SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BT INSTITUTIONAL FUNDS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
2
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BT INSTITUTIONAL FUNDS
INSTITUTIONAL TREASURY ASSETS FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 8, 1999
A Special Meeting of shareholders of BT Institutional Funds (the
"Trust") will be held at the offices of BT Alex. Brown Incorporated, One South
Street, 30th Floor, Baltimore, Maryland 21202 on October 8, 1999 at 11:00 a.m.
(the "Special Meeting"). The Trust is an open-end management investment company,
organized under the laws of the Commonwealth of Massachusetts, that is comprised
of Institutional Treasury Assets Fund (the "Fund") and Institutional Cash
Management Fund, Institutional Cash Reserves, Institutional Treasury Money Fund,
International Equity Fund Classes I and II, Equity 500 Index Fund, Institutional
Liquid Assets Fund and Institutional Daily Assets Fund, which are not addressed
in the accompanying Proxy Statement ("Proxy Statement").
The Special Meeting is being held to consider and vote on the following
matters for the Fund, as indicated below and more fully described under the
corresponding Proposals in the Proxy Statement, and such other matters as may
properly come before the meeting or any adjournments thereof:
PROPOSAL I: To approve or disapprove new investment advisory
agreements (each a "New Advisory Agreement" and
together the "New Advisory Agreements") for the Trust:
A. To approve or disapprove a New Advisory Agreement
between the Trust and Bankers Trust Company ("Bankers
Trust") (the "New BT Advisory Agreement").
B. To approve or disapprove a New Advisory Agreement
between the Trust and Morgan Grenfell Inc. ("MGI" and,
together with Bankers Trust, the "Advisers") (the "New
MGI Advisory Agreement") to be implemented within two
years of the date of the Special Meeting upon approval
of the members of the Trust's Board of Trustees, who
are not "interested persons" ("Independent Trustees")
(as defined in the Investment Company Act of 1940, as
amended (the "Act")).
C. To approve or disapprove a new sub-investment
advisory agreement (the "New Sub-advisory Agreement,"
which term, unless otherwise specified is included
within the meaning of New Advisory Agreements) among
the Trust, MGI and Bankers Trust under which Bankers
Trust may perform certain of MGI's responsibilities, at
MGI's expense, under the New MGI Advisory Agreement
with the Trust upon approval of the Independent
Trustees.
PROPOSAL II: To elect Trustees of the Trust to hold office until
their respective successors have been duly elected and
qualified or until their earlier resignation or
removal.
PROPOSAL III: To ratify or reject the selection of
PricewaterhouseCoopers LLP as the independent
accountants for the Fund's current fiscal year.
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The appointed proxies will vote in their discretion on any other
business as may properly come before the Special Meeting or any adjournment
thereof.
THE NEW ADVISORY AGREEMENTS DESCRIBED IN PROPOSALS IA, IB AND IC,
RESPECTIVELY, WILL CONTAIN SUBSTANTIALLY THE SAME TERMS AND CONDITIONS, EXCEPT
FOR THE PARTIES AND DATES OF EXECUTION, EFFECTIVENESS AND INITIAL TERM, AS THE
PRIOR INVESTMENT ADVISORY AGREEMENT PURSUANT TO WHICH SERVICES WERE PROVIDED TO
THE TRUST. IN ADDITION, THE FORM OF NEW SUB-ADVISORY AGREEMENT AUTHORIZES THE
APPLICABLE INVESTMENT ADVISER TO ADJUST THE DUTIES, THE AMOUNT OF ASSETS TO BE
MANAGED AND THE FEES PAID TO THE APPLICABLE INVESTMENT SUBADVISER WITH AND UPON
THE APPROVAL OF THE BOARD OF THE INDEPENDENT TRUSTEES. AS MORE FULLY DISCUSSED
IN THE ACCOMPANYING PROXY STATEMENT, APPROVAL OF THE NEW ADVISORY AGREEMENTS,
WHICH PROVIDE FOR THE SAME SERVICES TO BE PROVIDED AT THE SAME FEES, IS
GENERALLY OCCASIONED BY THE MERGER OF CIRCLE ACQUISITION CORPORATION, A WHOLLY
OWNED SUBSIDIARY OF DEUTSCHE BANK A.G. ("DEUTSCHE BANK"), WITH AND INTO BANKERS
TRUST CORPORATION, THE PARENT COMPANY OF BANKERS TRUST. MGI IS, AND AS A RESULT
OF THIS TRANSACTION, BANKERS TRUST BECAME, AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF DEUTSCHE BANK. THE NEW ADVISORY AGREEMENT WITH MGI DESCRIBED IN PROPOSAL IB
AND THE NEW SUB-ADVISORY AGREEMENT WITH BANKERS TRUST DESCRIBED IN PROPOSAL IC
WILL PERMIT DEUTSCHE BANK, UPON THE APPROVAL OF THE INDEPENDENT TRUSTEES, TO
SIMPLIFY THE ORGANIZATIONAL STRUCTURE OF ITS U.S. MUTUAL FUND OPERATIONS,
ENHANCE THE EFFICIENCY OF THEIR ADMINISTRATION AND PROMOTE CONSISTENCY OF
INTERNAL CONTROLS, COMPLIANCE AND REGULATORY OVERSIGHT. THE DEFERRAL IN
IMPLEMENTING THE NEW ADVISORY AGREEMENT WITH MGI IS NEEDED TO PERMIT DEUTSCHE
BANK A SUFFICIENT AMOUNT OF TIME TO PLAN, PREPARE AND INSTITUTE THE NECESSARY
ARRANGEMENTS FOR MGI TO CONSOLIDATE DEUTSCHE BANK'S U.S. MUTUAL FUND OPERATIONS.
The close of business on July 22, 1999 has been fixed as the record
date for the determination of the shareholders of the Fund entitled to notice
of, and to vote at, the Special Meeting. You are cordially invited to attend the
Special Meeting.
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES TO BE
FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT SHAREHOLDER
COMMUNICATIONS CORPORATION AT 1-800-732-6168.
This notice and related proxy material are first being mailed to
shareholders on or about August 23, 1999. This proxy is being solicited on
behalf of the Board of Trustees of the Trust.
By Order of the Board of Trustees,
Daniel O. Hirsch, SECRETARY
New York, New York
August 23, 1999
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WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR
SHARES (UNLESS YOU ARE VOTING BY TELEPHONE OR THROUGH THE
INTERNET). NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD
IS MAILED IN THE UNITED STATES.
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BT INSTITUTIONAL FUNDS
INSTITUTIONAL TREASURY ASSETS FUND
One South Street
Baltimore, Maryland 21202
PROXY STATEMENT FOR THE SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 8, 1999
This Proxy Statement ("Proxy Statement") is being furnished in
connection with the solicitation of proxies by the Board of Trustees of BT
Institutional Funds (the "Trust") with respect to the Institutional Treasury
Assets Fund (the "Fund") for use at the special meeting of the Trust to be held
at the offices of BT Alex. Brown Incorporated, One South Street, 30th Floor,
Baltimore, Maryland 21202 on October 8, 1999 at 11:00 a.m. (the "Special
Meeting") and at any adjournments thereof. This Proxy Statement and accompanying
proxy card(s) ("Proxy") are expected to be mailed to shareholders on or about
August 23, 1999.
The Trust is comprised of several series. The Fund is a separate series
of the Trust, along with seven other funds, which are not addressed in this
Proxy Statement.
For simplicity, actions are described in this Proxy Statement as being
taken by the Fund, although all actions are actually taken by the Trust on
behalf of the Fund.
The Special Meeting is being held to consider and vote on the following
matters for the Fund, as indicated below and described more fully under the
corresponding Proposals discussed herein, and such other matters as may properly
come before the meeting or any adjournments thereof:
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PROPOSAL I: To approve or disapprove new investment advisory
agreements (each a "New Advisory Agreement" and
together the "New Advisory Agreements") for the Trust:
A. To approve or disapprove a New Advisory Agreement
between the Trust and Bankers Trust Company ("Bankers
Trust") (the "New BT Advisory Agreement").
B. To approve or disapprove a New Advisory Agreement
between the Fund and Morgan Grenfell Inc. ("MGI" and,
together with Bankers Trust, the "Advisers") (the "New
MGI Advisory Agreement") to be implemented within two
years of the date of the Special Meeting upon approval
of the members of the Trust's Board of Trustees, who
are not "interested persons" thereof ("Independent
Trustees") (as defined in the Investment Company Act of
1940, as amended (the "Act")).
C. To approve or disapprove a new sub-investment
advisory agreement (the "New Sub-advisory Agreement,"
which term, unless otherwise specified, is included
within the meaning of the New Advisory Agreements)
among the Trust, MGI and Bankers Trust under which
Bankers Trust may perform certain of MGI's
responsibilities, at MGI's expense, under the New MGI
Advisory Agreement with the Trust upon approval of the
Independent Trustees.
