AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 24, 1996
FILE NO. 811-06071
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 21
BT INSTITUTIONAL FUNDS
(Exact Name of Registrant as Specified in Charter)
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 617-423-0800
Philip W. Coolidge Copies to: Burton M. Leibert, Esq.
Signature Broker-Dealer Services, Inc. Willkie Farr & Gallagher
6 St. James Avenue One Citicorp Center
Boston, Massachusetts 02116 153 East 53rd Street
(Name and Address of Agent for Service) New York, New York 10022
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES OF BENEFICIAL
INTEREST PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940.
REGISTRANT WILL FILE THE NOTICE REQUIRED BY RULE 24F-2 ON OR ABOUT AUGUST 30,
1997 FOR REGISTRANT'S FISCAL YEAR ENDED JUNE 30, 1997.
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EXPLANATORY NOTE
This Registration Statement has been filed by BT Institutional Funds (the
"Registrant") pursuant to Section 8(b) of the Investment Company Act of 1940, as
amended. However, shares of beneficial interest of Institutional Daily Assets
Fund (the "Fund"), a series of the Registrant, are not being registered under
the Securities Act of 1933 (the "1933 Act") since such shares will be issued by
the Registrant solely in private placement transactions which do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act. Shares of
the Fund may only be purchased by "accredited investors," as that term is
defined in Rule 501(a) of Regulation D under the Securities Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any shares of beneficial interest of the Fund.
Institutional Cash Management Fund, Institutional Treasury Money Fund,
Institutional NY Tax Free Money Fund, Institutional Tax Free Money Fund, Equity
500 Index Fund, Institutional Cash Reserves, Institutional Liquid Assets Fund,
and 100% Treasury Fund are each a series of shares of the Registant and are each
offered by separate Prospectuses included in Post-Effective Amendment No. 17 to
the Regisrant's Registration Statement. This Amendment does not relate to, amend
or otherwise affect any of the separate Prospectuses contained in Post-Effective
Amendment No. 17 and, therefore, pursuant to Rule 485(d) under the Securities
Act of 1933, as amended (the "1933 Act"), does not affect the effectiveness of
such Post-Effective Amendments.
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PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
See "Investment Objective and Policies" and "Risk Factors" in the
Private Placement Memorandum which is attached hereto.
Item 5. Management of the Fund.
See "Summary of Fund Expenses" and "Management of the Fund and Trust"
in the Private Placement Memorandum attached hereto.
Item 6. Capital Stock and Other Securities.
See "Management of the Trust and Fund -- Organization of the Trust"
and "Taxation" in the Private Placement Memorandum attached hereto.
Item 7. Purchase of Securities Being Offered.
See "Purchases and Redemptions of Shares" in the Private Placement
Memorandum attached hereto.
Item 8. Redemption or Repurchase.
See "Purchases and Redemptions of Shares" in the Private Placement
Memorandum attached hereto.
Item 9. Pending Legal Proceedings.
Not applicable.
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.
BT INSTITUTIONAL FUNDS
Prospective
Investor Copy #
CONFIDENTIAL PRIVATE OFFERING MEMORANDUM
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September , 1996
INSTITUTIONAL DAILY ASSETS FUND
BANKERS TRUST COMPANY
INVESTMENT ADVISER AND ADMINISTRATOR
SIGNATURE BROKER-DEALER SERVICES, INC.
PLACEMENT AGENT
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
DO NOT COPY OR CIRCULATE.
September , 1996
CONFIDENTIAL PRIVATE OFFERING MEMORANDUM
BT INSTITUTIONAL FUNDS - INSTITUTIONAL DAILY ASSETS FUND
The Institutional Daily Assets Fund (the "Fund") seeks a high level of current
income consistent with liquidity and the preservation of capital through
investment in high-quality money market instruments. The Fund is a registered
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act") and is a diversified series of BT Institutional Funds, a
Massachusetts business trust (the "Trust"). Bankers Trust Company serves as the
Fund's investment adviser. The Fund is a management investment company commonly
known as a money market fund.
Please read this Confidential Private Offering Memorandum (the "Memorandum")
carefully before investing and retain it for future reference. It contains
important information about the Fund that investors should know before
investing.
A Confidential Statement of Additional Information with respect to the Fund
("SAI") with the same date has been filed with the Securities and Exchange
Commission, and is incorporated herein by reference. A copy of the SAI is
available without charge by calling the Fund at (212) 250-6934.
Three copies of a Subscription Agreement for use in subscribing to purchase
shares of the Fund accompany delivery of this Memorandum. In order to purchase
shares of the Fund, a prospective investor must satisfactorily complete, execute
and deliver each copy of the Subscription Agreement to Bankers Trust Company,
130 Liberty Street, New York, New York 10006.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, BANKERS TRUST COMPANY OR ANY OTHER BANKING OR DEPOSITORY INSTITUTION, AND
THE SHARES ARE NOT FEDERALLY GUARANTEED OR INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE U.S. GOVERNMENT, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. THE FUND INTENDS TO MAINTAIN A CONSTANT $1.00 PER SHARE NET ASSET
VALUE, ALTHOUGH THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.
BT0608a.
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THE SECURITIES DESCRIBED HEREIN ARE OFFERED PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE
NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY OTHER REGULATORY AUTHORITY OF ANY JURISDICTION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE BEING OFFERED FOR INVESTMENT ONLY TO INVESTORS WHO
QUALIFY AS BOTH (1) "ACCREDITED INVESTORS" AS DEFINED UNDER REGULATION D UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND (2) INSTITUTIONAL INVESTORS. SHARES
OF THE FUND ARE NOT BEING OFFERED TO INDIVIDUALS OR TO ENTITIES ORGANIZED FOR
THE PURPOSE OF INVESTING ON BEHALF OF INDIVIDUALS.
BANKERS TRUST COMPANY
Investment Adviser and Administrator
BT0608a.
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FOR NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE
HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE ATTORNEY GENERAL OR THE SECRETARY OF STATE THAT ANY
DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY
SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR TRANSACTION MEANS THAT THE ATTORNEY GENERAL HAS PASSED IN ANY WAY
UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY
PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE,
TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT, ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
FOR GEORGIA INVESTORS
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE
SECTION 10-5-9 OF THE `GEORGIA SECURITIES ACT OF 1973,' AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT
TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.
FOR FLORIDA INVESTORS
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES AND
INVESTOR PROTECTION ACT.
IF SALES ARE MADE TO FIVE (5) OR MORE INVESTORS IN FLORIDA, ANY FLORIDA INVESTOR
MAY, AT THE INVESTOR'S OPTION, VOID ANY PURCHASE HEREUNDER WITHIN A PERIOD OF
THREE (3) DAYS AFTER THE INVESTOR (A) FIRST TENDERS OR PAYS TO THE ISSUER, AN
AGENT OF THE ISSUER OR AN ESCROW AGENT THE CONSIDERATION REQUIRED HEREUNDER OR
(B) DELIVERS ITS EXECUTED SUBSCRIPTION AGREEMENT, WHICHEVER OCCURS LATER. TO
ACCOMPLISH THIS, IT IS SUFFICIENT FOR A FLORIDA INVESTOR TO SEND A LETTER OR
TELEGRAM TO THE ISSUER WITHIN SUCH THREE (3) DAY PERIOD, STATING THAT THE
INVESTOR IS VOIDING AND RESCINDING THE PURCHASE. IF AN INVESTOR SENDS A LETTER,
IT IS PRUDENT TO DO SO BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO INSURE
THAT THE LETTER IS RECEIVED AND TO EVIDENCE THE TIME OF MAILING.
INVESTORS WILL BE REQUIRED TO REPRESENT THAT THEY MEET CERTAIN FINANCIAL
REQUIREMENTS AND THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS, RISKS AND
MERITS OF AN INVESTMENT IN THE FUND.
NO RESALE OF SHARES MAY BE MADE UNLESS THE SHARES ARE SUBSEQUENTLY REGISTERED
UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THIS CONFIDENTIAL PRIVATE OFFERING MEMORANDUM HAS BEEN PREPARED ON A
CONFIDENTIAL BASIS SOLELY FOR THE INFORMATION OF THE RECIPIENT AND MAY NOT BE
REPRODUCED, PROVIDED TO OTHERS OR USED FOR ANY OTHER PURPOSE.
NO PERSON HAS BEEN AUTHORIZED TO MAKE REPRESENTATIONS OR GIVE ANY INFORMATION
WITH RESPECT OF THE SHARES, EXCEPT THE INFORMATION CONTAINED HEREIN OR IN THE
TRUST'S REGISTRATION STATEMENT FILED UNDER THE 1940 ACT.
BT0608a.
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TABLE OF CONTENTS
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Summary of Fund Expenses 4
Fund Financial Highlights 4
Investment Objective and Policies 5
Risk Factors 10
Net Asset Value 10
Purchase and Redemption of Shares 11
Taxation and Distributions 12
Performance Information and Reports 13
Management of the Fund and Trust 14
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SUMMARY OF FUND EXPENSES
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The following table provides (i) a summary of expenses relating to purchases and
sales of shares of Institutional Daily Assets Fund (the "Fund") and the
estimated aggregate annual operating expenses of the Fund, as a percentage of
average net assets of the Fund and (ii) an example illustrating the dollar cost
of such expenses on a $1,000 investment in the Fund.
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Annual Operating Expenses
(as a percentage of the average daily net assets of the Fund)
Investment advisory fee 0.10%
Distribution (Rule 12b-1) Fee None
Other expenses (after reimbursements or waivers) 0.02
Total operating expenses (after reimbursements or waivers) 0.12%
EXAMPLE 1 year 3 years
You would pay the following expenses on a $1,000 investment,
assuming: (1) 5% annual return and (2) redemption at
the end of each time period $1 $4
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The expense table and the example above show the estimated costs and expenses
that an investor will bear directly or indirectly as a shareholder of the Fund.
The expense table and the example reflect a voluntary undertaking by Bankers
Trust Company ("Bankers Trust") to waive or reimburse expenses such that the
total operating expenses will not exceed 0.12% of the Fund's average net assets
annually. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES AND ACTUAL EXPENSES, PRIOR TO THE APPLICATION OF BANKERS TRUST'S
WAIVER OR REIMBURSEMENT OF SUCH EXPENSES, MAY BE GREATER OR LESS THAN THOSE
SHOWN. Moreover, while each example assumes a 5% annual return, actual
performance will vary and may result in a return greater or less than 5%.
Shares of the Fund are sold by Signature Broker-Dealer Services, Inc.
("Signature") as the Fund's placement agent (the "Placement Agent") primarily to
institutional customers of Bankers Trust that participate in Bankers Trust's
securities lending program.
For more information with respect to the expenses of the Fund see "Management of
the Fund and Trust" herein.
BT0608a.
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FUND FINANCIAL HIGHLIGHTS
The Fund will have a fiscal year-end of June 30. As this is the Fund's first
fiscal year, financial information with respect to the Fund is not available at
this time.
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INVESTMENT OBJECTIVE AND POLICIES
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The Fund seeks a high level of current income consistent with liquidity and the
preservation of capital through investment in high-quality money market
instruments. The Fund offers investors a convenient means of investing cash
collateral received in connection with securities lending transactions in a
diversified portfolio of short-term money market instruments.
There can be no assurance that the investment objective of the Fund will be
achieved. The Fund's investment objective is not a fundamental policy and may be
changed upon 30 days written notice to, but without the approval of, the Fund's
shareholders. If there is a change in the Fund's investment objective, the
Fund's shareholders should consider whether the Fund remains an appropriate
investment in light of their then-current needs.
The following is a discussion of the various investments and investment policies
of the Fund. Additional information about the investment policies of the Fund
appears in the Confidential Statement of Additional Information ("SAI") of the
Fund.
The Fund will attempt to achieve its investment objective by investing in the
following money market instruments:
OBLIGATIONS OF BANKS AND OTHER FINANCIAL INSTITUTIONS. The Fund may invest in
U.S. dollar-denominated fixed rate or variable rate obligations of U.S. or
foreign financial institutions, including banks, which are rated in the highest
short-term rating category by any two nationally recognized statistical rating
organizations ("NRSROs") (or one NRSRO if that NRSRO is the only such NRSRO
which rates such obligations) or, if not so rated, are believed by Bankers
Trust, acting under the supervision of the Board of Trustees of the Fund, to be
of comparable quality. Financial institution obligations in which the Fund may
invest include, but are not limited to, certificates of deposit, bankers'
acceptances, bank time deposits, commercial paper and other U.S.
dollar-denominated instruments issued or supported by the credit of U.S. or
foreign financial institutions, including banks. If Bankers Trust, acting under
the supervision of the Board of Trustees of the Fund, deems the instruments to
present minimal credit risk, the Fund may invest in obligations of foreign banks
or foreign branches and subsidiaries of U.S. and foreign financial institutions,
including banks. Investments in these obligations may entail risks that are
different from those of investments in obligations of U.S. financial
institutions, including banks, because of differences in political, regulatory
and economic systems and conditions. These risks include future political and
economic developments, currency blockage, the possible imposition of withholding
taxes on interest payments, differing reserve requirements, reporting and
recordkeeping requirements and accounting standards, possible seizure or
nationalization of deposits, difficulty or inability of pursuing legal remedies
and obtaining judgments in foreign courts, possible establishment of exchange
controls or the adoption of other foreign governmental restrictions that might
affect adversely the payment of principal and interest on financial institution
obligations. Under normal market conditions, the Fund will invest more than 25%
of its assets in te bank and other financial institution obligations described
above. The Fund's concentration of its investments in the obligations of banks
and other financial institutions will cause the Fund to be subject to the risks
peculiar to these industries to a greater extent than if its investments were
not so concentrated.
