankers Trust is the principal banking subsidiary of Bankers Trust
Corporation, One Bankers Trust Plaza, New York, New York 10006. Since Bankers
Trust is a bank, it is exempt from registering as an investment adviser under
federal law. Bankers Trust provides a broad range of commercial banking and
financial services, including loan origination, credit and deposit services and
financing arrangements. Bankers Trust also engages in trading currencies,
securities, derivatives and commodities. Bankers Trust serves as investment
adviser or subadviser to the following mutual funds, each having a similar
investment strategy as the Equity Portfolio:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Advisory Fees
Bankers Trust Company Net Assets Under Payable to
Proprietary Funds Management (5-31-99) Bankers Trust
----------------- -------------------- -------------
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
S&P Index Funds
- ---------------
Equity Index Portfolio (a)(b) $6,607,007,085.88 0.075%
Includes the following feeder funds:
BT Inst'l: Equity 500 Index Fund $2,391,761,781.53
BT Pyramid Investment Equity 500
Index $929,474,411.08
USAA S&P 500 Index $2,713,859,248.97
American AAdvantage S&P 500 Index
Fund $322,610,586.01
American AAdvantage S&P 500 Index
Mileage Fund $3,632,960.16
Scudder S&P 500 Index $244,805,518.35
BT Insur: Equity 500 Index (Variable
Annuity) (a) $111,273,342.87 0.20%
- -----------------------------------------------------------------------------------------------
Bankers Trust Company Assets Under
Third Party Sub-Advised Funds Management (5-31-99) Fee Schedule
----------------------------- -------------------- ------------
- -----------------------------------------------------------------------------------------------
VALIC - American General Series Portfolio: $4,624,973,419.19 A monthly fee computed at
Stock Index Fund (a) the Stock Index Fund (a)
annual rate of 0.02% on
the first $2 billion and
0.01% on assets over $2
billion. The Investment
Sub-Advisory Agreements
require that each
Sub-Adviser promptly
reduce its monthly fee by
the amount of any
commission, tender and
exchange offer
solicitation fees, other
fees or similar payments
received by the
Sub-Adviser, or any
affiliated person of the
Sub-Adviser, in connection
with Sub-Advised Fund
portfolio transactions.
- -----------------------------------------------------------------------------------------------
EQ Advisors Trust: $392,561,486.32 0.05% of the Portfolio's
BT Equity 500 Index Fund (a) average daily net assets.
- -----------------------------------------------------------------------------------------------
Pacific Mutual: A fee is paid at the
Equity Index Portfolio (a) $1,808,280,989.82 beginning of each calendar
quarter, based on an
annual percentage of the
combined daily net assets
of the Equity Index and
Small-Cap Index
5
<PAGE>
Portfolios, according to
the following schedule,
subject to a minimum
annual fee of $100,000:
0.08% on first $100
million; 0.04% on next
$100 million; 0.02% on
excess.
- -----------------------------------------------------------------------------------------------
Scudder Kemper Investment Inc.: The fee paid to the
AARP U.S. Stock Index Fund (a) $464,922,428.55 Sub-Adviser is calculated
on a quarterly basis and
depends on the level of
total assets in the AARP
U.S. Stock Index Fund. The
fee rate decreases as the
level of total assets for
the Fund increases. The
fee rate for each level of
assets is: 0.07% of the
first $100 million of
average daily net assets,
0.03% of such assets in
excess of $100 million,
and 0.01% of such assets
in excess of $200 million
with a minimum annual fee
of $75,000.
- -----------------------------------------------------------------------------------------------
SunAmerica Asset Management Corporation
Large-Cap Growth Portfolio (a) (b) $5,142,375.93 0.10% - first $500 million
0.03% - over $500 million
- -----------------------------------------------------------------------------------------------
Fidelity Commonwealth Trust: Manager will pay
Spartan Market Index Fund $8,573,448,838.36 Sub-Adviser a monthly
fee computed at an
annual rate of 0.006% (0.6
basis points) of the
average daily net assets
of the Portfolio (computed
in the manner set forth in
the Trust's Declaration of
Trust) throughout the month.
Variable Insurance Products Fund II:
Index 500 Portfolio $17,202,394,585.66 At an annual rate of 0.006%
(0.6 basis points).
Fidelity Concord Street Trust:
Spartan U.S. Equity Index Fund $78,012,265 At an annual rate of
0.006% (0.6 basis points).