PROPOSAL II: To elect Trustees of the Trust to hold office until
their respective successors have been duly elected and
qualified or until their earlier resignation or
removal.
PROPOSAL III: To ratify or reject the selection of
PricewaterhouseCoopers LLP as the independent
accountants for the Fund for the current fiscal year.
The appointed proxies will vote on any other business as may properly come
before the Special Meeting or any adjournment thereof.
Among other proposals, the shareholders of the Trust are to consider
the election of Charles P. Biggar, S. Leland Dill, Martin J. Gruber, Richard
Hale, Richard J. Herring, Bruce E. Langton, Philip Saunders, Jr. and Harry Van
Benschoten (the "Trustee Nominees") as Trustees of the Trust. Dr. Herring and
Messrs. Biggar and Langton currently serve on the Board of the Trust (the
"Board") and Dr. Gruber and Messrs. Dill, Saunders and Van Benschoten serve as
Trustees of various other investment companies within the Bankers Trust family
of funds. To ensure adherence by the Trust to Section 15(f) of the Act, only Mr.
Hale will be an "interested person" (within the meaning of Section 2(a)(19) of
the Act) of the Fund following the Merger (as defined herein) and the approval
of the New Advisory Agreements.
Notice of the Special Meeting and a Proxy accompany this Proxy
Statement. Proxy solicitations will be made primarily by mail, but solicitations
may also be made by telephone, telegraph, through the Internet or in person by
officers or agents of the Fund. All costs of solicitation, including (a)
printing and mailing of this Proxy Statement and accompanying material, (b) the
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reimbursement of brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of the Fund's shares, (c) payment
to Shareholder Communications Corporation for its services in soliciting proxies
and (d) supplementary solicitations to submit Proxies, will be borne by Bankers
Trust. If the Fund records votes by telephone or through the Internet, it will
use procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been properly
recorded. Proxies voted by telephone or through the Internet may be revoked at
any time before they are voted in the same manner that proxies voted by mail may
be revoked.
THE ANNUAL REPORT OF THE FUND CONTAINING AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, AS WELL AS THE SEMI-ANNUAL REPORT
OF THE FUND (EACH A "REPORT"), HAVE PREVIOUSLY BEEN FURNISHED TO THE FUND'S
SHAREHOLDERS. AN ADDITIONAL COPY OF EACH REPORT WILL BE FURNISHED WITHOUT CHARGE
UPON REQUEST BY WRITING TO THE TRUST AT THE ADDRESS SET FORTH ON THE COVER OF
THIS PROXY STATEMENT OR BY CALLING 1-800-368-4031.
If the enclosed Proxy is properly executed and returned in time to be
voted at the Special Meeting, the shares represented thereby will be voted in
accordance with the instructions marked on the Proxy. Shares of the Fund are
entitled to one vote each at the Special Meeting and fractional shares are
entitled to proportionate shares of one vote. If no instructions are marked on
the Proxy with respect to a specific Proposal, the Proxy will be voted "FOR" the
approval of such Proposal and in accordance with the judgment of the persons
appointed as proxies with respect to any other matter that may properly come
before the Special Meeting. Any shareholder giving a Proxy has the right to
attend the Special Meeting to vote his/her shares in person (thereby revoking
any prior Proxy) and also the right to revoke the Proxy at any time by written
notice received by the Fund prior to the time it is voted.
Bankers Trust will vote any shares in accounts as to which it has
investment authority, and shares in any other accounts as to which Bankers Trust
is the agent of record, which are not otherwise represented in person or by
proxy at the Special Meeting. Bankers Trust will vote shares of the Fund over
which it has investment discretion in accord with its fiduciary and other legal
obligations, and in its discretion may consult with the beneficial owners or
other fiduciaries. Bankers Trust will vote shares of the Fund for which it is
the owner of record but does not have investment discretion, with respect to
each Proposal on which shareholders of the Fund are entitled to vote, which are
not otherwise represented in person or by proxy at the Special Meeting. These
shares will be voted by Bankers Trust for, against, or abstaining, in the same
proportion as the votes cast by holders of all shares in the Fund otherwise
represented at the Special Meeting. This practice is commonly referred to as
"mirror" or "echo" voting.
In the event that a quorum is not present at the Special Meeting, or if
a quorum is present but sufficient votes to approve a Proposal are not received,
the persons named as proxies may propose one or more adjournments of the Special
Meeting to permit further solicitation of Proxies with respect to the Proposal.
In determining whether to adjourn the Special Meeting, the following factors may
be considered: the nature of the proposals that are the subject of the Special
Meeting, the percentage of votes actually cast, the percentage of negative votes
actually cast, the nature of any further solicitation and the information to be
provided to shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the Special Meeting in person or by Proxy. The persons named as
proxies will vote those Proxies that they are entitled to vote "FOR" any
Proposal in favor of an adjournment and will vote those Proxies required to be
voted "AGAINST" any such Proposal against any adjournment. A shareholder vote
may be taken
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on one or more of the Proposals in the Proxy Statement prior to any adjournment
if sufficient votes have been received and it is otherwise appropriate. A quorum
of shareholders is constituted by the presence in person or by proxy of the
holders of a majority of the outstanding shares of the Trust or Fund (as
applicable) entitled to vote at the Special Meeting. For purposes of determining
the presence of a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that these persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. (See "Vote
Required" for a further discussion of abstentions and broker non-votes.)
Shareholders of record at the close of business on July 22, 1999 (the
"Record Date") are entitled to notice of, and to vote at, the Special Meeting.
As of the Record Date, 731,336,348.030 shares of the Fund were issued and
outstanding.
In order that your shares may be represented, you are requested to
(unless you are voting by telephone or through the Internet):
o indicate your instructions on the Proxy;
o date and sign the Proxy; and
o mail the Proxy promptly in the enclosed envelope.
BENEFICIAL OWNERSHIP OF SHARES OF THE FUNDS
Annex I attached hereto sets forth information as of the Record Date
regarding the beneficial ownership of the Fund's shares by (i) the only persons
known by the Fund to beneficially own more than five percent of the outstanding
shares of the Fund, (ii) the Trustees and Trustee Nominees, (iii) the executive
officers of the Fund, and (iv) the Trustees and executive officers of the Fund
as a group. The number of shares beneficially owned by each Trustee, Trustee
Nominee or executive officer is determined under rules of the Securities and
Exchange Commission (the "Commission"), and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under these rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of the Record Date through
the exercise of any stock option or other right. Unless otherwise indicated,
each person has sole investment and voting power (or shares this power with his
or her spouse) with respect to the shares set forth in Annex I. The inclusion
herein of any shares deemed beneficially owned does not constitute an admission
of beneficial ownership of the shares.
Collectively, the Trustees and officers of the Trust own less than 1%
of the Fund's outstanding shares.
BACKGROUND
THE FUND. As indicated earlier, the Fund is a separate series of the
Trust. Bankers Trust, a banking corporation organized under the laws of the
State of New York, located at 130 Liberty Street (One Bankers Trust Plaza), New
York, New York 10006, serves as the investment adviser and custodian of the
Fund. Bankers Trust is a wholly-owned subsidiary of Bankers Trust Corporation
("BT Corporation"), located at 130 Liberty Street (One Bankers Trust Plaza), New
York, New York 10006, a registered bank holding company organized under the laws
of the State of New York. As discussed
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later in this Proxy Statement, as a result of the Merger (as defined herein) BT
Corporation became a wholly owned subsidiary of Deutsche Bank, A.G. ("Deutsche
Bank"), located at 31 West 52nd Street, New York, NY 10019. ICC Distributors,
Inc., located at Two Portland Square, Portland, Maine 04101 serves as the
principal underwriter of the Fund. ICC Distributors, Inc. is not affiliated with
Bankers Trust, Deutsche Bank or any of their affiliates.