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COMMERCIAL PAPER. The Fund may invest in fixed rate or variable rate commercial
paper, including variable rate master demand notes, issued by U.S. or foreign
corporations or financial institutions. Commercial paper when purchased by the
Fund must be rated in the highest short-term rating category by any two NRSROs
(or one NRSRO if that NRSRO is the only such NRSRO which rates such security)
or, if not so rated, must be believed by Bankers Trust, acting under the
supervision of the Board of Trustees of the Fund, to be of comparable quality.
Any commercial paper issued by a foreign corporation and purchased by the Fund
must be U.S. dollar-denominated and must not be subject to foreign withholding
tax at the time of purchase. Investing in foreign commercial paper generally
involves risks similar to those described above relating to obligations of
foreign banks or foreign branches and subsidiaries of U.S. and foreign banks.
Variable rate master demand notes are unsecured instruments that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. Because variable rate master demand notes are direct lending
arrangements between the Fund and the issuer, they are not ordinarily traded.
Although no active secondary market may exist for these notes, the Fund will
purchase only those notes under which it may demand and receive payment of
principal and accrued interest daily or may resell the note to a third party.
While the notes are not typically rated by credit rating agencies, issuers of
variable rate master demand notes must satisfy Bankers Trust,
acting under the supervision of the Board of Trustees of the Fund, that the same
criteria as set forth above for issuers of commercial paper are met. In the
event an issuer of a variable rate master demand note defaulted on its payment
obligation, the Fund might be unable to dispose of the note because of the
absence of a secondary market and could, for this or other reasons, suffer a
loss to the extent of the default. The face maturities of variable rate notes
may exceed 397 days. (See "Quality and Maturity of the Fund's Securities"
herein.)
U.S. GOVERNMENT OBLIGATIONS. The Fund may invest in obligations issued or
guaranteed by the U.S. Treasury or by agencies or instrumentalities of the U.S.
Government ("U.S. Government Obligations"). Obligations of certain agencies and
instrumentalities of the U.S. Government, such as short-term obligations of the
Government National Mortgage Association, are supported by the "full faith and
credit" of the U.S. Government; others, such as those of the Export-Import Bank
of the U.S., are supported by the right of the issuer to borrow from the U.S.
Treasury; others, such as those of the Federal National Mortgage Association,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; and still others, such as those of the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
No assurance can be given that the U.S. Government would provide financial
support to U.S. Government-sponsored instrumentalities if it is not obligated to
do so by law.
OTHER DEBT OBLIGATIONS. The Fund may invest in deposits, bonds, notes and
debentures of issuers that at the time of purchase have outstanding short-term
obligations meeting the above short-term rating requirements, or if there are no
such short-term ratings, are determined by Bankers Trust, acting under the
supervision of the Board of Trustees of the Fund, to be of comparable quality
and are rated in the top two highest long-term rating categories by two NRSROs
(or one NRSRO if that NRSRO is the only such NRSRO which rates the security).
ASSET-BACKED SECURITIES. The Fund may also invest in securities generally
referred to as asset-backed securities, which directly or indirectly represent a
participation interest in, or are secured by and payable from, a stream of
payments generated by particular assets such as motor vehicle or credit card
receivables. Asset-backed securities provide periodic payments that generally
consist of both interest and principal payments. Consequently, the life of an
asset-backed security varies with the prepayment and loss experience of the
underlying assets.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreement transactions
with banks and governmental securities dealers approved by the Fund's Board of
Trustees. Under the terms of a typical repurchase agreement, the Fund would
acquire U.S. Government Obligations of any remaining maturity for a relatively
short period (usually not more than one week), subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed price
and time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the underlying
securities will be at least equal at all times to the total amount of the
repurchase obligations, including interest. The Fund bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its obligations
and the Fund is delayed in or prevented from exercising its rights to dispose of
the collateral securities, including the risk of a possible decline in the value
of the underlying securities during the period in which the Fund seeks to assert
these rights. Bankers Trust, acting under the supervision of the Board of
Trustees of the Fund, reviews the creditworthiness of those banks and dealers
with which the Fund enters into repurchase agreements and monitors on an ongoing
basis the value of the securities subject to repurchase agreements to ensure
that it is maintained at the required level.
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REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse repurchase
agreements. In a reverse repurchase agreement the Fund agrees to sell portfolio
securities to financial institutions such as banks and broker-dealers and to
repurchase them at a mutually agreed date and price. At the time the Fund enters
into a reverse repurchase agreement it will earmark cash, U.S. Government
Obligations or other high grade, liquid debt instruments having a value equal to
the repurchase price, including accrued interest. Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Fund may
decline below the repurchase price of the securities. Reverse repurchase
agreements are considered to be borrowings by the Fund for purposes of the
limitations described in "Additional Investment Limitations" below and in the
Fund's SAI. The Fund may only enter into reverse repurchase agreements for
temporary purposes to satisfy redemptions and not for leverage.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. To secure prices deemed
advantageous at a particular time, the Fund may purchase securities on a
when-issued or delayed-delivery basis, in which case delivery of the securities
occurs beyond the normal settlement period; payment for or delivery of the
securities would be made prior to the reciprocal delivery or payment by the
other party to the transaction. The Fund will enter into when-issued or
delayed-delivery transactions for the purpose of acquiring securities and not
for the purpose of leverage. When-issued securities purchased by the Fund may
include securities purchased on a "when, as and if issued" basis under which the
issuance of the securities depends on the occurrence of a subsequent event.
Securities purchased on a when-issued or delayed-delivery basis may expose the
Fund to risk because the securities may experience fluctuations in value prior
to their actual delivery. The Fund does not accrue income with respect to a
when-issued or delayed-delivery security prior to its stated delivery date.
Purchasing securities on a when-issued or delayed-delivery basis can involve the
additional risk that the yield available in the market when the delivery takes
place may be higher than that obtained in the transaction itself. Upon
purchasing a security on a when-issued or delayed-delivery basis, the Fund will
earmark cash, U.S. Government Obligations or other high grade liquid debt
instruments in an amount at least equal to the when-issued or delayed-delivery
commitment.
INVESTMENT IN OTHER INVESTMENT COMPANIES. In accordance with applicable law, the
Fund may invest its assets in other money market funds with comparable
investment objectives. In general, the Fund may not (1) purchase more than 3% of
any other money market fund's voting stock; (2) invest more than 5% of its
assets in any single money market fund; and (3) invest more that 10% of its
assets in other money market funds.
ILLIQUID SECURITIES. The Fund may not invest more than 10% of its net assets in
securities which are illiquid or otherwise not readily marketable (such
securities may include securities which are subject to legal or contractual
restrictions on resale and repurchase agreements with maturities over seven
days). If a security becomes illiquid after purchase by the Fund, the Fund will
normally sell the security as soon as is reasonable practicable unless to do so
would not be in the best interests of shareholders.
Quality and Maturity of the Fund's Securities
The Fund will maintain a dollar-weighted average maturity of 90 days or less.
All securities in which the Fund invests will have or be deemed to have
remaining maturities of 397 days or less on the date of their purchase, will be
denominated in U.S. dollars and will have been granted the required ratings
established herein by two NRSROs (or one NRSRO if that NRSRO is the only such
NRSRO which provides such ratings), or if not so rated, are believed by Bankers
Trust, under the supervision of the Fund's Board of Trustees, to be of
comparable quality. Currently, there are six rating agencies which have been
designated by the SEC as an NRSRO. These organizations and their highest
short-term rating category (which also may be modified by a "+") are: Duff and
Phelps Credit Rating Co., D-1; Fitch Investors Services, LP, F-1; Moody's
Investors Service Inc., Prime-1; Standard & Poor's Rating Services, a Division
of the McGraw Hill Companies, Inc., A-1; IBCA Ltd. and IBCA Inc., A-1; Thomson
BankWatch, Inc., TBW-1. A description of all short and long-term ratings is
provided in the Appendix to the SAI. Bankers Trust, acting under the supervision
of and procedures adopted by the Fund's Board of Trustees, will also determine
that all securities purchased by the Fund present minimal credit risks. Bankers
Trust will cause the Fund to dispose of any security as soon as practicable if
the security is no longer of the requisite quality, unless such action would not
be in the best interest of the Fund. High-quality, short-term instruments may
result in a lower yield than instruments with a lower quality or longer term.
<PAGE>
Additional Investment Limitations
The Fund may not invest more than 25% of its total assets in the securities of
issuers in any single industry (excluding U.S. Government Obligations and
repurchase agreements collateralized by U.S. Government Obligations), except
that, under normal market conditions, more than 25% of the total assets of the
Fund will be invested in obligations of banks and other financial institutions.
As an operating policy, the Fund may not invest more than 5% of its total assets
in the obligations of any one issuer except: (1) as may be permitted by Rule
2a-7 under the 1940 Act; and (2) for U.S. Government Obligations and repurchase
agreements collateralized by U.S. Government obligations, which may be purchased
without limitation. The Fund is also authorized to borrow for temporary purposes
to meet redemptions, including entering into reverse repurchase transactions, in
an amount up to 10% of its total assets and to pledge its assets to the same
extent in connection with these borrowings. At the time of an investment, the
Fund's aggregate holdings of repurchase agreements having a remaining maturity
of more than seven calendar days (or which may not be terminated within seven
calendar days upon notice by the Fund), time deposits having remaining
maturities of more than seven calendar days and other illiquid securities will
not exceed 10% of the Fund's net assets. If changes in the liquidity of certain
securities cause the Fund to exceed such 10% limit, the Fund will take steps to
bring the aggregate amount of its illiquid securities back below 10% of its net
assets as soon as practicable, unless such action would not be in the best
interest of the Fund. The Fund's limitations on investment in a single industry
and on borrowing may not be changed without the approval of the shareholders of
the Fund. All other investment policies and limitations described in this
Memorandum may be changed by a vote of the Fund's Board of Trustees.
The SAI contains further information on the Fund's investment restrictions.
RISK FACTORS
The Fund is designed as a cash management vehicle for institutional investors
seeking high current income approximating money market rates while remaining
liquid with a stable share price. The Fund adheres to the following practices
which enable it to attempt to maintain a $1.00 share price: limiting average
dollar-weighted maturity of the securities held by the Fund to 90 days or less;
buying securities with remaining maturities of 397 days or less as determined
under Rule 2a-7 under the 1940 Act; and buying only high-quality securities with
minimal credit risks. The Fund cannot guarantee a $1.00 share price, but these
practices help to minimize any price fluctuations that might result from rising
or declining interest rates. While the Fund invests in high-quality money market
securities, investors should be aware that an investment in the Fund is not
without risk. All money market instruments, including U.S. Government
Obligations, can change in value when interest rates or an issuer's
creditworthiness changes.
It is expected that money used to purchase Fund shares will be comprised
primarily of cash collateral which the Fund's institutional investors receive in
connection with their participation in Bankers Trust's securities lending
program. The amount of such collateral is subject to periodic fluctuation, and
accordingly the Fund may experience large purchases and redemptions over a
relatively short time period which may impact the Fund's ability to optimize
cash management. To assist the Fund in remaining fully invested, pursuant to its
request the Fund has received an order from the Securities and Exchange
Commission ("SEC") granting the Fund and Bankers Trust permission to jointly
enter into repurchase agreements and other investments with non-affiliated
banks, broker-dealers or other issuers with respect to amounts to be received on
any day. Such investments will be apportioned between the Fund and Bankers Trust
in such a manner as to maximize the investment of cash by the Fund.
NET ASSET VALUE
On each day on which the Fund is open (each such day being a "Valuation Day"),
the net asset value per share of the Fund is calculated at 5:30 p.m., New York
time. The Fund is currently open on each day, Monday through Friday, except (a)
January 1st, Martin Luther King, Jr.'s Birthday (the third Monday in January),
Presidents' Day (the third Monday in February), Memorial Day (the last Monday in
May), July 4th, Labor Day (the first Monday in September), Columbus Day (the
second Monday in October), Veteran's Day (November 11th), Thanksgiving Day (the
last Thursday in November) and December 25th; and (b) the preceding Friday or
the subsequent Monday when one of the calendar determined holidays falls on a
Saturday or Sunday, respectively.
The net asset value per share of the Fund is computed by dividing the value of
the Fund's assets, less all liabilities, by the total number of its shares
outstanding. The Fund's net asset value per share will normally be $1.00.
The Fund values its portfolio securities by using the amortized cost method of
valuation. This method involves valuing each security held by the Fund at its
cost at the time of its purchase and thereafter assuming a constant amortization
to maturity of any discount or premium. Accordingly, immaterial fluctuations in
the market value of the securities held by the Fund will not be reflected in the
Fund's net asset value. All cash receivables and current payments are valued at
face value. Other assets are valued at fair value as determined in good faith by
the Fund's Board of Trustees.
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
Purchase of Shares
The Fund accepts purchase orders for shares of the Fund at the net asset value
per share of the Fund next determined on each Valuation Day. See "Net Asset
Value" above. There is no sales charge on the purchase of shares. There is no
minimum required initial investment amount. Shares of the Fund may be purchased
in only those states where they may be lawfully sold. The Fund and Signature
reserve the right to reject any purchase order.
Investors in the Fund must qualify as both (1) "Accreditied Investors" as
defined under Regulation D of the Securities Act of 1933, as amended and (2)
institutional investors.
Purchase orders for shares of the Fund will receive, on any Valuation Day, the
net asset value next determined following receipt by Bankers Trust, as the
Fund's transfer agent (the "Transfer Agent"), of such order. If a purchase order
is transmitted to the Transfer Agent prior to 5:30 p.m., New York time, and if
payment in the form of federal funds is received on that day by Bankers Trust,
as the Fund's custodian (the "Custodian"), the shareholder will be invested as
of that day and will accrue the dividend declared on that day.
It is anticipated that the majority of investors in the Fund will issue standing
orders, effective on or before 5:30 p.m. of each day on which the Fund is open,
to invest in the Fund cash collateral received in connection with securities
lending transactions. Shares must be purchased in accordance with procedures
established by Bankers Trust and the Placement Agent in connection with
customers' accounts.