- -----------------------------------------------------------------------------------------------
</TABLE>
(a) Information pertaining to advisory fees is shown before expense waivers
and/or reimbursements, if any, are applied.
(b) Master portfolio not available for direct retail purchase.
Bankers Trust also serves as transfer agent, custodian and administrator
to the Equity Portfolio. For the fiscal year ended December 31, 1998, Bankers
Trust earned $676,625 in compensation for administrative and other services
provided to the Equity Portfolio. As of March 31, 1999, Bankers Trust had over
$313 billion of assets under management, including over $6.6 billion of assets
in the Equity Portfolio.
The names, business addresses and principal occupations of the current
directors and chief executive officers of Bankers Trust are set forth below.
Except as otherwise indicated, the business address of the individuals named
below is Deutsche Bank, A.G., Taunusanlage 12, D-60262 Frankfurt am Main,
Federal Republic of Germany.
6
<PAGE>
<TABLE>
<CAPTION>
Name and Address
- ----------------
<S> <C>
Josef Ackermann Chairman of the Board, Chief Executive
Officer and President, Bankers Trust; Member,
Board of Managing Directors, Deutsche Bank,
A.G.
Hans Angermueller Of Counsel, Shearman & Sterling
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
George B. Beitzel Director, Computer Task Group, Inc., Phillips
29 King Street Petroleum Company, TIG Holdings, Inc.
Chappaqua, NY 10514-3432
William R. Howell Director, Exxon Corporation, Halliburton
J.C. Penney Company, Inc. Company, National Organization on Disability,
P.O. Box 10001 National Retail Federation, Southern
Dallas, TX 75301-1109 Methodist University Board of Trustees
(Chairman), Warner-Lambert Company; Chairman
Emeritus, J.C. Penney Company, Inc.
Hermann-Josef Lamberti Member, Board of Managing Directors, Deutsche
Bank, A.G.
John A. Ross Regional Chief Executive Officer, Deutsche
Deutsche Bank Americas Holding Corp. Bank Americas Holding Corp.
31 West 52nd Street
New York, NY 10019
Ronaldo H. Schmitz Member, Board of Managing Directors, Deutsche
Bank, A.G.
</TABLE>
ADDITIONAL INFORMATION
On March 11, 1999, Bankers Trust announced that it had reached an
agreement with the U.S. Attorney's Office in the Southern District of New York
to resolve an investigation concerning inappropriate transfers of unclaimed
funds and related record-keeping problems that occurred between 1994 and early
1996. Bankers Trust pleaded guilty to misstating entries in the bank's books and
records and agreed to pay a $63.5 million fine to state and federal authorities.
On July 26, 1999, the federal criminal proceedings were concluded with Bankers
Trust's formal sentencing. The events leading up to the guilty pleas did not
arise out of the investment advisory or mutual fund management activities of
Bankers Trust or its affiliates.
7
<PAGE>
As a result of the plea, absent an order from the SEC, Bankers Trust
would not be able to continue to provide investment advisory services to the
Equity Portfolio. The SEC has granted Bankers Trust a temporary order under
federal law to permit Bankers Trust and its affiliates to continue to provide
investment advisory services to registered investment companies, such as the
Equity Portfolio. Additionally, Bankers Trust has applied to the SEC for a
permanent order. However, there is no assurance that the SEC will grant the
permanent order. On May 7, 1999, the SEC extended the temporary order so that
the SEC may take final action on the application for a permanent order. If the
SEC refuses to grant a permanent order, the Equity Portfolio Board will
recommend such appropriate action as in the best interests of the interest
holders, including the Funds. In such event, the Funds' Boards also will
determine what, if any, appropriate action to take.
RECOMMENDATION OF THE EQUITY PORTFOLIO'S BOARD
At a meeting on March 8, 1999, the Equity Portfolio Board, including its
Independent Trustees, unanimously approved the New Agreement between Bankers
Trust and the Equity Portfolio. In reaching this conclusion, the Equity
Portfolio Board obtained from Bankers Trust Corporation, Deutsche Bank and
Bankers Trust such information as deemed reasonably necessary to approve Bankers
Trust as the investment adviser to the Equity Portfolio. The Equity Portfolio
Board considered a number of factors, including, among other things: the nature,
scope and quality of services that Bankers Trust would likely provide; the
quality of Bankers Trust's personnel; Bankers Trust's commitment to continue to
provide these services in the future; the maintenance of the identical advisory
fee rates; and the fact that the New Agreement contains substantially the same
terms and conditions as the Prior Agreement. Based on these factors and others,
the Equity Portfolio Board determined that the New Agreement is fair and
reasonable and in the best interests of the Equity Portfolio and its
shareholders. Additionally, at meetings held on March 24 and April 21, 1999, the
Equity Portfolio Board, including its Independent Trustees, also were apprised
of the guilty pleas discussed above and the exemptive relief sought by Bankers
Trust.