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PROPOSALS IA, IB AND IC
APPROVAL OF NEW ADVISORY AGREEMENTS
THE NEW ADVISORY AGREEMENTS WILL CONTAIN SUBSTANTIALLY THE SAME TERMS
AND CONDITIONS, EXCEPT FOR THE PARTIES AND THE DATES OF EXECUTION, EFFECTIVENESS
AND INITIAL TERM, AS THE PRIOR INVESTMENT ADVISORY AGREEMENT PURSUANT TO WHICH
SERVICES WERE PROVIDED TO THE FUND. IN ADDITION, THE FORM OF NEW SUB-ADVISORY
AGREEMENT AUTHORIZES THE APPLICABLE INVESTMENT ADVISER TO ADJUST THE DUTIES, THE
AMOUNT OF ASSETS TO BE MANAGED AND THE FEES PAID TO THE APPLICABLE INVESTMENT
SUBADVISER WITH AND UPON THE APPROVAL OF THE BOARD AND OF THE INDEPENDENT
TRUSTEES. AS MORE FULLY DISCUSSED BELOW, APPROVAL OF THE NEW ADVISORY
AGREEMENTS, WHICH PROVIDE FOR THE SAME SERVICES TO BE PROVIDED AT THE SAME FEES,
IS GENERALLY OCCASIONED BY THE MERGER (AS DEFINED HEREIN) PURSUANT TO WHICH
BANKERS TRUST BECAME AN INDIRECT SUBSIDIARY OF DEUTSCHE BANK. THE NEW MGI
ADVISORY AGREEMENT DESCRIBED IN PROPOSAL IB AND THE NEW SUB-ADVISORY AGREEMENT
WITH BANKERS TRUST DESCRIBED IN PROPOSAL IC WILL PERMIT DEUTSCHE BANK, UPON THE
APPROVAL OF THE INDEPENDENT TRUSTEES, TO SIMPLIFY THE ORGANIZATIONAL STRUCTURE
OF ITS U.S. MUTUAL FUND OPERATIONS, ENHANCE THE EFFICIENCY OF THEIR
ADMINISTRATION AND PROMOTE CONSISTENCY OF INTERNAL CONTROLS, COMPLIANCE AND
REGULATORY OVERSIGHT. THE DEFERRAL IN IMPLEMENTING THE NEW MGI ADVISORY
AGREEMENT IS NEEDED TO PERMIT DEUTSCHE BANK A SUFFICIENT AMOUNT OF TIME TO PLAN,
PREPARE AND INSTITUTE THE NECESSARY ARRANGEMENTS FOR MGI TO CONSOLIDATE DEUTSCHE
BANK'S U.S. MUTUAL FUND OPERATIONS.
THE PRIOR ADVISORY AGREEMENT.
THE PRIOR ADVISORY AGREEMENT. Prior to June 4, 1999, Bankers Trust
served as investment adviser to the Fund (as discussed earlier) pursuant to an
investment advisory agreement between Bankers Trust and the Fund (the "Prior
Advisory Agreement"). The Prior Advisory Agreement was initially approved by the
Board, including a majority of the Independent Trustees.
The date of the Prior Advisory Agreement was August 6, 1996. The Prior
Advisory Agreement was most recently approved by the Fund's Trustees on March 8,
1999. The advisory fee rate is 0.15%. The fee paid by the Trust for the prior
fiscal year for services rendered pursuant to the Prior Advisory Agreement was
$646,253.00.(1)
THE MERGER. On November 30, 1998, BT Corporation, Deutsche Bank and
Circle Acquisition Corporation entered into an Agreement and Plan of Merger (the
"Merger Agreement"). Pursuant to the terms of the Merger Agreement, Circle
Acquisition Corporation, a wholly-owned New York subsidiary of Deutsche Bank,
merged with and into BT Corporation on June 4, 1999, with BT Corporation
continuing as the surviving entity (the "Merger"). Under the terms of the
Merger, each outstanding share of BT Corporation common stock was converted into
the right to receive $93 in cash, without interest. Since the Merger, BT
Corporation, along with its affiliates, has continued to offer the range of
financial products and services, including investment advisory services, that it
offered prior to the Merger.
As a result of the Merger, BT Corporation became a wholly-owned
subsidiary of Deutsche Bank. Deutsche Bank is a banking company with limited
liability organized under the laws of the
(1) Pursuant to an Expense Limitation Agreement between the Trust and Bankers
Trust, the Fund's total fund operating expenses for the current fiscal year
are capped. The fee and fee rate shown do not reflect the cap.
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Federal Republic of Germany. Deutsche Bank is the parent company of a group
consisting of banks, capital markets companies, fund management companies,
mortgage banks and a property finance company, installment financing and leasing
companies, insurance companies, research and consultancy companies and other
domestic and foreign companies (the "Deutsche Bank Group"). At March 31, 1999,
the Deutsche Bank Group had total assets of US $727 billion. The Deutsche Bank
Group's capital and reserves at March 31, 1999, were US $19.6 billion.
IMPACT OF THE MERGER ON THE PRIOR ADVISORY AGREEMENT. Section 15(a) of
the Act provides, in pertinent part, that "[i]t shall be unlawful for any person
to serve or act as investment adviser of a registered investment company, except
pursuant to a written contract, which contract, whether with such registered
company or with an investment adviser of such registered company, has been
approved by the vote of a majority of the outstanding voting securities of such
registered company...." Section 15(a)(4) of the Act further requires that
such written contract provide for automatic termination in the event of its
assignment. Section 2(a)(4) of the Act defines "assignment" to include any
direct or indirect transfer of a contract by the assignor.
While it may be argued otherwise, consummation of the Merger may have
resulted in an "assignment" of the Prior Advisory Agreement within the meaning
of the Act, terminating the agreement according to its terms and the Act as of
June 4, 1999. Specifically, as Bankers Trust is a wholly-owned subsidiary of BT
Corporation, the merger of Circle Corporation with and into BT Corporation could
be deemed to have resulted in an "assignment" of the Prior Advisory Agreement
with Bankers Trust.
On May 25, 1999, Bankers Trust was granted an exemptive order (the
"Exemptive Order") by the Commission permitting implementation, without
obtaining prior shareholder approval, of the New BT Advisory Agreement during an
interim period commencing on the date of the closing of the Merger and
continuing, for a period of up to 150 days, through the date on which the New BT
Advisory Agreement is approved or disapproved by the shareholders of the Fund
(the "Interim Period"). Under the terms of the Exemptive Order, Bankers Trust
was allowed to receive advisory fees during the Interim Period pursuant to the
New BT Advisory Agreement, provided that these fees would be held in escrow
pending shareholder approval of the New BT Advisory Agreement. In accordance
with the Exemptive Order, the advisory fees charged to the Fund and paid to the
Adviser under the New BT Advisory Agreement have been held in an
interest-bearing escrow account and the Fund expects to continue to deposit
these fees in such account until approval of the New BT Advisory Agreement by
the shareholders of the Fund has been obtained. If the New BT Advisory Agreement
is not approved by the shareholders by the expiration of the Interim Period, the
fees held in escrow will be remitted to the Fund. As of June 30, 1999, the
amount in escrow totaled $64,792.61.
The shareholders of the Fund are not being asked to approve or
disapprove the Merger or the Merger Agreement; rather, they are being asked
under these Proposals to approve and continue the New BT Advisory Agreement and
to approve the New Advisory Agreements for the Fund. OTHER THAN THE PARTIES AND
THE DATES OF EXECUTION, EFFECTIVENESS, AND INITIAL TERM OF THE AGREEMENT, THE
NEW ADVISORY AGREEMENTS WILL CONTAIN SUBSTANTIALLY THE SAME TERMS AND CONDITIONS
AS THE PRIOR ADVISORY AGREEMENT. In addition, the form of New Sub-advisory
Agreement authorizes the applicable investment adviser to adjust the duties, the
amount of assets to be managed and the fees paid to the applicable investment
subadviser with and upon the approval of the Board of the Independent Trustees.
The advisory fee rate charged to the Fund under the Prior Advisory Agreement has
continued to apply under the New BT Advisory Agreement and would continue to
apply under the New MGI Advisory Agreement. MGI, and not the Trust, would be
solely responsible for paying the sub-advisory fees,
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which may vary from time to time as approved by the Independent Trustees. The
sub-advisory fees would be paid by MGI directly to the subadviser. In addition,
the Advisers have advised the Fund that it can expect to continue to receive the
same level and quality of services under the New BT Advisory Agreement as it
received under the Prior Advisory Agreement. The Advisers have represented to
the Board that in the event of any material change in the investment management
personnel of the Advisers responsible for providing services to the Fund, the
Advisers will apprise and consult with the Board to ensure that the Board,
including a majority of the Board's Independent Trustees, is satisfied that the
services provided by the Advisers will not be diminished in scope and quality.
THE NEW ADVISORY AGREEMENTS
THE NEW ADVISORY AGREEMENTS. The form of the New Advisory and
Sub-advisory Agreement is attached to this Proxy Statement as Exhibit A. If
shareholders approve the New Advisory Agreements, each of the agreements will
remain in effect for an initial term of two years from its effective date, and
may be renewed annually thereafter by specific approval of the Board or
shareholders of the Fund, provided that they are also approved by a majority of
the Independent Trustees. The terms and conditions of the New Advisory
Agreements other than the parties and the dates of execution, effectiveness and
initial term, are substantially the same as those of the Prior Advisory
Agreement. In addition, the form of New Sub-advisory Agreement authorizes the
applicable investment adviser to adjust the duties, the amount of assets to be
managed and the fees paid to the applicable investment subadviser with and upon
approval of the Board and the Independent Trustees. The New BT Advisory
Agreement became effective as of April 4, 1999, the date of the consummation of
the Merger.