Certificates for shares will not be issued. Each shareholder's account will be
maintained by the Transfer Agent. The Transfer Agent may subcontract with other
service providers to perform certain services.
Redemption of Shares
Shareholders may redeem shares at the net asset value per share next determined
on each Valuation Day. It is anticipated that the majority of investors in the
Fund will issue standing orders to Bankers Trust to redeem shares of the Fund as
necessary in connection with such investors' participation in Bankers Trust's
securities lending program. Redemption requests for shares of the Fund
transmitted to the Transfer Agent prior to 5:30 p.m., New York time, on each
Valuation Day will be redeemed on that day at the net asset value per share next
determined, and the redemption proceeds normally will be delivered to the
shareholder's account on that day; no dividend will accrue on the day of
redemption. Payments for redemptions will in any event be made within seven
calendar days following receipt of the request. Within the first five Valuation
Days of each month, the Fund pays dividends for the preceding month. Dividends
will not be reinvested in the Fund. Redemption orders are processed without
charge by the Fund.
TAXATION AND DISTRIBUTIONS
The Trust intends for the Fund to qualify annually and to elect to be treated as
a "regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code").
Provided that the Fund continues to qualify as a regulated investment company,
the Fund will not be subject to U.S. Federal income tax on its investment
company taxable income and net capital gains (the excess of net long-term
capital gains over net short-term capital losses), if any, that it distributes
to shareholders. The Fund intends to distribute to its shareholders, at least
annually, substantially all of its investment company taxable income and net
capital gains, and therefore does not anticipate incurring a Federal income tax
liability.
The Fund determines its net income and realized capital gains, if any, on each
Valuation Day at 5:30 p.m. The Fund declares dividends from its net income on
each Valuation Day and pays dividends in cash for the preceding month within the
first five Valuation Days of each month. The Fund reserves the right to include
realized short-term gains, if any, in such daily dividends. Distributions of the
Fund's realized long-term capital gains, if any, and any undistributed net
realized short-term capital gains are normally declared and paid annually in
cash at the end of the fiscal year in which they were earned to the extent they
are not offset by any capital loss carryforwards.
Dividends paid out of the Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income, provided that such shareholder
is not a tax-exempt entity. Distributions of net capital gains, if any,
designated as capital gain dividends are taxable as long-term capital gains,
regardless of how long the shareholder has held the Fund's shares, and are not
eligible for the dividends-received deduction applicable to corporations.
Shareholders should consult their own tax adviser concerning the application of
federal, state and local taxes to the distributions they receive from the Fund.
The Trust is organized as a Massachusetts business trust and, under current law,
neither the Trust nor the Fund is liable for any income or franchise tax in the
Commonwealth of Massachusetts, provided that the Fund continues to qualify as a
regulated investment company under Subchapter M of the Code.
<PAGE>
PERFORMANCE INFORMATION AND REPORTS
From time to time, the Fund may report its "current yield" and/or "effective
yield" to investors. The Fund will not publicly advertise its performance, nor
make its performance figures available to reporting services. All yield figures
are based on historical earnings and are not intended to indicate future
performance. The "current yield" of the Fund refers to the income generated by
an investment in the Fund over a seven-day period (which period will be stated
in the advertisement). This income is then "annualized;" that is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
The "effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because of the
compounding effect of this assumed reinvestment.
Yield is a function of the quality, composition and maturity of the securities
held by the Fund and operating expenses of the Fund. In particular, the Fund's
yield will rise and fall with short-term interest rates, which can change
frequently and sharply. In periods of rising interest rates, the yield of the
Fund will tend to be somewhat lower than prevailing market rates, and in periods
of declining interest rates, the yield will tend to be somewhat higher. In
addition, when interest rates are rising, the inflow of net new money to the
Fund from the continuous sale of its shares will likely be invested by the Fund
in instruments producing higher yields than the balance of the Fund's
securities, thereby increasing the current yield of the Fund. In periods of
falling interest rates, the opposite can be expected to occur. Accordingly,
yields will fluctuate and do not necessarily indicate future results. While
yield information may be useful in reviewing the performance of the Fund, it may
not provide a basis for comparison with bank deposits, other fixed rate
investments, or other investment companies that may use a different method of
calculating yield.
From time to time reports to shareholders may compare the yield of the Fund to
that of other mutual funds with similar investment objectives or to that of a
particular index. The yield of the Fund might be compared with, for example, the
IBC/Donoghue's Taxable First Tier Institutional Only Money Fund Average, which
is an average compiled by IBC/Donoghue's Money Fund Report, a widely recognized,
independent publication that monitors the performance of money market mutual
funds. Similarly, the yield of the Fund might be compared with rankings prepared
by Micropal Limited and/or Lipper Analytical Services, Inc., which are widely
recognized, independent services that monitor the investment performance of
mutual funds. The yield of the Fund might also be compared with the average
yield reported by the Bank Rate Monitor for money market deposit accounts
offered by the 50 leading banks and thrift institutions in the top five standard
metropolitan areas. Shareholders may make inquiries regarding the Fund's
performance by contacting the Fund at (212) 250-6934.
Shareholders will receive financial reports semi-annually that include the
Fund's financial statements, including a listing of investment securities held
by the Fund at those dates. Annual reports are audited by independent
accountants.
MANAGEMENT OF THE FUND AND TRUST
Board of Trustees
The affairs of the Fund and Trust are managed under the supervision of the
Trust's Board of Trustees (referred to herein as the "Fund's Board of
Trustees"). For more information with respect to the Fund's Board of Trustees,
see "Management of the Trust" in the SAI. By virtue of the responsibilities
assumed by Bankers Trust, as administrator of the Trust, the Trust does not need
employees other than its executive officers. None of the executive officers of
the Trust devotes full time to the affairs of the Fund or Trust.
Investment Adviser
The Trust has retained the services of Bankers Trust, as investment adviser with
respect to the Fund. Bankers Trust, a New York banking corporation with
principal offices at 280 Park Avenue, New York, New York 10017, is a
wholly-owned subsidiary of Bankers Trust New York Corporation. Bankers Trust
conducts a variety of general banking and trust activities and is a major
wholesale supplier of financial services to the international and domestic
institutional markets. As of December 31, 1995, Bankers Trust New York
Corporation was the ninth largest bank holding company in the United States with
total assets of approximately $104 billion. Bankers Trust is one of the nation's
largest and most experienced investment managers, with approximately $200
billion in assets under management globally. Bankers Trust is also one of the
nation's leading managers of cash funds with approximately $50 billion in cash
assets. Bankers Trust's officers have had extensive experience in managing
investment funds having objectives similar to those of the Fund.
<PAGE>
Bankers Trust, subject to the supervision and direction of the Fund's Board of
Trustees, manages the Fund in accordance with the Fund's investment objective
and stated investment policies, makes investment decisions for the Fund, places
orders to purchase and sell securities and other financial instruments on behalf
of the Fund and employs professional investment managers and securities analysts
who provide research services to the Fund. All orders for investment
transactions on behalf of the Fund are placed by Bankers Trust with
broker-dealers and other financial intermediaries that it selects, including
those affiliated with Bankers Trust. A Bankers Trust affiliate will be used in
connection with a purchase or sale of an investment for the Fund only if Bankers
Trust believes that the affiliate's charge for the transaction does not exceed
usual and customary levels. The Fund will not invest in obligations for which
Bankers Trust or any of its affiliates is the ultimate obligor or accepting
bank. The Fund may, however, invest in the obligations of correspondents and
customers of Bankers Trust.
Under its Investment Advisory Agreement, Bankers Trust receives a fee from the
Fund, computed daily and paid monthly, at the annual rate of 0.10% of the
average daily net assets of the Fund.
Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Fund and Trust
described in this Memorandum and the SAI without violation of the Glass-Steagall
Act or other applicable banking laws or regulations. State laws on this issue
may differ from the interpretations of relevant Federal law and banks and
financial institutions may be required to register as dealers pursuant to state
securities law.
Administrator
Under its Administration and Services Agreement with the Trust, Bankers Trust
acts as administrator, transfer agent, shareholder servicing agent, custodian
and dividend disbursing agent. As the Fund's administrator, Bankers Trust
calculates the net asset value of the Fund and generally assists the Board of
Trustees of the Fund in all aspects of the administration and operation of the
Trust. Under its Administration and Services Agreement with the Trust, Bankers
Trust receives a fee, computed daily and paid monthly, at the annual rate of
0.02% of the average daily net assets of the Fund. This fee is included in the
Fund's other expenses. (See Summary of the Fund Expenses) Under the
Administration and Services Agreement, Bankers Trust may delegate one or more of
its responsibilities to others, including Signature, at Bankers Trust's expense.
For more information, see the SAI.
Placement Agent
Under its Placement Agent Agreement with the Fund, Signature, as Placement
Agent, serves as the Trust's principal underwriter on a best efforts basis. In
addition, Signature provides the Trust with office facilities. Signature is a
wholly-owned subsidiary of Signature Financial Group, Inc. ("SFG"). SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The principal business address of SFG and
Signature is 6 St. James Avenue, Boston, Massachusetts 02116.
Service Agent
Bankers Trust acts as service agent ("Service Agent") pursuant to its
Administration and Services Agreement with the Fund and receives no additional
compensation from the Fund for such shareholder services. The services provided
by Bankers Trust as Service Agent may include establishing and maintaining
shareholder accounts, processing purchase and redemption transactions,
performing shareholder sub-accounting, answering client inquiries regarding the
Fund, transmitting proxy statements, updating prospectuses and other
communications to shareholders and, with respect to meetings of shareholders,
collecting, tabulating and forwarding to the Trust executed proxies and
obtaining such other information and performing such other services as the
shareholders may reasonably request and agree upon with the Service Agent.
Custodian and Transfer Agent
Bankers Trust acts as custodian of the assets of the Fund and serves as the
transfer agent for the Fund under the Administration and Services Agreement with
the Fund.
<PAGE>
Organization of the Trust
The Trust was organized on March 26, 1990 under the laws of the Commonwealth of
Massachusetts. The Fund is a separate series of the Trust. The Trust offers
shares of beneficial interest of separate series, par value $0.001 per share.
The shares of the other series of the Trust are offered through separate
prospectuses. No series of shares has any preference over any other series.
The Trust is an entity commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a business trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.
When matters are submitted for shareholder vote, shareholders of the Fund will
have one vote for each full share held and proportionate, fractional votes for
fractional shares held. A separate vote of the Fund is required on any matter
affecting the Fund on which shareholders are entitled to vote. Shareholders of
the Fund are not entitled to vote on Trust matters that do not affect the Fund.
There normally will be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of Trustees holding
office have been elected by shareholders, at which time the Trustees then in
office will call a shareholders' meeting for the election of Trustees. Any
Trustee may be removed from office upon the vote of shareholders holding at
least two-thirds of the Trust's outstanding shares at a meeting called for that
purpose. The Trustees are required to call such a meeting upon the written
request of shareholders holding at least 10% of the Trust's outstanding shares.
Shareholders of all the series of the Trust will vote together to elect Trustees
of the Trust and for certain other matters. Under certain circumstances, the
shareholders of one or more series could control the outcome of these votes.
Expenses of the Trust
The Fund bears its own expenses. Operating expenses for the Fund generally
consist of all costs not specifically borne by Bankers Trust, including
investment advisory fees, administration and services fees, fees for necessary
professional services, amortization of organizational expenses, the costs of
regulatory compliance and costs associated with maintaining legal existence and
shareholder relations. Bankers Trust has agreed to reimburse the Fund to the
extent required by applicable state law for certain expenses that are described
in the SAI.
BT0608a.
<PAGE>
BT INSTITUTIONAL FUNDS -
INSTITUTIONAL DAILY ASSETS FUND
INVESTMENT ADVISER AND ADMINISTRATOR
BANKERS TRUST COMPANY
PLACEMENT AGENT
SIGNATURE BROKER-DEALER SERVICES, INC.
CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND LLP
COUNSEL
WILLKIE FARR & GALLAGHER
No person has been authorized to give any information or to make any
representations other than those contained in the Fund's Confidential Private
Offering Memorandum, its Confidential Statement of Additional Information in
connection with the offering of the Fund's shares and, if given or made, such
other information or representations must not be relied on as having been
authorized by the Trust. This Confidential Private Offering Memorandum does not
constitute an offer in any state in which, or to any person to whom, such offer
may not lawfully be made.
BT0608a.
<PAGE>
INSTITUTIONAL DAILY ASSETS FUND
6 St. James Avenue
Boston, Massachusetts 02116
PART B
September 24, 1996
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS.
PAGE
General Information and History....................................14
Investment Objective and Policies.................................. 3
Management of the Trust and the Portfolio.......................... 9
Control Persons and Principal Holders of Securities................11
Investment Advisory, Management and Other Services................. 9
Portfolio Transactions and Brokerage Commissions................... 7
Capital Stock and Other Securities................................. 9
Purchase, Redemption and Pricing of Securities..................... 9
Tax Status.........................................................15
Underwriters.......................................................14
Calculations of Performance Data...................................16
Financial Statements...............................................16
<PAGE>
DO NOT COPY OR CIRCULATE.
Investor _____________________________________ Copy No. ________________
BT INSTITUTIONAL FUNDS
INSTITUTIONAL DAILY ASSETS FUND September 24, 1996
CONFIDENTIAL STATEMENT OF ADDITIONAL INFORMATION
BT Institutional Funds (the "Trust") is an open-end management
investment company that offers investors a selection of investment portfolios,
each having distinct investment objectives and policies. This Confidential
Statement of Additional Information relates to the Institutional Daily Assets
Fund (the "Fund"). The Fund seeks a high level of current income consistent with
liquidity and the preservation of capital through investment in high-quality
money market instruments.
Shares of the Fund are sold by Signature Broker-Dealer Services, Inc.