After careful consideration, the Equity Portfolio Board, including its
Independent Trustees, recommend the approval of the New Agreement.
VOTE REQUIRED
Approval of the proposal outlined above with respect to the Equity
Portfolio requires the affirmative vote of the holders of a "majority of the
outstanding voting securities" of the Equity Portfolio entitled to vote, as such
term is defined in the 1940 Act. For that purpose, a vote of the holders of a
"majority of the outstanding voting securities" of the Equity Portfolio means
the lesser of either (1) the vote of 67% or more of the shares of the Equity
Portfolio present at the Meeting if the holders of more than 50% of the
outstanding Equity Portfolio shares are present or represented by proxy, or (2)
the vote of the holders of more than 50% of the outstanding shares of the Equity
Portfolio.
As discussed previously, each Fund will vote its respective interest in
the Equity Portfolio in proportion to the votes cast by that Fund's shareholders
at a meeting called for the purpose of approving or disapproving proposal
(1)(a). However, since a Fund's votes are proportionate to its interest in the
8
<PAGE>
Equity Portfolio, a majority of the Equity Portfolio's other interest holders
may approve or disapprove the proposal, even though that Fund's shareholders
have voted otherwise.
If the New Agreement is approved by the Equity Portfolio's interest
holders, it will continue in effect as described earlier. If the New Agreement
is not approved by the Equity Portfolio's interest holders, the advisory fees
held in escrow will be paid over to the Equity Portfolio. In such event, the
Equity Portfolio Board will consider what other action is appropriate based upon
the interests of its interest holders. Further, the Funds' Boards will determine
what, if any, appropriate action to take.
THE BOARDS OF TRUSTEES OF THE AADVANTAGE TRUST AND THE MILEAGE TRUST RECOMMEND
THAT YOU VOTE "FOR" PROPOSAL (1)(A).
PROPOSAL (1)(B): ELECTION OF EIGHT TRUSTEES TO THE BOARD OF TRUSTEES OF THE
EQUITY 500 INDEX PORTFOLIO
The Equity Portfolio's Independent Trustees recently selected, and the
Equity Portfolio Board nominated, the individuals named below ("Trustee
Nominees") at a meeting held on July 27, 1999. The names and ages of the Trustee
Nominees, their principal occupations during the past five years and certain of
their other affiliations are provided below. No Trustee or Trustee Nominee of
the Equity Portfolio serves or will serve as an officer of the Equity Portfolio.
Each of the Trustee Nominees has agreed to serve if elected at the Special
Meeting. If any Trustee Nominee is unable or unavailable to serve, the persons
named in the proxy card will vote the proxies for such other person as the
Equity Portfolio Board may recommend.
The following table sets forth the current names, ages, position with
the Equity Portfolio, and principal occupation of each Trustee Nominee:
<TABLE>
<CAPTION>
TRUSTEE NOMINEES
MEMBERSHIPS ON THE BOARD OF
OTHER REGISTERED INVESTMENT
POSITION WITH THE PRINCIPAL OCCUPATIONS DURING COMPANIES AND OTHER
NAME AND AGE EQUITY PORTFOLIO LAST FIVE YEARS PUBLICLY HELD COMPANIES
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles P. Biggar** Trustee Since Retired; formerly Vice None
Age: 68 1991 President of International
Business Machines and
President of the National
Services and the Field
Engineering Divisions of IBM
9
<PAGE>
S. Leland Dill** Trustee Since Retired; formerly Partner of Director, Coutts (U.S.A.)
Age: 69 1991 KPMG Peat Marwick International; Trustee,
Phoenix-Zweig Trust and
Phoenix - Euclid Market
Neutral Fund; Director,
Vintners International
Company Inc.; Director,
Coutts Trust Holdings
Ltd; Director, Coutts
Group; General Partner
of Pemco (an investment
company registered
under the Act)
Martin J. Gruber Nomura Professor of Finance, Trustee, TIAA pension
Age: 62 Leonard N. Stern School of fund; Trustee, Cowen
Business, New York Mutual Funds; Trustee,
University (since 1964) Japan Equity Fund;
Trustee, Taiwan Equity
Fund
Richard Hale* Managing Director, Deutsche Director, Flag Investors
Age: 54 Asset Management (Americas) Funds (registered
investment companies);
Director and President,
Investment Company
Capital Corp.