If the New MGI Advisory Agreement and/or the New Subadvisory Agreement
is approved, Bankers Trust will continue to perform its advisory duties under
the New BT Advisory Agreement until the New MGI Advisory Agreement and/or the
New Subadvisory Agreement, as applicable, is implemented. MGI, as Adviser, and
Bankers Trust, as subadviser, would perform its respective advisory duties and
be paid its respective advisory fees only upon implementation of the applicable
New Advisory Agreement.
Under the terms of the New Advisory Agreement, as under the Prior
Advisory Agreement, each of the Advisers agrees to furnish the Fund with
investment advisory and other services in connection with a continuous
investment program for the Fund, including investment research and management
with respect to all securities, investments, cash and cash equivalents in the
portfolios. Subject to the supervision and control of the Board, each of the
Advisers agrees to (a) conform to all applicable rules and regulations of the
Commission, including all applicable provisions of the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of 1934 (the "Exchange
Act"), the Act and the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and will conduct its activities under the New Advisory
Agreement in accordance with applicable regulations of the Board of Governors of
the Federal Reserve System pertaining to the investment advisory activities of
bank holding companies and their subsidiaries, (b) provide the services rendered
by it in accordance with the Fund's investment objectives and policies as stated
in the Prospectus and Statement of Additional Information of the Fund, as from
time to time in effect, and the Fund's then current registration statement on
Form N-1A as filed with the Commission and the then current offering Memorandum
if the Fund is not registered under the 1933 Act, (c) place orders pursuant to
its investment determinations for the Fund either directly with the issuer or
with any broker or dealer selected by it, (d) determine from time to time what
securities or other investments will be purchased, sold or retained
<PAGE>
by the Fund, and (e) maintain books and records with respect to the securities
transactions of the Fund and render to the Board such periodic and special
reports as they may request.
THE ADVISORY FEE. THE INVESTMENT ADVISORY FEE RATE CHARGED TO THE FUND
UNDER THE NEW BT ADVISORY AGREEMENT AND THE NEW MGI ADVISORY AGREEMENT IS THE
SAME AS THE INVESTMENT ADVISORY FEE RATE CHARGED UNDER THE PRIOR ADVISORY
AGREEMENT. AS NOTED ABOVE, THE INVESTMENT ADVISORY FEE PAYABLE UNDER THE NEW
SUB-ADVISORY AGREEMENT WOULD BE PAID BY MGI, NOT THE TRUST, AND MAY VARY FROM
TIME TO TIME, SUBJECT TO THE APPROVAL OF THE BOARD, INCLUDING A MAJORITY OF ITS
INDEPENDENT TRUSTEES.
Bankers Trust is paid a fee under the New BT Advisory Agreement for its
services, calculated daily and paid monthly, equal, on an annual basis, to 0.15%
of the Fund's average daily net assets.
GENERALLY. If approved, the New Advisory Agreements, as applicable,
will remain in effect for an initial term of two years (unless sooner
terminated), and shall remain in effect from year to year thereafter if approved
annually (1) by the Board or by the holders of a majority of the Fund's
outstanding voting securities and (2) by a majority of the Independent Trustees
who are not parties to such contract or agreement. Like the Prior Advisory
Agreement, the New Advisory Agreements will terminate upon assignment by any
party and are terminable, without penalty, on 60 days' written notice by the
Board or by a "majority" vote of the shareholders of the Fund (as defined in the
Act) or upon 60 days' written notice by the applicable Adviser.
The services of the Advisers are not deemed to be exclusive and nothing
in the New Advisory Agreement prevents them or their affiliates from providing
similar services to other investment companies and other clients (whether or not
their investment objectives and policies are similar to those of the Fund) or
from engaging in other activities. In addition, the Advisers are obligated to
pay expenses associated with providing the services contemplated by the New
Advisory Agreements. The Trust bears certain other expenses including the fees
of the Board. The Trust also pays any extraordinary expenses incurred.
Under the New Advisory Agreements, each of the Advisers will exercise
its best judgment in rendering its advisory services. The Advisers shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust or the Fund in connection with the matters to which the New Advisory
Agreements relate, provided that nothing therein shall be deemed to protect or
purport to protect the Advisers against any liability to the Trust or the Fund
or to its shareholders to which the Advisers could otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on their part in
the performance of their duties or by reason of the Advisers' reckless disregard
of their obligations and duties under the New Advisory Agreements.
THE ADVISERS
BANKERS TRUST. Bankers Trust is the principal banking subsidiary of BT
Corporation. Bankers Trust is a bank and, therefore, not required to register as
an investment adviser under the Advisers Act. Bankers Trust provides a broad
range of commercial banking and financial services, including originating loans
and other forms of credit, accepting deposits and arranging financings. Bankers
Trust also engages in trading currencies, securities, derivatives and
commodities. In addition to providing investment advisory services to the Fund,
Bankers Trust serves as investment adviser to 31 other investment companies and
investment subadviser to 34 other investment companies. (See Annex II for a list
of those investment companies that Bankers Trust advises that have investment
objectives similar
<PAGE>
to those of the Fund, together with information regarding the fees charged to
those companies.) As of March 31, 1999, Bankers Trust had over $313 billion of
assets under management.
The names, business addresses and principal occupations of the current
directors and chief executive officer of Bankers Trust are set forth below.
NAME AND ADDRESS PRINCIPAL OCCUPATION
Josef Ackermann Chairman of the Board, Chief Executive Officer
Deutsche Bank A.G. and President, Bankers Trust Company; Member,
Taunusanlage 12 Board of Managing Directors, Deutsche Bank A.G.
D-60262 Frankfurt am Main
Federal Republic of Germany
Hans Angermueller Shearman & Sterling, of counsel
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Mr. George B. Beitzel Director, Computer Task Group, Inc.; Director,
29 King Street Phillips Petroleum Company; Director, TIG
Chappaqua, NY 10514-3432 Holdings Inc.
Mr. William R. Howell Chairman Emeritus, J.C. Penney Company, Inc.;
J.C. Penney Company, Inc. Director, Exxon Corporation; Director,
P.O. Box 10001 Halliburton Company; Director, National
Dallas, TX 75301-1109 Organization on Disability; Director, National
Retail Federation; Director and Chairman,
Southern Methodist University Board of
Trustees; Director, Warner-Lambert Company;
Director, The Williams Companies, Inc.
Hermann-Josef Lamberti Member, Board of Managing Directors, Deutsche
Deutsche Bank A.G. Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
John A. Ross Regional Chief Executive Officer, Deutsche Bank
Deutsche Bank A.G. Americas Holding Corp.
31 West 52nd Street
New York, NY 10019
Ronaldo H. Schmitz Member, Board of Managing Directors, Deutsche
Deutsche Bank A.G. Bank A.G.
Taunusanlage 12
D-60262 Frankfurt am Main
Federal Republic of Germany
<PAGE>
In addition to serving as investment adviser to the Fund, Bankers Trust
also serves as administrator, transfer agent and custodian of the Fund. The Fund
paid fees to Bankers Trust in the amount of $430,835 for these services for the
most recently completed fiscal year.
MGI. MGI is a corporation organized under the laws of the State of
Delaware and is a registered investment adviser under the Advisers Act. It is
located at 885 Third Avenue, 32nd Floor, New York, NY 10022. MGI provides a full
range of investment advisory services to institutional clients. MGI serves as
investment adviser to ten other investment companies and is subadviser to five
other investment companies. MGI is a subsidiary of Morgan Grenfell Asset
Management Ltd. ("MGAM"), located at 20 Finsbury Circus, London, England, a
wholly owned subsidiary of Deutsche Morgan Grenfell Group PLC, located at Great
Winchester Street, London, England, an investment holding company which is, in
turn, a wholly owned subsidiary of Deutsche Bank. MGAM currently manages
approximately $16.5 billion for a wide range of pension, corporate, insurance,
local authority, government and private clients worldwide. (See Annex II for a
list of those investment companies that MGI advises that have investment
objectives similar to those of the Fund, together with information regarding the
fees charged to those companies.)
The names, business addresses and principal occupations of the current
directors and chief executive officer of MGI are set forth below. Except as
otherwise indicated, the business address of the individuals named below is 885
Third Avenue, 32nd Floor, New York, NY 10022 and their positions at MGI
constitute their principal occupation.
NAME AND ADDRESS PRINCIPAL OCCUPATION
Richard Marin President and Director, Morgan Grenfell
280 Park Avenue Inc.; Managing Director, Deutsche Bank,
New York, NY 10017 A.G.
David Westover Baldt Executive Vice President and Director,
Morgan Grenfell Inc.
Joan A. Binstock Chief Operating Officer, Secretary,
Treasurer and Director, Morgan Grenfell
Inc.