("Signature"), the Trust's Distributor (and the Fund's Placement Agent),
primarily to clients and customers of Bankers Trust Company ("Bankers Trust")
that participate in Bankers Trust's securities lending program. Bankers Trust
serves as the Fund's investment adviser (the "Adviser").
THE SECURITIES DESCRIBED HEREIN ARE OFFERED PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY AUTHORITY OF
ANY JURISDICTION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS CONFIDENTIAL
STATEMENT OF ADDITIONAL INFORMATION. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
SHARES OF THE FUND ARE BEING OFFERED ONLY TO INVESTORS WHO QUALIFY AS BOTH (1)
ACCREDITED INVESTORS AS DEFINED UNDER REGULATION D UNDER THE SECURITIES ACT AND
(2) INSTITUTIONAL INVESTORS. SHARES OF THE FUND ARE NOT BEING OFFERED TO
INDIVIDUALS OR TO ENTITIES ORGANIZED FOR THE PURPOSE OF INVESTING ON BEHALF OF
INDIVIDUALS. NO RESALE OF SHARES MAY BE MADE UNLESS THE SHARES ARE SUBSEQUENTLY
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
THIS CONFIDENTIAL STATEMENT OF ADDITIONAL INFORMATION HAS BEEN PREPARED ON A
CONFIDENTIAL BASIS SOLELY FOR THE INFORMATION OF THE RECIPIENT AND MAY NOT BE
REPRODUCED, PROVIDED TO OTHERS OR USED FOR ANY OTHER PURPOSE.
NO PERSON HAS BEEN AUTHORIZED TO MAKE REPRESENTATIONS OR ANY INFORMATION WITH
RESPECT TO THE SHARES, EXCEPT THE INFORMATION CONTAINED HEREIN OR IN THE TRUST'S
REGISTRATION STATEMENT FILED UNDER THE 1940 ACT.
<PAGE>
INVESTORS WILL BE REQUIRED TO REPRESENT THAT THEY MEET CERTAIN FINANCIAL
REQUIREMENTS AND THAT THEY ARE FAMILIAR WITH AND UNDERSTAND THE TERMS, RISKD AND
MERITS OF AN INVESTMENT IN THE FUND.
The Fund's confidential private offering memorandum, which may be amended
from time to time (the "Confidential Private Offering Memorandum"), is dated
September 24, 1996. The Confidential Private Offering Memorandum provides the
basic information investors should know before investing, may be obtained
without charge by calling the Fund at (212) 250-6934. This Confidential
Statement of Additional Information, which is not a Confidential Private
Offering Memorandum, is intended to provide additional information regarding the
activities and operations of the Trust and should be read in conjunction with
the Confidential Private Offering Memorandum. Capitalized terms not otherwise
defined in this Confidential Statement of Additional Information have the
meanings accorded to them in the Fund's Confidential Private Offering
Memorandum.
BANKERS TRUST COMPANY
INVESTMENT ADVISER AND ADMINISTRATOR
SIGNATURE BROKER-DEALER SERVICES, INC.
PLACEMENT AGENT
6 St. James Avenue Boston, Massachusetts 02116 (800) 730-1313
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Fund's Confidential Private Offering Memorandum discusses the
investment objective of the Fund and the policies to be employed to achieve that
objective. This section contains supplemental information concerning the types
of securities and other instruments in which the Fund may invest, the investment
policies and portfolio strategies that the Fund may utilize and certain risks
attendant to those investments, policies and strategies.
OBLIGATIONS OF BANKS AND OTHER FINANCIAL INSTITUTIONS
For purposes of the Fund's investment policies with respect to
obligations of financial institutions including banks, the assets of a bank will
be deemed to include the assets of its domestic and foreign branches.
Obligations of foreign branches of U.S. banks and foreign banks may be general
obligations of the parent bank in addition to the issuing bank or may be limited
by the terms of a specific obligation and by government regulation. If Bankers
Trust, acting under the supervision of the Board of Trustees, deems the
instruments to present minimal credit risk, the Fund may invest in U.S. or
foreign financial institutions, including banks located in the United Kingdom,
Grand Cayman Island, Nassau, Japan and Canada. Investments in these obligations
may entail risks that are different from those of investments in obligations of
U.S. domestic banks or other financial institutions because of differences in
political, regulatory and economic systems and conditions. These risks include
future political and economic developments, currency blockage, the possible
imposition of withholding taxes on interest payments, possible seizure or
nationalization of foreign deposits, difficulty or inability of pursuing legal
remedies and obtaining judgments in foreign courts, possible establishment of
exchange controls or the adoption of other foreign governmental restrictions
that might affect adversely the payment of principal and interest on bank
obligations. Foreign branches of U.S. banks and foreign banks may also be
subject to less stringent reserve requirements and to different accounting,
auditing, reporting and recordkeeping standards that those applicable to
domestic branches of U.S. banks.
COMMERCIAL PAPER
Commercial paper obligations in which the Fund may invest are
short-term, unsecured negotiable promissory notes of U.S. or foreign
corporations that at the time of purchase meet the rating criteria described in
the Confidential Private Offering Memorandum. Investments in foreign commercial
paper generally involve risks similar to those described above relating to
obligations of financial institutions, including foreign banks or foreign
branches and subsidiaries of U.S. and foreign banks.
<PAGE>
U.S. GOVERNMENT OBLIGATIONS
The Fund may invest in direct obligations issued by the U.S. Treasury
or in obligations issued or guaranteed by the U.S. Treasury or by agencies or
instrumentalities of the U.S. Government ("U.S. Government Obligations").
Certain short-term U.S. Government Obligations, such as those issued by the
Government National Mortgage Association ("GNMA"), are supported by the "full
faith and credit" of the U.S. Government; others, such as those of the Export-
Import Bank of the U.S., are supported by the right of the issuer to borrow from
the U.S. Treasury; others, such as those of the Federal National Mortgage
Association are solely the obligations of the issuing entity but are supported
by the discretionary authority of the U.S. Government to purchase the agency's
obligations; and still others, such as those of the Student Loan Marketing
Association, are supported by the credit of the instrumentality. No assurance
can be given that the U.S. Government would provide financial support to U.S.
Government-sponsored instrumentalities if it is not obligated to do so by law.
Examples of the types of U.S. Government Obligations that the Fund may
hold include, in addition to those described above and direct U.S. Treasury
obligations, the obligations of the Federal Housing Administration, Farmers Home
Administration, Small Business Administration, General Services Administration,
Central Bank for Cooperatives, Federal Farm Credit Banks, Federal Farm Credit
Banks Funding Corp., Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal Land Banks and Maritime
Administration.
REVERSE REPURCHASE AGREEMENTS
The Fund may borrow funds for temporary or emergency purposes, such as
meeting larger than anticipated redemption requests, and not for leverage, by
among other things, agreeing to sell portfolio securities to financial
institutions such as banks and broker-dealers and to repurchase them at a
mutually agreed date and price (a "reverse repurchase agreement"). At the time
the Fund enters into a reverse repurchase agreement it will place in a
segregated custodial account cash, U.S. Government Obligations or high-grade
liquid debt obligations having a value equal to the repurchase price, including
accrued interest. Reverse repurchase agreements involve the risk that the market
value of the securities sold by the Fund may decline below the repurchase price
of those securities. Reverse repurchase agreements are considered to be
borrowings by the Fund.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
Since the investment companies in which the Fund may invest have their
own operating expenses, the Fund's investment in these investment companies may
result in the duplication of expenses.
4
<PAGE>
RATING SERVICES
Ratings represent the opinions of rating services as to the quality of
the securities that they undertake to rate. It should be emphasized, however,
that ratings are relative and subjective and are not absolute standards of
quality. Although these ratings are an initial criterion for selection of
portfolio investments, Bankers Trust also makes its own evaluation of these
securities, subject to review by the Board of Trustees of the Trust. After
purchase by the Fund, an obligation may cease to be rated or its rating may be
reduced below the minimum required for purchase by the Fund. Neither event would
require the Fund to eliminate the obligation from its portfolio, but Bankers
Trust will consider such an event in its determination of whether the Fund
should continue to hold the obligation. A description of the ratings used herein
and in the Confidential Private Offering Memorandum is set forth in the Appendix
to this Confidential Statement of Additional Information.
THE FOLLOWING FUNDAMENTAL INVESTMENT RESTRICTIONS AND NON-FUNDAMENTAL
INVESTMENT OPERATING POLICIES HAVE BEEN ADOPTED BY THE TRUST, WITH RESPECT TO
THE FUND BECAUSE OF REQUIREMENTS OF FEDERAL SECURITIES LAWS OR REGULATIONS.
UNLESS AN INVESTMENT INSTRUMENT OR TECHNIQUE IS DESCRIBED IN THE CONFIDENTIAL
PRIVATE OFFERING MEMORANDUM, THE FUND MAY NOT INVEST IN THAT INVESTMENT
INSTRUMENT OR ENGAGE IN THAT INVESTMENT TECHNIQUE.
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the Trust with
respect to the Fund as fundamental policies. Under the 1940 Act, a "fundamental"
policy may not be changed without the "vote of a majority of the outstanding
voting securities" of the Fund which is defined in the 1940 Act as the lesser of
(a) 67% or more of the shares of the Fund present at a shareholder meeting of
the Fund if the holders of more than 50% of the outstanding shares of the Fund
are present or represented by proxy, or (b) more than 50% of the outstanding
shares of the Fund. The percentage limitations contained in the restrictions
listed below apply at the time of the purchase of the securities.
As a matter of fundamental policy, the Fund may not:
1. Borrow money or mortgage or hypothecate assets of the Fund,
except that in an amount not to exceed 1/3 of the current value of the
Fund's total assets, it may borrow money as a temporary measure for
extraordinary or emergency purposes and enter into reverse repurchase
agreements or dollar roll transactions, and except that it may pledge,
mortgage or hypothecate not more than 1/3 of such assets to secure such
5
<PAGE>
borrowings (it is intended that money would be borrowed only from banks
or through reverse repurchase agreements and only either to accommodate
redemption requests while effecting an orderly liquidation of portfolio
securities or to maintain liquidity in the event of an unanticipated
failure to complete a portfolio security transaction or other similar
situations), provided that collateral arrangements with respect to
options and futures, including deposits of initial deposit and
variation margin, are not considered a pledge of assets for purposes of
this restriction and except that assets may be pledged to secure
letters of credit solely for the purpose of participating in a captive
insurance company sponsored by the Investment Company Institute; for
additional related restrictions, see clause (i) under the caption
"Federal Restrictions" below. (As an operating policy, the Fund may not
engage in dollar roll transactions or options and futures);
2. Underwrite securities issued by other persons except
insofar as the Trust or the Fund may technically be deemed an
underwriter under the Securities Act of 1933, as amended (the "1933
Act"), in selling a portfolio security;
3. Make loans to other persons except (a) through the use of
repurchase agreements or the purchase of short-term obligations or (b)
by purchasing a portion of an issue of debt securities of types
distributed publicly or privately;
4. Purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or
commodity contracts (except futures and option contracts) in the
ordinary course of business (except that the Fund may hold and sell,
for the Fund's portfolio, real estate acquired as a result of the
Fund's ownership of securities);
5. Concentrate its investments in any particular industry
(excluding U.S. Government Obligations), except that the Fund will
invest more than 25% of its total assets in the obligations of banks
and other financial institutions, and if it is deemed appropriate for
the achievement of the Fund's investment objective, up to 25% of its
total assets may be invested in any other industry; and
6. Issue any "senior security" (as that term is defined in the
1940 Act) if such issuance is specifically prohibited by the 1940 Act
or the rules and regulations promulgated thereunder, provided that
collateral arrangements with respect to options and futures, including
deposits of
6
<PAGE>
initial deposit and variation margin, are not considered to be the
issuance of a senior security for purposes of this restriction.
PORTFOLIO TURNOVER
The Fund may attempt to increase yield by trading to take advantage of
short-term market variations, which results in higher portfolio turnover.
However, this policy does not result in higher brokerage commissions to the Fund
as the purchases and sales of portfolio securities are usually effected as
principal transactions. The Fund's turnover rate is not expected to have a
material effect on their income and have been and are expected to be zero for
regulatory reporting purposes.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities and other financial instruments
for the Fund are made by Bankers Trust, which also is responsible for placing
these transactions, subject to the overall review of the Trust's Board of
Trustees. Although investment requirements for the Fund are reviewed
independently from those of the other accounts managed by Bankers Trust,
investments of the type the Fund may make may also be made by these other
accounts. When the Fund and one or more other accounts managed by Bankers Trust
are prepared to invest in, or desire to dispose of, the same security or other
financial instrument, available investments or opportunities for sales will be
allocated in a manner believed by Bankers Trust to be equitable to each. In some
cases, this procedure may affect adversely the price paid or received by the
Fund or the size of the position obtained or disposed of by the Fund.
Purchases and sales of securities on behalf of the Fund will be
principal transactions. These securities are normally purchased directly from
the issuer or from an underwriter or market maker for the securities. The cost
of securities purchased from underwriters includes an underwriting commission or
concession and the prices at which securities are purchased from and sold to
dealers include a dealer's mark-up or mark-down. U.S. Government Obligations are
generally purchased from underwriters or dealers, although certain newly issued
U.S. Government Obligations may be purchased directly from the U.S. Treasury or
from the issuing agency or instrumentality.
Over-the-counter purchases and sales are transacted directly with
principal market makers except in those cases in which better prices and
executions may be obtained elsewhere and principal transactions are not entered
into with persons affiliated with the Fund except pursuant to exemptive rules or
orders adopted by the Securities and Exchange Commission (the "SEC"). Under
rules adopted by the SEC, broker-dealers may not execute transactions on the
floor of any national
7
<PAGE>
securities exchange for the accounts of affiliated persons, but may effect
transactions by transmitting orders for execution.