(registered investment
adviser)
Richard J. Herring Jacob Safra Professor of None
Age: 53 International Banking,
Professor of Finance,
Finance Department, and Vice
Dean, The Wharton School,
University of Pennsylvania
(since 1972)
Bruce E. Langton Retired, Member, Pension and Trustee, Allmerica
Age: 68 Thrift Plans and Investment Financial Mutual Funds
Committee, Unilever U.S. Director, TWA Pilots
Corporation (1989 to present) Directed Account Plan and
401(k) Plan (1998 to
present)
Philip Saunders, Jr.** Trustee Since Principal, Philip Saunders None
Age: 63 1991 Associates (Economic and
Financial Analysis); President,
John Hancock Home Mortgage
Corporation; and Senior Vice
President of Treasury and
Financial Services, John
Hancock Mutual Life Insurance
Company, Inc.
Harry Van Benschoten Retired (since 1987); None
Age: 71 Director, Canada Life
Insurance Corporation of New
York
- -----------------------
</TABLE>
* "Interested Person" within the meaning of Section 2(a)(19) of the Act.
Mr. Hale is a Managing Director of Deutsche Asset Management (Americas).
** Member of the Audit Committee of the Equity Portfolio.
10
<PAGE>
The Equity Portfolio Board has established an Audit Committee that meets
with the Equity Portfolio's independent accountants to review its financial
statements, adequacy of internal controls and accounting procedures and
policies, and reports on these matters to the Equity Portfolio's entire Board.
The Independent Trustees of the Equity Portfolio Board, who constitute 100% of
the membership of the current Equity Portfolio Board, select and nominate the
new trustee nominees who are not "interested persons" as determined under the
1940 Act. The Equity Portfolio Board does not have a compensation committee.
During 1998, the Equity Portfolio Board held 4 meetings and the Audit Committee
held 2 meetings. No Trustee attended less than 75% of applicable meetings. If
Richard Hale is elected, he will not be a member of the Audit Committee.
The following table sets forth the compensation received by the Trustee
Nominees for their services to the Equity Portfolio and Bankers Trust Fund
Complex (as defined below) during the calendar year ended December 31, 1998. In
addition to the fees listed below, the Trustees also are reimbursed for all
reasonable expenses incurred during the execution of their duties for the Equity
Portfolio and Bankers Trust Fund Complex.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Aggregate Pension or Retirement Estimated Total Compensation
Compensation Benefits Accrued as Annual From the Bankers Trust
from the Equity Part of the Equity Benefits upon Fund Complex*
Name of Trustee Portfolio Portfolio's Expenses Retirement Paid to Trustees
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Charles P. Biggar $ 1,148 N/A N/A $ 36,250
- ----------------------------------------------------------------------------------------------------
S. Leland Dill $ 971 N/A N/A $ 36,250
- ----------------------------------------------------------------------------------------------------
Martin J. Gruber N/A N/A N/A $ 36,250
- ----------------------------------------------------------------------------------------------------
Richard Hale N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------
Richard J. Herring N/A N/A N/A $ 36,250
- ----------------------------------------------------------------------------------------------------
Bruce E. Langton N/A N/A N/A $ 36,250
- ----------------------------------------------------------------------------------------------------
Philip Saunders, Jr. $ 977 N/A N/A $ 36,250
- ----------------------------------------------------------------------------------------------------
Harry Van Benschoten N/A N/A N/A $ 36,250
</TABLE>
- ---------------------
* The "Bankers Trust Fund Complex" consists of the Equity Portfolio, as
well as BT Institutional Funds, BT Pyramid Mutual Funds, BT Advisor Funds, BT
Insurance Funds Trust, BT Investment Portfolios, Cash Management Portfolio,
Intermediate Tax Free Portfolio, Tax Free Money Portfolio, NY Tax Free Money
Portfolio, Treasury Money Portfolio, International Equity Portfolio, Capital
Appreciation Portfolio and Asset Management Portfolio.