Audrey Mary Theresa Jones Executive Vice President, Portfolio
Manager and Director, Morgan Grenfell Inc.
Robert H. Smith Chairman and Director, Morgan Grenfell Inc.;
Chief Executive Officer, Morgan Grenfell Asset
Management; Chairman and Chief Executive
Officer, Morgan Grenfell Development Capital
Steven Schneider Managing Director, Deutsche Bank A.G.
280 Park Avenue
New York, NY 10017
<PAGE>
SECTION 15(F) OF THE ACT
Section 15(f) of the Act provides that when a change of control of an
investment adviser to an investment company occurs, the investment adviser or
any of its affiliated persons may receive an amount or benefit in connection
therewith as long as two conditions are satisfied.
First, no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the change of control, or any express or
implied terms, conditions or understandings applicable thereto. As defined in
the Act, the term "unfair burden" includes any arrangement during the two (2)
year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any "interested person" (as defined in the
Act) of such adviser, receives or is entitled to receive any compensation,
directly or indirectly, from the investment company or its security holders
(other than fees for bona fide investment advisory or other services), or from
any person in connection with the purchase or sale or other property to, or on
behalf of the investment company (other than fees for bona fide brokerage and
principal underwriting services). The Advisers have advised the Board that there
are no circumstances arising from the Merger that might result in an "unfair
burden" (within the meaning of section 15(f) of the Act) being imposed on the
Trust. After conducting its reviews of the Advisers and of Bankers Trust's
performance, and after reviewing materials specifically provided by Bankers
Trust as a result of the termination of the Prior Advisory Agreement and its
request that the Board approve the New Advisory Agreements, the Board was
satisfied that it had received and appropriately considered the relevant factors
and, after consultation with counsel, the Board determined to approve the New
Advisory Agreements.
The second condition is that, during the three (3) year period
immediately following the Merger, at least 75% of the members of the Board must
not be "interested persons" of the Advisers within the meaning of the Act. All
current members of the Board are not, and have continued not to be since the
Merger, "interested persons" of the Advisers.
ADDITIONAL INFORMATION
On March 11, 1999, Bankers Trust announced that it had reached an
agreement with the United States Attorney's Office in the Southern District of
New York to resolve an investigation concerning inappropriate transfers of
unclaimed funds and related record-keeping problems that occurred between 1994
and early 1996. Bankers Trust pleaded guilty to misstating entries in the bank's
books and records and agreed to pay a $63.5 million fine to state and federal
authorities. On July 26, 1999, the federal criminal proceedings were concluded
with Bankers Trust's formal sentencing. The events leading up to the guilty
pleas did not arise out of the investment advisory or mutual fund management
activities of Bankers Trust or its affiliates.
As a result of the plea, absent an order from the Commission, Bankers
Trust would not be able to continue to provide investment advisory services to
the Fund. The Commission has granted Bankers Trust a temporary order under
Section 9(c) of the Act to permit Bankers Trust and its affiliates to continue
to provide investment advisory services to registered investment companies, and
Bankers Trust, pursuant to Section 9(c) of the Act, has filed an application for
a permanent order. On May 7, 1999, the Commission extended the temporary order
under Section 9(c) of the Act until the Commission takes final action on the
application for a permanent order or, if earlier, November 8, 1999. However,
there is no assurance that the Commission will grant a permanent order. If the
Commission refuses to grant a permanent order, shareholders will receive
supplemental proxy materials
<PAGE>
requesting approval to release any amounts held in escrow up to the time of the
refusal and such other action as deemed appropriate by the Board.
RECOMMENDATION OF THE BOARD
At a meeting of the Board held on March 8, 1999 called for the purpose
of, among other things, voting on approval of the New BT Advisory Agreement, the
Board, including the Independent Trustees, unanimously approved the New BT
Advisory Agreement. In reaching this conclusion, the Board obtained from BT
Corporation, Deutsche Bank and Bankers Trust such information as they deemed
reasonably necessary to approve Bankers Trust as investment adviser to the
Trust. Additionally, the Board considered a number of factors, including, among
other things, the continuity of the management of the Trust after the Merger;
the nature, scope and quality of services that Bankers Trust would likely
provide to the Fund; the quality of the personnel of Bankers Trust; Bankers
Trust's commitment to continue to provide these services in the future; the
maintenance of the identical advisory fee rates; and the fact that the New BT
Advisory Agreement contains substantially the same terms and conditions as the
Prior Advisory Agreement. Based on the factors discussed above and others, the
Board determined that the New BT Advisory Agreement is fair and reasonable and
in the best interest of the Fund and its shareholders.
At meetings of the Board held on July 15 and July 27, 1999 called for
the purpose of, among other things, discussing and voting on approval of the New
MGI Advisory Agreement and the New Sub-advisory Agreement, the Board obtained
from Deutsche Bank and MGI such information as it deemed reasonably necessary to
approve MGI as investment adviser to the Fund. Representatives of Deutsche Bank
and MGI made detailed presentations at the July 15th and July 27th meetings with
respect to, among other factors, the organizational structure, assets under
management, asset management services, financial condition and business plan of
MGI. The Board considered the same factors described above for the New BT
Advisory Agreement with regard to the New MGI Advisory Agreement and the New
Sub-advisory Agreement. The Board also considered a number of other factors,
including the capacity of MGI to perform its duties under the New Advisory
Agreements; the high degree of continuity of investment management personnel
expected to be available to the Fund because most of the personnel of Bankers
Trust who provided services under the Prior Advisory Agreement will be employed
by MGI; the financial standings of Deutsche Bank and MGI; the benefits to the
Fund and the Trust from technological advances being instituted by Deutsche Bank
on a world-wide basis; the experience and expertise of MGI as an investment
adviser, as reflected in its amount of assets under management, and the new
organizational structure proposed to be created as a component of the Merger and
the benefits that may accrue to the shareholders as a result thereof. With
respect to the last factor, the Board considered that the proposed
organizational structure may simplify the organizational structure of Deutsche
Bank's U.S. mutual fund operations, enhance the efficiency of their
administration and promote consistency of internal controls, compliance and
regulatory oversight. Additionally, the eventual implementation of the New MGI
Advisory Agreement will provide the Fund and the Trust with an investment
adviser registered under the Advisers Act.
The Board was apprised that the deferral in implementing the New MGI
Advisory Agreement is needed to permit Deutsche Bank a sufficient amount of time
to plan, prepare and institute the necessary arrangements for MGI to consolidate
Deutsche Bank's U.S. mutual fund operations. The Advisers also emphasized to the
Board that the New MGI Advisory Agreement and the New Sub-advisory Agreement
would be implemented only upon the approval of the Independent Trustees based on
information they then deemed adequate and necessary to consider these
arrangements. At the July
<PAGE>
27th meeting of the Board, a majority of the Board, including a majority of the
Independent Trustees, approved the New MGI Advisory Agreement and the New
Sub-advisory Agreement.
Based on the factors discussed above and others, the Board determined
that the New MGI Advisory Agreement and the New Sub-advisory Agreement are fair
and reasonable and in the best interests of the shareholders.
In addition, at meetings held on March 24 and April 21, 1999 the Board,
including the Independent Trustees, also were apprised of the guilty pleas
discussed above and the exemptive relief sought by Bankers Trust.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE "FOR"
THE APPROVAL OF THE NEW ADVISORY AGREEMENTS AS SET FORTH IN THESE PROPOSALS.
IF THE NEW BT ADVISORY AGREEMENT IS APPROVED BY THE SHAREHOLDERS, IT
WILL CONTINUE IN EFFECT AS DESCRIBED ABOVE. IF THE NEW BT ADVISORY AGREEMENT IS
NOT APPROVED BY THE SHAREHOLDERS, THE ADVISORY FEES HELD IN ESCROW WITH RESPECT
TO THE NEW BT ADVISORY AGREEMENT WILL BE PAID OVER TO THE TRUST. IN SUCH EVENT,
THE BOARD WILL CONSIDER WHAT OTHER ACTION IS APPROPRIATE BASED UPON THE
INTERESTS OF THE SHAREHOLDERS. IF THE NEW MGI ADVISORY AGREEMENT AND/OR THE NEW
SUB-ADVISORY AGREEMENT ARE NOT APPROVED BY THE SHAREHOLDERS, THE NEW BT ADVISORY
AGREEMENT, IF IT HAS BEEN APPROVED BY THE SHAREHOLDERS, WILL CONTINUE IN EFFECT
IN ACCORDANCE WITH ITS TERMS WHILE THE BOARD CONSIDERS WHETHER AND THE EXTENT TO
WHICH OTHER ACTION IS APPROPRIATE BASED UPON THE INTERESTS OF THE SHAREHOLDERS.