In selecting dealers to execute portfolio transactions on behalf of the
Fund, Bankers Trust seeks the best overall terms available. In assessing the
best overall terms available for any transaction, Bankers Trust will consider
the factors it deems relevant, including the breadth of the market in the
investment, the price of the investment and the financial condition and
execution capability of the dealer for the specific transaction and on a
continuing basis. In addition, Bankers Trust is authorized, in selecting parties
to execute a particular transaction and in evaluating the best overall terms
available, to consider the "brokerage services", but not "research services" (as
those terms are defined in Section 28(e) of the Securities Exchange Act of 1934,
as amended) provided to the Fund.
NET ASSET VALUE
The Confidential Private Offering Memorandum discusses the time at
which the net asset value per share of the Fund is determined for purposes of
sales and redemptions.
The valuation of the Fund's securities is based on their amortized
cost, which does not take into account unrealized capital gains or losses.
Amortized cost valuation involves initially valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount or
premium, generally without regard to the impact of fluctuating interest rates on
the market value of the instrument. Although this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument.
The Fund's use of the amortized cost method of valuing its securities
is permitted by a rule adopted by the SEC. Under this rule, the Fund must
maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase only instruments having remaining maturities of two years or less and
invest only in securities determined by or under the supervision of the Trust's
Board of Trustees to present minimal credit risks.
Pursuant to the rule, the Trust's Board of Trustees also has
established procedures designed to allow investors in the Fund to stabilize, to
the extent reasonably possible, the investors' price per share as computed for
the purpose of sales and redemptions at $1.00. These procedures include review
of the Fund's holdings by the Trust's Board of Trustees, at such intervals as it
deems appropriate, to determine whether the value of the Fund's assets
calculated by
8
<PAGE>
using available market quotations or market equivalents deviates from such
valuation based on amortized cost.
The rule also provides that the extent of any deviation between the
value of the Fund's assets based on available market quotations or market
equivalents and such valuation based on amortized cost must be examined by the
Trust's Board of Trustees. In the event the Trust's Board of Trustees determines
that a deviation exists that may result in material dilution or other unfair
results to investors or existing shareholders, pursuant to the rule, the Trust's
Board of Trustees must cause the Fund to take such corrective action as the
Board of Trustees regards as necessary and appropriate, including: selling
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends or paying
distributions from capital or capital gains; redeeming shares in kind; or
valuing the Fund's assets by using available market quotations.
PURCHASE AND REDEMPTION INFORMATION
The Trust may suspend the right of redemption or postpone the date of
payment for shares of the Fund during any period when: (a) trading on the NYSE
is restricted by applicable rules and regulations of the SEC; (b) the NYSE is
closed for other than customary weekend and holiday closings; (c) the SEC has by
order permitted such suspension; or (d) an emergency exists as determined by the
SEC.
Under the terms of a Placement Agent Agreement, Signature acts as
placement agent on a "best efforts" basis with respect to the sale of shares of
the Fund In addition to Signature's duties as placement agent, Signature may, in
its discretion, perform additional functions in connection with transactions in
the shares of the Fund.
MANAGEMENT OF THE TRUST
The Trust's Board of Trustees is composed of persons experienced in
financial matters who meet throughout the year to oversee the activities of the
Fund. In addition, the Trustees review contractual arrangements with companies
that provide services to the Fund and review the Fund's performance.
The Trustees and officers of the Trust and their principal occupations
during the past five years are set forth below. Their titles may have varied
during that period. Asterisks indicate those Trustees who are "interested
persons" (as defined in the 1940 Act) of the Trust. Unless otherwise indicated,
the address of each Trustee and officer is c/o Signature Broker-Dealer Services,
Inc., 6 St. James Avenue, 9th Floor, Boston, Massachusetts 02116.
9
<PAGE>
TRUSTEES OF THE TRUST
CHARLES P. BIGGAR (age 65) -- Trustee; Retired; Director of Chase/NBW
Bank Advisory Board; Director, Batemen, Eichler, Hill Richards Inc.; formerly
Vice President of International Business Machines and President of the National
Services and the Field Engineering Divisions of IBM. His address is 12 Hitching
Post Lane, Chappaqua, New York 10514.
RICHARD J. HERRING (age 50) -- Trustee; Professor, Finance Department, Julian
Avesty Professor, Vice Dean, The Wharton School, University of Pennsylvania. His
address is Box 768, 325 S. Roberts Road., Bryn Mawr, PA 19010.
BRUCE E. LANGTON (age 64) -- Trustee; Retired; Director, Adela Investment Co.
and University Patents, Inc.; formerly Assistant Treasurer of IBM Corporation
(until 1986). His address is 99 Jordan Lane, Stamford, Connecticut 06903.
PHILIP W. COOLIDGE* (age 44) -- President and Trustee; Chairman, Chief
Executive Officer and President, Signature Financial Group, Inc. ("SFG") (since
December, 1988) and Signature (since April, 1989).
OFFICERS OF THE TRUST
JOHN R. ELDER (age 47) -- Treasurer; Vice President, SFG (since April
1995); Treasurer, Phoenix Family of Mutual Funds (prior to April 1995).
BARBARA M. O'DETTE (age 36) -- Assistant Treasurer; Assistant
Treasurer, SFG (since December, 1988); Assistant Treasurer, Signature (since
April, 1989).
DANIEL E. SHEA (age 34) -- Assistant Treasurer; Assistant Manager, SFG
(since November 1993); Supervisor and Senior Technical Advisor, Putnam
Investments (prior to November 1993).
LINDA T. GIBSON (age 31) -- Assistant Secretary of the Trust; Vice
President, Global Product Management and Assistant Secretary, SFG (since May,
1992); Assistant Secretary, Signature (since October, 1992); student, Boston
University School of Law (September, 1989 to May, 1992).
THOMAS M. LENZ (age 38) -- Secretary; Senior Vice President and
Associate General Counsel, SFG (since November, 1989); Assistant Secretary,
Signature (since February, 1991); Attorney, Ropes & Gray (prior to November,
1989).
10
<PAGE>
MOLLY S. MUGLER (age 44) -- Assistant Secretary; Legal Counsel and
Assistant Secretary, SFG (since December, 1988); Assistant Secretary, Signature
(since April, 1989).
ANDRES E. SALDANA (age 33) -- Assistant Secretary of the Trust; Legal
Counsel, SFG (since November, 1992); Assistant Secretary, Signature (since
September 1993); Attorney, Ropes & Gray (September, 1990 to November, 1992).
Messrs. Coolidge, Elder, Lenz, Saldana and Shea and Mss. Gibson, Mugler and
O'Dette also hold similar positions for other investment companies for which
Signature or an affiliate serves as the principal underwriter.
No person who is an officer or director of Bankers Trust is an officer
or Trustee of the Trust. No director, officer or employee of Signature or any of
its affiliates will receive any compensation from the Trust for serving as an
officer or Trustee of the Trust. The Trust pays each Trustee who is not a
director, officer or employee of the Adviser, the Distributor, the Administrator
or any of their affiliates an annual fee of $10,000, respectively, per annum
plus $1,250, respectively, per meeting attended and reimburses them for travel
and out-of-pocket expenses.
TRUSTEE COMPENSATION TABLE
(estimated for the fiscal year ended September 30, 1997*)
Aggregate Total Compensation
Compensation from Fund Complex
NAME OF TRUSTEE FROM TRUST PAID TO TRUSTEES**
Philip W. Coolidge None*** None***
Richard J. Herring $12,500 $12,500
Bruce E. Langton $12,500 $12,500
Charles P. Biggar $12,500 $12,500
- -----
*Amounts shown are estimates of future payments to be made pursuant to existing
arrangements.
** Each Trustee also serves as a Trustee of one other Trust of the
BT Family of Funds.
*** Mr. Coolidge is considered to be an interested person as defined in the
1940 Act, and accordingly, receives no compensation for services
as a Trustee.
As of September 15, 1996, the Trustees and officers of the Trust and the
Funds owned in the aggregate less than 1% of the shares of any Fund or the Trust
(all series taken together).
INVESTMENT ADVISER
Under the terms of an Advisory Agreement between the Fund and Bankers
Trust, Bankers Trust manages the Fund subject to the supervision and direction
of the Board of Trustees of the Fund. Bankers Trust will: (i) act in strict
conformity with the Fund's Declaration of Trust, the 1940 Act and the Investment
Advisers Act of 1940, as the same may from time to time be amended; (ii) manage
the Fund in accordance with the
11
<PAGE>
Fund's investment objectives, restrictions and policies, as stated herein and in
the Confidential Private Offering Memorandum; (iii) make investment decisions
for the Fund; and (iv) place purchase and sale orders for securities and other
financial instruments on behalf of the Fund.
Bankers Trust bears all expenses in connection with the performance of
services under the Advisory Agreement. The Fund bears certain other expenses
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees of Trustees of the Trust who are not officers,
directors or employees of Bankers Trust, Signature or any of their affiliates;
SEC fees and state Blue Sky filing fees, if any; administrative and services
fees; certain insurance premiums; outside auditing and legal expenses; costs of
maintenance of corporate existence; costs attributable to investor services,
including, without limitation, telephone and personnel expenses; and printing
confidential private offering memorandums and confidential statements of
additional information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of shareholders,
officers and Trustees of the Trust; and any extraordinary expenses.
Bankers Trust may have deposit, loan and other commercial banking
relationships with the issuers of obligations which may be purchased on behalf
of the Fund, including outstanding loans to such issuers which could be repaid
in whole or in part with the proceeds of securities so purchased. Such
affiliates deal, trade and invest for their own accounts in such obligations and
are among the leading dealers of various types of such obligations. Bankers
Trust has informed the Trust that, in making its investment decisions, it does
not obtain or use material inside information in its possession or in the
possession of any of its affiliates. In making investment recommendations for
the Fund, Bankers Trust will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by the Fund is a customer of
Bankers Trust, its parent or its subsidiaries or affiliates and, in dealing with
its customers, Bankers Trust, its parent, subsidiaries, and affiliates will not
inquire or take into consideration whether securities of such customers are held
by any fund managed by Bankers Trust or any such affiliate.
ADMINISTRATOR
Under the administration and services agreements, Bankers Trust is
obligated on a continuous basis to provide such administrative services as the
respective Board of Trustees of the Trust reasonably deems necessary for the
proper administration of the Trust. Bankers Trust will generally assist in all
aspects of the Fund's operations; supply and maintain office facilities (which
may be in Bankers Trust's own offices), statistical and research data, data
processing services, clerical, accounting, bookkeeping and recordkeeping
services (including without limitation the maintenance of such books and records
as are required under the 1940 Act and the rules thereunder, except as
maintained by other agents of the Trust), internal auditing, executive and
12
<PAGE>
administrative services, and stationery and office supplies; prepare reports to
shareholders or investors; prepare and file tax returns; supply financial
information and supporting data for reports to and filings with the SEC and
various state Blue Sky authorities, if applicable; supply supporting
documentation for meetings of the Board of Trustees; provide monitoring reports
and assistance regarding compliance with the Trust's Declaration of Trust,
by-laws, investment objectives and policies and with applicable Federal and
state securities laws; arrange for appropriate insurance coverage; calculate the
net asset value, net income and realized capital gains or losses of the Trust;
and negotiate arrangements with, and supervise and coordinate the activities of,
agents and others retained to supply services.
Pursuant to a sub-administration agreement (the "Sub-Administration
Agreement") Signature performs such sub-administration duties for the Trust as
from time to time may be agreed upon by Bankers Trust and Signature. The
Sub-Administration Agreement provides that Signature will receive such
compensation as from time to time may be agreed upon by Signature and Bankers
Trust. All such compensation will be paid by Bankers Trust.
CUSTODIAN AND TRANSFER AGENT
Bankers Trust, 280 Park Avenue, New York, New York 10017, serves as
custodian and transfer agent for the Trust and as custodian for the Fund
pursuant to the administration and services agreements discussed above. As
custodian, Bankers Trust holds the Fund's assets. For such services, Bankers
Trust receives monthly fees from the Fund, which are included in the
administrative services fees discussed above. As transfer agent for the Trust,
Bankers Trust maintains the shareholder account records for the Fund, handles
certain communications between shareholders and the Trust and causes to be
distributed any dividends and distributions payable by the Trust. Bankers Trust
is also reimbursed by the Fund for its out-of-pocket expenses. Bankers Trust
will comply with the self-custodian provisions of Rule 17f-2 under the 1940 Act.
USE OF NAME
The Trust and Bankers Trust have agreed that the Trust may use "BT" as
part of its name for so long as Bankers Trust serves as investment adviser. The
Trust has acknowledged that the term "BT" is used by and is a property right of
certain subsidiaries of Bankers Trust and that those subsidiaries and/or Bankers
Trust may at any time permit others to use that term.
The Trust may be required, on 60 days' notice from Bankers Trust at any
time, to abandon use of the acronym "BT" as part of its name. If this were to
occur, the Trustees would select an appropriate new name for the Trust, but
there would be no other material effect on the Trust, its shareholders or
activities.
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<PAGE>
BANKING REGULATORY MATTERS
Bankers Trust has been advised by its counsel that in its opinion
Bankers Trust may perform the services for the Fund contemplated by the Advisory
Agreement and other activities for the Trust described in the Confidential
Private Offering Memorandum and this Confidential Statement of Additional
Information without violation of the Glass- Steagall Act or other applicable
banking laws or regulations. However, counsel has pointed out that future
changes in either Federal or state statutes and regulations concerning the
permissible activities of banks or trust companies, as well as future judicial
or administrative decisions or interpretations of present and future statutes
and regulations, might prevent Bankers Trust from continuing to perform those
services for the Trust. If the circumstances described above should change, the
Board of Trustees would review the Trust's relationship with Bankers Trust and
consider taking all actions necessary in the circumstances. In addition, state
securities law on this issue may differ from interpretations of Federal law as
expressed herein and banks and financial institutions may be required to
register as dealer pursuant to state law.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street,
New York, New York 10022-4669, serves as Counsel to the Trust and from time to
time provides certain legal services to Bankers Trust. Coopers & Lybrand LLP,
1100 Main Street, Suite 900, Kansas City, Missouri 64105 has been selected as
Independent Accountants for the Trust.