The following table sets forth the names, ages, and position of the
executive officers of the Equity Portfolio and length of service in such
position, and principal occupations during the past five years.
11
<PAGE>
POSITION WITH THE EQUITY PORTFOLIO
NAME AND AGE AND PRINCIPAL OCCUPATIONS
- ------------ -------------------------
John Y. Keffer President and Chief Executive Officer since
Age: 57 December 1998; President, Forum Financial Group
L.L.C. and its affiliates; President, ICC
Distributors, Inc.
Charles A. Rizzo Treasurer since July 1999; Vice President and
Age: 41 Department Head, Deutsche Asset Management
(Americas) since April 1998; Senior
Manager, PricewaterhouseCoopers LLP
from October 1993 to April 1998.
Daniel O. Hirsch Secretary since December 1998; Director, Deutsche
Age: 45 Asset Management (Americas) since July 1999;
Principal, BT Alex Brown 1998-1999; Associate
General Counsel, Office of General Counsel, United
States Securities and Exchange Commission from
1993 to 1998.
RECOMMENDATION OF THE EQUITY PORTFOLIO'S BOARD
At its meeting on July 27, 1999, the Equity Portfolio Board, based on a
recommendation of the incumbent Independent Trustees, unanimously approved the
nomination of the Trustee Nominees. In reaching this conclusion, the Equity
Portfolio Board obtained from the Trustee Nominees such information as they
deemed reasonably necessary to approve the Trustee Nominees and considered a
number of factors, including the nature, scope and quality of services that the
Trustee Nominees would likely provide to the Equity Portfolio, and the
desirability of maintaining compliance with Section 15(f) of the 1940 Act. Based
on these factors, the Equity Portfolio Board determined that the election of the
Trustee Nominees is in the best interest of the Equity Portfolio and its
interest holders.
Therefore, after careful consideration, the Equity Portfolio Board,
including the Independent Trustees, recommend the approval of the election of
Trustee Nominees.
VOTE REQUIRED
Approval of this proposal requires the affirmative vote of a plurality
of votes cast in person or by proxy.
If the Trustee Nominees are elected, each Trustee Nominee will serve
until his successor is duly elected and qualified or until his earlier
resignation or removal. If the Trustee Nominees are not elected, the Equity
Portfolio Board will consider what action is appropriate based upon the
interests of the Equity Portfolio and its interest holders.
12
<PAGE>
THE BOARDS OF TRUSTEES OF THE AADVANTAGE TRUST AND THE MILEAGE TRUST RECOMMEND
THAT YOU VOTE "FOR" PROPOSAL (1)(B).
PROPOSAL (1)(C): RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT
ACCOUNTANTS OF THE EQUITY 500 INDEX PORTFOLIO
The Equity Portfolio Board, including a majority of the Independent
Trustees, have approved the selection of PricewaterhouseCoopers LLP to serve as
independent accountants for the Equity Portfolio for the current fiscal year.
PricewaterhouseCoopers LLP has served as independent accountants of the Equity
Portfolio since its inception and has advised the Equity Portfolio that they
have no direct or indirect financial interest in the Equity Portfolio.
PricewaterhouseCoopers LLP also has served as independent accountants of the
Funds since their inception. One or more representatives of
PricewaterhouseCoopers LLP are not expected to be present at the Meeting and,
thus, are not expected to make a statement; however, one or more representatives
will be available by telephone to respond to appropriate questions posed by
shareholders or management.
VOTE REQUIRED
Ratification of this proposal requires a majority of the votes cast at
the meeting in person or by proxy.
THE BOARDS OF TRUSTEES OF THE AADVANTAGE TRUST AND THE MILEAGE TRUST RECOMMEND
THAT YOU VOTE "FOR" PROPOSAL (1)(C).
SHAREHOLDER PROPOSALS
As a general matter, the AAdvantage Trust and the Mileage Trust do not
hold annual or other regular meetings of shareholders. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to their fund at 4333
Amon Carter Boulevard, MD 5645, Fort Worth, Texas 76155. In addition, the
AAdvantage Trust and the Mileage Trust are required to convene a special
shareholders' meeting upon written request for such a meeting by their
respective shareholders owning at least ten percent of their outstanding shares
for the purpose of voting on the removal of any Trustee or for any other
purpose.