<PAGE>
PROPOSAL II
ELECTION OF BOARD OF TRUSTEES OF THE TRUST
Trustees constituting the entire Board of Trustees of the Trust are to
be elected at the Special Meeting to serve until their successors have been duly
elected and qualified or until their earlier resignation or removal. The Trustee
Nominees were recently selected by the Independent Trustees and nominated by the
full Board at a meeting held on July 27, 1999. The names and ages of the Trustee
Nominees, their principal occupations during the past five years and certain of
their other affiliations are provided below. Of the Trustee Nominees, Richard J.
Herring, Charles P. Biggar and Bruce E. Langton are currently Trustees of the
Trust. No Trustee or Trustee Nominee of the Trust serves or will serve as an
officer of the Trust. Each of the Trustee Nominees has agreed to serve if
elected at the Special Meeting. It is the intention of the persons designated as
proxies in the Proxy, unless otherwise directed therein, to vote at the Special
Meeting for the election of the Trustee Nominees named below as the entire Board
of Trustees of the Trust. If any Trustee Nominee is unable or unavailable to
serve, the persons named in the Proxies will vote the Proxies for such other
person as the Board may recommend.
The following table sets forth the names, ages, position with the
Trust, and principal occupation of each Trustee Nominee:
<TABLE>
<CAPTION>
TRUSTEE NOMINEES
NAME AND AGE POSITION WITH TRUST PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------- ------------------- ----------------------------------------------------------------------
<S> <C> <C>
Charles P. Biggar(1)+ Trustee of Trust Retired; formerly, Vice President of International Business Machines
Age: 68 since 1990 ("IBM") and President of the National Services and Field Engineering
Divisions of IBM.
S. Leland Dill Retired; Director, Coutts (U.S.A.) International; Director, Phoenix-Zweig
Age: 69 Trust(4) and Phoenix-Euclid Market Neutral Fund(4); former Partner of KPMG
Peat Marwick; Director, Vintners International Company Inc.; Director,
Coutts Trust Holdings Ltd.; Director, Coutts Group; General Partner,
Pemco(3).
Martin J. Gruber(2) Nomura Professor of Finance, Leonard N. Stern School of Business, New York
Age: 62 University (since 1964); Trustee, TIAA(4); Trustee, SG Cowen Mutual
Funds(4); Trustee, Japan Equity Fund(4); Trustee, Taiwan Equity Fund(4).
Richard Hale* Managing Director, Deutsche Asset Management; Director, Flag Investors
Age: 54 Fund(4); Managing Director, BT Alex. Brown Incorporated; Director and
President, Investment Company Capital Corp.
Richard J. Herring(1)+ Trustee of Trust Jacob Safra Professor of International Banking, Professor of Finance and
Age: 53 since 1990 Vice Dean, The Wharton School, University of Pennsylvania (since 1972).
Bruce E. Langton(1)+ Trustee of Trust Retired; Trustee, Allmerica Financial Mutual Funds (1994 to present);
Age: 68 since 1990 Member, Pension & Thrift Plans and Investment Committee, Unilever U.S.
Corporation (1989 to present)(3); Director, TWA Pilots Directed Account
Plan and 401K Plan (1988 to present)(4).
<PAGE>
TRUSTEE NOMINEES
NAME AND AGE POSITION WITH TRUST PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
- ------------------------- ------------------- ----------------------------------------------------------------------
Philip Saunders, Jr.(2) Principal, Philip Saunders Associates (Economic and Financial Analysis);
Age: 63 Former Director, Financial Industry Consulting, Wolf and Company;
President, John Hancock Home Mortgage Corporation; Senior Vice President of
Treasury and Financial Services, John Hancock Mutual Life Insurance
Company, Inc.
Harry Van Benschoten(2) Retired; Director, Canada Life Insurance Corporation of New York.
Age: 71
</TABLE>
- ------------------
* "Interested Person" within the meaning of Section 2(a)(19) of the Act.
Mr. Hale is a Managing Director of Deutsche Asset Management, the U.S.
asset management unit of Deutsche Bank and its affiliates.
+ Member of the Audit Committee.
(1) Holds one other trusteeship in the Bankers Trust Fund Complex, as defined
herein.
(2) Holds two other trusteeships in the Bankers Trust Fund Complex, as defined
herein.
(3) A publicly held company with securities registered pursuant to Section 12
of the Exchange Act.
(4) An investment company registered under the Act.
The Board has established an Audit Committee that meets with the
Trust's independent accountants to review the financial statements of the Trust,
the adequacy of internal controls and the accounting procedures and policies of
the Trust, and reports on these matters to the Board. The Independent Trustees,
who constitute 100% of the membership of the current Board, select and nominate
the new trustee nominees who are not "interested persons," as defined under the
Act, of the Trust. The Board does not have a compensation committee. During
1998, the Board held four meetings and the Audit Committee held two meetings. No
Trustee attended less than 75% of the applicable meetings.
If Richard Hale is elected, he will not be a member of the Audit
Committee.
The following table sets forth the compensation received by the Trustee
Nominees for their services to the Trust and Bankers Trust Fund Complex (as
defined below) during the calendar year ended December 31, 1998. In addition to
the fees listed below, the Trustees are also reimbursed for all reasonable
expenses incurred during the execution of their duties for the Trust and Bankers
Trust Fund Complex.*
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Estimated
Aggregate Pension or Retirement Annual Total Compensation
Compensation Benefits Accrued as Benefits upon From the Complex*
Name of Trustee from the Trust Part of Trust Expenses Retirement Paid to Trustees
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Charles P. Biggar $11,107 N/A N/A $36,250
- ---------------------------------------------------------------------------------------------------------
S. Leland Dill N/A N/A N/A $36,250
- ---------------------------------------------------------------------------------------------------------
Martin J. Gruber N/A N/A N/A $36,250
- ---------------------------------------------------------------------------------------------------------
Richard Hale N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------
Richard J. Herring $23,625 N/A N/A $35,000
- ---------------------------------------------------------------------------------------------------------
Bruce E. Langton $23,625 N/A N/A $35,000
- ---------------------------------------------------------------------------------------------------------
Philip Saunders, Jr. N/A N/A N/A $36,250
- ---------------------------------------------------------------------------------------------------------
Harry Van Benschoten N/A N/A N/A $36,250
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ------------------
* The "Bankers Trust Fund Complex" consists of the Trust, as well as BT
Investment Funds, BT Pyramid Mutual Funds, BT Advisor Funds and BT Insurance
Funds Trust (collectively, the "BT Funds"), as well as the portfolios into
which those series of the BT Funds which have a master feeder structure
invest.
The following table sets forth the names, ages, position with the Trust
and length of service in such position, and principal occupations during the
past five years, of the officers of the Trust.
NAME AND AGE POSITION WITH TRUST AND PRINCIPAL OCCUPATIONS
- ------------ ---------------------------------------------
John A. Keffer President and Chief Executive Officer
Age: 56 since 1998; President, Forum Financial Group L.L.C. and
its affiliates; President, ICC Distributors, Inc.*
Daniel O. Hirsch Secretary since 1998; Director, Deutsche Asset
Age: 45 Management since 1999; Director, BT Alex. Brown
Incorporated and Investment Company Capital
Corporation, 1998-99; Associate General Counsel,
Office of General Counsel, United States Securities
and Exchange Commission, 1993-1998.
Charles A. Rizzo Treasurer since 1999; Vice President and Department
Age: 41 Head, Deutsche Asset Management since 1998; Senior
Manager, PricewaterhouseCoopers LLP 1993-98.
- ------------------
* Underwriter/Distributor for the Trust. Mr. Keffer owns 100% of the shares of
ICC Distributors, Inc.
RECOMMENDATION OF THE BOARD
At a meeting of the Board held on July 27, 1999, the Board, based on a
recommendation of the incumbent Independent Trustees, unanimously approved the
nomination of the Trustee Nominees. In reaching this conclusion, the Board
obtained from the Trustee Nominees such information as they deemed reasonably
necessary to approve the Trustee Nominees and considered a number of factors,
including, among other things: the nature, scope and quality of services that
the Trustee Nominees would likely provide to the Trust and the desirability of
maintaining adherence to Section 15(f) of the Act. Based on the factors
discussed above and others, the Board determined that the election of the
Trustee Nominees is in the best interest of the Trust and its shareholders.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMEND THAT THE SHAREHOLDERS OF THE TRUST VOTE "FOR"
THE ELECTION OF THE TRUSTEE NOMINEES AS SET FORTH IN THIS PROPOSAL.
IF THE TRUSTEE NOMINEES ARE ELECTED BY THE APPLICABLE SHAREHOLDERS,
EACH TRUSTEE NOMINEE WILL SERVE UNTIL HIS SUCCESSOR IS DULY ELECTED AND
QUALIFIED OR UNTIL HIS EARLIER RESIGNATION OR REMOVAL. IF THE TRUSTEE NOMINEES
ARE NOT ELECTED, THE BOARD WILL CONSIDER WHAT ACTION IS APPROPRIATE BASED UPON
THE INTERESTS OF THE TRUST'S SHAREHOLDERS.