ORGANIZATION OF THE TRUST
The Trust was organized on March 15, 1990 as a an unincorporated
business association under the laws of the Commonwealth of Massachusetts
("Massachusetts Business Trust"). The shares of each series participate equally
in the earnings, dividends and assets of the particular series. The Trust may
create and issue additional series of shares, and may divide the shares of any
series into one or more classes, in the future. The Declaration of Trust of the
Trust permits the Trustees to divide or combine the shares into a greater or
lesser number of shares without thereby changing the proportionate beneficial
interest in a series. Each share represents an equal proportionate interest in a
series with each other share. Shares when issued are fully paid and
non-assessable, except as set forth below. Shareholders are entitled to one vote
for each share held.
Shares of the Trust do not have cumulative voting rights, which means
that holders of more than 50% of the shares voting for the election of Trustees
can elect all Trustees. Shares of the Fund are not transferable nor do shares
have preemptive, conversion or subscription rights.
14
<PAGE>
The Trust is not required to hold annual meetings of shareholders but
will hold special meetings of shareholders when in the judgement of the Trustees
it is necessary or desirable to submit matters for a shareholder vote.
Shareholders have under certain circumstances the right to communicate with
other shareholders in connection with requesting a meeting of shareholders for
the purpose of removing one or more Trustees without a meeting. Upon liquidation
of the Fund, shareholders of the Fund would be entitled to share pro rata in the
net assets of the Fund available for distribution to shareholders.
Massachusetts law provides that shareholders could under certain
circumstances be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of this disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or a Trustee. The Declaration of Trust provides for indemnification from the
Trust's property for all losses and expenses of any shareholder held personally
liable for the obligations of the Trust. Thus, the risk of shareholders
incurring financial loss on account of shareholder liability is limited to
circumstances in which the Trust itself would be unable to meet its obligations,
a possibility that the Trust believes is remote. Upon payment of any liability
incurred by the Trust, the shareholder paying the liability will be entitled to
reimbursement from the general assets of the Trust. The Trustees intend to
conduct the operations of the Trust in a manner so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of the Trust.
TAXES
The following is only a summary of certain tax considerations generally
affecting the Fund and its shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult tax advisers with
specific reference to their tax situations.
As described above and in the Fund's Confidential Private Offering
Memorandum: the Fund is designed to provide investors with liquidity and current
income. The Fund is not intended to constitute a balanced investment program and
is not designed for investors seeking capital gains, maximum income or maximum
tax-exempt income irrespective of fluctuations in principal.
The Trust intends that the Fund qualify as a separate regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). Provided that the Fund is a regulated investment company, the Fund will
not be liable for Federal income taxes to the extent all of its taxable net
investment income and net realized long- and short-term capital gains, if any,
are distributed to its shareholders. Although the Trust expects the Fund to be
relieved of all or substantially all Federal income taxes, depending upon the
extent of its activities
15
<PAGE>
in states and localities in which its offices are maintained, in which its
agents or independent contractors are located or in which they are otherwise are
deemed to be conducting business, that portion of the Fund's income which is
treated as earned in any such state or locality could be subject to state and
local tax. Any such taxes paid by the Fund would reduce the amount of income and
gains available for distribution to its shareholders.
While the Fund does not expect to realize net long-term capital gains,
any such gains realized will be distributed annually as described in the Fund's
Confidential Private Offering Memorandum. Such distributions ("capital gain
dividends"), if any, will be taxable to non tax-exempt shareholders as long-term
capital gains, regardless of how long a shareholder has held Fund shares.
PERFORMANCE INFORMATION
The "effective yield" of the Fund is an annualized "yield" based on a
compounding of the unannualized base period return. These yields are each
computed in accordance with a standard method prescribed by the rules of the
SEC, by first determining the "net change in account value" for a hypothetical
account having a share balance of one share at the beginning of a seven-day
period (the "beginning account value"). The net change in account value equals
the value of additional shares purchased with dividends from the original share
and dividends declared on both the original share and any such additional
shares. The unannualized "base period return" equals the net change in account
value divided by the beginning account value. Realized gains or losses or
changes in unrealized appreciation or depreciation are not taken into account in
determining the net change in account value.
The yields are then calculated as follows:
Base Period Return = NET CHANGE IN ACCOUNT VALUE
Beginning Account Value
Current Yield = Base Period Return x 365/7
Effective Yield = [(1 + Base Period Return)365/7] - 1
FINANCIAL STATEMENTS
The Fund's Annual Report, which, when available, will be attached
hereto and incorporated into this Confidential Statement of Additional
Information by reference, and Semi-Annual Report will be provided, without
charge, to each shareholder as they become available.
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BT INSTITUTIONAL FUNDS
INSTITUTIONAL DAILY ASSETS FUND
STATEMENT OF ASSETS AND LIABILITIES
September 16, 1996
Assets:
Cash..................................................... $ 10
Deferred organization expenses........................... 200,000
---------
Total assets......................................... 200,010
Liabilities:
Accrued organization expenses................... 200,000
Net assets........................................... $ 10
===========
Net asset value per share of beneficial interest
($10.00 / 1 shares outstanding)...................... $10.00
Notes:
. BT Institutional Funds, a Massachusetts business trust (the "Trust"), was
organized on March 29, 1990 and has been inactive since that date with
respect to Institutional Daily Assets Fund (the "Fund") except for the Fund's
establishment and designation as a series of the Trust, and the registration
under the Securities Act of 1933 of the Fund's shares of beneficial interest
("Shares") and the sale of one share (the "Initial Shares") of the Fund to
Signature Financial Group, Inc. ("SFG").
. Organization expenses of the Fund are being deferred and will be amortized on
a straight-line basis over a period not to exceed five years from the
commencement of investment operations of the Fund. The amount paid by the
Trust on any redemption by SFG or any other then-current holder of the
Initial Shares of the Fund will be reduced by a portion of any unamortized
organization expenses of the Fund, determined by the proportion of the number
of the Initial Shares of the Fund redeemed to the number of the Initial
Shares then outstanding after taking into account any prior redemptions of
the Initial Shares of the Fund.
. The Trust has entered into an Administration and Services Agreement with
Bankers Trust Company under which Bankers Trust Company provides
administration, custody and transfer agency services to the Trust.
17
<PAGE>
APPENDIX
DESCRIPTION OF SECURITIES RATINGS
DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS:
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted A-1+.
DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations.
DESCRIPTION OF FITCH INVESTORS SERVICE'S COMMERCIAL PAPER RATINGS:
F-1+--Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1--Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than the strongest
issue.
DESCRIPTION OF DUFF & PHELPS' COMMERCIAL PAPER RATINGS:
Duff 1+--Highest certainty of timely payment. Short term liquidity,
including internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk free U.S. Treasury short
term obligations.
Duff 1--Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors are
minor.
DESCRIPTION OF IBCA'S SHORT-TERM RATINGS:
A1+--Obligations supported by the highest capacity for timely repayment.
A1--Obligations supported by a strong capacity for timely repayment.
DESCRIPTION OF THOMSON BANK WATCH SHORT-TERM RATINGS:
TBW-1--The highest category; indicates a very high likelihood that
principal and interest will be paid on a timely basis.
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TABLE OF CONTENTS
Investment Objectives and Policies...................................... 3
Net Asset Value......................................................... 10
Purchase and Redemption Information..................................... 11
Management of the Trust................................................. 11
Organization of the Trust............................................... 15
Taxes................................................................... 16
Performance Information................................................. 17
Financial Statements.................................................... 17
Appendix: Description of Securities Ratings............................ A-1
INVESTMENT ADVISER AND ADMINISTRATOR
BANKERS TRUST COMPANY
PLACEMENT AGENT
SIGNATURE BROKER-DEALER SERVICES, INC.
CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
COUNSEL
WILLKIE FARR & GALLAGHER
--------------------
No person has been authorized to give any information or to make any
representations other than those contained in the Fund's Confidential Private
Offering Memorandum or its Confidential Statement of Additional Information in
connection with the offering of the Fund's shares and, if given or made, such
other information or representations must not be relied on as having been
authorized by the Trust. This Confidential Statement of Additional Information
does not constitute an offer in any state in which, or to any person to whom,
such offer may not lawfully be made.
--------------------
BT0550E
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
The following financial statements are included in Part A:
Not applicable.
The following financial statements are included in Part B:
Statement of Assets and Liabilities, September 16, 1996
(b) EXHIBITS:
(1A) Amended and Restated Declaration of Trust of the Trust.5
(1B) Fifth Amended and Restated Establishment and Designation of
Series of the Trust.5
(1C) Sixth Amended and Restated Establishment and Designation of
Series of the Trust.5
(1D) Seventh Amended and Restated Establishment and Designation of
Series of the Trust.5
(1E) Eighth Amended and Restated Establishment and Designation of
Series of the Trust.5
(1F) Ninth Amended and Restated Establishment and Designation of
Series of the Trust.5
(1G) Tenth Amended and Restated Establishment and Designation of
Series of the Trust.5
(1H) Eleventh Amended and Restated Establishment and Designation
of Series of the Trust.7
(2) By-Laws of the Trust.5
(3) Inapplicable.
(4) Specimen stock certificates for shares of beneficial interest
of the Trust.1
(5) Investment Advisory Agreement.7
(6) Inapplicable
(7) Inapplicable.
(8) See Item (9).
(9A) Administration and Services Agreement.5
(9B) Schedule of fees under Administration and Service Agreement.7
(10) Inapplicable
(11) Inapplicable.
(12) Inapplicable.
(13A) Investment representation letter of initial shareholder of the
Equity 500 Index Fund.3
(13B) Investment representation letter of initial shareholder of the
Institutional Liquid Assets Fund.5
(13C) Investment representation letter of initial shareholder of the
Institutional Daily Assets Fund.7
(14) Inapplicable.
(15A) Plan of Distribution pursuant to Rule 12b-l under the
Investment Company Act of 1940, as amended (the "1940 Act").4
(15B) Schedule of fees under Plan of Distribution.5
(15C) Placement Agent Agreement.7
(16A) Method of computation of performance information for money
market funds.2
(16B) Method of computation of performance information for non-money
market funds.3
(17) Financial Data Schedules.7
(25) Powers of Attorney.4
<PAGE>
1 Incorporated herein by reference from Pre-Effective Amendment No. 1 to
the Registration Statement as filed with the SEC on July 20, 1990.
2 Incorporated herein by reference from Post-Effective Amendment No. 1 to
the Registration Statement as filed with the SEC on February 29, 1991.
3 Incorporated herein by reference from Post-Effective Amendment No. 4 to
the Registration Statement as filed with the SEC on April 30, 1992.
4 Incorporated herein by reference from Post-Effective Amendment No. 6 to
the Registration Statement as filed with the SEC on January 29, 1993.
5 Incorporated herein by reference from Post-Effective Amendment No. 15
to the Registration Statement as filed with the SEC on July 5, 1995.
6 Incorporated herein by reference from Post-Effective Amendment No.20
to the Registration Statement as filed with the SEC on April 29, 1996.
7 Filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
(1) (2)
Title of Class Number of Record Holders
(par value $0.01 per share) (as of September 15, 1996)
Institutional Cash Management Fund: 772
Institutional Treasury Money Fund: 565
Institutional Tax Free Money Fund: 0
Institutional NY Tax Free Money Fund: 0
Equity 500 Index Fund: 76
BT Institutional Capital Appreciation Fund: 0
Institutional Liquid Assets Fund: 2
Institutional Cash Reserves: 219
Institutional Daily Assets Fund: 0
Item 27. Indemnification.
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed as an exhibit to the Registration Statement.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Bankers Trust serves as investment adviser to the Trust. Bankers
Trust, a New York banking corporation, is a wholly owned subsidiary of Bankers
Trust New York Corporation. Bankers Trust conducts a variety of commercial
banking and trust activities and is a major wholesale supplier of financial
services to the international institutional market.
To the knowledge of the Trust, none of the directors or officers of
Bankers Trust, except those set forth below, is engaged in any other business,
profession, vocation or employment of a substantial nature, except that certain
directors and officers also hold various positions with and engage in business
for Bankers Trust New York Corporation. Set forth below are the names and
principal businesses of the directors and officers of Bankers Trust who are
engaged in any other business, profession, vocation or employment of a
substantial nature.
NAME AND PRINCIPAL BUSINESS ADDRESS, PRINCIPAL OCCUPATION AND OTHER INFORMATION
George B. Beitzel, International Business Machines Corporation, Old Orchard
Road, Armonk, NY 10504. Retired Senior Vice President and Director, Member
of Advisory Board of International Business Machines Corporation. Director of
Bankers Trust and Bankers Trust New York Corporation. Director of
FlightSafety International, Inc. Director of Phillips Petroleum Company.
Director of Roadway Services, Inc. Director of Rohm and Hass Company.
William R. Howell, J.C. Penney Company, Inc., P.O. Box 10001, Plano, TX
75301-0001. Chairman of the Board and Chief Executive Officer, J.C. Penney
Company, Inc. Director of Bankers Trust and Bankers Trust New York
Corporation. Also a Director of Exxon Corporation, Halliburton Company and
Warner-Lambert Corporation.
<PAGE>
Jon M. Huntsman, Huntsman Chemical Corporation, 2000 Eagle Gate Tower, Salt
Lake City, UT 84111. Chairman and Chief Executive Officer, Huntsman Chemical
Corporation, Director of Bankers Trust and Bankers Trust New York
Corporation. Chairman of Constar Corporation, Huntsman Corporation, Huntsman
Holdings Corporation and Petrostar Corporation. President of Autostar
Corporation, Huntsman Polypropylene Corporation and Restar Corporation.