OTHER BUSINESS
Management knows of no business to be presented to the Meeting other
than the matters set forth in this Proxy Statement, but should any other matter
requiring a vote of shareholders
13
<PAGE>
arise, the proxies will vote thereon according to their best judgment and in the
best interests of the Funds.
By order of the Board of Trustees,
ROBERT J. ZUTZ
Secretary
September 13, 1999
IT IS IMPORTANT THAT YOU VOTE PROMPTLY
ACCORDING TO THE INSTRUCTIONS ON THE
ENCLOSED PROXY CARD(S).
14
<PAGE>
Exhibit A
[FORM OF INVESTMENT ADVISORY AGREEMENT]
---------------------------------------
AGREEMENT made as of [_________________] by and between [Trust Name], a
(state of organization) (herein called the "Trust") and [________________]
(herein called the "Investment Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940;
WHEREAS, the Trust desires to retain the Investment Adviser to render
investment advisory and other services to the Trust with respect to certain of
its series of shares of beneficial interests as may currently exist or be
created in the future (each, a "Fund") as listed on Exhibit A hereto, and the
Investment Adviser is willing to so render such services on the terms
hereinafter set forth;
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. APPOINTMENT. The [Trust] [Investment Adviser] hereby appoints the
Investment Adviser to act as investment adviser to each Fund for the period and
on the terms set forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. MANAGEMENT. Subject to the supervision of the [Board of Trustees of
the Trust] [Investment Adviser], the Investment Adviser will provide a
continuous investment program for the Fund, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Fund. The Investment Adviser will determine from time to time
what securities and other investments will be purchased, retained or sold by
each Fund. The Investment Adviser will provide the services rendered by it
hereunder in accordance with the investment objective(s) and policies of each
Fund as stated in the Fund's then-current prospectus and statement of additional
information (or the Fund's then current registration statement on Form N-1A as
filed with the Securities and Exchange Commission (the "SEC") and the
then-current offering memorandum if the Fund is not registered under the
Securities Act of 1933, as amended ("1933 Act"). The Investment Adviser further
agrees that:
(a) it will conform with all applicable rules and regulations of
the SEC (herein called the "Rules") and with all applicable provisions of the
1933 Act; as amended, the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Investment Company Act of 1940, as amended (the "1940 Act"); and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and will, in
addition, conduct its activities under this Agreement in accordance with
applicable regulations of the Board of Governors of the Federal Reserve System
pertaining to the investment advisory activities of bank holding companies and
their subsidiaries;
(b) it will place orders pursuant to its investment determinations
for each Fund either directly with the issuer or with any broker or dealer
selected by it. In placing orders with brokers and dealers, the Investment
Adviser will use its reasonable best efforts to obtain the best net price and
the most favorable execution of its orders, after taking into account all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. Consistent with this
obligation, the Investment Adviser may, to the extent permitted by law, purchase
and sell
<PAGE>
portfolio securities to and from brokers and dealers who provide brokerage and
research services (within the meaning of Section 28(e) of the 1934 Act) to or
for the benefit of any fund and/or other accounts over which the Investment
Adviser or any of its affiliates exercises investment discretion. Subject to the
review of the [Trust's Board of Trustees] [Investment Adviser] from time to time
with respect to the extent and continuation of the policy, the Investment
Adviser is authorized to pay to a broker or dealer who provides such brokerage
and research services a commission for effecting a securities transaction which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Investment Adviser determines in
good faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Investment Adviser with respect to the accounts as to which it exercises
investment discretion; and
(c) it will maintain books and records with respect to the
securities transactions of each Fund and will render to the [Trust's Board of
Trustees] [Investment Adviser] such periodic and special reports as the Board
may request.
3. SERVICES NOT EXCLUSIVE. The investment advisory services rendered by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to render similar services to others so long as
its services under this Agreement are not impaired thereby.
4. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
of the Rules under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the [Trust] [Investment Adviser] any of
such records upon request of the [Trust] [Investment Adviser]. The Investment
Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act and to comply in full with the requirements of Rule 204-2 under the
Advisers Act pertaining to the maintenance of books and records.
5. EXPENSES. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of purchasing securities (including brokerage
commissions, if any) for the Fund.
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, [_________] will pay the Investment Adviser, and the
Investment Adviser will accept as full compensation therefor, fees, computed
daily and payable monthly, on an annual basis equal to the percentage set forth
on Exhibit A hereto of that Fund's average daily net assets.
7. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER INDEMNIFICATION.
(a) The Investment Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by a Fund in connection with
the matters to which this Agreement relates, except a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Adviser in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement;
(b) Subject to the exceptions and limitations contained in Section
7(c) below:
(i) the Investment Adviser (hereinafter referred to as a
"Covered Person") shall be indemnified by the respective Fund to the fullest
extent permitted by law, against liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or proceeding
in which he becomes involved, as a party or otherwise, by virtue of his being or
having been the Investment Adviser of the Fund, and against amounts paid or
incurred by him in the settlement thereof;
- 2 -
<PAGE>
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(c) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the [Trust] [Investment
Adviser] or to one or more Funds' investors by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office, or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of a Fund; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office;
(A) by the court or other body approving the settlement;
or
(B) by at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to the matter based upon
a review of readily available facts (as opposed to a full trial-type inquiry);
or
(C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a full trial-type
inquiry); provided, however, that any investor in a Fund may, by appropriate
legal proceedings, challenge any such determination by the Trustees or by
independent counsel.
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the [Trust] [Investment Adviser], shall be
severable, shall not be exclusive of or affect any other rights to which any
Covered Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be a Covered Person and shall inure to the benefit of the
successors and assigns of such person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel and any other persons, other
than a Covered Person, may be entitled by contract or otherwise under law.
(e) Expenses in connection with the preparation and presentation of
a defense to any claim, suit or proceeding of the character described in
subsection (b) of this Section 7 may be paid by the [Trust] [Investment Adviser]
on behalf of the respective Fund from time to time prior to final disposition
thereto upon receipt of an undertaking by or on behalf of such Covered Person
that such amount will be paid over by him to the [Trust] [Investment Adviser] on
behalf of the respective Fund if it is ultimately determined that he is not
entitled to indemnification under this Section 7; provided, however, that either
(i) such Covered Person shall have provided appropriate security for such
undertaking or (ii) the [Trust] [Investment Adviser] shall be insured against
losses arising out of any such advance payments, or (iii) either a majority of
the Trustees who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts as opposed to a
trial-type inquiry or full investigation, that there is reason to believe that
such Covered Person will be entitled to indemnification under this Section 7.
8. DURATION AND TERMINATION. This Agreement shall be effective as to a
Fund as of the date the Fund commences investment operations after this
Agreement shall have been approved by the Board of Trustees of the Trust with
respect to that Fund and the Investor(s) in the Fund in the manner contemplated
by Section 15 of the 1940 Act and, unless sooner terminated as provided herein,
shall continue until the second anniversary of such date. Thereafter, if not
terminated, this Agreement shall continue in effect as to such Fund for
successive periods of 12 months each, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board of Trustees of the Trust who are not parties to this Agreement or
- 3 -
<PAGE>
Interested Persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or (b) by Vote of a Majority of the
Outstanding Voting Securities of the Trust; provided, however, that this
Agreement may be terminated by the Trust at any time, without the payment of any
penalty, by the Board of Trustees of the Trust, by Vote of a Majority of the
Outstanding Voting Securities of the Trust on 60 days' written notice to the
Investment Adviser, or by the Investment Adviser as to the [Trust] [Investment
Adviser] at any time, without payment of any penalty, on 90 days' written notice
to the [Trust] [Investment Adviser]. This Agreement will immediately terminate
in the event of its assignment (as used in this Agreement, the terms "Vote of a
Majority of the Outstanding Voting Securities," "Interested Person" and
"Assignment" shall have the same meanings as such terms have in the 1940 Act and
the rules and regulatory constructions thereunder.)
9. AMENDMENT OF THIS AGREEMENT. No material term of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of a material term of this
Agreement shall be effective with respect to a Fund, until approved by Vote of a
Majority of the Outstanding Voting Securities of that Fund.
10. REPRESENTATIONS AND WARRANTIES. The Investment Adviser hereby
represents and warrants as follows:
(a) [The Investment Adviser is exempt from registration under the
1940 Act:]
(b) The Investment Adviser has all requisite authority to enter
into, execute, deliver and perform its obligations under this Agreement;
(c) This Agreement is legal, valid and binding, and enforceable in
accordance with its terms; and
(d) The performance by the Investment Adviser of its obligations
under this Agreement does not conflict with any law to which it is subject.