<PAGE>
PROPOSAL III
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS FOR THE FUND
The Board, including a majority of the Independent Trustees, has
approved the selection of PricewaterhouseCoopers LLP to serve as independent
accountants for the Fund for the current fiscal year. PricewaterhouseCoopers LLP
has served as independent accountants of the Fund since the date of the Fund's
inception and has advised the Trust that they have no direct or indirect
financial interest in the Fund. Representatives of PricewaterhouseCoopers LLP
are not expected to be present at the Special Meeting and, thus, are not
expected to make a statement; however, one or more representatives will be
available by telephone to respond to appropriate questions posed by shareholders
or management.
THEREFORE, AFTER CAREFUL CONSIDERATION, THE BOARD, INCLUDING THE
INDEPENDENT TRUSTEES, RECOMMENDS THAT THE SHAREHOLDERS OF THE TRUST VOTE "FOR"
THE RATIFICATION OF THE INDEPENDENT ACCOUNTANTS AS SET FORTH IN THIS PROPOSAL.
<PAGE>
VOTE REQUIRED
Approval of Proposals IA, IB and IC with respect to the Trust's New
Advisory Agreements requires the affirmative vote of a "majority" of the
outstanding shares of the Fund. "Majority" (as defined in the Act) means (as of
the Record Date) the lesser of (a) 67% or more of the shares of the Fund present
at the special meeting, if the holders of more than 50% of the outstanding
shares of the Fund are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Fund present and voting at the special meeting.
Because abstentions and broker non-votes are treated as shares present but not
voting, any abstentions and broker non-votes will have the effect of votes
against Proposals IA, IB and IC, which requires the approval of a specified
percentage of the outstanding shares of the Fund.
Approval of Proposal II with respect to the Trustee Nominees requires
the affirmative vote of a plurality of the votes cast in person or by proxy at
the Special Meeting. Because abstentions and broker non-votes are not treated as
shares voted, abstentions and broker non-votes will have no impact on Proposal
II.
Approval of Proposal III with respect to the selection of the
independent accountants of the Fund requires the affirmative vote of a majority
of the votes cast in person or by proxy at the Special Meeting for the Fund.
Because abstentions and broker non-votes are not treated as shares voted,
abstentions and broker non-votes will have no impact on Proposal III.
- --------------------------------------------------------------------------------
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS VOTE "FOR" APPROVAL OF PROPOSALS IA, IB, IC, II
AND III. ANY UNMARKED PROXIES WILL BE SO VOTED.
- --------------------------------------------------------------------------------
The Board is not aware of any other matters that will come before the
Special Meeting. Should any other matter properly come before the Special
Meeting, it is the intention of the persons named in the accompanying Proxy to
vote the Proxy in accordance with their judgment on such matters.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund does not hold regular shareholders' meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a subsequent
shareholders' meeting should send their written proposals to the Secretary of
the Trust at the address set forth on the cover of this Proxy Statement.
Proposals must be received at a reasonable time prior to the date of a
meeting of shareholders to be considered for inclusion in the materials for the
Fund's meeting. Timely submission of a proposal does not, however, necessarily
mean that such proposal will be included.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding at least 10% of the Fund's outstanding voting
securities (as defined in the Act) may require the calling of a meeting of
shareholders for the purpose of voting on the removal of any Trustee of the
Fund. Meetings of shareholders for any other purpose also shall be called by the
Board when requested in writing by shareholders holding at least 10% of the
shares then outstanding.
<PAGE>
IF YOU HAVE ANY QUESTIONS CONCERNING THE PROXY STATEMENT OR THE PROCEDURES TO BE
FOLLOWED TO EXECUTE AND DELIVER A PROXY, PLEASE CONTACT SHAREHOLDER
COMMUNICATIONS CORPORATION AT 1-800-732-6168.
- --------------------------------------------------------------------------------
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING AND
WHO WISH TO HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, UNLESS
THEY ARE VOTING BY TELEPHONE OR THROUGH THE INTERNET.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
- --------------------------------------------------------------------------------
By Order of the Board of Trustees,
Daniel O. Hirsch, SECRETARY
August 23, 1999
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES OF THE TRUST HOPES THAT SHAREHOLDERS WILL ATTEND
THE SPECIAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE (UNLESS YOU ARE VOTING BY
TELEPHONE OR THROUGH THE INTERNET).
- --------------------------------------------------------------------------------
<PAGE>
ANNEX I
SHARES BENEFICIALLY PERCENT OWNERSHIP
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF OUTSTANDING SHARES
- ------------------------------------ ------------------- ---------------------
(i) 5% SHAREHOLDERS
[TO COME]
(ii) TRUSTEES AND TRUSTEE NOMINEES *
Charles P. Biggar *
S. Leland Dill *
Martin J. Gruber *
Richard Hale *
Richard J. Herring *
Bruce E. Langton *
Philip Saunders, Jr. *
Harry Van Benschoten *
(iii)EXECUTIVE OFFICERS *
John A. Keffer *
Daniel O. Hirsch *
Charles A. Rizzo *
(iv) TRUSTEES AND EXECUTIVE OFFICERS *
AS A GROUP
* The Trustees, the Trustee Nominees, the executive officers of the Trust
and the Trustees and executive officers as a group own less than 1% of the
Fund's outstanding shares.
<PAGE>
ANNEX II
I. BANKERS TRUST
[TO COME]
<PAGE>
II. MORGAN GRENFELL INC.
[TO COME]
<PAGE>
EXHIBIT A
[FORM OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENT]
AGREEMENT made as of [_________________] by and between [Trust Name], a
(state of organization) (herein called the "Trust") and [________________]
(herein called the "Investment Adviser") [and [______________] (herein called
the "Investment Subadviser")].
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940;
WHEREAS, the Trust desires to retain the Investment Adviser to render
investment advisory and other services to the Trust with respect to certain of
its series of shares of beneficial interests as may currently exist or be
created in the future (each, a "Fund") as listed on Exhibit A hereto, and the
Investment Adviser is willing to so render such services on the terms
hereinafter set forth;
[WHEREAS, the Investment Adviser desires to retain the Investment
Subadviser to perform certain of the Investment Adviser's duties under this
Agreement, and the Investment Subadviser is willing to so render such services
on the terms hereinafter set forth;]
NOW, THEREFORE, this Agreement
W I T N E S S E T H:
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. Appointment. The [Trust] [Investment Adviser] hereby appoints the
[Investment Adviser] [Investment Subadviser] to act as [investment adviser]
[investment subadviser] to each Fund for the period and on the terms set forth
in this Agreement. The [Investment Adviser] [Investment Subadviser] accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Management. Subject to the supervision of the [Board of Trustees of
the Trust] [Investment Adviser], the [Investment Adviser] [Investment
Subadviser] will provide a continuous investment program for the Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents in the Fund. The [Investment Adviser] [Investment
Subadviser] will determine from time to time what securities and other
investments will be purchased, retained or sold by each Fund. The [Investment
Adviser] [Investment Subadviser] will provide the services rendered by it
hereunder in accordance with the investment objective(s) and policies of each
Fund as stated in the Fund's then-current prospectus and statement of additional
information (or the Fund's then current registration statement on Form N-1A as
filed with the Securities and Exchange Commission (the "SEC") and the
then-current offering memorandum if the Fund is not registered under the
Securities Act of 1933, as amended ("1933 Act"). The [Investment Adviser]
[Investment Subadviser] further agrees that:
(a) it will conform with all applicable rules and regulations of
the SEC (herein called the "Rules") and with all applicable provisions of the
1933 Act; as amended, the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Investment Company Act of 1940, as amended (the "1940 Act"); and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and will, in
addition, conduct its activities under this Agreement in accordance with
applicable regulations of the Board of Governors of the Federal Reserve System
pertaining to the investment advisory activities of bank holding companies and
their subsidiaries;
<PAGE>
(b) it will place orders pursuant to its investment determinations
for each Fund either directly with the issuer or with any broker or dealer
selected by it. In placing orders with brokers and dealers, the [Investment
Adviser] [Investment Subadviser] will use its reasonable best efforts to obtain
the best net price and the most favorable execution of its orders, after taking
into account all factors it deems relevant, including the breadth of the market
in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing basis.