Director of Razzleberry Foods Corporation and Thiokol Corporation. General
Partner of Huntsman Group Ltd., McLeod Creek Partnership and Trustar Ltd.
Vernon E. Jordan, Jr., Akin, Gump, Strauss, Hauer & Feld, LLP, 1333 New
Hampshire Ave., N.W., Washington, DC 20036. Partner, Akin, Gump, Strauss,
Hauer & Feld, LLP. Director of Bankers Trust and Bankers Trust New York
Corporation. Also a Director of American Express Company, Corning
Incorporated, Dow Jones, Inc., J.C. Penney Company, Inc., RJR Nabisco Inc.,
Revlon Group Incorporated, Ryder System, Inc., Sara Lee Corporation, Union
Carbide Corporation and Xerox Corporation.
Hamish Maxwell, Philip Morris Companies Inc., 120 Park Avenue, New York, NY
10017. Chairman of the Executive Committee, Philip Morris Companies Inc.
Director of Bankers Trust and Bankers Trust New York Corporation. Director of
The News Corporation Limited.
Donald F. McCullough, Collins & Aikman Corporation, 210 Madison Avenue, New
York, NY 10016. Chairman Emeritus, Collins & Aikman Corporation. Director
of Bankers Trust and Bankers Trust New York Corporation. Director of
Massachusetts Mutual Life Insurance Co. and Melville Corporation.
N.J. Nicholas Jr., 745 Fifth Avenue, New York, NY 10020. Former President,
Co-Chief Executive Officer and Director of Time Warner Inc. Director of
Bankers Trust and Bankers Trust New York Corporation. Also a Director of
Xerox Corporation.
Russell E. Palmer, The Palmer Group, 3600 Market Street, Suite 530,
Philadelphia, PA 19104. Chairman and Chief Executive Officer of The Palmer
Group. Director of Bankers Trust and Bankers Trust New York Corporation. Also
Director of Allied-Signal Inc., Contel Cellular, Inc., Federal Home Loan
Mortgage Corporation, GTE Corporation, Goodyear Tire & Rubber Company, Imasco
Limited, May Department Stores Company and Safeguard Scientifics, Inc.
Member, Radnor Venture Partners Advisory Board.
Didier Pineau-Valencienne, Schneider S.A., 4 Rue de Longchamp, 75116 Paris,
France. Chairman and Chief Executive Officer, Schneider S.A. Director and member
of the European Advisory Board of Bankers Trust and Director of Bankers Trust
New York Corporation. Director of AXA (France) and Equitable Life Assurance
Society of America, Arbed (Luxembourg), Banque Paribas (France), Ciments
Francais (France), Cofibel (Belgique), Compagnie Industrielle de Paris (France),
SIAPAP, Schneider USA, Sema Group PLC (Great Britain), Spie- Batignolles,
Tractebel (Belgique) and Whirlpool. Chairman and Chief Executive Officer of
Societe Parisienne d'Entreprises et de Participations.
Charles S. Sanford, Jr., Bankers Trust Company, 280 Park Avenue, New York, NY
10017. Chairman of the Board of Bankers Trust and Bankers Trust New York
Corporation. Also a Director of Mobil Corporation and J.C. Penney Company,
Inc.
Eugene B. Shanks, Jr., Bankers Trust Company, 280 Park Avenue, New York, NY
10017. President of Bankers Trust and Bankers Trust New York Corporation.
Patricia Carry Stewart, c/o Office of the Secretary, 280 Park Avenue, New
York, NY 10017. Former Vice President, The Edna McConnell Clark Foundation.
Director of Bankers Trust and Bankers Trust New York Corporation. Director,
Borden Inc., Continental Corp. and Melville Corporation.
George J. Vojta, Bankers Trust Company, 280 Park Avenue, New York, NY 10017.
Vice Chairman of the Board of Bankers Trust and Bankers Trust New York
Corporation. Director of Northwest Airlines and Private Export Funding Corp.
<PAGE>
Item 29. Principal Underwriters.
(a) Signature is the exclusive placement agent for the Registrant.
Signature and its affiliates serve as placement agent or distributor
for other registered investment companies.
(b) Set forth below are the names, principal business addresses and
positions of each director and officer of Signature. Unless otherwise
noted, the principal business address of these individuals is
Signature Broker-Dealer Services, Inc., 6 St. James Avenue, Boston,
Massachusetts 02116. Unless otherwise specified, none of the officers
and directors of Signature serve as officers and Trustees of the
Trust.
PHILIP W. COOLIDGE: Chief Executive Officer, President and Director of
Signature and President and Trustee of the Registrant.
LINWOOD C. DOWNS: Treasurer of Signature.
JOHN R. ELDER: Assistant Treasurer of Signature and Treasurer of the
Registrant.
JOAN GULINELLO: Secretary of Signature.
THOMAS M. LENZ: Assistant Secretary of Signature and Assistant Secretary of
the Registrant.
MOLLY S. MUGLER: Assistant Secretary of Signature and Assistant Secretary of
the Registrant.
LINDA T. GIBSON: Assistant Secretary of Signature and Assistant Secretary of
the Registrant.
ANDRES E. SALDANA: Assistant Secretary of Signature and Assistant Secretary
of the Registrant.
SUSAN JAKUBOSKI: Assistant Treasurer of Signature.
DANIEL E. SHEA: Assistant Treasurer of the Registrant.
BARBARA M. O'DETTE: Assistant Treasurer of Signature and Assistant Treasurer
of the Registrant.
BETH A. REMY: Assistant Treasurer of Signature.
JULIE J. WYETZNER: Product Management Officer of Signature.
ROBERT G. DAVIDOFF: Director of Signature; CMNY Capital, L.P, 135 East 57th
Street, New York, NY 10022.
DONALD S. CHADWICK: Director of Signature; Scarborough & Company, 110 East
42nd Street, New York, NY 10017.
LEEDS HACKETT: Director of Signature; National Credit Management Corporation,
10155 York Road, Cockeysville, MD 21030.
LAURENCE E. LEVINE: Director of Signature; First International Capital, Ltd.,
130 Sunrise Avenue, Palm Beach, FL 33480.
(c) Inapplicable.
ITEM 30. Location of Accounts and Records.
BT INSTITUTIONAL FUNDS: 6 St. James Avenue, Boston, MA 02116.
BANKERS TRUST COMPANY: 280 Park Avenue, New York, NY 10017.
INVESTORS FIDUCIARY TRUST COMPANY: 127 West 10th Street, Kansas City, MO
64105.
SIGNATURE BROKER-DEALER SERVICES, INC.: 6 St. James Avenue, Boston, MA 02116.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this registration statement on Form N-1A to be signed
on its behalf by the undersigned, thereto duly authorized in the City of Boston,
and Commonwealth of Massachusetts on the 23rd day of September, 1996.
BT INSTITUTIONAL FUNDS
By: /S/ PHILIP W. COOLIDGE
Philip W. Coolidge
President
<PAGE>
INDEX TO EXHIBITS
1 Amendment to Declaration of Trust (Designation of Series)
5 Investment Advisory Agreement
9b Schedule of Fees for Administrative Agreement
13c Initial Shareholder Letter
15c Placement Agent Agreement
17 Financial Data Schedule
BTDECTR Appendix I
BT INSTITUTIONAL FUNDS
Eleventh Amended and Restated Establishment and
Designation of Series of Shares of
Beneficial Interest (par value $0.001 per share)
as of June 7, 1996
Pursuant to Sections 6.9 and 9.3 of the Amended and Restated
Declaration of Trust, dated as of March 29, 1990 (the "Declaration of Trust"),
of the BT Institutional Funds (the "Trust"), the Trustees of the Trust hereby
amend and restate the Establishment and Designation of Series appended to the
Declaration of Trust to establish and to designate one additional series of
Shares (as defined in the Declaration of Trust), and the deletion of the
Short/Intermediate U.S. Government Securities Fund, such additional series of
Shares together with the nine existing series of Shares totalling ten series of
Shares (each a "Fund" and collectively the "Funds").
1. The Funds shall be designated as follows:
Institutional Cash Management Fund Institutional Treasury Money
Fund Institutional Tax Free Money Fund Institutional NY Tax Free
Money Fund Equity 500 Index Fund 100% Treasury Fund BT
Institutional Capital Appreciation Fund Institutional Cash
Reserves Institutional Liquid Assets Fund Institutional Daily
Assets Fund
and shall have the following special and relative rights:
2. Each Fund shall be authorized to hold cash, invest in securities,
instruments and other properties and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Securities Act of 1933 to the extent pertaining to the offering of
Shares of such Fund. Each Share of a Fund shall be redeemable, shall be entitled
to one vote (or fraction thereof in respect of a fractional share) on matters on
which Shares of the Fund shall be entitled to vote, shall represent a pro rata
beneficial interest in the assets allocated or belonging to the Fund, and shall
be entitled to receive its pro rata share of the net assets of the Fund upon
liquidation of the Fund, all as provided in Section 6.9 of the Declaration of
Trust. The proceeds of sales of Shares of a Fund, together with any income and
gain thereon, less any diminution or expenses thereof, shall irrevocably belong
to that Fund, unless otherwise required by law.
3. Shareholders of each Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to such Fund as provided in, Rule 18f-2, as
<PAGE>
from time to time in effect, under the Investment Company Act of 1940, as
amended, or any successor rule, and by the Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated among the
Funds as set forth in Section 6.9 of the Declaration of Trust.
5. Subject to the provisions of Section 6.9 and Article IX of the
Declaration of Trust, the Trustees (including any successor Trustees) shall have
the right at any time and from time to time to reallocate assets and expenses,
to change the designation of any Fund created previously or now or hereafter
created, or to otherwise change the special and relative rights of any Fund.
IN WITNESS WHEREOF, the undersigned have signed this instrument as of
June 7, 1996. This instrument may be executed by the Trustees on separate
counterparts but shall be effective only when signed by a majority of the
Trustees.
/s/PHILIP W. COOLIDGE
Philip W. Coolidge
as Trustee
and not individually
/s/BRUCE E. LANGTON
Bruce E. Langton
as Trustee
and not individually
/s/RICHARD J. HERRING
Richard J. Herring
as Trustee
and not individually
/s/CHARLES P. BIGGAR
Charles P. Biggar
as Trustee
and not individually
BTDECTR
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of August 6, 1996 by and between BT INSTITUTIONAL
FUNDS, a Massachusetts business trust (herein called the "Trust") and BANKERS
TRUST COMPANY (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 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, 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 1933 Act. The Investment Adviser further agrees that
it:
(a) will conform with all applicable rules and regulations of
the SEC (herein called the "Rules") and with 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 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) will place orders pursuant to its investment
determinations for each Fund either directly with the issuer or with any broker
or dealer selected
<PAGE>
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
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 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) will maintain books and records with respect to the
securities transactions of each Fund and will render to the Trust's Board of
Trustees 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 any of such records upon
request of the Trust. 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.
In addition, if the aggregate expenses of a Fund exceed, in its fiscal
year, the applicable expense limitations imposed by the securities regulations
of any state in which the shares of any Fund are registered or qualified for
sale to the public, the Investment Adviser shall reimburse the Fund for the
excess expense to the extent required by state law.
<PAGE>
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust 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;
(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 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
<PAGE>
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, 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 on behalf of the
respective Fund from time to time prior to final disposition thereof, 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 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 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
Interested Persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust 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 at any time, without payment of any penalty, on 90 days' written
notice to the Trust. This Agreement will immediately terminate in the event of
its assignment. (As used in this Agreement, the terms "Vote of a Majority of the
<PAGE>
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. (a) REPRESENTATIONS AND WARRANTIES. The Investment Adviser hereby
represents and warrants as follows:
(i) The Investment Adviser is exempt from registration under the
1940 Act;
(ii) The Investment Adviser has all requisite authority to enter
into, execute, deliver and perform its obligations under, this Agreement;
(iii) This Agreement is legal, valid and binding, and enforceable
in accordance with its terms; and
(iv) The performance by the Investment Adviser of its obligations
under this Agreement does not conflict with any law to which it is subject.
(b) COVENANTS. The Investment Adviser hereby covenants and agrees
that, so long as this Agreement shall remain in effect,
(i) The Investment Adviser shall remain either exempt from, or
registered under, the registration provisions of the Advisers Act; and
(ii) The performance by the Investment Adviser of its
obligations under this Agreement shall not conflict with any law to which it is
then subject.
11. 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, Four Albany
Street, New York, New York 10006 or (b) to the Trust, c/o Signature Financial
Group, Inc., 6 St. James Avenue, 9th Floor, Boston, Massachusetts 02116.
12. 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
under this Agreement.
13. 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,
<PAGE>
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by the
laws of the Commonwealth of Massachusetts, without reference to principles of
conflicts of law. The Trust is organized under the laws of the Commonwealth of
Massachusetts pursuant to a Declaration of Trust dated March 29, 1990. 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.