11. COVENANTS. The Investment Adviser hereby covenants and agrees that,
so long as this Agreement shall remain in effect:
(a) The Investment Adviser shall remain either exempt from, or
registered under, the registration provisions of the Advisers Act; and
(b) The performance by the Investment Adviser of its obligations
under this Agreement shall not conflict with any law to which it is then
subject.
12. NOTICES. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, (a) to the Investment Adviser, Mutual Funds Services, 130 Liberty
Street (One Bankers Trust Plaza), New York, New York 10006, and (b) to the
Trust, c/o BT Alex. Brown, Incorporated, One South Street, Baltimore, Maryland
21202.
13. WAIVER. With full knowledge of the circumstances and the effect of
its action, the Investment Adviser hereby waives any and all rights which it may
acquire in the future against the property of any investor in a Fund, other than
shares in that Fund, which arise out of any action or inaction of the [Trust]
[Investment Adviser] under this Agreement.
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
- 4 -
<PAGE>
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by the
laws of the ______________________________, without reference to principles of
conflicts of law. The Trust is organized under the laws of
_________________________________ pursuant to a ______________ dated
______________. No Trustee, officer or employee of the Trust shall be personally
bound by or liable hereunder, nor shall resort be had to their private property
for the satisfaction of any obligation or claim hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
[SIGNATORIES]
- 5 -
<PAGE>
EXHIBIT A
TO
INVESTMENT ADVISORY AGREEMENT
MADE AS OF ____________________
BETWEEN
[Trust Name] AND [______________]
Fund Investment Advisory Fee
- ---- -----------------------
<PAGE>
APPENDIX A
AMERICAN AADVANTAGE S&P 500 INDEX FUND
AMERICAN AADVANTAGE S&P 500 INDEX MILEAGE FUND
Combined Special Meeting of Shareholders
October 8, 1999
The undersigned hereby appoints as proxies William F. Quinn, Barry Y. Greenberg
and Christina E. Frazier, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated on the reverse,
all the shares of each of the above-referenced funds ("Fund") held of record by
the undersigned on September 8, 1999, at the meeting of shareholders to be held
on October 8, 1999, or any adjournment thereof, with discretionary power to vote
upon such other business as may properly come before the meeting. Unless
indicated to the contrary, this proxy shall be deemed to grant authority to vote
"FOR" all proposals.
If any other matters properly come before the meeting about which the proxy
holders were not aware prior to the time of the solicitation, authorization is
given the proxy holders to vote in accordance with the views of management
thereon. Management is not aware of any such matters at this time.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES WITH RESPECT TO THE
FUND.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR" ALL PROPOSALS.
CONTROL NUMBER
ACCOUNT NUMBER
To vote by Telephone
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Call 1-800-690-6903
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Go to web site www.proxyvote.com.
3) Enter the 12-digit Control Number set forth on the Proxy Card and follow the
simple instructions.
To vote by Mail
1) Read the Proxy Statement and have the Proxy Card below at hand.
2) Record your vote on the Proxy Card.
<PAGE>
3) Sign, date and mail the Proxy Card using the enclosed, postage-paid envelope.
Receipt of the Notice of Meeting and the Proxy Statement, dated September 13,
1999, is hereby acknowledged.
(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 corporation officer, please give your FULL title.)
YOUR VOTE IS IMPORTANT. PLEASE RESPOND PROMPTLY.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
AMERICAN AADVANTAGE S&P 500 INDEX FUND
AMERICAN AADVANTAGE S&P 500 INDEX MILEAGE FUND
1) The approval of a new investment advisory agreement between the Equity 500
Index Portfolio (Portfolio) and Bankers Trust Company
For / / Against / / Abstain / /
2) The election of eight Trustees to the Board of Trustees of the Portfolio:
Election of Messrs: 1) Biggar, 2) Dill, 3) Gruber, 4) Hale, 5) Herring
6) Langton, 7) Saunders and 8) Van Benschoten
For All / / Withhold All / / For All Except / / (check one)
TO WITHHOLD AUTHORITY TO VOTE, MARK "FOR ALL EXCEPT" AND WRITE THE
NOMINEE'S NAME HERE ______________________.
3) The ratification of the selection of PricewaterhouseCoopers LLP as the
independent accountants for the Portfolio for the current fiscal year.
For / / Against / / Abstain / /
Signature Date Signature (Joint Owners) Date