Consistent with this obligation, the [Investment Adviser] [Investment
Subadviser] may, to the extent permitted by law, purchase and sell portfolio
securities to and from brokers and dealers who provide brokerage and research
services (within the meaning of Section 28(e) of the 1934 Act) to or for the
benefit of any fund and/or other accounts over which the [Investment Adviser]
[Investment Subadviser] or any of its affiliates exercises investment
discretion. Subject to the review of the [Trust's Board of Trustees] [Investment
Adviser] from time to time with respect to the extent and continuation of the
policy, the [Investment Adviser] [Investment Subadviser] is authorized to pay to
a broker or dealer who provides such brokerage and research services a
commission for effecting a securities transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if the [Investment Adviser] [Investment Subadviser] determines
in good faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the [Investment Adviser] [Investment Subadviser] with respect to the accounts as
to which it exercises investment discretion; and
(c) it will maintain books and records with respect to the
securities transactions of each Fund and will render to the [Trust's Board of
Trustees] [Investment Adviser] such periodic and special reports as the Board
may request.
3. [Subject to the provisions of this Agreement, the duties of the
Investment Subadviser, the portion of portfolio assets that the Subadviser shall
manage, and the fees to be paid the Investment Subadviser by the Investment
Adviser under and pursuant to this Agreement may be adjusted from time to time
by the Investment Adviser with and upon the approval of the Board and the
members of the Trust's Board of Trustees who are not "interested persons," as
defined in the Act ].(1)
4. Services Not Exclusive. The investment advisory services rendered by
the [Investment Adviser] [Investment Subadviser] hereunder are not to be deemed
exclusive, and the [Investment Adviser] [Investment Subadviser] shall be free to
render similar services to others so long as its services under this Agreement
are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
of the Rules under the 1940 Act, the [Investment Adviser] [Investment
Subadviser] hereby agrees that all records which it maintains for the Trust are
the property of the Trust and further agrees to surrender promptly to the
[Trust] [Investment Adviser] any of such records upon request of the [Trust]
[Investment Adviser]. The [Investment Adviser] [Investment Subadviser] further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act and to
comply in full with the requirements of Rule 204-2 under the Advisers Act
pertaining to the maintenance of books and records.
6. Expenses. During the term of this Agreement, the [Investment
Adviser] [Investment Subadviser] will pay all expenses incurred by it in
connection with its activities under this Agreement other than the cost of
purchasing securities (including brokerage commissions, if any) for the Fund.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, the [Trust] [Investment Adviser] will pay the
[Investment Adviser] [Investment Subadviser], and the [Investment Adviser]
[Investment Subadviser] will accept as full compensation therefor, fees,
computed daily and payable monthly, on an annual basis equal to the percentage
set forth on Exhibit A hereto of that Fund's average daily net
(1) Provision contained in the form of Investment Subadvisory Agreement only.
<PAGE>
assets.
8. Limitation of Liability of the [Investment Adviser] [Investment
Subadviser]: Indemnification.
(a) The [Investment Adviser] [Investment Subadviser] shall not be
liable for any error of judgment or mistake of law or for any loss suffered by a
Fund in connection with the matters to which this Agreement relates, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the [Investment Adviser] [Investment
Subadviser] in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement;
(b) Subject to the exceptions and limitations contained in Section
7(c) below:
(i) the [Investment Adviser] [Investment Subadviser]
(hereinafter referred to as a "Covered Person") shall be indemnified by the
respective Fund to the fullest extent permitted by law, against liability and
against all expenses reasonably incurred or paid by him in connection with any
claim, action, suit or proceeding in which he becomes involved, as a party or
otherwise, by virtue of his being or having been the [Investment Adviser]
[Investment Subadviser] of the Fund, and against amounts paid or incurred by him
in the settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(c) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the [Trust] [Investment
Adviser] or to one or more Funds' investors by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office, or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of a Fund; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office;
(A) by the court or other body approving the settlement; or
(B) by at least a majority of those Trustees who are
neither Interested Persons of the Trust nor are parties to the matter based upon
a review of readily available facts (as opposed to a full trial-type inquiry);
or
(C) by written opinion of independent legal counsel based
upon a review of readily available facts (as opposed to a full trial-type
inquiry); provided, however, that any investor in a Fund may, by appropriate
legal proceedings, challenge any such determination by the Trustees or by
independent counsel.
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the [Trust] [Investment Adviser], shall be
severable, shall not be exclusive of or affect any other rights to which any
Covered Person may now or hereafter be entitled, shall continue as to a person
who has ceased to be a Covered Person and shall inure to the benefit of the
successors and assigns of such person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel and any other persons, other
than a Covered Person, may be entitled by contract or otherwise under law.
<PAGE>
(e) Expenses in connection with the preparation and presentation of
a defense to any claim, suit or proceeding of the character described in
subsection (b) of this Section 7 may be paid by the [Trust] [Investment Adviser]
on behalf of the respective Fund from time to time prior to final disposition
thereto upon receipt of an undertaking by or on behalf of such Covered Person
that such amount will be paid over by him to the [Trust] [Investment Adviser] on
behalf of the respective Fund if it is ultimately determined that he is not
entitled to indemnification under this Section 7; provided, however, that either
(i) such Covered Person shall have provided appropriate security for such
undertaking or (ii) the [Trust] [Investment Adviser] shall be insured against
losses arising out of any such advance payments, or (iii) either a majority of
the Trustees who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts as opposed to a
trial-type inquiry or full investigation, that there is reason to believe that
such Covered Person will be entitled to indemnification under this Section 7.
9. Duration and Termination. This Agreement shall be effective as to a
Fund as of the date the Fund commences investment operations after this
Agreement shall have been approved by the Board of Trustees of the Trust with
respect to that Fund and the Investor(s) in the Fund in the manner contemplated
by Section 15 of the 1940 Act and, unless sooner terminated as provided herein,
shall continue until the second anniversary of such date. Thereafter, if not
terminated, this Agreement shall continue in effect as to such Fund for
successive periods of 12 months each, provided such continuance is specifically
approved at least annually (a) by the vote of a majority of those members of the
Board of Trustees of the Trust who are not parties to this Agreement or
Interested Persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, or (b) by Vote of a Majority of the
Outstanding Voting Securities of the Trust; provided, however, that this
Agreement may be terminated by the Trust at any time, without the payment of any
penalty, by the Board of Trustees of the Trust, by Vote of a Majority of the
Outstanding Voting Securities of the Trust on 60 days' written notice to the
[Investment Adviser] [Investment Subadviser], or by the [Investment Adviser]
[Investment Subadviser] as to the [Trust] [Investment Adviser] at any time,
without payment of any penalty, on 90 days' written notice to the [Trust]
[Investment Adviser]. This Agreement will immediately terminate in the event of
its assignment (as used in this Agreement, the terms "Vote of a Majority of the
Outstanding Voting Securities," "Interested Person" and "Assignment" shall have
the same meanings as such terms have in the 1940 Act and the rules and
regulatory constructions thereunder.)
10. Amendment of this Agreement. No material term of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of a material term of this
Agreement shall be effective with respect to a Fund, until approved by Vote of a
Majority of the Outstanding Voting Securities of that Fund.
11. Representations and Warranties. The [Investment Adviser]
[Investment Subadviser] hereby represents and warrants as follows:
(a) [The [Investment Adviser] [Investment Subadviser] is exempt
from registration under the 1940 Act:]
(b) The [Investment Adviser] [Investment Subadviser] has all
requisite authority to enter into, execute, deliver and perform its obligations
under this Agreement;
(c) This Agreement is legal, valid and binding, and enforceable in
accordance with its terms; and
(d) The performance by the [Investment Adviser] [Investment
Subadviser] of its obligations under this Agreement does not conflict with any
law to which it is subject.
12. Covenants. The [Investment Adviser] [Investment Subadviser] hereby
covenants and agrees that, so long as this Agreement shall remain in effect:
<PAGE>
(a) The [Investment Adviser] [Investment Subadviser] shall remain
either exempt from, or registered under, the registration provisions of the
Advisers Act; and
(b) The performance by the [Investment Adviser] [Investment
Subadviser] of its obligations under this Agreement shall not conflict with any
law to which it is then subject.
13. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid, (a) to the Investment Adviser, Mutual Funds Services, 130 Liberty
Street (One Bankers Trust Plaza), New York, New York 10006 , [(b) to the
Subadviser, [Address] or ](c) to the Trust, c/o BT Alex. Brown, Incorporated,
One South Street, Baltimore, Maryland 21202.
14. Waiver. With full knowledge of the circumstances and the effect of
its action, the [Investment Adviser] [Investment Subadviser] hereby waives any
and all rights which it may acquire in the future against the property of any
investor in a Fund, other than shares in that Fund, which arise out of any
action or inaction of the [Trust] [Investment Adviser] under this Agreement.
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by the
laws of the ______________________________, without reference to principles of
conflicts of law. The Trust is organized under the laws of
_________________________________ pursuant to a ______________ dated
______________. No Trustee, officer or employee of the Trust shall be personally
bound by or liable hereunder, nor shall resort be had to their private property
for the satisfaction of any obligation or claim hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
[SIGNATORIES]