BT INSTITUTIONAL FUNDS
By:/s/ PHILIP W. COOLIDGE
Name:Philip W. Coolidge
BANKERS TRUST COMPANY
By:/s/BRIAN WIXTED
Name:Brian Wixted
<PAGE>
EXHIBIT A
TO
INVESTMENT ADVISORY AGREEMENT
MADE AS OF AUGUST 6, 1996
BETWEEN
BT INSTITUTIONAL FUNDS AND BANKERS TRUST COMPANY
FUND INVESTMENT ADVISORY FEE
Institutional Daily Assets Fund 0.10%
EXHIBIT D
TO
ADMINISTRATION AND SERVICES AGREEMENT
MADE AS OF OCTOBER 28, 1992
BETWEEN
BT INSTITUTIONAL FUNDS AND BANKERS TRUST COMPANY
FUND FEE
Institutional Cash Management Fund 0.05%
Institutional Treasury Money Fund 0.05%
Institutional Tax Free Money Fund 0.05%
Institutional NY Tax Free Money Fund 0.05%
Institutional Liquid Assets Fund 0.05%
Equity 500 Index Fund 0.05%
100% Treasury Fund 0.05%
Short/Intermediate U.S. Government Securities Fund 0.20%
Institutional Cash Reserves 0.05%
BT Institutional Capital Appreciation Fund 0.20%
BT Institutional Daily Assets Fund 0.02%
September 16, 1996
BT Institutional Funds
6 St. James Avenue
Boston, Massachusetts 02116
Ladies and Gentlemen:
With respect to our purchase from you of one share of beneficial
interest ("Initial Share") of Institutional Daily Assets Fund (the "Fund"), a
series of BT Institutional Funds, a Massachusetts business trust, for a purchase
price of $10, we hereby advise you that we are purchasing such Initial Share
with no intention to dispose of them either through resale to others or
redemption by the Fund.
The amount paid by the Fund on any redemption by us of any such Initial
Share will be reduced by the PRO RATA portion of any unamortized organization
expenses which the number of Initial Shares redeemed bears to the total number
of Initial Shares outstanding immediately prior to such redemption.
Very truly yours,
SIGNATURE FINANCIAL GROUP, INC.
By: /s/ LINWOOD C. DOWNS
Name: Linwood C. Downs
Title: Treasurer
BT0612
BT Institutional Funds
6 St. James Avenue
Boston, Massachusetts 02116
August 6, 1996
Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, Massachusetts 02116
Ladies and Gentlemen:
Re: PLACEMENT AGENT AGREEMENT -- INSTITUTIONAL DAILY ASSETS FUND
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, BT Institutional Funds (the "Trust"), an
open-end diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), organized as a
Massachusetts business trust, has agreed that Signature Broker-Dealer Services,
Inc. ("SBDS") shall be the exclusive placement agent (the "Placement Agent") of
the shares of beneficial interest ("Shares") of the following series of the
Trust: Institutional Daily Assets Fund (the "Fund").
1. SERVICES AS PLACEMENT AGENT.
1.1 SBDS will act as Placement agent of the Shares. In acting
as Placement agent under this Placement agent Agreement, neither SBDS nor its
employees or any agents thereof shall make any offer or sale of Shares in a
manner which would require the Shares to be registered under the Securities Act
of 1933, as amended (the "1933 Act").
1.2 All activities by SBDS and its agents and employees as
Placement agent of Shares shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations adopted
pursuant to the 1940 Act by the Securities and Exchange Commission (the
"Commission").
1.3 Nothing herein shall be construed to require the Trust to
accept any offer to purchase any Shares, all of which shall be subject to
approval by the Trust's Board of Trustees.
1.4 The Trust shall furnish from time to time for use in
connection with the sale of Shares such information with respect to the Trust
and Shares as SBDS may reasonably request. The Trust shall also furnish SBDS
upon request with: (a) unaudited semiannual statements of the Trust's books and
accounts prepared by the Trust, and (b) from time to time such additional
information regarding the Trust's financial or regulatory condition as SBDS may
reasonably request.
1.5 The Trust represents to SBDS that all registration
statements filed by the Trust with the Commission under the 1940 Act have been
prepared in conformity with the requirements of such statute and the rules and
regulations of the Commission thereunder. As used in this Agreement the term
"registration statement" shall mean any registration statement filed with the
Commission, as modified by any amendments thereto that at any time shall have
been filed with the Commission by or on behalf of the Trust. The Trust
represents and warrants to SBDS that any registration statement will contain all
statements required to be stated therein in conformity with both such statute
and the rules and regulations of the Commission; that all statements of fact
contained in any registration statement or private placement offering
<PAGE>
memorandum will be true and correct in all material respects at the time of
filing of such registration statement (or amendment thereto) or delivery of such
private placement offering memorandum; and that no registration statement or
private placement offering memoranda will include an 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 not misleading to a purchaser of
Shares. The Trust may but shall not be obligated to propose from time to time
such amendment to any registration statement as in the light of future
developments may, in the opinion of the Trust's counsel, be necessary or
advisable. If the Trust shall not propose such amendment and/or supplement
within fifteen days after receipt by the Trust of a written request from SBDS to
do so, SBDS may, at its option, terminate this Agreement. The Trust shall not
file any amendment to any registration statement or revise any private placement
offering memorandum without giving SBDS reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement shall in any way
limit the Trust's right to file at any time such amendment to any registration
statement or to revise any such private placement offering memorandum as the
Trust may deem advisable, such right being in all respects absolute and
unconditional.
1.6 The Trust agrees to indemnify, defend and hold SBDS, its
several officers and directors, and any person who controls SBDS within the
meaning of Section 15 of the 1933 Act or Section 20 of the Securities and
Exchange Act of 1934 (the "1934 Act") (for purposes of this paragraph 1.6,
collectively, "Covered Persons") free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which any Covered Person may incur under the 1933 Act,
the 1934 Act, otherwise, arising out of or based on any untrue statement of a
material fact contained in any registration statement, private placement
memorandum or other offering material ("Offering Material") or arising out of or
based on any omission to state a material fact required to be stated in any
Offering Material or necessary to make the statements in any Offering Material
not misleading; provided, however, that the Trust's agreement to indemnify
Covered Persons shall not be deemed to cover any claims, demands, liabilities or
expenses arising out of any statements regarding SBDS as are furnished in
writing to the Trust by SBDS in its capacity as Placement agent for use in the
answers to any items of any registration statement or in any statements made in
any Offering Material, or arising out of or based on any omission or alleged
omission to state a material fact in connection with the giving of such
information required to be stated in such answers or necessary to make the
answers not misleading; and further provided that the Trust's agreement to
indemnify SBDS and the Trust's representations and warranties hereinbefore set
forth in paragraph 1.5 shall not be deemed to cover any liability to the Trust
or its investors to which a Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of a Covered Person's reckless disregard of its obligations
and duties under this Agreement. The Trust should be notified of any action
brought against a Covered Person, such notification to be given by letter or by
telegram addressed to the Trust, c/o Burton M. Leibert, Esq., Willkie Farr &
Gallagher, One Citicorp Center, 153 East 53rd Street, New York, New York 10022,
with a copy to Brian Wixted, Vice President, Bankers Trust Company, Mutual Funds
Services, Four Albany Street, New York, New York 10006, promptly after the
summons or other first legal process shall have been duly and completely served
upon such Covered Person. The failure to so notify the Trust of any such action
shall not relieve the Trust from any liability except to the extent the Trust
shall have been prejudiced by such failure or from any liability that the Trust
may have to the Covered Person against whom such action is brought by reason of
any such untrue statement or omission, otherwise than on account of the Trust's
indemnity agreement contained in this paragraph. The Trust will be entitled to
assume the defense of any suit brought to enforce any such claim, demand or
liability, but in such case such defense shall be conducted by counsel of good
standing chosen by the Trust and approved by SBDS, which approval shall not be
unreasonably withheld. In the event the Trust elects to assume the defense of
any such suit and retain counsel of good standing approved by SBDS, the
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but in case the Trust does not elect
to assume the defense of any such suit, or in case SBDS reasonably does not
approve of counsel chosen
<PAGE>
by the Trust, the Trust will reimburse the Covered Person named as defendant in
such suit, for the fees and expenses of any counsel retained by SBDS or the
Covered Persons. The Trust's indemnification agreement contained in this
paragraph and the Trust's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of Covered Persons, and shall survive the delivery of any
Shares. This agreement of indemnity will inure exclusively to Covered Persons
and their successors. The Trust agrees to notify SBDS promptly of the
commencement of any litigation or proceedings against the Trust or any of its
officers or Trustees in connection with the issue and sale of any Shares.
1.7 SBDS agrees to indemnify, defend and hold the Trust, its
several officers and trustees, and any person who controls the Trust within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (for
purposes of this paragraph 1.7, collectively, "Covered Persons") free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending such claims, demands,
liabilities and any counsel fees incurred in connection therewith) that Covered
Persons may incur under the 1933 Act, the 1934 Act or common law or otherwise,
but only to the extent that such liability or expense incurred by a Covered
Person resulting from such claims or demands shall arise out of or be based on
any untrue statement of a material fact contained in information regarding SBDS
furnished in writing by SBDS in its capacity as Placement agent to the Trust for
use in (i) the answers to any of the items of any registration statement or (ii)
in any statements in any other Offering Material or which shall arise out of or
be based on any omission to state a material fact in connection with such
information regarding SBDS furnished in writing by SBDS to the Trust required to
be stated in such answers or necessary to make such information not misleading.
SBDS shall be notified of any action brought against a Covered Person, such
notification to be given by letter or telegram addressed to SBDS at 6 St. James
Avenue, Boston, Massachusetts 02116, Attention: Philip W. Coolidge, promptly
after the summons or other first legal process shall have been duly and
completely served upon such Covered Person. SBDS shall have the right of first
control of the defense of the action with counsel of its own choosing
satisfactory to the Trust if such action is based solely on such alleged
misstatement or omission on SBDS's part, and in any other event each Covered
Person shall have the right to participate in the defense or preparation of the
defense of any such action. The failure to so notify SBDS of any such action
shall not relieve SBDS from any liability except to the extent the Trust shall
have been prejudiced by such failure, or from any liability that SBDS may have
to Covered Persons by reason of any such untrue or alleged untrue statement, or
omission or alleged omission, otherwise than on account of SBDS's indemnity
agreement contained in this paragraph.
1.8 No Shares shall be offered by either SBDS or the Trust
under any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
registration statement or any necessary amendments thereto shall be suspended
under any of the provisions of the 1933 Act or the 1940 Act; provided, however,
that nothing contained in this paragraph shall in any way restrict or have an
application to or bearing on the Trust's obligation to redeem Shares from any
investor in accordance with the provisions of the Trust's registration statement
or Declaration of Trust, as amended from time to time.
1.9 The Trust agrees to advise SBDS as soon as reasonably
practical by a notice in writing delivered to SBDS or its counsel:
(a) of any request by the Commission for amendments to the
registration statement then in effect or for additional information;
(b) in the event of the issuance by the Commission of any stop
order suspending the registration statement then in effect or the initiation by
service of process on the Trust of any proceeding for that purpose;
<PAGE>
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement then in effect
or that requires the making of a change in such registration statement in order
to make the statements therein not misleading; and
(d) of all action of the Commission with respect to any
amendment to any registration statement that may from time to time be filed with
the Commission.
For purposes of this paragraph 1.9, informal requests by or
acts of the staff of the Commission shall not be deemed actions of or requests
by the Commission.
1.10 SBDS agrees on behalf of itself and its employees to
treat confidentially and as proprietary information of the Trust all records and
other information not otherwise publicly available relative to the Trust and its
prior, present or potential investors and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Trust, which approval shall not be unreasonably withheld and may not be
withheld where SBDS may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
2. TERM.
This Agreement shall become effective on the date first above
written and, unless sooner terminated as provided herein, shall continue until
August 7, 1997 and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically approved at least annually by
(i) the Trust's Board of Trustees or (ii) by a "vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Fund,
provided that in either event the continuance is also approved by the majority
of the Trust's Trustees who are not "interested persons" (as defined in the 1940
Act) of the Trust and who have no direct or indirect financial interest in this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval. This Agreement is terminable without penalty, on not less than
60 days' notice, by the Board, by a "vote of a majority of the outstanding
voting securities" (as defined in the 1940 Act) of the Fund, or by SBDS. This
Agreement will also terminate automatically in the event of its "assignment" (as
defined in the 1940 Act and the rules thereunder).
3. REPRESENTATIONS AND WARRANTIES.
SBDS and the Trust each hereby represents and warrants to the
other that it has all requisite authority to enter into, execute, deliver and
perform its obligations under this Agreement and that, with respect to it, this
Agreement is legal, valid and binding, and enforceable in accordance with its
terms.
4. CONCERNING APPLICABLE PROVISIONS OF LAW, ETC.
This Agreement shall be subject to all applicable provisions
of law, including the applicable provisions of the 1940 Act and to the extent
that any provisions herein contained conflict with any such applicable
provisions of law, the latter shall control.
This Agreement is executed and delivered in Boston,
Massachusetts, and the laws of the Commonwealth of Massachusetts shall, except
to the extent that any applicable provisions of federal law shall be
controlling, govern the construction, validity and effect of this Agreement,
without reference to principles of conflicts of law.
<PAGE>
The undersigned officer of the Trust has executed this
Agreement not individually, but as an officer of the Trust under the Trust's
Declaration of Trust, dated March 29, 1990, as amended from time to time.
Pursuant to the Declaration of Trust the obligations of this Agreement are not
binding upon any of the Trustees or investors of the Trust individually, but
bind only the trust estate.
If the contract set forth herein is acceptable to you, please
so indicate by executing the enclosed copy of this Agreement and returning the
same to the undersigned, whereupon this Agreement shall constitute a binding
contract between the parties hereto effective at the closing of business on the
date hereof.
Yours very truly,
BT INSTITUTIONAL FUNDS
By: /s/ PHILIP W. COOLIDGE
Name:Philip W. Coolidge
Title: President
Accepted:
Signature Broker-Dealer Services, Inc.
By:/s/ PHILIP W. COOLIDGE
Name:Philip W. Coolidge
Title: President
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Assets and Liabilities dated September 16, 1996 and is qualified in
its entirety by reference to such statement.
</LEGEND>
<CIK> 0000862157
<NAME> BT INSTITUTIONAL FUNDS
<SERIES>
<NUMBER> 8
<NAME> INSTITUTIONAL DAILY ASSETS FUND
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> SEP-16-1996
<PERIOD-END> SEP-16-1996
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<RECEIVABLES> 0
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<EXPENSE-RATIO> 0
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
